ASYST TECHNOLOGIES INC /CA/, 8-K/A, 1999-08-16

ASYST TECHNOLOGIES INC /CA/
8-K/A, 1999-08-16
SPECIAL INDUSTRY MACHINERY, NEC

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SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 8-K/A

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 3, 1999

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

California
(State or other jurisdiction of incorporation)

000-22430 94-2944251
(Commission File No.) (IRS Employer Identification No.)

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

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

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This Current Report of Form 8-K A is being filed to amend and restate Asyst
Technologies, Inc.'s (the "Company") Consolidated Balance Sheets as of March 31,
1999 and 1998 and the related Consolidated Statements of Operations,
Shareholders' Equity and Cash Flows for the years ended March 31, 1999, 1998 and
1997 to reflect the pooling of interests for accounting purposes of the
Company's acquisition of Progressive System Technologies, Inc. ("PST") pursuant
to an Agreement and Plan of Merger and Reorganization dated June 2, 1999.
Furthermore, pursuant to Item 5 hereof, the Company has determined to update its
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" in connection with the filing of the foregoing restated financial
statements.

ITEM 5. OTHER INFORMATION

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS

Overview

The Company develops, manufactures and markets systems utilizing isolation
technology, material tracking products and factory automation solutions used
primarily in cleanrooms for semiconductor manufacturing. The Company's sales are
tied to capital expenditures at wafer fabrication facilities. The majority of
the Company's revenues in any single quarter is typically derived from
relatively few customers, and the Company's revenues will therefore fluctuate
based on a number of factors, including the timing of significant customer
orders, variations in the mix of products sold and changes in customer buying
patterns. In addition, due to production cycles and customer requirements, the
Company often ships significant quantities of products in the last month of the
quarter. This factor increases the risk of unplanned fluctuations in net sales
since management has limited opportunity to take corrective actions should a
customer reschedule a shipment or otherwise delay an order during the last month
of the quarter.

Fiscal year 1999 has been significantly and adversely impacted by the
worldwide drop in demand for semiconductor devices. The drop in demand resulted
from a dramatic slowdown in the Asian economies and over-capacity of memory chip
manufacturing. In response, many of the Company's customers slashed capital
expenditure budgets by 40 percent or more. The Company's net sales hit a record
$46.6 million for the quarter ended March 31, 1998. Net sales for the quarter
ended June 30, 1998 (the first fiscal quarter of fiscal year 1999) fell to $37.4
million. Net sales continued to fall to $18.9 million in the quarter ended
September 30, 1998 and to $17.9 million in the quarter ended December 31, 1998
with a slight rebound to $18.7 million in the quarter ended March 31, 1999. In
addition, in fiscal year 1999, the Company acquired the FluoroTrac RFID product
line and HDI. On June 2, 1999, the Company completed its acquisition of 100
percent of the common stock of Progressive System Technologies, Inc. ("PST"), a
Texas corporation that manufactures wafer-sorting equipment used by
semiconductor manufacturers. The acquisition was accounted for as a pooling of
interest. Accordingly, the Company's consolidated financial statements for all
periods presented have been restated to include the financial statements of PST.
The significant decline in net sales and the new acquisitions required the
Company to undertake substantial restructuring activities to reduce costs and
eliminate low margin products. Nevertheless, the Company experienced a net loss
in fiscal year 1999 of $26.9 million compared to a record net income of $15.4
million in fiscal year 1998.

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

<TABLE>
<CAPTION>
Fiscal Year Ended
March 31,
----------------------------
1997 1998 1999
----- ----- -----
<S> <C> <C> <C>
Net sales....................................................... 100.0% 100.0% 100.0%
Cost of sales................................................... 60.1 56.2 64.4
----- ----- -----
Gross profit.............................................. 39.9 43.8 35.6
----- ----- -----
Operating expenses:.............................................
Research and development...................................... 7.5 9.1 19.4
Selling, general and administrative........................... 20.6 20.6 45.0
In-process research and development of acquired business...... 0.9 -- 7.7
Restructuring expense -- -- 6.0
----- ----- -----
Total operating expenses.................................. 29.0 29.7 78.1
----- ----- -----
Operating income (loss)................................... 10.9 14.1 (42.5)
Other income (expense), net..................................... 0.4 1.0 1.9
----- ----- -----
Income (loss) from continuing operations
before provision (benefit) for income taxes................... 11.3 15.1 (40.6)
Provision (benefit) for income taxes............................ 4.7 5.6 (11.6)
----- ----- -----
Income (loss) from continuing operations........................ 6.6 9.5 (29.0)
----- ----- -----
Loss from operations of Asyst Automation, Inc.,.................
net of applicable income taxes............................... (4.0) -- --
Loss on closure of Asyst Automation, Inc.,......................
net of applicable income taxes............................... (5.6) (1.0) --
----- ----- -----
Net income (loss)............................................... (3.0)% 8.5% (29.0)%
===== ===== =====
</TABLE>

Fiscal Years Ended March 31, 1997, 1998 and 1999

Net sales. Net sales in the year ended March 31, 1999 decreased by 49.0
percent to $92.9 million from $182.3 million for the year ended March 31, 1998.
Net sales for the year ended March 31, 1997 were approximately $152.3 million.
The decrease in sales was consistent across all of the Company's products. Both
the OEM channel and direct fabrication end user channel were impacted by the
worldwide reduction in capital spending budgets of the major semiconductor
manufacturers. Net sales would have been over $6.3 million less had the Company
not acquired the FluoroTrac product line and HDI during the fiscal year ended
March 31, 1999.

For the quarter ended March 31, 1999, the Company's ending backlog was
greater than net sales for that quarter. Beginning in the quarter ended March
31, 1999, many semiconductor manufacturers publicly announced increases in their
capital spending budgets. There is no assurance that this trend in orders will
continue. Furthermore, there is no assurance that orders may not be cancelled in
the future.

The Company's international sales, including the local revenues recorded at
the foreign locations were as follows (dollars in millions):

<TABLE>
<CAPTION>
Fiscal Year Ended March 31,
-------------------------------------------------------------
1997 1998 1999
------------------ ----------------- -----------------
% of % of % of
$ Sales $ Sales $ Sales
----- ------ ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C>
Taiwan........................... $48.8 32.1% $ 79.3 43.5% $31.1 33.5%
Singapore........................ 9.4 6.2 13.6 7.5 3.4 3.7
Thailand......................... 6.6 4.3 -- -- -- --
Korea............................ 6.1 4.0 -- -- 0.5 0.5
Japan............................ 10.3 6.7 15.9 8.7 8.1 8.7
Other............................ 0.4 0.3 0.5 0.3 0.3 0.3
----- ------ ------ ------ ----- ------
Total Asia.................. 81.6 53.6 109.3 60.0 43.4 46.7
Europe........................... 5.1 3.3 6.5 3.5 4.1 4.4
----- ------ ------ ------ ----- ------
Total International......... $86.7 56.9% $115.8 63.5% $47.5 51.1%
===== ==== ====== ====== ===== ======
</TABLE>

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Direct sales to international customers remain a substantial portion of the
Company's sales. During fiscal year 1999, international sales as a percent of
net sales decreased to 51.0 percent from 63.0 percent of net sales in fiscal
year 1998. The drop in international net sales as a percent of net sales
resulted in part due to the acquisition of HDI on July 31, 1998, as HDI had a
lower percentage of sales than the Company. International net sales of robots,
the primary product of HDI represented less than 10 percent of the $6.3 million
of robot sales of the Company during fiscal year 1999. In addition, in fiscal
year 1999, the Company experienced a sharp decline in its Asia foundry sales in
response to the slowdown in worldwide demand for semiconductors. For example,
the Company's largest customer in fiscal year 1998 reduced its purchases of the
Company's products from $53.0 million to just $6.3 million (representing the
Company's second largest customer) in fiscal year 1999. In fiscal year 1999, the
Company's largest customer purchased $10.3 million of products. The largest
customer in each year, as measured in net sales, were Asia based foundries.

The net sales by product or service categories comprising the Company's net
sales for the fiscal years ended March 31, were as follows (dollars in
thousands):

<TABLE>
<CAPTION>
Fiscal Year Ended March 31,
-------------------------------
1999 1998 1997
-------- --------- --------
<S> <C> <C> <C>
SMIF Systems....................................................... $ 66,609 $ 145,702 $118,647
Non-SMIF Systems................................................... 8,794 16,827 14,783
SMART Traveler Systems............................................. 6,227 14,533 11,145
Robotics........................................................... 6,323 -- --
Services & other................................................... 4,995 5,228 7,728
-------- --------- --------
Total.......................................................... $ 92,948 $ 182,290 $152,303
========= ========= ========
</TABLE>

The Company's competitors are increasingly competing on price. Certain
international competitors receive various forms of government support, ranging
from different forms of financial subsidies to high level diplomatic support.
While the Company has been successful in maintaining market share by competing
on product quality and service value, there is no assurance that the impact of
the competition's actions will not have a negative effect on future sales and
gross margins.

Gross margin. The Company's gross margin was 39.9 percent in fiscal year
1997, 43.8 percent in fiscal year 1998, and 35.6 percent in fiscal year 1999.
The decrease in the gross margin in fiscal year 1999 resulted because of the
49.0 percent drop in net revenues from fiscal year 1998 and the Company's
inability to reduce its manufacturing overhead to compensate for the lower
revenues. The Company also increased its inventory reserves by $2.3 million
during the fiscal year ended March 31, 1999. In addition, significant orders
were received and shipped near the end of each quarter requiring higher levels
of overtime by the Company's employees. Competitive pressures continue to put
pressure on gross margins in spite of continuing efforts to reduce costs through
design changes and manufacturing overhead reductions process improvements. In
fiscal year 1998, gross margins were benefited by record net revenues and
changes in the Company's product mix. The Company's LPP line, which has a higher
gross profit margin than its other products, increased from 19.9 percent of net
revenues in fiscal 1997 to 43.7 percent of net revenues in fiscal 1998. Gross
margins on the LPP line in fiscal 1998 improved over the gross margins in fiscal
1997 because of design improvements directed at reducing manufacturing costs.
The Company expects margins to improve and return to historical levels as net
revenues increase to those achieved in fiscal years 1997 and 1998. During fiscal
year 1999, the Company has operated a single shift in its manufacturing
operations. Given the level of net sales, it is only using about 60 percent of
its manufacturing capacity during that shift. However, because of pressures on
prices brought about by competition, changes in product mix, the rate of change
in net sales, changes in sales activities, and customer demands for shorter lead
times and the introduction of new products, the Company expects gross margins to
fluctuate.

Research and development. Research and development expenses were $11.4
million, $16.6 million and $18.0 million for the years ended March 31, 1997,
1998 and 1999, respectively, representing 7.5 percent, 9.1 percent and 19.4
percent of net sales in those respective periods. The increase in research and
development expense in fiscal year 1999, resulted because of increased spending
for the Company's new SMIF-300 product series, the acquisition of HDI and
continuing enhancements and additions to its 200 mm product line due to the
transition to 300 mm facilities by the semiconductor industry. Research and
development expenses consist of salaries, project materials

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and other expenses related to the Company's commitment to ongoing product
development efforts. The Company capitalizes certain legal cost related to its
patents. The Company, to date, has not capitalized costs associated with
software development because such costs incurred to date that are eligible for
capitalization have not been material. The Company expects its research and
development activities and related expenditures to increase in future periods.

Selling, general and administrative. Selling, general and administrative
expenses were $31.4 million or 20.6 percent of net sales, $37.7 million or 20.7
percent of net sales, and $41.9 million or 45.0 percent of net sales for the
years ended March 31, 1997, 1998 and 1999, respectively. Selling and marketing
expenses were $11.7 million or 7.7 percent of net sales, $14.1 million or 7.7
percent of net sales, and $14.7 million or 15.8 percent of net sales for the
same periods. The growth in selling and marketing expenses in fiscal year 1998
and 1999 are the result of increasing the Company's global presence and
developing new customer relationships presented by the emerging 300 mm
technology. The growth in selling and marketing expenses in fiscal year 1999
resulted primarily from the acquisition of HDI and the FluoroTrac product line.

General and administrative expenses were $19.7 million or 12.9 percent of
net sales, $23.6 million or 13.0 percent of net sales, and $27.2 million or 29.2
percent of net sales for fiscal years 1997, 1998 and 1999, respectively. In
fiscal year 1999, general and administrative expenses increased $3.5 million
over the prior year even though net sales decreased 49.0 percent, due largely
from the acquisition of HDI and the FluoroTrac product line. The Company
incurred goodwill amortization related to the two acquisitions of approximately
$1.7 million. Other general and administrative expenses related to the two
acquisitions added another $1.9 million in the year ended March 31, 1999. In
addition, the Company incurred an additional $4.3 million of legal expenses in
connection with its patent infringement lawsuit (See "Item 3 - Legal
Proceedings") than it incurred in the prior year. The Company believes it will
incur substantially lower legal fees in connection with this lawsuit during the
year ending March 31, 2000. These increases in general and administrative
expenses were offset by $2.0 million of expenses charged to its warranty
reserves for warranty labor in fiscal year 1999. In prior years, expenses
related to warranty activities were charged to general and administrative
expense. In response to the 49.0 percent reduction in net sales, the Company
reduced general and administrative expense by an additional $2.9 million.

Restructuring charge. In the year ended March 31, 1999 the Company
underwent significant restructuring of its operations to reduce its cost
structure in response to the 49.1 percent reduction in net sales. The Company
also is in the process of restructuring activities in Japan and Europe to
reposition its activities to compete more effectively. In addition, the Company
is repositioning its product offerings to eliminate low margin products, or
software services that have high risks of failure. The following table
summarizes restructuring charges by geographic region (dollars in thousands):

<TABLE>
<CAPTION>
Cash outlays
as of Ending
Expensed March 31, 1999 Accrual
-------- -------------- -------
<S> <C> <C> <C>
Europe........................................
Severance................................. $ 1,732 $ 1,050 $ 682
Facilities................................ 336 235 101
Other..................................... 437 130 307
Japan
Severance................................. 150 75 75
Other..................................... 35 -- 35
US
Severance................................. 700 500 200
Facilities................................ 550 300 250
Other..................................... 1,002 102 900
Non-cash 600 N/A N/A
-------- -------------- -------
Total $ 5,542 $ 2,392 $ 2,550
======== ============== =======
</TABLE>

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Japan and eight in Europe. All of those employees were informed prior to March
31, 1999 and the Company expects to complete the termination process of these
employees by July 3, 1999. Facilities impacted by these restructuring activities
either have been vacated as of March 31, 1999 or will be vacated by July 3,
1999. Other costs include expenses incurred for consultants and legal services,
equipment or service buy-out cost and any estimated incremental costs associated
with the closure of facilities or completion of other contractual obligations.

In-process research and development of acquired business and product line.
During the year ended March 31, 1999, the Company completed its acquisition of
the FluoroTrac product line and HDI. HDI was accounted for using the purchase
method of accounting during the quarter ended September 30, 1998. In connection
with the purchase price allocation of both FluoroTrac and HDI, the Company
recorded a write-off of approximately $1.2 and $5.9 million, respectively, of
in-process research and development costs in the quarters ended June 30, 1998
and September 30, 1998, respectively. The decision to write-off these costs was
primarily due to the fact that the acquired in-process research and development
related to the FluoroTrac product line and HDI had not yet reached technological
feasibility and had no perceived alternative future uses. This technology is
still being developed. Additionally, in November 1996, the Company completed the
acquisition of Radiance Systems, Inc. ("RSI") which was accounted for as a
purchase in the quarter ended December 31, 1998. In connection with the purchase
price allocation, the Company recorded a write-off of $1.3 million of in-process
research and development in the quarter ended December 31, 1996, as the acquired
in-process research and development had not yet reached technological
feasibility and had no alternative future uses.

Other income (expense), net. Other income (expense), net includes interest
income, interest expense, foreign exchange gain and loss (which has not been
material), and royalty income. The primary components are interest income and
royalties. In fiscal year 1997, other income (expense), net was less than 1.0
percent of net sales. In fiscal year 1998, other income (expense), net increased
to 1.0 percent of net sales primarily because of the increase in interest income
on the significantly higher cash position of the Company throughout the year.
The improved cash and short-term investment position was the result of improved
receivable collection and a private placement of 1,000,000 shares of the
Company's common stock in September 1997. In fiscal year 1999, other income
(expense), net was 1.9 percent of net sales. The increase as a percentage of net
sales was due largely to the 49.0 percent decrease in 1999.

Provision (benefit) for income taxes. In fiscal years 1997, 1998 and 1999
the effective tax rate was 42 percent, 37 percent and 29 percent, respectively.
In fiscal year 1999, the Company experienced a net operating loss, which
generated a tax benefit of approximately $10.8 million. The benefit for income
taxes was impacted by foreign income and withholding taxes in excess of the
statutory rates, the lack of Foreign Sales Corporation ("FSC") benefit due to
net operating losses during the current year and limitations on State net
operating loss carryforwards. However, the Company is anticipating the
recognition of increased tax benefits, over those recognized in prior years, due
to the increase in tax benefits related to tax exempt income and other available
tax credits. The Company has recorded a deferred tax asset of approximately
$19.1 million, of which $10.8 million relates to net operating losses and tax
credits generated during the current year. The Company will be able to recognize
approximately $5.0 million of the deferred tax asset immediately following the
filing of carryback claims with Federal and various State taxing authorities,
which will be completed in the near future. Realization of the remaining
deferred tax asset is dependent on generating sufficient future taxable income.
Although realization is not assured, management believes that it is more likely
than not that the deferred tax assets will be realized. Although the deferred
tax asset is considered realizable, actual amounts could be reduced if
sufficient future taxable income is not achieved. In fiscal 1998, the Company
was able to recognize certain tax benefits related to FSC benefit and tax exempt
income. The effective rate in fiscal 1997 was impacted by the write-off of the
in-process research and development expenses related to the acquisition of RSI.

The Company's provision for income taxes differs from the expected tax
expense (benefit) amount by applying the statutory Federal income tax rate of 35
percent to income (loss) before income taxes as a result of state income taxes,
permanent items and the application of the valuation allowance associated with
the deferred tax assets generated by PST during the current and prior fiscal
years.

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carryforwards and other deferred tax assets. As of March 31, 1999, PST had
Federal net operating loss carryforwards of approximately $5.3 million, which
will expire beginning in fiscal 2012 . The utilization of the net operating
losses may be subject to a substantial annual limitation due to the "change in
ownership" and consolidated loss provisions of the Internal Revenue Code.
Subsequent to the merger, PST will file and be included in the consolidated
income tax return of the Company and its wholly owned subsidiaries.

Discontinued operations. In January 1997, the Company adopted a formal plan
to close Asyst Automation Inc. ("AAI") by the end of September 1997, which was
accounted for in the third quarter of fiscal year 1997. In December 1997, it was
determined that an additional reserve of $1.8 million (net of a tax benefit of
$1.0 million) was necessary. All of the amounts reserved in connection with the
closure of AAI have been used as of March 31, 1999. In September 1997, the
Company entered into an asset purchase agreement with Palo Alto Technologies,
Inc. ("PAT"), pursuant to which the Company sold to PAT (a related party)
certain intellectual property rights and office equipment which were owned or
licensed by AAI. See Note 10 of "Notes to Consolidated Financial Statements."

New Accounting Pronouncement

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards requiring that every derivative
instrument be recorded in the balance sheet as either an asset or liability
measured at its fair value. It requires that changes in the derivative's fair
value be recognized currently in earnings unless specific hedge accounting
criteria are met and that a company must formally document, designate and assess
the effectiveness of transactions that receive hedge accounting. SFAS No. 133 is
effective for fiscal years beginning after June 15, 2000 and cannot be applied
retroactively. The Company has not yet determined the effect SFAS No. 133 will
have on its financial position, results of operations or cash flows.

Liquidity and Capital Resources

Since its inception, the Company has funded its operations primarily
through the sale of equity securities and public stock offerings in fiscal years
1994, 1996 and 1998, customer pre-payments, bank borrowings and cash generated
from operations. The Company recorded net proceeds of $9.2 million in its
initial public offering in September 1993. In February 1995, the Company raised
an additional $34.4 million in net proceeds from a secondary public offering. In
1997, PST completed a private placement of 4,504,505 shares of Series A
redeemable preferred stock, generating net proceeds to PST of $5.0 million. On
September 30, 1997, the Company completed a private placement of 1.0 million
shares of its common stock, generating net proceeds to the Company of $42.9
million. As of March 31, 1999, the Company had approximately $6.4 million in
cash and cash equivalents, $29.4 million in short-term investments and working
capital of approximately $72.5 million. In June 1998, the Board of Directors of
the Company authorized a stock repurchase program to repurchase up to 2,000,000
shares of the Company's common stock. As of March 31, 1999, the Company had
repurchased 865,800 shares of common stock at an aggregate cost of approximately
$11.5 million. In May 1999, the Company announced it had cancelled the
repurchase program and completed a private placement of 625,000 shares of its
Common Stock to eight institutional investors. The private placement, was priced
at $18.00 per share, for aggregate proceeds to the Company of approximately
$11.3 million. The purpose of the private placement was to untaint shares of
Common Stock to obtain pooling of interests accounting treatment for the
acquisition of PST. During the second, third and fourth quarters of fiscal 1999,
the Company issued 3,137 shares of common stock in connection with its employee
stock programs. The proceeds will be used for general corporate purposes.

During fiscal year 1999, the Company used $2.8 million in cash to acquire
the net assets of the FluoroTrac product line and used $12.4 million in cash in
connection with the acquisition of HDI. In addition, the Company used $12.5 of
cash to pay the debt assumed as part of the HDI acquisition. The Company also
used $5.0 million to modify its facilities and purchase new equipment and
furniture used in its operations. The Company sold $41.1 million of its
short-term investments to fund its cash requirements.

Although the Company cannot anticipate with certainty the effect of
inflation on its operations, to date inflation has not had a material impact on
the Company's net sales or results of operations. The functional currency

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of the Company is the U.S. dollar. To date, the impact of currency translation
gains or losses has not been material to the Company's sales or results of
operations.

The nature of the semiconductor industry, combined with the current
economic environment, make it very difficult for the Company to predict future
liquidity requirements with certainty. However, the Company believes that its
existing cash and cash equivalents, short-term investments, cash generated from
operations and existing sources of working capital will be adequate to finance
its operations through the fourth quarter of fiscal year 2000.

Interest Rate Risk. The Company's exposure to market risk for changes in
interest rates relate primarily to the investment portfolio. The Company does
not use derivative financial instruments in its investment portfolio. The
Company's investment portfolio consists of short-term fixed income securities
and by policy is limited by the amount of credit exposure to any one issuer. As
stated in its policy, the Company ensures the safety and preservation of its
invested principal funds by limiting default risk, market risk and reinvestment
risk. The Company mitigates default risk by investing in safe and high-credit
quality securities and by constantly positioning its portfolio to respond
appropriately to a significant reduction in a credit rating of any investment
issuer, guarantor or depository. The portfolio includes only marketable
securities with active secondary or resale markets to ensure portfolio
liquidity. These securities, like all fixed income instruments, carry a degree
of interest rate risk. Fixed rate securities have their fair market value
adversely affected due to rise in interest rates.

The table below presents principal amounts and related weighted average
interest rates for the investment portfolio at March 31, 1999. All investments
mature, by policy, in twelve months or less (dollars in thousands).

<TABLE>
<CAPTION>
Average
Carrying Interest
Amount Rate
-------------- -----------
<S> <C> <C>
CASH EQUIVALENTS:

U.S. corporate securities...................................................... $ -- --%
--------- ---------
Total Cash Equivalents................................................... -- --%
--------- ---------

SHORT-TERM INVESTMENTS:

U.S. corporate debt securities................................................. $16,600 3.70%
Debt securities issued by States of the Unites States and
political subdivisions of the States........................................ 12,780 3.58%
Foreign securities............................................................. -- --%
--------- ---------

Total Short-Term Investments............................................. $29,380 3.65%
========= =========
</TABLE>

Foreign Currency Exchange Risk. The Company is engaged in international
operations and transacts business in various foreign countries. The primary
foreign currency cash flows are located in Europe, Japan, Singapore and Taiwan.
Although the Company and its subsidiaries operate and sell products in various
global markets, substantially all sales are denominated in the U.S. dollar,
therefore reducing the foreign currency risk factor. Currently, the Company does
not employ a foreign currency hedge program utilizing foreign currency forward
exchange contracts. To date, the foreign currency transactions and exposure to
exchange rate volatility have not been significant. There can be no assurance
that foreign currency risk will not be a material impact on the financial
position, results of operations or cash flow of the Company in the future.

Year 2000 Compliance Initiative

What is commonly referred to as the Year 2000 ("Y2K") issue arises because
many computer systems use only two digits to represent the year portion of a
date. As a result, these systems may fail to properly calculate dates and
date-related computations at, around or after January 1, 2000, resulting in
erroneous results or system failures.

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In conjunction with third-party expert consultants, the Company launched a
comprehensive program to assess and address its potential exposures. The program
is substantially complete with the exception of PST as noted below.

With respect to its internal business systems, the Company is working with
the third-party vendors of such systems to ensure Year 2000 compliance either
exists today or will be achieved via vendor supplied upgrade in a timely manner.
The Company's principal enterprise resource planning system has been certified
Year 2000 compliant by its manufacturer and has passed in-house compliance
testing. The Company believes that except for a systematic failure outside its
control, such as a prolonged loss of electrical power or telephone service, Year
2000 problems of these third parties will not have a material impact on
operations.

The Company's products have been, and continue to be, evaluated for Year
2000 compliance. Many have been found to be compliant today and others have been
found to require modest modification to be compliant. Programs are in place and
are being further developed to complete such modifications, for both future
shipments and in the customer installed base.

Also being assessed is the potential impact to the Company of
non-compliance by suppliers, subcontractors, business partners and customers. As
part of that assessment, the Company has requested, in writing, assurances from
these third parties that they are Year 2000 compliant. Some of these third
parties have indicated that they are Year 2000 compliant. Others are still in
the process of their own compliance reviews. If the Company identifies that a
third party has a material Year 2000 compliance issue, it will work with the
third party to resolve the issue or identify another supplier or service
provider that is Year 2000 compliant.

With the acquisition of PST on June 2, 1999, additional products and
systems must be integrated to the Company's Year 2000 Compliance Program. These
efforts are expected to be completed in a timely manner.

The Company's total incremental cost of assessing and remediating its
systems and product Y2K issues is estimated to be between $500,000 and $1
million. Approximately $200,000 has been expended as of March 31, 1999, with
between $200,000 and $350,000 in capital expenditures planned for the first nine
months of fiscal year 2000.

While the Company is engaged in an ongoing Year 2000 assessment, it has not
developed any contingency plans at this time. The completion of the ongoing
assessment will include a determination of the need for, and nature and extent
of any contingency plans.

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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS

(b) Pro forma financial information is not required to be filed by the
Registrant in connection with the acquisition by the Registrant of Progressive
Systems Technologies, Inc. ("PST"). The Company has restated certain of its
historical fiscal year end audited financial statements to reflect the business
combination which is consistent with the accounting treatment for a pooling of
interests. Listed in the index below are the financial statements, related
information which are responsive to Item 7(b) hereof.

(c) The following exhibits are being filed herewith as a result of the
restatement of the Company's audited financial statements:

Exhibit No. Description
---------- -----------

2.1* Agreement and Plan of Merger and Reorganization,
dated as of June 2, 1999, among Asyst Technologies,
Inc., PSTI Merger Sub Acquisition Corp., Progressive
System Technologies, Inc., Advent International
Investor II, Envirotech Fund I and Global Private
Equity II (the Disclosure Schedule has been omitted
as permitted pursuant to the rules and regulations of
the Securities and Exchange Commission ("SEC"), but
will be furnished supplementally to the SEC upon
request).

2.2* Escrow Agreement, dated as of June 2, 1999, among
Asyst Technologies, Inc., Progressive System
Technologies, Inc., State Street Bank and Trust
Company of California, N.A. as Escrow Agent, and
certain shareholders of Progressive System
Technologies, Inc.

2.3* Common Stock Purchase Agreement, dated as of May 26,
1999, among Asyst Technologies, Inc. and the
purchasers thereto.

4.1 Reference is made to Exhibits 2.1 and 2.2.

23.1 Consent of Arthur Andersen LLP

23.2 Consent of Ernst & Young LLP

99.1* Press release announcing the execution of the Letter
of Intent.

99.2* Press release announcing the consummation of the
acquisition and the private placement.

* Previously filed with Registrant's Current Report on Form 8-K, dated
June 17, 1999 and filed June 18, 1999.

10
<PAGE>

Index to Financial Statements

The Financial Statements required by this item are submitted in a separate
section beginning on page 12 of this report.
Page
----
Report of Independent Public Accountants 12
Report of Independent Auditors 13
Consolidated Balance Sheets 14
Consolidated Statements of Operations 15
Consolidated Statements of Shareholders' Equity 16
Consolidated Statements of Cash Flows 17
Notes to Consolidated Financial Statements 18

11
<PAGE>

REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Asyst Technologies, Inc.:

We have audited the accompanying consolidated balance sheets of Asyst
Technologies, Inc. (a California corporation) and subsidiaries (the "Company")
as of March 31, 1999 and 1998, and the related consolidated statements of
operations, shareholders' equity and cash flows for each of the three years in
the period ended March 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
consolidated financial statements of Progressive System Technologies, Inc. (a
Texas corporation) and subsidiary ("PST"), a company acquired in June 1999 in a
transaction accounted for as a pooling of interests, as discussed in Note 15.
Such statements are included in the consolidated financial statements of the
Company and reflect total assets of 4 percent and 7 percent of the consolidated
total for 1999 and 1998, respectively, and total revenues of 10 percent, 10
percent and 11 percent of the consolidated total for 1999, 1998, and 1997,
respectively. These statements were audited by other auditors whose report has
been furnished to us, and our opinion, insofar as it relates to amounts included
for PST, is based solely upon the report of the other auditors.

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

In our opinion, based on our audits and the report of other auditors, the
financial statements referred to above present fairly, in all material respects,
the financial position of Asyst Technologies, Inc. and subsidiaries as of March
31, 1999 and 1998, and the results of their operations and their cash flows for
each of the three years in the period ended March 31, 1999, in conformity with
generally accepted accounting principles.

ARTHUR ANDERSEN LLP

San Jose, California
August 12, 1999

12
<PAGE>

REPORT OF INDEPENDENT AUDITORS

To Board of Directors and Stockholders
Progressive System Technologies, Inc.

We have audited the accompanying consolidated balance sheets of Progressive
System Technologies, Inc. and its subsidiary as of December 31, 1998, 1997, and
1996 and the related consolidated statements of operations, stockholders' equity
(deficit) and cash flows for each of the three years in the period ended
December 31, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

In our opinion, the consolidated financial statements present fairly, in
all material respects, the consolidated financial statement position of
Progressive System Technologies, Inc. and its subsidiary as of December 31,
1998, 1997, and 1996 and the results of their operations and their cash flows
for each of the three years in the period ended December 31, 1998 in conformity
with generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared
assuming that Progressive System Technologies, Inc. will continue as a going
concern. As more fully described in Note 10, the Company has sustained operating
losses and has a working capital deficiency. In addition, the Company has not
complied with certain covenants of loan agreements with banks. These conditions
raise substantial doubt about the Company's ability to continue as a going
concern. The consolidated financial statements do not include any adjustments to
reflects the possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result from the
outcome of this uncertainty.

ERNST & YOUNG LLP

Austin, Texas
May 7, 1999

13
<PAGE>

ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share amounts)

<TABLE>
<CAPTION>
ASSETS
March 31,
------------------------
1999 1998
---------- ---------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents...................................................... $ 6,382 $ 15,006
Short-term investments......................................................... 29,380 70,487
Accounts receivable, net of allowances for doubtful accounts of $ 1,947 and
and $1,369 in 1999 and 1998, respectively................................... 14,511 29,879
Inventories.................................................................... 19,373 22,856
Deferred tax asset............................................................. 19,142 --
Prepaid expenses and other..................................................... 3,474 12,035
Net current assets of discontinued operations.................................. -- 1,438
---------- ---------
Total current assets......................................... 92,262 151,701
---------- ---------

PROPERTY AND EQUIPMENT:
Leasehold improvements......................................................... 5,259 4,720
Machinery and equipment........................................................ 12,536 7,358
Office equipment, furniture and fixtures....................................... 12,713 11,526
---------- ---------
30,508 23,604
Less-- Accumulated depreciation and amortization............................... (17,585) (10,844)
---------- ---------
12,923 12,760
OTHER ASSETS, net of accumulated amortization of
$4,021 and $1,414 in 1999 and 1998, respectively........................... 19,103 2,041
---------- ---------
$ 124,288 $ 166,502
========== =========

LIABILITIES AND SHAREHOLDERS' EQUITY

CURRENT LIABILITIES:
Current portion of long-term debt.............................................. $ 2,190 $ 3,215
Accounts payable............................................................... 5,055 9,850
Accrued liabilities and other.................................................. 10,051 14,138
Customer deposits.............................................................. 1,806 1,357
Income taxes payable........................................................... 676 606
---------- ---------
Total current liabilities.................................... 19,778 29,166
---------- ---------

LONG-TERM DEBT, net of current portion............................................. 2,876 3,086
---------- ---------

COMMITMENTS AND CONTINGENCIES (See Note 8 and 17):

REDEEMABLE CONVERTAIBLE PREFERRED STOCK (See note 6) .............................. 5,000 5,000
---------- ---------

SHAREHOLDERS' EQUITY:

Preferred Stock, no par value
Authorized shares -- 4,000,000
Outstanding shares-- none.................................................. -- --
Common Stock, no par value
Authorized shares -- 20,000,000
Outstanding shares -- 11,598,699 and 12,134,602 shares
in 1999 and 1998, respectively.......................................... 111,851 115,934
Retained earnings (deficit).................................................... (15,217) 13,316
---------- ---------
Total shareholders' equity................................... 96,634 129,250
---------- ---------
$ 124,288 $ 166,502
========== =========
</TABLE>

The accompanying notes are an integral part of these consolidated balance
sheets.

14
<PAGE>

ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except share and per share amounts)

<TABLE>
<CAPTION>
Fiscal Year Ended March 31,
------------------------------------
1999 1998 1997
---------- ---------- ----------
<S> <C> <C> <C>
NET SALES........................................................... $ 92,948 $ 182,290 $ 152,303
COST OF SALES....................................................... 59,895 102,392 91,601
--------- ---------- ---------
Gross profit..................................................... 33,053 79,898 60,702
--------- ---------- ---------

OPERATING EXPENSES:
Research and development......................................... 18,027 16,567 11,391
Selling, general and administrative.............................. 41,859 37,658 31,397
In-process research and development of acquired business......... 7,100 -- 1,335
Restructuring.................................................... 5,542 -- --
--------- ---------- ---------
Total operating expenses...................................... 72,528 54,225 44,123
--------- ---------- ---------
Operating income (loss)....................................... (39,475) 25,673 16,579
--------- ---------- ---------

OTHER INCOME (EXPENSE):
Interest income.................................................. 2,627 1,391 810
Interest expense................................................. (872) (389) (148)
Other income (expense)........................................... (18) 785 (78)
--------- ---------- ---------
Other income (expense), net................................... 1,737 1,787 584
--------- ---------- ---------

Income (loss) from continuing operations before provision
(benefit) for income taxes................................. (37,738) 27,460 17,163

PROVISION (BENEFIT) FOR INCOME TAXES................................ (10,807) 10,258 7,173
--------- ---------- ---------
INCOME (LOSS) FROM CONTINUING OPERATIONS............................ (26,931) 17,202 9,990

DISCONTINUED OPERATIONS:
Loss from operations of Asyst Automation, Inc.,
Net of applicable income taxes................................ -- -- (6,092)
Loss on closure of Asyst Automation, Inc.,
Net of applicable income taxes................................ -- (1,840) (8,573)
--------- ---------- ---------

NET INCOME (LOSS) $ (26,931) $ 15,362 $ (4,675)
========= ========= =========

BASIC EARNINGS (LOSS) PER SHARE:
Income (loss) per share from continuing operations............... $ (2.30) $ 1.51 $ 0.96
========= ========= ========
Net income (loss) per share...................................... $ (2.30) $ 1.34 $ (0.45)
========= ========= ========

DILUTED EARNINGS (LOSS) PER SHARE:
Income (loss) per share from continuing operations............... $ (2.30) $ 1.41 $ 0.94
========= ========= ========
Net income (loss) per share...................................... $ (2.30) $ 1.26 $ (0.44)
========= ========= ========

SHARES USED IN THE PER SHARE CALCULATION:
Basic earnings (loss) per share................................. 11,730 11,429 10,363
========= ========= ========
Diluted earnings (loss) per share................................ 11,730 12,228 10,643
========= ========= ========
</TABLE>

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

15
<PAGE>

ASYST TECHNOLOGIES, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Dollars in thousands, except share amounts)

<TABLE>
<CAPTION>
Retained Total
Common Stock Repurchased Shares Earnings Shareholders'
Shares Amount Shares Amount (Deficit) Equity
-------------- ---------- --------- --------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1996 10,092,181 $ 62,187 -- $ -- $ 2,766 $ 64,953
Common stock used for
exercise of stock options........... 224,920 1,149 -- -- -- 1,149
Stock issued for acquisition.......... 259,480 2,235 -- -- -- 2,235
Employee stock purchase plan.......... 88,500 640 -- -- -- 640
Tax benefit realized from activity
in employee stock option plans...... -- 147 -- -- -- 147
Distributions to PST shareholders.... -- -- -- -- (137) (137)
Net loss.............................. -- -- -- -- (4,675) (4,675)
------------- --------- -------- --------- ---------- ----------

BALANCE, MARCH 31, 1997 10,665,081 66,358 -- -- (2,046) 64,312
Common stock used for
exercise of stock options........... 385,841 3,313 -- -- -- 3,313
Common stock used for private
Placement........................... 1,000,000 42,920 -- -- -- 42,920
Employee stock purchase plan.......... 83,680 928 -- -- -- 928
Issuance of PST warrants.............. -- 174 -- -- -- 174
Tax benefit realized from activity
in employee stock option plans...... -- 2,241 -- -- -- 2,241
Net income............................ -- -- -- 15,362 15,362
------------- --------- -------- --------- ---------- ----------

BALANCE, MARCH 31, 1998................... 12,134,602 115,934 -- -- 13,316 129,250
Repurchased common stock.............. -- -- (865,800) (11,472) -- (11,472)
Common stock used for
exercise of stock options........... 25,685 178 184,817 2,450 (1,499) 1,129
Stock options issued in acquisition... -- 1,900 -- -- -- 1,900
Employee stock purchase plan.......... 67,523 725 51,872 687 (103) 1,309
Issuance of PST warrants.............. -- 337 -- -- -- 337
Tax benefit realized from activity in
employee stock option plans......... -- 1,112 -- -- -- 1,112
Net loss.............................. -- -- -- -- (26,931) (26,931)
------------- --------- -------- --------- ---------- ----------

BALANCE, MARCH 31, 1999................... 12,227,810 $ 120,186 (629,111) $ (8,335) $ (15,217) $ 96,634
============ ========= ======== ========= ========== ==========
</TABLE>

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

16
<PAGE>

ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)

<TABLE>
<CAPTION>
Fiscal Year Ended March 31,
---------------------------------
1999 1998 1997
--------- --------- ---------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss)...................................................... $(26,931) $ 15,362 $ (4,675)
Adjustments to reconcile net income (loss) to net cash provided by
(used by) operating activities -- ...................................
Loss from operations of discontinued operations................... -- -- 6,092
Loss on closure of discontinued operations........................ -- 1,840 8,573
Changes in net current assets of discontinued operations.......... 1,438 (529) (8,178)
Depreciation and amortization expense............................. 7,825 5,189 2,984
Discount on accretion on bank debt................................ 148 -- --
Change in provision for doubtful accounts......................... (133) 2,269 (300)
Non-cash restructuring expense.................................... 784 -- --
Write-down of inventories......................................... 1,837 -- --
Tax benefit associated with employee stock option plans........... 1,112 2,241 147
Purchased in-process research and development..................... 7,100 -- 1,335
Changes in assets and liabilities, net of acquisition of FluoroTrac(R)
product line and Hine Design Incorporated:
Accounts receivable............................................... 16,722 4,863 (8,029)
Inventories....................................................... 5,488 2,355 (661)
Deferred tax asset................................................ (11,445) 3,902 (6,051)
Prepaid expenses and other........................................ 194 (3,186) 1,164
Other assets, net................................................. (605) (70) (546)
Accounts payable.................................................. (5,674) (4,648) 4,669
Accrued liabilities and other..................................... (5,183) 2,919 4,932
Customer deposits................................................. 449 (2,224) (6,087)
Income taxes payable.............................................. 70 (1,904) (685)
-------- ---------- ----------
Net cash provided by (used by) operating activities............ (6,804) 28,379 (5,316)
-------- ---------- ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of short-term investments.................................... (38,680) (326,737) (7,000)
Sale of short-term investments......................................... 79,787 257,250 8,005
Purchase of property and equipment, net................................ (5,032) (5,094) (4,505)
Cash used in the acquisition of the FluoroTrac product line............ (2,794) -- --
Cash used in the acquisition of Hine Design Incorporated............... (12,433) -- --
-------- ---------- ----------
Net cash provided by (used by) investing activities............ 20,848 (74,581) (3,500)
-------- ---------- ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
Cash used in the reduction of debt assumed in the acquisition
of Hine Design Incorporated........................................ (12,479) -- --
Issuance of common stock............................................... 2,438 47,161 1,789
Cash used to repurchase common stock................................... (11,472) -- --
Borrowings under line of credit agreements............................. 15 163 6,123
Payments under line of credit agreements............................... (1,864) (590) (3,712)
Proceeds from issuance of redeemable preferred stock................... -- -- 5,000
Proceeds from issuance of subordinated debt and note payable to bank... 912 3,481 --
Repayments of debt..................................................... (218) (258) (1,246)
Distributions to stockholders.......................................... -- -- (137)
Net cash provided by (used by) financing activities............ (22,668) 49,957 7,817
-------- ---------- ----------

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS.......................... (8,624) 3,755 (999)
CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR.............................. 15,006 11,251 12,250
-------- ---------- ----------

CASH AND CASH EQUIVALENTS, END OF YEAR.................................... $ 6,382 $ 15,006 $ 11,251
======== ========== ==========
</TABLE>

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

17
<PAGE>

1. ORGANIZATION OF THE COMPANY:

Asyst Technologies, Inc. (the "Company") was incorporated in California on
May 31, 1984, for the purpose of designing, developing, manufacturing and
marketing minienvironment systems utilized primarily in clean rooms for
semiconductor manufacturing. These systems are designed to reduce contamination
of in-process wafers by isolating processing equipment and wafers in ultra clean
minienvironments within a cleanroom production facility.

On June 2, 1999, the Company completed its acquisition of 100 percent of
the common stock of Progressive System Technologies, Inc. ("PST"), a Texas
corporation that manufactures wafer-sorting equipment used by semiconductor
manufacturers. The acquisition was accounted for as a pooling of interest.
Accordingly, the Company's consolidated financial statements for all periods
presented have been restated to include the financial statements of PST (see
Note 15).

In July 1998, the Company acquired 100 percent of the common stock of Hine
Design Incorporated ("HDI"), a Delaware Corporation in a transaction accounted
for using the purchase method of accounting. HDI manufactures robots used
primarily in tools supplied by original equipment manufacturers ("OEMs") to
semiconductor manufacturers. (See Note 14).

In January 1997, the Company adopted a formal plan to discontinue the
operations of its subsidiary, Asyst Automation, Inc. ("AAI"), which manufactured
interbay automation products that automate the transport, storage and handling
of individual silicon wafers and other wafer containers during the semiconductor
manufacturing process. The consolidated statements and the related notes to the
consolidated financial statements and supplemental data have been adjusted and
restated to reflect the results of operations and net assets of AAI as
discontinued operations in the quarter ended December 31, 1996 (See Note 11).

Asyst Software, Inc. ("ASI") was incorporated in the state of Delaware in
January 1996. The Company develops software integration solutions to tie OEM
tools to the manufacturing facilities operating system and to automate material
control throughout a semiconductor fabrication facility. In November 1996, the
Company through its subsidiary, ASI, acquired Radiance Systems, Inc. ("RSI")
(See Note 12). In September 1998, through a plan to restructure its operations
(See Note 4), the Company consolidated the activities related to its software
business.

The accompanying consolidated financial statements include the accounts of
the Company and its wholly-owned subsidiaries. All material intercompany
accounts and transactions have been eliminated in consolidation. The preparation
of financial statements in conformity with generally accepted accounting
principles requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts
of revenues and expenses during the reporting period. Actual results may differ
from those estimates.

2. SIGNIFICANT ACCOUNTING POLICIES:

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original
maturity of three months or less from the date of purchase to be cash and cash
equivalents. The carrying value of the cash equivalents approximates their
current fair market value.

Short-term Investments

As of March 31, 1999 and 1998, the Company's short-term investments consist
of liquid debt investments with maturities, at the time of purchase, greater
than three months and less than one year. All such investments have been
classified as "available-for-sale" and are carried at fair value, with
unrealized holding gains and losses, net of taxes reported, which have not been
material to date, as a separate component of shareholders' equity. The cost of
the debt security is adjusted for amortization of premiums and accretion of
discounts to maturity. Such amortization, interest

18
<PAGE>

income, realized gains and losses and declines in value that are considered to
be other than temporary, are included in other income (expense), net, on the
accompanying consolidated statements of operations. There have been no declines
in value that are considered to be other than temporary for any of the three
years in the period ended March 31, 1999. The cost of investments sold is based
on specific identification. The Company does not intend to hold the individual
securities for greater than one year.

Short-term investments by security type are as follows (dollars in
thousands):

<TABLE>
<CAPTION>
March 31,
-------------------
1999 1998
--------- -------
<S> <C> <C>
Debt securities issued by States of the United States and
political subdivisions of the States..................................... $12,780 $50,487
U.S. Corporate debt securities............................................ 16,600 20,000
------ ------
Total $29,380 $70,487
====== ======
</TABLE>

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market
and include materials, labor and manufacturing overhead costs. Provisions, when
required, are made to reduce excess and obsolete inventories to their estimated
net realizable values. Inventories of continuing operations consisted of the
following (dollars in thousands):

<TABLE>
<CAPTION>
March 31,
-----------------
1999 1998
------- -------
<S> <C> <C>
Raw materials............................................................. $16,119 $16,934
Work-in-process and finished goods........................................ 3,254 5,922
------- -------
$19,373 $22,856
======= =======
</TABLE>

Property and Equipment

Property and equipment are recorded at cost. Depreciation and amortization
are computed using the straight-line method over the estimated useful lives of
the assets (or over the lease term if it is shorter for leasehold improvements)
which range from two to five years.

Software Development Costs

The Company capitalizes eligible software development costs upon the
establishment of technological feasibility, which the Company has defined as
completion of a working model. For fiscal years 1999, 1998 and 1997, costs which
were eligible for capitalization, after consideration of factors such as
realizable value, were insignificant and, thus, the Company has charged all
software development costs to research and development expense in the
accompanying consolidated statements of operations.

Accrued Liabilities and other

Accrued liabilities and other consisted of the following (dollars in
thousands):

<TABLE>
<CAPTION>
March 31,
-----------------
1999 1998
------- -------
<S> <C> <C>
Accrued warranty costs.................................................. $ 1,809 $ 4,053
Accrued payroll and payroll related costs............................... 3,841 5,468
Accrued restructuring costs (See Note 4)................................ 2,550 --
Other accrued liabilities............................................... 1,851 4,617
------- -------
$10,051 $14,138
======= =======
</TABLE>

19
<PAGE>

Revenue Recognition

The Company recognizes revenues from standard products and custom
enclosures at the time of shipment to the customer assuming no significant
obligations remain. The Company records reserves for anticipated product
returns, installation costs and warranty costs at the time of shipment based on
historical and anticipated rates of return and cost, as appropriate. The Company
generally sells products on net 30-day payment terms. Prepayments are sometimes
required on orders that involve significant engineering. As of March 31, 1999
and 1998, the Company has received prepayments of approximately $1.8 million and
$1.4 million, respectively, which is reflected as customer deposits in the
accompanying consolidated balance sheet.

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

Comprehensive Income

In 1999, the Company adopted Statement of Financial Accounting Standards
("SFAS") No. 130 "Reporting Comprehensive Income," which establishes standards
for reporting and presentation of comprehensive income. SFAS No. 130, which was
adopted by the Company in the first quarter of 1999, requires companies to
report a new measure of income (loss). Comprehensive income is defined as the
change in equity of a company during a period from transactions and other events
and circumstances excluding transactions resulting from investments by owners
and distributions to owners and is to include unrealized gains and losses that
have historically been excluded from net income (loss) and reflected instead in
equity. The Company has not had any such transactions or events during the
periods and therefore comprehensive income (loss) is the same as the net income
(loss) reported in the consolidated financial statements.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to a
concentration of credit risk principally consist of cash investments and
accounts receivable. The Company has a cash investment policy that limits cash
investments to short-term, low risk investments. As of March 31, 1999 and 1998,
approximately 63 percent and 55 percent, respectively, of accounts receivable,
net, were concentrated with ten customers. In addition, as of March 31, 1999 and
1998, approximately 68 percent and 43 percent, respectively, of accounts
receivable, net, respectively were due from customers located in Japan,
Singapore, Taiwan and the United Kingdom. As of March 31, 1999, approximately 14
percent and 11 percent of the total accounts receivable, net, were due from two
customers located in Taiwan. As of March 31, 1998, approximately 18 percent of
the total accounts receivable, net, was due from a single customer in Taiwan.
The Company performs ongoing credit evaluations of its customers' financial
condition and, generally, does not require collateral on accounts receivable as
the majority of the Company's customers are large, well established companies.
The allowance for non-collection of accounts receivable is based upon the
expected collectibility of all accounts receivable.

Common Stock Split

On July 21, 1997, the Board of Directors declared a two-for-one stock split
of the Company's Common Stock in the form of a stock dividend. The stock
dividend was paid on August 22, 1997 to the holders of record on August 1, 1997.
All share and per share data, including common stock equivalents, have been
adjusted to give effect to the split.

Patents

The Company capitalizes the direct costs associated with obtaining patents.
The costs, which are included in other assets, net in the accompanying
consolidated balance sheets, are being amortized using the straight-line

20
<PAGE>

method over the expected useful lives of the patents of 10 years. Accumulated
amortization was approximately $0.7 million and $0.6 million as of March 31,
1999 and 1998, respectively.

Foreign Currency Translation

The functional currency of the Company's foreign subsidiaries is the U.S.
dollar. Accordingly, foreign translation and foreign exchange gains and losses,
which have not been material, are reflected in other income (expense) in the
accompanying consolidated statements of operations.

Intangible Assets

The realizability of intangible assets (See Note 12, 13 and 14), which are
included in other assets, net, in the accompanying consolidated balance sheet,
is evaluated periodically as events or circumstances indicate a possible
inability to recover the net carrying amount. Such evaluation is based on
various analyses, including cash flow and profitability projections that
incorporate, as applicable, the impact on existing lines of business. The
analyses involve a significant level of management judgment in order to evaluate
the ability of the Company to perform within projections. During the year ended
March 31, 1999, the Company determined that an impairment loss had occurred
related to the intangibles associated with the acquisition of RSI (See Note 12).

New Accounting Pronouncement

Earnings Per Share

Earnings per share has been reported based upon SFAS No. 128, "Earnings Per
Share," which requires presentation of basic and diluted earnings per share.
Basic earnings per share has been computed using the weighted average number of
actual common shares outstanding, while diluted earnings per share has been
computed using the weighted average number of common and common equivalent
shares outstanding. Common equivalent shares used in the computation of diluted
earnings per share result from the assumed exercise of stock options and
warrants, using the treasury stock method and the conversion of the redeemable
convertible preferred stock. For the year ended March 31, 1999, the number of
shares used in the computation of diluted earnings (loss) per share was the same
as those used for the computation of basic earnings (loss) per share due to
potentially dilutive securities of 745,765 being not included in the computation
of diluted earnings (loss) per common share because to do so would reduce the
loss per share.

The Company adopted SFAS No. 128 as of December 31, 1997 and restated all
prior periods. The reconciliation of the numerators and denominators of the
basic and diluted earnings per share computations are as follows (dollars in
thousands, except per share amounts):

21
<PAGE>

<TABLE>
<CAPTION>
Income Shares Per Share
(Numerator) (Denominator) Amount
------------- ----------------- ----------
<S> <C> <C> <C>
FOR YEAR ENDED MARCH 31, 1997
Basic Earnings Per Share:
Income from continuing operations available to common
shareholders.............................................. $ 9,990 10,363 $ 0.96
=======
Common shares issuable upon conversion of redeemable
preferred stock........................................... -- 34
Common shares issuable upon exercise of stock options and
warrants using the treasury method........................ -- 246
--------- ---------

Diluted Earnings Per Share:
Income from continuing operations available to common
shareholders plus assumed conversions..................... $ 9,990 10,643 $ 0.94
========= ========= =======

FOR YEAR ENDED MARCH 31, 1998
Basic Earnings Per Share:
Income from continuing operations available to common
shareholders.............................................. $ 17,202 11,429 $ 1.51
=======
Common shares issuable upon conversion of redeemable
preferred stock........................................... -- 34
Common shares issuable upon exercise of stock options and
warrants using the treasury method........................ -- 765
--------- ---------

Diluted Earnings Per Share:
Income from continuing operations available to common
shareholders plus assumed conversions..................... $ 17,202 12,228 $ 1.41
========= ========= =======

FOR YEAR ENDED MARCH 31, 1999
Basic Earnings (loss) Per Share:
Loss from continuing operations available to common
shareholders.............................................. $(26,931) 11,730 $ (2.30)
=======
Common shares issuable upon exercise of stock options and
warrants using the treasury method........................ -- --
--------- ---------

Diluted Earnings (loss) Per Share:
Loss from continuing operations available to common
shareholders plus assumed conversions..................... $(26,931) 11,730 $ (2.30)
========= ========= =======
</TABLE>

Reclassifications

Prior years' amounts have been reclassified where necessary to conform with
the fiscal 1999 presentation.

3. SUPPLEMENTAL STATEMENTS OF CASH FLOWS DISCLOSURES:

Cash paid for interest and domestic and foreign income taxes was as follows
(dollars in thousands):

<TABLE>
<CAPTION>
Fiscal Year Ended March 31,
---------------------------
1999 1998 1997
----- ------- -------
<S> <C> <C> <C>
Interest............................................................... $ 658 $ 392 $ 182
Income taxes........................................................... $ 536 $5,037 $ 3,328

Non-cash transactions (dollars in thousands):

Reduction of accounts receivable, net in exchange for return of
inventories....................................................... $ -- $3,204 $ --
</TABLE>

22
<PAGE>

4. RESTRUCTURING CHARGE:

In the year ended March 31, 1999 the Company underwent significant
restructuring of its operations to reduce its costs structure in response to the
49.0 percent in reduction in net sales. The Company also is in the process of
restructuring activities in Japan and Europe to reposition its activities to
compete more effectively. In addition, the Company is repositioning its product
offerings to eliminate low margin products, or software services that have high
risks of failure. The following table summarizes restructuring charges by
geographic region (dollars in thousands):

<TABLE>
<CAPTION>
Cash outlays
as of Ending
Expensed March 31, 1999 Accrual
----------- --------------- ----------
<S> <C> <C> <C>
Europe
Severance................................. $1,732 $1,050 $ 682
Facilities................................ 336 235 101
Other..................................... 437 130 307
Japan
Severance................................. 150 75 75
Other..................................... 35 -- 35
US
Severance................................. 700 500 200
Facilities................................ 550 300 250
Other..................................... 1,002 102 900
Non-cash 600 N/A N/A
------ ------- --------
Total $5,542 $2,392 $2,550
====== ======= ========
</TABLE>

The restructurings have resulted in terminating the employment of 110 U.S.
employees and 30 international employees. Management had formal plans for each
of the activities undertaken and all affected employees were notified of the
actions. As of March 31, 1999, all of the employees affected have been
terminated except one in Japan and eight in Europe. All of those employees were
informed prior to March 31, 1999 and the Company expects to complete the
termination process of these employees by July 3, 1999. Facilities impacted by
these restructuring activities either have been vacated as of March 31, 1999 or
will be vacated by July 3, 1999. Other costs include expenses incurred for
consultants and legal services, equipment or service buy-out cost and any
estimated incremental costs associated with the closure of facilities or
completion of other contractual obligations.

5. LONG-TERM DEBT:

Long-term debt consisted of the following (dollars in thousands):

<TABLE>
<CAPTION>
March 31,
---------------------
1999 1998
-------- ---------
<S> <C> <C>
Bank line of credit..................................................... $ 1,169 $ 3,018
Subordinated notes payable.............................................. 4,000 3,000
Note payable to bank.................................................... 237 403
Note payable to shareholder............................................. 23 54
Discount on subordinated notes payable.................................. (363) (174)
------- -------
5,066 6,301
Less: Current maturities (2,190) (3,215)
------- -------
Long-term debt, net of current maturities $ 2,876 $ 3,086
======= =======
</TABLE>

23
<PAGE>

Line of Credit

PST has a $4 million revolving line of credit with a bank, with interest
payable monthly at the bank's prime rate plus 1.5% (9% at March 31, 1999),
maturing on May 26, 1999. At March 31, 1999, there was $1,169,000 outstanding
under this line. The revolving line of credit is collateralized by equipment,
inventory, general intangibles, accounts receivable and other property and
contains certain covenants, including restrictions on dividend payments, and
requires PST to meet certain financial reporting requirements. At March 31,
1999, PST was not in compliance with the covenants, and therefore, had no
additional borrowing capacity on the line of credit. In June 1999, the entire
balance was repaid.

Subordinated Notes Payable

In December 1997, PST issued a $3 million subordinated promissory note to
an investment company, with interest payable monthly of 13 percent and maturing
on December 24, 2002. The note is subordinated to obligations owed to the bank
and is collateralized by equipment, inventory, general intangibles, accounts
receivable and other property. The note contains certain covenants, including
restrictions on dividends and debt. In connection with the issuance of the
subordinated note in December 1997, PST issued two warrants to purchase 268,538
and 89,513 shares of PST common stock at $0.01 per share. The warrants expire on
December 24, 2007 and 2008, respectively, and have been accounted for as a
discount to the notes, which is being amortized to expense over the life of the
loan. As of March 31, 1999, the unamortized discount on the subordinated note
was $194,000.

In October 1998, PST issued a $1.5 million subordinated promissory note to
the holders of redeemable preferred stock to be issued in three closings, each
$500,000. Interest accrues annually at 10 percent for the first six months
outstanding and annually at 15 percent, thereafter. As of March 31, 1999, $1.5
million was outstanding. The notes, which are due on demand by the holders, or
upon a liquidation event of PST, are collateralized by equipment, inventory,
general intangibles, accounts receivable and other property. The notes have a
conversion feature whereby the holders have the option, but not the obligation,
to convert all of the principal amount of the notes and all accrued interest
thereon into shares of equity to be issued by PST. In connection with the
issuance of the subordinated note in October 1998, PST issued two warrants to
purchase 272,325 and 181,550 shares of PST common stock at $0.01 per share. The
warrants expire on October 16, 2008 and December 1, 2008, respectively, and have
been accounted for as a discount to the notes, which is being amortized to
expense over the life of the loan. As of March 31, 1999, the unamortized
discount on the subordinated note was $169,000. On June 2, 1999, $4.9 million of
subordinated notes plus accrued interest were converted into 225,190 shares of
Asyst common stock.

Note Payable to Bank

As of March 31, 1999, PST had $237,000 outstanding under a term loan
agreement with a bank (the "Term Loan"), which bears interest at prime plus 2
percent (9.75 percent at March 31, 1999) and expires in May 2000. Principal
payments of $14,000 plus interest are due monthly. The Term Note is
collateralized by equipment, inventory, general intangibles, accounts receivable
and other property and contains certain covenants, including restrictions on
dividends and debt. In June 1999, the entire principal balance was repaid.

Note payable to Shareholder

As of March 31, 1999, PST had $23,000 outstanding under a term loan
agreement with a shareholder, which bears interest at 12 percent and expires in
July 1999. Principal payments of $8,000 plus interest are due quarterly. In June
1999, the entire principal balance was repaid.

24
<PAGE>

At March 31, 1999, maturities of all long-term debt are as follows (dollars in
thousands):

2000.......................................................... $2,359
2001.......................................................... 70
2002.......................................................... --
2003.......................................................... 3,000
2004.......................................................... --
------
$5,429
======

6. REDEEMABLE CONVERTIBLE PREFERRED STOCK:

PST has authorized the issuance of up to 5,000,000 shares of preferred
stock and has designated 4,504,505 of the preferred shares to be Series A
Preferred Stock. In January 1996, PST issued the Series A Preferred Stock to
outside investors for consideration of $5,000,000. The holders of these
preferred shares are entitled to, among other things, cumulative dividend
preferences, liquidation preferences, conversion rights, redemption rights and
voting rights, as set forth in PST's Certificate of Designation of Rights and
Preferences of Series A Preferred Stock. The Series A Preferred Stock accrues
annual dividends equal to 8% of the original purchase price paid per share. The
dividends are cumulative and any unpaid amounts are added to the original
purchase price for purposes of calculating succeeding years' dividends. At March
31, 1999, cumulative unpaid dividends were $1,299,000. The liquidation price is
equal to $1.11 per share, subject to certain antidilution provisions, plus all
accrued and unpaid dividends. The Series A Preferred Stock is convertible at any
time into PST common stock on a one-for-one basis subject to certain
antidilution provisions. At March 31, 1999, such conversion rate equaled
one-for-one. The Series A Preferred Stock are first redeemable on October 30,
2000 at the election of the holders of at least 67% of the then outstanding
Series A Preferred Stock. In connection with the merger with PST, all
outstanding shares of redeemable preferred stock plus all cumulative unpaid
dividends were converted into 5,347,137 shares of PST common stock, which were
then converted into 40,686 shares of Asyst common stock.

7. COMMON STOCK:

As of March 31, 1999, the following shares of common stock were reserved
for issuance:

Employee Stock Option Plans................................... 3,598,597
Non-employee Director's Stock Option Plan..................... 244,374
Employee Stock Purchase Plan.................................. 250,553
Conversion of PST redeemable preferred stock.................. 34,275
Conversion of all outstanding PST warrants and stock options.. 21,313
---------
4,149,112
=========

Private Placement

On September 30, 1997, the Company completed a private placement of one
million unregistered shares of its common stock at $42.92 per share to a group
of mutual funds managed by a single, large, institutional investment management
company, generating net proceeds to the Company of $42.9 million. The Company
filed a registration statement with the Securities Exchange Commission on Form
S-3, which became effective on December 1, 1997, for the resale of the
securities. The proceeds from such private placement augmented the Company's
working capital.

Stock Repurchase Program

In June 1998, the Board of Directors of the Company, authorized a stock
repurchase program whereby up to 2,000,000 shares of its Common Stock may be
repurchased by the Company, from time-to-time at market prices, and as market
and business conditions warrant, in the open market, or in negotiated
transactions, using existing cash. The Company utilized a portion of the
reacquired shares for common stock required by the Employee Stock Option

25
<PAGE>

and Employee Stock Purchase Plan activity. The Company used the first-in, first-
out method and the excess of repurchase cost over reissuance price, if any, was
treated as a reduction of retained earnings. On April 19, 1999, the Company
rescinded the stock repurchase program. As of March 31, 1999, and up to the date
the stock repurchase program was rescinded, the Company had repurchased 865,800
shares of common stock at an aggregate cost of approximately $11.5 million.

In conjunction with the acquisition of PST (see Note 15), the Company also
completed a private placement of 625,000 shares of its Common Stock to eight
institutional investors. The private placement, which closed in May 1999 was
priced at $18.00 per share, for aggregate proceeds of approximately $11.3
million. The purpose of the private placement was to untaint shares of Common
Stock to obtain pooling of interest accounting treatment for the acquisition of
PST. The proceeds will be used for general corporate purposes.

Shareholders' Rights' Plan

The Company has adopted a Shareholders Rights Plan under which all
shareholders of record, as of July 10, 1998 (the "Record Date"), received a
dividend of one preferred share purchase right (a "Right") for each outstanding
share of common stock, without par value per share, (the "Common Shares") of the
Company. The Rights will also attach to new Common Shares issued after the
Record Date. Each Right entitles the registered holder to purchase from the
Company one one-hundredth of a share of Series A Junior Participating Preferred
Stock, without par value per share, (the "Preferred Shares") of the Company at a
price of $140 per one one-hundredth of a Preferred Share (the "Purchase Price"),
subject to adjustment. Each Preferred Share is designed to be the economic
equivalent of 100 Common Shares.

Asyst Stock Option Plans

Under the Company's stock option plans, options are granted for ten year
periods and become exercisable ratably over a vesting period of four years, or
as determined by the Board of Directors'. Under the 1986 Plan (the "86 Plan"),
which was terminated in 1994, there are no further options available for
issuance. Under the 1993 Plan (the "93 Plan"), as amended, 2,600,000 shares of
common stock are reserved for issuance thereunder. The 93 Plan provides for the
grant of both incentive stock options and non-qualified stock options to key
employees and consultants of the Company. Under the 93 Plan, options may be
granted at prices not less than the fair market value of the Company's common
stock at grant date (85 percent for non-qualified options). Under the 1993
Non-Employee Directors' Stock Plan (the "Directors' Plan"), as amended, 250,000
shares of common stock are reserved for issuance thereunder.

Activity in the Company's stock option plans is summarized as follows
(prices are weighted average prices):

<TABLE>
<CAPTION>
Fiscal Year Ended March 31,
---------------------------------------------------------------------------
1999 1998 1997
----------------------- ------------------------ --------------------
Shares Price Shares Price Shares Price
---------- --------- ---------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C>
Options outstanding, beginning of year 1,791,273 $13.96 1,648,220 $11.87 1,433,994 $11.58
Granted............................ 1,930,128 9.87 1,119,745 16.11 790,152 10.37
Exercised.......................... (210,502) (5.53) (385,841) 8.59 (224,920) 5.09
Canceled........................... (148,056) (14.98) (590,851) 15.72 (351,006) 11.78
---------- ------ --------- ------ --------- ------

Options outstanding, end of year... 3,362,843 $12.10 1,791,273 $13.96 1,648,220 $11.84
========== ====== ========= ====== ========= ======

Exercisable, end of year........... 1,492,949 $12.59 554,456 $11.05 472,742 $11.04
========== ====== ========= ====== ========= ======
</TABLE>

26
<PAGE>

The following table summarizes the stock options as of March 31, 1999
(prices and contractual life are weighted averages):

<TABLE>
<CAPTION>
Options Outstanding Exercisable Options
----------------------------------------- ----------------------------
Remaining
Number Contractual Exercise Number Exercise
Actual Range of Exercise Prices Outstanding Life Price Exercisable Price
------------------------------- ----------- ---- ----- ----------- -----
<S> <C> <C> <C> <C> <C>
$ .25 - $ .25 7,000 8.37 $ .25 6,333 $ .25
.84 - .84 23,547 9.33 .84 9,680 .84
1.67 - 2.09 27,258 9.33 2.05 20,815 2.03
4.50 - 6.27 160,001 5.99 6.14 153,458 6.14
6.88 - 10.25 1,522,180 8.57 8.17 406,780 9.10
10.84 - 15.00 1,155,332 8.47 13.14 693,343 13.27
16.38 - 24.31 287,543 7.93 21.18 158,222 21.33
24.88 - 38.75 179,982 8.67 32.84 44,318 34.21
----- ----- ----------- ---- ----- --------- -----

$ .25 - $ 38.75 3,362,843 8.37 $ 12.10 1,492,949 $ 12.59
===== ===== =========== ==== ===== ========= =====
</TABLE>

PST Option Plan and Founder Options

PST, prior to its merger with Asyst, had an option plans for its employees
and had issued and outstanding options to its founders. In connection with the
merger of Asyst and PST, options are no longer granted from the PST plan and any
options outstanding that were initially granted under the PST plans or issued to
its founders are exercisable into Asyst common stock.

Under the PST stock option plan (the "PST Plan"), options are granted for
ten year periods and become exercisable ratably over a vesting period of five
years, or as determined by the Board of Directors'. Under the PST Plan, which
was terminated in June 1999 upon the merger with Asyst, there are no further
options available for issuance. All options outstanding under the PST Plan were
converted at the exchange ratio of .007609. The PST Plan provided for the grant
of both incentive stock options and non-qualified stock options to key employees
and consultants of the Company. Under the PST Plan, options were granted at
prices not less than the fair market value of the Company's common stock at
grant date (85 percent for non-qualified options), as determined by the PST
Board of Directors. At March 31, 1999, 1998 and 1997, options outstanding under
the PST Plan, which are fully vested, were 8,951, 11,189 and 6,083,
respectively, with weighted average exercise prices of $88.05, $111.71, and
$72.28 per share, respectively and a weighted average remaining contractual life
of 4.6 years. In addition to the options outstanding under the PST Plan, options
to purchase 18,415 shares of common stock at $0.01 per share, which were
originally issued by PST in March 1993, were outstanding at March 31, 1999.

The Company accounts for the Asyst and PST plans under APB Opinion No. 25.
Had compensation cost for these plans been determined consistent with SFAS No.
123, "Accounting for Stock-Based Compensation," the Company's net income (loss)
and per share information would have been adjusted to the following pro forma
amounts, for the years ended March 31, (dollars in thousands, except per share
amounts):

<TABLE>
<CAPTION>
1999 1998 1997
---------- -------- ---------
<S> <C> <C> <C> <C>
Net income (loss) As reported $ (26,931) $ 15,362 $ (4,675)

Pro forma $ (35,002) $ 17,933 $ (6,018)

Basic net income (loss) per share As reported $ (2.30) $ 1.34 $ (0.45)

Pro forma $ (2.98) $ 1.57 $ (0.58)

Diluted net income (loss) per share As reported $ (2.30) $ 1.26 $ (0.44)

Pro forma $ (2.98) $ 1.47 $ (0.57)
</TABLE>

The weighted-average grant date fair value of options during 1999, 1998 and
1997 was $15.21, $16.93 and $5.88, respectively. The fair value of each option
grant is estimated on the date of grant using the Black-Scholes

27
<PAGE>

option pricing model with the following weighted average assumptions used for
grants in 1999, 1998 and 1997; risk-free interest rate of 5.1 percent; 5.4
percent and 7.0 percent, respectively; expected dividend yields of 0.0 percent;
expected lives of 3.95 years, 4.16 years and 4.3 years, respectively; expected
volatility of 73 percent, 72 percent and 70 percent, respectively. Because the
SFAS No. 123 method of accounting has not been applied to options granted prior
to fiscal 1996, the resulting pro forma compensation cost may not be
representative of that to be expected in future years.

Employee Stock Purchase Plan

Under the 1993 Employee Stock Purchase Plan (the "Plan"), as amended,
700,000 shares of common stock are reserved for issuance to eligible employees.
The Plan permits employees to purchase common stock through payroll deductions,
which may not exceed 10 percent of an employee's compensation, at a price not
less than 85 percent of the market value of the stock on specified dates. At
March 31, 1999, 449,447 shares had been purchased by employees under the Plan.

8. COMMITMENTS:

The Company leases various facilities under non-cancelable operating
leases. At March 31, 1999, the future minimum commitments under these leases are
as follows (dollars in thousands):

<TABLE>
<CAPTION>
Fiscal Year Ending
March 31,
---------
<S> <C>
2000........................................................... $2,966
2001........................................................... 1,721
2002........................................................... 1,265
2003........................................................... 1,137
2004........................................................... 826
Thereafter..................................................... 1,928
------
$9,843
======
</TABLE>

Rent expense under the Company's operating leases was approximately $4.1
million, $2.9 million and $2.4 million for fiscal years 1999, 1998 and 1997,
respectively.

9. REPORTABLE SEGMENTS:

In 1999, the Company adopted SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." SFAS No. 131 supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise", replacing the
"industry segment" approach with the "management" approach. SFAS No. 131
designates the internal organization that is used by management for making
decisions, evaluating performance and allocating resources of the enterprise as
the source of the Company's reportable segments. SFAS No. 131 also requires
disclosures about products and services, geographic areas and major customers.
The adoption of SFAS No. 131 did not impact the results of operations or
financial position but did affect the disclosures of segment information.

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

28
<PAGE>

Net sales by geography were as follows (dollars in thousands):

<TABLE>
<CAPTION>
Fiscal Year Ended March 31,
-------------------------------
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
United States............................................................. $45,379 $ 66,485 $ 65,589
Taiwan.................................................................... 31,121 79,289 48,836
Singapore................................................................. 3,351 13,646 9,410
Japan..................................................................... 8,118 15,890 10,252
Europe.................................................................... 4,123 6,461 5,114
Other Asia (excluding Japan, Singapore and Taiwan)........................ 856 519 13,102
-------- -------- --------
Total................................................................. $92,948 $182,290 $152,303
======== ======== ========
</TABLE>

The net sales by product or service categories comprising the Company's net
sales for the fiscal year ended March 31, were as follows (dollars in
thousands):

<TABLE>
<CAPTION>
Fiscal Year Ended March 31,
------------------------------
1999 1998 1997
------- -------- --------
<S> <C> <C> <C>
SMIF Systems.............................................................. $66,609 $145,702 $118,647
Non-SMIF Systems.......................................................... 8,794 16,827 14,783
SMART Traveler Systems.................................................... 6,227 14,533 11,145
Robotics.................................................................. 6,323 -- --
Services & other.......................................................... 4,995 5,228 7,728
------- -------- --------
Total................................................................. $92,948 $182,290 $152,303
======= ======== ========
</TABLE>

In the fiscal year ended March 31, 1999, one customer accounted for 11
percent of the Company's net sales. In fiscal years ended March 31, 1998 and
1997, another customer accounted for 29.1 percent and 13 percent, respectively
of net sales.

10. INCOME TAXES:

The provision (benefit) for income taxes attributable to continuing
operations is based upon income (loss) before income taxes from continuing
operations as follows (dollars in thousands):

<TABLE>
<CAPTION>
Fiscal Year Ended March 31,
--------------------------------
1999 1998 1997
--------- -------- -------
<S> <C> <C> <C>
Domestic................................................... $(41,377) $29,340 $17,058
Foreign.................................................... 3,639 (1,880) 105
-------- ------- -------
$(37,738) $27,460 $17,163
======== ======= =======
</TABLE>

The provision (benefit) for income taxes consisted of (dollars in
thousands):

<TABLE>
<CAPTION>
Fiscal Year Ended March 31,
----------------------------------
1999 1998 1997
--------- -------- --------
<S> <C> <C> <C>
Current:
Federal................................................. $ 64 $4,435 $ 3,437
State................................................... 456 851 1,294
Foreign................................................. 118 35 97
--------- -------- --------
Total current....................................... 638 5,321 4,828
--------- -------- --------

Deferred:
Federal................................................. (11,020) 3,047 (4,616)
State................................................... (425) 855 (1,288)
--------- -------- --------
Total deferred...................................... (11,445) 3,902 (5,904)
--------- -------- --------
$(10,807) $9,223 $(1,076)
========= ======== ========
</TABLE>

29
<PAGE>

The provision (benefit) for income taxes included in the accompanying
consolidated statements of operations consisted of the following (dollars in
thousands):

<TABLE>
<CAPTION>
Fiscal Year Ended March 31,
-----------------------------------
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
Continuing operations...................................... $(10,807) $10,258 $ 7,173
Discontinued operations.................................... -- (1,035) (8,249)
-------- ------- -------
Total............................................... $(10,807) $ 9,223 $(1,076)
======== ======= =======
</TABLE>

The provision for income taxes attributable to continuing operations is
reconciled with the Federal statutory rate as follows (dollars in thousands):

<TABLE>
<CAPTION>
Fiscal Year Ended March 31,
---------------------------------
1999 1998 1997
-------- ------- -------
<S> <C> <C> <C>
Provision computed at Federal statutory rate............... $(13,211) $ 9,605 $6,007
State taxes, net of Federal benefit........................ 30 1,676 1,295
Foreign income and withholding taxes in excess of
statutory rate.......................................... 635 -- --
In-process research and development cost write-off......... -- -- 467
Non-deductible expenses and other.......................... 196 241 195
FSC benefit................................................ -- (1,159) (705)
Change in valuation allowance.............................. 2,262 297 (1)
Tax exempt income.......................................... (719) (402) (85)
-------- ------- -------
$(10,807) $10,258 $7,173
======== ======= =======
Effective income tax rate.................................. 29% 37% 42%
======== ======= =======
</TABLE>

The components of the net deferred tax asset are as follows (dollars in
thousands):

<TABLE>
<CAPTION>
March 31,
---------------------
1999 1998
--------- --------
<S> <C> <C>
Provisions for discontinued operations..................... $ -- $3,042
Accounts receivable allowances............................. 1,330 703
Inventory reserves......................................... 2,210 1,983
Accrued vacation........................................... 583 910
Accrued warranty........................................... 1,196 1,562
Acquired technology........................................ 2,868 692
Restructure reserve........................................ 989 --
Capitalized research and development
and other carryforwards.................................. 954 --
Net operating loss carryforwards........................... 12,293 295
Other temporary differences................................ 779 298
--------- --------
Deferred tax asset...................................... 23,202 9,485
--------- --------

Depreciation and amortization.............................. (752) (556)
Capitalized patent costs................................... (171) (308)
--------- --------
Deferred tax liability.................................. (923) (864)
--------- --------
Valuation allowance for net deferred tax asset............. (3,136) (874)
--------- --------
Net deferred tax asset................................ $19,143 $7,747
========= ========
</TABLE>

The Company has recorded a deferred tax asset of approximately $19.1
million, of which $10.8 million relates to net operating losses and tax credits
generated during the current year. The Company will be able to recognize
approximately $5.0 million of the deferred tax asset immediately following the
filing of carryback claims with Federal and various State taxing authorities,
which will be completed in the near future. Realization of the remaining
deferred tax asset is dependent on generating sufficient future taxable income.
Although realization is not assured, management believes that it is more likely
than not that the deferred tax assets will be realized. Although the deferred
tax asset is considered realizable, actual amounts could be reduced if
sufficient future taxable income is not achieved.

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<PAGE>

Prior to the merger between the Company and PST, PST provided a valuation
allowance to offset the deferred tax asset in the amount of $3.1 million due to
uncertainties regarding the future realization of net operating loss
carryforwards and other deferred tax assets. As of March 31, 1999, PST had
Federal net operating loss carryforwards of approximately $5.3 million, which
will expire beginning in fiscal 2012. The utilization of the net operating
losses may be subject to a substantial annual limitation due to the "change in
ownership" and consolidated loss provisions of the Internal Revenue Code.
Subsequent to the merger, PST will file and be included in the consolidated
income tax return of the Company and its wholly owned subsidiaries.

11. CLOSURE OF ASYST AUTOMATION, INC.:

In January 1997, the Company adopted a formal plan to cease operations of
its subsidiary, Asyst Automation, Inc. ("AAI") by the end of September 1997. The
operations of AAI ceased on September 30, 1997. The decision was based upon the
subsidiary's lack of ability to profitably manufacture and sell AAI's products.
Accordingly, AAI has been accounted for as a discontinued operation in the
accompanying financial statements. In the third quarter of fiscal year 1998, an
additional loss of $1,840,000, net of $1,035,000 income tax benefit was
recorded. This resulted from management's determination that higher costs
related to ongoing warranty activities and contractual obligations existed for
periods extending beyond those originally estimated. The net assets of AAI at
March 31, 1998 and 1997 consisted primarily of trade receivables, inventory and
property, plant and equipment, net of ongoing warranty reserves, assumed by
Asyst Technologies, Inc.

The losses from the closure of AAI reflected management's best estimate,
based on the information currently then available, of costs to be incurred for
existing and probable events of the discontinued operations. The results of AAI
are as follows (dollars in thousands):

<TABLE>
<CAPTION>
Fiscal Year Ended March 31,
---------------------------
1998 1997
------------ -----------
<S> <C> <C>
Net sales................................................ $ -- $ 22,743
========= =========
Loss from operations before income tax benefit........... $ -- $ (9,519)
Income tax benefit....................................... -- 3,427
--------- ---------
Loss from operations................................. -- (6,092)
--------- ---------

Loss on disposal before income tax benefit............... (2,875) (13,395)
Income tax benefit....................................... 1,035 4,822
--------- ---------
Loss on disposal..................................... (1,840) (8,573)
--------- ---------
Total loss on discontinued operations.................... $(1,840) $(14,665)
========= =========
</TABLE>

12. ACQUISITION OF RADIANCE SYSTEMS, INC.:

On November 15, 1996, the Company purchased RSI, a developer and supplier
of software products to be used in the semiconductor manufacturing industry, by
acquiring all of the outstanding stock of RSI in exchange for 129,740 shares of
common stock of the Company. The total purchase price was approximately $2.4
million and was accounted for as a purchase in the quarter ended December 28,
1996.

In connection with the acquisition, approximately $1.3 million of the
acquired intangible assets consisted of in-process research and development.
Because there was no assurance that the Company would be able to successfully
complete the development of RSI products or that the acquired technology had any
alternative future use, the acquired in-process research and development was
charged to expense in fiscal 1997. As a result of the purchase

31
<PAGE>

price allocation, $1.7 million (including $0.6 million of deferred tax
liability) was assigned to intangible assets related to existing product
technology, the assembled workforce and excess of the purchase price over net
assets acquired. These intangible assets are being amortized over a period of
three years. Accumulated amortization including approximately $0.5 million as a
result of a write-down of the intangible assets (See Note 2) was approximately
$1.6 million and $0.7 million as of March 31, 1999 and 1998, respectively.
Management believes that the unamortized balance of these assets, which is
included in other assets, net, in the accompanying consolidated balance sheets,
is recoverable.

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

13. ACQUISITION OF THE FLUOROTRAC PRODUCT LINE:

In April 1998, the Company entered into an agreement with Fluoroware, Inc.
("Fluoroware"), a supplier of materials management solutions, to acquire
Fluoroware's FluoroTrac automated radio frequency identification ("RFID")
technology for automated work-in-progress tracking in semiconductor factories.
Under the terms of the agreement, the Company acquired all of the FluoroTrac
intellectual property including RFID tracking solutions, inventory and
installed-base opportunities from Fluoroware in consideration for approximately
$2.8 million in cash and liabilities assumed by the Company.

In connection with the acquisition, approximately $1.2 million of the
intangible assets acquired consisted of in-process research and development.
Because there can be no assurance that the Company will be able to successfully
complete the development of FluoroTrac products or that the technology has any
alternative future use, such in-process research and development was charged as
an expense. As a result of the purchase price allocation, approximately $0.3
million was assigned to intangible assets related to existing product
technology, the assembled workforce and the excess purchase price over the net
assets acquired. These intangibles are being amortized over a three to five year
period. Management believes that the unamortized balance of these assets, which
is included in other assets, net, in the accompanying condensed consolidated
balance sheets, is recoverable.

14. ACQUISITION OF HINE DESIGN INCORPORATED:

On July 31, 1998, the Company completed its acquisition of HDI, a supplier
of wafer-handling robots for semiconductor processing tools. Accordingly,
results of HDI's operations have been combined with those of the Company's,
since the date of acquisition. Under the terms of the agreement, the Company
acquired all of the outstanding capital stock of HDI for approximately $12.4
million in cash and assumed debt of approximately $12.5 million. In addition,
the Company exchanged outstanding options to acquire HDI Common Stock and
deferred compensation units for identical options of the Company. The value of
the options substituted was approximately $1.9 million. The acquisition was
accounted for using the purchase method of accounting.

In connection with the acquisition, a portion of the purchase price was
allocated to the net liabilities acquired based on their estimated fair values.
The fair values of the tangible assets acquired and liabilities assumed were
approximately $4.4 million and $14.4 million, respectively. As a result of the
purchase price allocation, approximately $18.4 million was assigned to
intangible assets related to existing product technology, the assembled
workforce and the excess purchase price over the net assets acquired. These
intangibles are being amortized over a four to fourteen year period. As of March
31, 1999, charges for amortization of the intangible asset, made by the Company,
amounted to approximately $1.6 million. Management believes that the unamortized
balance of these assets, which is included in other assets, net, in the
accompanying condensed consolidated balance sheets, is recoverable. In addition,
approximately $5.9 million of the intangible assets acquired consisted of
in-process research and development. Because there can be no assurance that the
Company will be able to successfully complete the development of HDI products or
that the technology has any alternative future use, such in-process research and
development was charged as an expense.

32
<PAGE>

Comparative proforma information reflecting the acquisition of HDI has not
been presented because the operations of HDI are not material to the Company's
financial statements.

15. ACQUISITION OF PROGRESSIVE SYSTEM TECHOLOGIES, INC.:

On June 2, 1999, the Company completed its acquisition of 100 percent of
the common stock of PST, a Texas corporation, in exchange for 274,810 shares of
common stock of the Company. In addition to the exchange of common stock in the
merger, 225,190 shares of common stock of the Company were issued in exchange
for $4.9 million of PST debt and accrued interest. PST manufactures
wafer-sorting equipment used by semiconductor manufacturers. The acquisition has
been accounted for using the pooling of interest method of accounting.
Accordingly, the accompanying consolidated financial statements have been
restated for all periods prior to the business combination. All material
intercompany transactions between the Company and PST have been eliminated.
Costs associated with the PST merger, which were not material, consist primarily
of transaction costs and were expensed in the period incurred. PST's fiscal year
end was December 31. In accordance with Securities and Exchange Commission
Rules, the consolidated financial statements for each of the three years in the
period ended March 31, 1999 have been restated to reflect the financial
position, statements of operations and cash flows of PST. The conforming of
Asyst Technologies, Inc.'s and PST's accounting practices resulted in no
adjustments to net income (loss) or shareholders' equity. Net sales and net
income (loss) for the individual companies reported prior to the merger, net of
all material intercompany transactions between the Company and PST, were as
follows (dollars in thousands):

<TABLE>
<CAPTION>
Years Ended March 31,
-------------------------------
1999 1998 1997
-------- --------- ---------
<S> <C> <C> <C>
Net sales:
Asyst Technologies, Inc............................................... $ 84,154 $165,463 $137,520
PST................................................................... 8,794 16,827 14,783
-------- -------- --------
Total..................................................................... $ 92,948 $182,290 $152,303
======== ======== ========

Net income (loss):
Asyst Technologies, Inc............................................... $(20,979) $ 16,397 $ (3,257)
PST................................................................... (5,952) (1,035) (1,418)
-------- -------- --------
Total..................................................................... $(26,931) $ 15,362 $ (4,675)
======== ======== ========
</TABLE>

16. RELATED PARTY TRANSACTIONS:

On September 30, 1997, the Company entered into an asset purchase agreement
with Palo Alto Technologies, Inc. ("PAT") pursuant to which the Company sold to
PAT certain intellectual property rights and office equipment which were owned
or licensed by AAI in consideration for quarterly "Earn-Out Payments" up to an
aggregate of $2.0 million. The earn-out payments are equal to 4.0 percent of PAT
gross revenue. The Company may convert the right to receive such earn-out
payments into shares of PAT securities at the closing of certain issuance's of
securities by PAT. In addition, PAT granted the Company the non-exclusive,
worldwide right to distribute and sell any of PAT's products on PAT's most
favorable distributor terms and conditions; except PAT may grant exclusive
distribution rights to particular markets so long as such rights are first
offered to the Company and the Company does not accept the offer. Such
distribution rights shall terminate on the earlier of (i) the fifth anniversary
of such agreement or (ii) if the Company begins selling its own products which
are directly competitive with PAT's products. The Chairman and Chief Executive
Officer of the Company is the Chairman and principal shareholder of PAT. The
parties have agreed that the Chairman and Chief Executive Officer of the Company
and one other officer (also a shareholder of PAT) of the Company may be advisors
or directors of PAT while employed full time by the Company.

At March 31, 1999, the Company held four notes receivable, with balances
totaling $1,172,750, from two executive officers of the Company. Loans extended
to the officers amounted to $365,250 and $757,500 during the years ended March
31, 1998 and March 31, 1999, respectively, and have resulted from advances made
to the officers to assist in their relocation to California. The notes bear
interest that ranges from 4.0 percent to 6.4 percent

33
<PAGE>

per annum and are fully secured by second deeds of trust on certain real
property, as well as, other pledged securities of the Company owned by the
officers, respectively. The notes mature at various dates between September 1,
2002 and January 31, 2004.

17. LEGAL PROCEEDINGS:

In October 1996, the Company filed a lawsuit in the United States District
Court for the Northern District of California against Jenoptik A.G.
("Jenoptik"), Jenoptik-Infab, Inc. ("Infab"), Emtrak, Inc. ("Emtrak") and Empak,
Inc. ("Empak") alleging infringement of two patents related to the Company's
SMART Traveler System. The Company amended its Complaint in April 1997 to allege
causes of action for breach of fiduciary duty against Jenoptik and Meissner &
Wurst, GmbH, and misappropriation of trade secrets and unfair business practices
against all defendants. The Company's Complaint seeks damages and injunctive
relief against further infringement. All defendants filed counter claims,
seeking a judgment declaring the patents invalid, unenforceable and not
infringed. Jenoptik, Infab, and Emtrak also alleged that the Company has
violated federal antitrust laws and engaged in unfair competition. The Company
has denied these allegations. In May 1998, the Company and Empak stipulated to a
dismissal, without prejudice, of their respective claims and counter claims
against each other. In November 1998, the court granted defendants' motion for
partial summary judgment as to most of the patent infringement claims and
invited further briefing as to the remainder. In January 1999, the court granted
the Company's motion for leave to seek reconsideration of the November summary
judgment order and also, pursuant to a stipulation of the parties, dismissed
without prejudice two of the three antitrust counter claims brought by the
defendants. Since then, the parties stipulated to, and the court has ordered,
the dismissal with prejudice of the defendants' unfair competition and remaining
antitrust counterclaim, and the Company's breach of fiduciary duty,
misappropriation of trade secrets and unfair business practices claims. On June
4, 1999, the court issued an order by which it granted the Company's motion for
reconsideration in the sense that it considered the merits of the Company's
arguments, but decided that it would not change its prior ruling on summary
judgment and would also grant summary judgment for defendants on the remaining
patent infringement claim. The Company intends to take an appeal. The trial date
has since been vacated and the court has requested briefing, now due on July 12,
1999, on whether it is obligated to proceed with any remaining matters. While it
is not possible to predict accurately or to determine the eventual outcome of
these matters, the Company believes that the outcome of these legal proceedings
will not have a material adverse effect on the financial position of the
Company.

34
<PAGE>

SIGNATURES

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

ASYST TECHNOLOGIES, INC.

Dated: August 16, 1999 By: /s/ Douglas J. McCutcheon
-------------------------------
Douglas J. McCutcheon
Senior Vice President and
Chief Financial Officer

35
<PAGE>

EXHIBIT INDEX

Exhibit No. Description
- ----------- -----------

2.3* Common Stock Purchase Agreement, dated as of May 26,
1999, among Asyst Technologies, Inc. and the
purchasers thereto.

4.1 Reference is made to Exhibits 2.1 and 2.2.

23.1 Consent of Arthur Andersen LLP

23.2 Consent of Ernst & Young LLP

99.1* Press release announcing the execution of the Letter
of Intent.

99.2* Press release announcing the consummation of the
acquisition and the private placement.

* Previously filed with Registrant's Current Report on Form 8-K, dated
June 17, 1999 and filed June 18, 1999.

<PAGE>

EXHIBIT 23.1

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the incorporation of our
report included (or incorporated by reference) in this Form 8-K/A, into the
Company's previously filed Registration Statement Nos. 333-71641, 333-45799,
333-31417, 33-301438 and 33-70100 on Form S-8.

/s/ ARTHUR ANDERSEN LLP

San Jose, California
August 12, 1999

<PAGE>

EXHIBIT 23.2

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to the
use of our report dated May 7, 1999, with respect to the financial statements
and schedules of Progressive System Technologies, Inc. included (or incorporated
by reference) in the Registration Statement (Form S-3 No. 333-_______) and
related Prospectus of Asyst Technologies, Inc. for the registration of 1,106,596
shares of its common stock.

/s/ ERNST & YOUNG LLP

Austin, Texas
August 12, 1999