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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549

FORM 10-K

[X]ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR FISCAL YEAR ENDED MARCH 30, 1997for fiscal year ended March 29, 1998

[_]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

COMMISSION FILE NUMBERCommission file number 0-21294

ASECO CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

DELAWARE 04-2816806
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)

500 DONALD LYNCH BOULEVARD, MARLBORO, MASSACHUSETTS 01752
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)

REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE
508-481-8896

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
NoneNONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
Common stock,COMMON STOCK, $.01 par value

Indicate by check mark whether the registrantPAR VALUE

INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) has filed all reports
required to be filed by SectionHAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 or 15(d) of the Securities Exchange Act ofOR 15(D) OF THE SECURITIES EXCHANGE ACT OF
1934 during the precedingDURING THE PRECEDING 12 months (or for such shorter period that the
registrant was required to file such reports)MONTHS (OR FOR SUCH SHORTER PERIOD THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), andAND (2) has been subject to
such filing requirements for the pastHAS BEEN SUBJECT TO
SUCH FILING REQUIREMENTS FOR THE PAST 90 days . Yes X No

Indicate by check mark if disclosure of delinquent filers pursuant to ItemDAYS. YES [X] NO [_]

INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM
405 of RegulationOF REGULATION S-K is not contained herein, and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in PartIS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO
THE BEST OF THE REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION
STATEMENTS INCORPORATED BY REFERENCE IN PART III of this FormOF THIS FORM 10-K or any
amendment to this FormOR ANY
AMENDMENT TO THIS FORM 10-K.

The aggregate market value of voting stock held by non-affiliates of the
registrant was $46,818,217$18,423,492 as of May 30, 1997

3,672,017
(Number of shares of common stock outstanding as of May1998

3,731,718
(NUMBER OF SHARES OF COMMON STOCK OUTSTANDING AS OF MAY 30, 1997)1998)

DOCUMENTS INCORPORATED BY REFERENCE

PartPART III incorporates by reference certain information from the Registrant's
proxy statement for the annual meeting of stockholders to be held on August 6,
1997INCORPORATES BY REFERENCE CERTAIN INFORMATION FROM THE REGISTRANT'S
PROXY STATEMENT FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST
11, 1998

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PART I

ITEM 1. BUSINESS

OVERVIEW

Aseco designs, manufactures and markets test handlers used to automate the
testing of integrated circuits in surface mount packages. Surface mount
technology ("SMT") has been widely adopted as a package configuration for
integrated circuits used in a wide range of applications, including automotive
electronics, telecommunications equipment and personal computers, because it
permits the production of packaged integrated circuits ("IC devices") which
are smaller and/or more powerful than those using conventional packaging
technologies. Aseco provides high
quality, versatile test handlers designed to maximize the productivity of the
significantly more costly testers with which they operate. The Company's net sales have grown from fiscal 1986 through
fiscalOn May 23, 1997 at a compound annual growth rate of 30% and the
Company has
operated profitablyacquired Western Equipment Developments (Holdings) Ltd. ("WED"), based
in Plymouth, England for eachapproximately $6,100,000 in cash. (See Note L to the
Consolidated Financial Statements.) WED designs, manufactures and markets
integrated circuit wafer handling and inspection systems. These systems are
used to load, sort and transport wafers during both manual and automatic
inspection as well as other wafer processing steps in the semiconductor
manufacturing process.

INDUSTRY BACKGROUND

The manufacture of integrated circuits (IC's) takes place in ultra-clean
fabrication plants. Flat circular discs of silicon ("wafers"), of extremely
high perfection and purity, are taken through a variety of processes--
principally micro-patterning, where small structures are etched into the
past thirty-eight consecutive quarters.

INDUSTRY BACKGROUNDsurface, and physical and chemical processes, where material is deposited or
implanted into the structures. Between these major processing steps the wafers
must be transported cleanly and safely and inspected and assessed for quality
and cleanliness. Automated wafer handling and inspection equipment facilitates
the safe transport, handling and defect detection and assessment of wafers
between process steps preventing damage, contamination and breakage which
often results from manual intervention.

Following the manufacturing process, IC devices are tested by semiconductor
manufacturers for quality and electrical performance at the end of the manufacturing process and before shipment to end
users. In addition, volume purchasers of IC devices often test IC devices
during incoming inspection. Test handlers facilitate the fast, automated and
cost-effective testing of IC devices. The automated test process requires two
major pieces of equipment: a tester and a test handler. Testers are
specialized, computer-controlled electronic systems that perform the
electrical test of IC devices, including memory, logic, linear, microprocessor
and Application Specific Integrated Circuit (ASIC) devices. Test handlers are
electro-mechanical systems which are connected to and communicate with the
tester. IC devices are loaded into the test handler and are then stabilized at
a specified temperature to simulate operating extremes for the IC device. The
test handler then transports the IC device to a contactor, which provides an
electrical connection between the IC device and the tester and allows an
interchange of electrical signals between the tester and device under test so
the tester can evaluate the performance of the IC. Finally, the handler
segregates the devices as determined by the tester.

Traditionally, IC devices were attached to one side of a printed circuit
board by means of pins, also referred to as leads, that were inserted into
pre-drilled holes and soldered to the electrical circuits on the board, a
technique known as "through-hole" mounting. SMT,Surface mount technology ("SMT"),
an alternative technology which is widely used, involves soldering of IC
devices directly to the surface of the board. This technology has been
increasingly adopted in response to the introduction of more powerful IC
devices with more leads and the demand for ever more increasing
miniaturization. SMT has several distinct advantages over through-
holethrough-hole
technology. First, because IC device leads are not inserted through the board,
IC device leads can be closer together allowing IC devices and the boards they
populate to be smaller. This reduction in IC device size also enhances circuit
processing speed and thus board and system performance. Second, because IC
device leads are not inserted through the board, boards can be populated on
both sides which further reduces overall required board size.

The demand for test handlers is driven primarily by IC device production
levels and technological changes relating to the packaging of integrated
circuits. Because only the test handler has physical contact with the IC

devices, changes in integrated circuit packaging have minimal effect on tester
requirements but generally have a major effect on test handler requirements
and the demand for the test handlers.

The test handler market is commonly segmented on the basis of the function
of the IC devices handled: test handlers which process memory IC devices, such
as Dynamic Random Access Memory devices (DRAM) and Static Random Access Memory
devices (SRAM), and test handlers which process non-memory IC devices, such as
digital, logic, linear, ASIC and microprocessor devices. Non-memory IC devices
generally have short test times, are often configured with leads on four
sides, come in a wide variety of package configurations and are produced in
relatively small lot sizes. Consequently, non-memory IC device test handlers
must be able to handle devices gently and transport them to and from the
contactor rapidly ("index time") and must be adaptable to

1
accommodate many
different package types. Memory IC devices, by contrast, generally have longer
test times, have leads on just two sides, come in fewer package configurations
and are produced in larger lot sizes. The index time of memory IC device test
handlers is less important because of the long test times of memory IC
devices.

Test handlers capable of facilitating the testing of multiple IC devices
simultaneously ("multi-site test handlers") have been developed to improve
test handler throughput of memory IC devices. Traditionally, multi-site test
handlers have not been used in connection with the testing of non-memory IC
devices. Recently, however, as non-memory IC devices have become more complex
and their test times have correspondingly increased, multi-site test handlers
have been used in connection with the testing of non-memory IC devices as
well. In addition, certain SRAM IC devices possess characteristics typical of
non-memory IC devices, such as shorter test time, leads on four sides and
wider variety of package configurations, therefore creating the demand in the
SRAM market for a multi-site test handler with fast index speed and gentle
handling capabilities.

The majority of DRAM IC devices are manufactured in Japan and Korea while
the majority of non-memory IC devices are manufactured in the United States. A
significant number of SRAM IC devices are manufactured in the United States as
well as in Japan and Korea.

To date, the Company's products have primarily addressed the non-memory
surface mount device portion of the test handler market.

TEST HANDLERSASECO'S AUTOMATION EQUIPMENT

Wafer Handling and Inspection Automation Equipment

Wafer handling and inspection equipment is used to automate the transfer and
inspection of wafers between semiconductor manufacturing process steps.
Generally, wafers are transported through the factory in receptacles called
cassettes. Basic bench top wafer handling equipment extracts a wafer from a
cassette and places it on a horizontal stage where microscope inspection takes
place. More sophisticated bench top equipment facilitates "macro-inspection"
of wafers (i.e. not under a microscope) by placing each wafer on a stage which
tilts and rotates the wafer at all angles under a high intensity lamp to
reveal defects.

During the wafer fabrication process, wafers are tracked in lots (typically
of 25 wafers) which often need to be broken down into sub-lots in order to fit
into certain process equipment and then returned to the original lots. In
order to accomplish this, wafers are identified by alphanumeric or bar-code
symbols etched into the surface of each wafer. Integrated wafer automation
equipment enables the user to select any wafer from a maximum of 100 wafers
(usually 4 lots of 25), identify it automatically, assign it a new position
among the wafers, extract a given number of wafers from a batch, reorder the
wafers or combine two lots or sublots. These wafer sorting devices then are
able to communicate wafer and system status to an external factory computer
enabling the sorter to function as an automation center under the control of
the central factory automation system. Another type of wafer automation
equipment is an integrated inspection station. Such a module enables the user
to extract a wafer from a cassette, place it on a stage, inspect the wafer
under a microscope using a monitor to view the microscope imaging, identify
defects, collect and analyze data and return the wafer to its cassette for
further processing.

Test Handlers

Test handlers are used to automate the electrical testing of IC devices. IC
devices are loaded into the handler from tubes, magazines or trays. They are
then transported to a temperature chamber within the test handler where they
are thermally conditioned at temperatures typically ranging from -55 to +155
Celsius to simulate operating extremes for the IC device. After the IC devices
are stabilized at a specified temperature, the test handler positions the IC
devices within a contactor, which provides an electrical connection between
the IC device and the tester and insulates the tester from the temperature
extremes inside the handler. Test routines can last from fractions of a second
to minutes depending on the type of IC device being tested and the purpose of
the test. After testing, the tester signals the test handler to sort the IC
devices into various categories for shipment, additional testing or disposal.

There are four basic types of test handlers: gravity-feed systems, pick and
place systems, belt-conveyance systems and air-bearing systems. The
appropriate type of test handler is generally determined by the size and lead
configuration of the IC devices being tested. The gravity-feed system, the
oldest of the four test handler types, is the predominant test handler for
through-hole IC devices. As the name indicates, gravity-feed systems rely on
gravity to move IC devices through the test handler. This type of test handler
has the advantage of being able to process IC devices quickly, but has a
greater tendency to damage IC devices with leads on four sides. Damaged leads
can cause soldering defects when the IC devices are mounted on boards, which
in turn increases re-work and warranty costs. Pick and place systems, in
contrast, transport IC devices by means of robotic arms, which prevent the IC
devices from coming into contact with one another and reduce the chance of
lead damage. While pick and place systems are suitable for fragile IC devices
that are susceptible to lead damage such as the Quad Flat Pack (QFP), they
typically process IC devices more slowly than other types of test handlers.
Air-bearing systems, which transport IC devices on a bed of air in the
temperature chamber, permit high-speed processing while minimizing the
potential for lead damage characteristic of gravity-feed systems. Belt-
conveyance systems move large quantities of devices quickly into and out of
the system on belts without damaging fragile leads.

KEY TEST HANDLERASECO EQUIPMENT FEATURES

Key Wafer Automation Equipment Features

Cleanliness--Semiconductor wafer fabrication is conducted under ultra-clean
conditions; therefore, cleanliness of the equipment which operates in this
environment is important. WED achieves cleanliness in its equipment by
covering all moving parts, by ensuring that all moving parts are below the
wafer plane and by carefully selecting the materials used to make the
equipment.

As wafer sizes and therefore equipment sizes grow and as cleanliness assumes
greater importance, the cost of producing wafer fabrication cleanrooms will
become prohibitively high. As an alternative, minienvironment technology
offers lower costs in the construction of cleanrooms. Within such
minienvironments, only the air immediately above the equipment where the wafer
resides needs to be clean and this area is isolated by shields from the
general area surrounding the equipment. Wafers are carried from process to
process in sealed boxes which interface with the equipment shield via a "SMIF"
Port (Standard Mechanical Interface). WED's entire range of benchtop and
integrated systems are compatible with SMIF technology.

Safety of Handling--Each wafer processed by a semiconductor manufacturer
requires dozens of costly passes through each manufacturing process and
ultimately yields numerous individual IC's. As a result, safety of handling,
or zero wafer breakage, is of paramount importance to semiconductor
manufacturers. WED has achieved safe handling using designs which incorporate
both hardware sensors and software checks.

Versatility--An important aspect of WED's technology and product range is
the maximum wafer size that it can accommodate. State of the art fabrication
units currently are running 8 inch (200mm) wafers. The next generation wafer
size will be 12 inches, although facilities to support this production are,
for the most part, on

hold. WED offers a full range of 6 inch and 8 inch compatible equipment and
plans to broaden its product line to accommodate 12 inch wafers in time to
take advantage of the construction of fabrication plants needed to produce 12
inch wafers.

Key Test Handler Features

The primary function of the test handler is to automate the testing process
thereforethereby increasing the productivity of the tester resulting in the accurate
testing of IC devices at the lowest per unit cost possible. Important test
handler features include:

Gentle Handling. In order for the test handler user to maximize yield and
the quality of the IC devices it ships, it is imperative that the test handler
not damage the IC devices it processes. Due to their fragility, surface mount
IC device leads are especially susceptible to damage, and as IC devices with
higher lead counts and more fragile leads have become more prevalent, gentle
handling has become an increasingly important test handler feature. Aseco
currently offers test handlers with threefour IC device transport mediums--
gravity-feed,mediums--gravity-
feed, air-bearing, and pick and place and in the fourth quarter of
fiscal 1997, shipped a beta test version of its newest belt-conveyance test handler (see "Product Development").handlers. The four
transport mediums allow customers to use the type of test handler most
suitable for the IC device being tested. In addition, Aseco test handlers are
equipped with vacuum stops, limited force contactors and other features to
further minimize lead damage.

Signal Integrity. Signal integrity is the ability of the test handler to
facilitate accurate transmission of electrical signals between the tester and
the IC device being tested. Poor transmission can lead to incorrect test
results. Aseco maximizes its performance in this area by equipping its test
handlers with Aseco's proprietary contactors which position the IC device
under test in close proximity to the tester which allows fast and accurate
signal transmission. If so desired by customers, other contactors can also be
used with Aseco equipment.

Cold Operation. The ability of the test handler to operate for extended
periods of time at cold temperatures (typically -55 Celsius) without
interruption for defrosting is an especially important factor in the overall
productivity of the test handler. Aseco has developed considerable expertise
in thermal engineering and insulation technology which is reflected by the
fact that its test handlers are capable of operating for long periods over
multiple work shifts without interruption.

Productivity. The productivity of a test handler is largely a function of
the rate at which it moves IC devices through the test handler ("throughput")
and the percentage of time the test handler is available for use ("uptime").
The throughput of Aseco's test handlers is enhanced by their use of forced air
to thermally condition IC devices. This produces an effect analogous to wind
chill and minimizes the time IC devices are required to stay in the
temperature chamber. The Company believes its handlers are able to achieve
high uptime because of their relatively simple design that reduces jam rates
and the frequency and duration of required maintenance. Maintenance time also
is
also reduced by the diagnostic software incorporated in each Aseco test handler.

Versatility. With the increase in the number of different IC device lead
configurations, an important feature of a test handler is its ability to
accommodate IC devices with different lead configurations. Through the use of
easy to install conversion kits, Aseco's test handlers are currently capable
of processing many different IC device configurations.

ASECO AUTOMATION PRODUCTS

Aseco offers a range of products to address the varying wafer handling and
inspection and IC device test handling requirements of its customers.

Wafer Handling and Inspection

MICROLOADER

The Microloader extracts a wafer from its carrying cassette and places it on
a flat, horizontal stage, usually for microscope inspection. Wafers can be
selected specifically or randomly for quality assurance functions. The

microscope operator is freed from the delicate and potentially damaging task
of manipulating the wafer to concentrate on the inspection task.

AML (AUTOMATIC MICROSCOPE LOADER)

The AML performs the same basic functions as the Microloader and adds an
intermediate orientation stage to enable the operator to find specific
features and an option to sort good wafers from bad. Higher throughput rates
can also be achieved on this system.

MACROSPEC

The Macrospec also shares the same functions and features of a Microloader
and has a built in "macro-inspection" stage, which tilts and rotates the wafer
at all angles ensuring good visibility of all surface features of the wafer. A
high intensity lamp shines on the wafer surface revealing wafer defects.

HIGH SPEED MICROSORTER (SMIF OR NON-SMIF)

The Microsorter is an integrated solution allowing semiconductor wafers to
be automatically identified and sorted using advanced vision processing.
Operator contact is eliminated as wafer movements are completed by a precision
robotic transfer module ensuring clean and safe transfers. The Microsorter may
be fitted with an optional SMIF minienvironment SubClass 1 which creates a
clean environment surrounding the cassette transport modules.

ORBIS

The Orbis is an integrated inspection station that provides fully automatic
detection of surface contamination, damage and process errors and dimensional
tolerance failures on semiconductor wafers. The machine incorporates an
autosizing function for 4 to 8 inch wafers which speeds set up and changeover
for multi-size fabrication operations. Wafers are pre-aligned, automatically
identified by machine vision and loaded to the microscope for fine alignment
and flaw detection. The machine collects and stores inspection data for future
recall and reference.

Test Handlers

The Company's test handlers share certain common features including the
ability to operate at cold, ambient and hot temperatures and a menu-driven CRT
user interface that displays test handler performance and diagnostic
information. All of the Company's current
products have been introduced since fiscal 1990, except for the S-130 which
was introduced in fiscal 1987. The Company's products are as follows:

MODEL S-130 TEST HANDLER

The Company's principal product is currently its S-130 test handler, the
successor to the Company's original S-150 product.

The S-130 is a versatile air-bearing test handler, capable of handling a
broad array of non-memory IC device types. Through the use of conversion kits,
the S-130 is currently able to accommodate a wide variety of IC device
configurations. The S-130 reaches throughput rates of 2,400 devices per hour,
and has the capability to operate at temperatures between -55 and +150
Celsius. The versatility of the S-130 has made it popular with suppliers of
ASIC devices and others who need to test a relatively small number of many
different IC device package types.

3
MODEL S-133 TEST HANDLER

The S-133 is a modified version of the S-130 test handler. It offers all the
features and capabilities of the S-130 plus the ability to position the device
for electrical testing of accelerometers while under physical shock. An
accelerometer is a device that activates when a large amount of force is
placed upon it and is used in such applications as car airbags.

MODEL S-170 TEST HANDLER

The S-170 is a high-speed gravity-feed test handler capable of a throughput
rate of 6,000 IC devices per hour. This test handler is equipped with high
performance contactors and provides test handling at temperatures ranging from
- -55 to +155 Celsius. Changing between different IC device package lead counts
is achieved by simple keypad entry on a menu-driven CRT display. The S-170 is
most appropriate for high volume testing of small surface mount IC devices
having short test times and leads on only two sides such as linear devices.

MODEL S-170C AND S-170D TEST HANDLERS

The S-170C and S-170D are modified versions of the S-170 gravity feed test
handler. Each offers all the features and capabilities of the S-170 plus the
ability to handle a broader spectrum of the popular SOIC package types and,
accordingly, has a target market that is approximately twice as large as the
market for the original S-170 model.types. In
addition, the S-170D offers plunge to board capability that allows an
electrical connection between the IC device and a device under test ("dut")
board eliminating the need for a contactor and facilitating testing of IC
devices with very short lead lengths.

MODEL TL-50S-200 TEST HANDLER

The TL-50S-200 is a pick and place test handler, particularly suitable for
handling fragile lead IC devices such as the popular QFP package. The TL-50S-200
has a throughput capacity of 1,200 devices per hour and operates at
temperatures ranging from -55 to +155 Celsius. Key features of the TL-50S-200
include its simple design, which enhances uptime, and the ease with which it
can be converted to handle different package types plus automatic tray loading
and unloading. MODEL S-200 TEST HANDLER

The S-200 is the successor to the TL-50. It has the same functionality and
form factor as the TL-50. ItsA key distinguishing feature is its ability, through the
addition of an optional machine vision system, to provide in-line lead
inspection in addition to its normal electrical test handling capability.

MODEL S-450 TEST HANDLER

The S-450 is a versatile, high capacity, highly automated test handler
employing an air-bearing transport system. This product incorporates the best
features of Aseco's other test handlers, while incorporating additional
capabilities such as a touch screen user interface, multi-site testing, high
throughput and automated IC device loading and unloading. The S-450 meets the
demand for higher throughput at lower cost per IC device tested and in
addition to PLCC and SOIC(W) has the ability to accommodate new, larger IC
devices with high lead counts such as the Molded Carrier Ring (MCR).

The multi-site test capability of the S-450 allows up to eight IC devices to
be tested simultaneously, thereby dramatically improving throughput. In
addition, this product is the Company's first offering to the SRAM portion of
the surface mount IC device test handler market. The Company believes that the
high throughput and gentle handling features of the S-450 make it particularly
suitable for SRAM devices that have more leads and shorter test times than
many other memory IC devices. The S-450 can be converted to handle numerous IC
device package types and, like the Company's other test handler models, allows
testing at hot, cold and ambient temperatures.

4
MODEL VT8000 TEST HANDLER

The VT8000 is the Company's newest test handler and employs a unique
combination of machine vision and multi track belt conveyance to enable more
gentle handling of fragile devices. The VT8000 handles IC devices with
simplified conversion kits resulting in cost savings for customers and less
complicated set up and changeover. Machine vision facilitates lead inspection
of IC devices before and after testing to identify parts with damaged leads.
The VT8000 handles a variety of package types and incorporates an optional
plunge-to board feature.

Remanufacturing Services

The Remanufacturing Services Group provides services such as machine
upgrades, reconditioning and reconfiguration for all of the Company's test
handler models.

CUSTOMERS

An integral part6

Distribution Agreements

In October 1997, Aseco entered into a distribution agreement with Aju
Systems, Inc. ("Aju") to market and sell its memory test handler in all
geographic areas except Korea and Japan. In turn, Aju agreed to market and
sell Aseco's test handlers in Korea. The Aju handler, the 7070, handles up to
64 devices simultaneously at a throughput rate of Aseco's overall strategy is6,400 devices per hour and
will operate within a temperature range of -30(degrees)C to maintain close
relationships125(degrees)C.

In November 1997, Aseco entered into a distribution agreement with Rasco to
market and sell its customersSO1000 high-speed multi site test handler in the United
States and to broaden its customer base. In fiscal
1997, approximately 90% of the Company's net sales represented repeat
business. In addition, since 1988 the Company has succeeded in adding new
names to its customer list each and every quarter.Canada.

CUSTOMERS

Customers for the Company's products are primarily semiconductor
manufacturers, but also include volume purchasers of IC devices and companies
engaged in the business of testing IC devices for others.

As of March 30, 1997,29, 1998, the Company had sold 1,1451,349 test handler systems to
approximately 130136 customers in more than 160161 worldwide locations. In fiscal
1998, two customers, Maxim Integrated Products, Inc and Analog Devices, Inc.,
accounted for 23% and 16% of net sales, respectively. In fiscal 1997, one
customer, Analog Devices, Inc., accounted for 17% of net sales.

SALES AND MARKETING

The Company markets its products primarily through manufacturers'
representative organizations.organizations and, in certain geographic regions, a direct
sales force. As of March 30, 1997,29, 1998, the Company had tenfourteen United States
manufacturers' representatives and sixfourteen international manufacturers'
representatives located in London, Munich, Seoul,England, Germany, France, Israel, Korea, Hong Kong,
Italy, Malaysia, Singapore, Sweden, and Taipei.Taiwan.

The Company's sales organization coordinates the activities of the Company's
manufacturers' representatives and actively participates with them in selling
efforts. Aseco provides sales and technical support to its manufacturers'
representatives through the Company's sales and service offices in Marlboro,
Massachusetts, Santa Clara, California, Singapore, Plymouth, England and Kuala
Lumpur, MalaysiaMalaysia. The Company employs a direct sales force to market and Malta.
In the first quarter of fiscal 1998, the Company also established a sales and
service officesell
in Singapore.Northern California. The Company's marketing efforts include participation
in industry trade shows and production of product literature. These efforts
are designed to generate sales leads for the Company's manufacturers'
representatives.

To date, the Company's international sales have been primarily to customers
located in the Asia Pacific region (excluding Japan) and Western Europe.
International sales accounted for approximately 52%36%, 42%52%, and 42% of the
Company's net sales in fiscal 1998, 1997 and 1996, and 1995, respectively.

AllDuring fiscal 1998 a small percentage of the Company's international sales
arewere invoiced in U.S. dollarsforeign currencies and, accordingly, have not historically beenwere subject to
fluctuating currency exchange rates. The Company's international sales are
subject to certain risks common to many export activities, such as
governmental regulations, export license requirements and the risk of
imposition of tariffs and other trade barriers.

As a result of the Company's acquisition of WED on May 23, 1997, in
England, a portion of the Company's international sales will be subject to
fluctuating currency exchange rates. (See "Fiscal 1997 Developments" at the
end of Part I)

BACKLOG

The Company's backlog which consists of customer purchase orders which the
Company expects to fill within the next twelve months, was approximately
$4,011,000 as of March 29, 1998 compared to approximately $2,995,000 as of
March 30, 1997. Because all purchase orders are subject to cancellation or
delay by customers with limited or no penalty, the Company's backlog is not
necessarily indicative of future revenues or earnings. The Company typically
ships its test handlersmajor equipment within eight to ten weeks of receipt of purchase
order and its conversion kits and spare parts within a shorter period.

CUSTOMER SERVICE

The Company believes that strong customer service is important in achieving
its goal of high customer satisfaction. Aseco's customer service organization,
augmented by the Company's engineering personnel,

5
provides product training,
telephone technical support, applications support, maintenance and operations
manuals and on-site service and repair. Such services are provided from the
Company's headquarters in Marlboro, Massachusetts and from one other domestic
and eight international field service centers, each strategically located near
customers to minimize response time to customer service requests. Six of the
eightnine international field service centers are maintained by the Company's
manufacturers' representative organizations and twothree directly by the Company. In addition, in
the first quarter of fiscal 1998, the Company established a subsidiary in
Singapore to provide service and technical support directly to its customers.

The Company warranties its products against defects in material and
workmanship for a period of up to one year. To date, the Company's warranty
claims have not been material. The Company believes its accrual for product
warranties at March 30, 199729, 1998 is adequate.

PRODUCT DEVELOPMENT

The Company believes that its future success will depend in large part on
its ability to enhance and broaden, with the input of its customers, its
existing product line to meet the evolving needs of the test handler market.
To date, the Company has relied on internal development and a product
acquisition (the TL-50)TL-50, the forerunner of the S-200) to extend its product
offering. The Company is continually engaged in improving its current products
and expanding the types of IC devices its test handlers can accommodate.accommodate and
the size of wafers its wafer automation equipment can manage. In addition, the
Company is currently focused on the continued development of enhancements and
features for its current test handler systems.automation products. As the test handlersemiconductor equipment
market continues to develop, the software component of the Company's products
plays an increasingly important role. The Company currently develops all
software in-
housein-house and plans to expand its expertise in this area by hiring
additional personnel as needed.

During the fourth quarter of fiscal 1997, the Company initiated beta testing
of its newest test handler that employs a belt-conveyance transport medium
addressing a wide range of IC applications with limited need for conversion
kits. Assuming the successful completion of beta testing, the Company plans to
begin shipments of this model in the second half of fiscal 1998.

MANUFACTURING AND SUPPLY

The Company manufactures its products at its facilityfacilities in Marlboro,
Massachusetts.Massachusetts and Plymouth, England. The Company's manufacturing operations
consist of procurement and inspection of components and subassemblies,
assembly and extensive testing of finished products.

A significant portion of the components and subassemblies of the Company's
products, including circuit boards, vacuum pumps, optical sensors,
refrigeration units and contactor elements, are manufactured by third parties
on a subcontract basis. Currently all components, subassemblies and parts used
in Aseco's products are available from multiple sources.

Quality and reliability are emphasized in both the design and manufacture of
the Company's test handlers.equipment. All components and subassemblies are inspected for
mechanical and electrical defects. Fully assembled products are thoroughly
tested and inspected for conformity to specifications of both Aseco and the
customer. Test handler products are tested at all temperatures and with all
the IC device packages to be accommodated.

They are also inspected for conformity to specifications of both
Aseco and the customer.

COMPETITION

The test handler market isand wafer handling and inspection markets are highly
competitive. Aseco competes with a large number of companies ranging from very
small businesses to large companies, many of which have substantially greater
financial, manufacturing, marketing and product development resources than the
Company. Certain of these companies manufacture and sell both testers and test
handlers. The Company's test handlers are compatible with all major testers,
including those manufactured by companies which sell both testers and test
handlers. The large companies in the overall surface mount IC device test
handler market with which the Company competes include Advantest and Cohu. In
general, the particular companies with which the Company competes vary with
the Company's different markets, with no one company dominating the overall
test handler

8
market. The companies with which the Company competes most directly in the
surface mount non-memory IC device test handler market are companies such as
Multitest, JLSI, Aetrium and Micro Component Technology, Inc.

6
The Company's competitors in the wafer handling and inspection market vary
depending upon the type of equipment. The Company's major competitors,
however, in this market are Irvine Optical, Kensington, PST, Cybeq, Leica,
Nikon, Zeiss and JenOptic.

The Company competes primarily on the basis of the speed, ease-of-use,
accuracy and other performance characteristics of its products, the breadth of
its product lines, the effectiveness of its sales and distribution channels
and its customer service.

INTELLECTUAL PROPERTY RIGHTS

Aseco attempts to protect the proprietary aspects of its products with
patents, copyrights, trade secret laws and internal nondisclosure safeguards.
The Company has several patents covering certain features of the TL-50 and S-
200S-200 and the
contactor elements incorporated in certain of its other test handlers. In
addition, the Company has patent applications pending with respect to the
machine vision technology in the VT8000. The source code for all software
contained in the Company's products is protected as a trade secret and as
unpublished copyrighted work. In addition, the Company has entered into
nondisclosure and assignment of invention agreements with each of its key
employees. Despite these restrictions, it may be possible for competitors or
users to copy aspects of the Company's products or to obtain information which
the Company regards as a trade secret.

Because of the rapid pace of technological changes in the test handler
industry, the Company believes that patent, trade secret and copyright
protection are less significant to its competitive position than factors such
as the knowledge, ability and experience of the Company's personnel, new
product development, frequent product enhancements, name recognition and
ongoing reliable product maintenance and support.

The Company believes that its products and trademarks and other proprietary
rights do not infringe the proprietary rights of third parties. There can be
no assurance, however, that third parties will not assert infringement claims
in the future.

EMPLOYEES

As of March 30, 1997,29, 1998, Aseco had 129202 regular employees and 15 contract
employees including 4978 in manufacturing, 4967 in engineering and product
development, 1623 in general administration and finance, 2744 in sales and
marketing and 35 in customer service. None of the Company's employees isare
represented by a labor union or isare subject to a collective bargaining
agreement. The Company has never experienced a work stoppage and believes that
its employee relations are excellent.

FISCAL 1997 DEVELOPMENTS

In the fourth quarter of fiscal 1997, the Company initiated beta testing of
its newest test handler that employs a belt conveyance transport medium and
addresses a wide range of IC applications with limited need for conversion
kits. Assuming the successful completion of beta testing, the Company plans to
begin shipments of this model in the second half of fiscal 1998.

In the first quarter of fiscal 1998, the Company established a new
subsidiary in Singapore to provide service and technical support to its
customer base in Southeast Asia. Personnel at this site will provide on-site
service and repair, product training and technical support services.

On May 23, 1997 the Company acquired Western Equipment Developments
(Holdings) Ltd. ("WED"), based in Plymouth, England for approximately
$6,000,000 in cash. WED designs, manufactures and markets integrated circuit
wafer handling robot systems. These systems are used to load, sort and
transport wafers during both manual and automatic inspection as well as other
wafer processing steps in the semiconductor manufacturing process. WED will
allow Aseco to broaden its presence in the semiconductor automated handling
and processing equipment market while taking advantage of synergies such as
similar customer bases and distribution channels. WED has approximately 40
employees and generated net sales of approximately $5.0 million for its fiscal
year ended April 30, 1997. (See Footnote M to Consolidated Financial
Statements)adequate.

ITEM 2. PROPERTIES

The Company's administrative, manufacturing and product development, and its
principal sales, marketing and field service office is located in Marlboro,
Massachusetts where the Company occupies approximately 61,000 square feet
under a lease that expires in May 2000. The Company's wafer automation
equipment manufacturing and product development reside in Plymouth, England
where the Company occupies 21,000 square feet under a lease that expires in
November 2002.

The Company also leases and occupies approximately 2,900 square feet of
space in Santa Clara, California under a lease that expires in fiscal 1998.1998 and
213 square meters of space in Singapore under a lease that expires in
September 2000. The Company uses this spacethese latter two locations for sales and
field service support operations.

The Company believes its facilities are adequate for all its reasonable
foreseeable requirements.

ITEM 3. LEGAL PROCEEDINGS

None.

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

No matters were submitted to a vote of the Company's security holders during
the last quarter of the fiscal year ended March 30, 1997.29, 1998.

EXECUTIVE OFFICERS OF THE REGISTRANT

The following table sets forth the executive officers of the Company, their
ages, present position and principal occupations held for at least the past
five years.

NAME AGE POSITION
- ---- --- --------

Carl S. Archer, Jr......... 59 President,Jr.......... 60 Chief Executive Officer and Chairman of the
Board
Sebastian J. Sicari........ 45Sicari......... 46 President, Chief Operating Officer, Treasurer
Mary R. Barletta............ 37 Vice President, Finance and Administration, Chief Financial Officer
Treasurer and Director
C. Kenneth Gray............Robert L. Murray............ 46 Vice President, Worldwide Customer Support
Robert E. Sandberg.......... 40 Vice President, Sales
Phillip J. Villari.......... 48 Vice President, SalesEngineering & Marketing
Dennis A. Legal............ 57 Vice President, Engineering
Theodore A. Aronis......... 59 Vice President, Manufacturing
Operations
R. Bruce O'Connor.......... 58 Vice President, Device Process Equipment
Marketing

Mr. Archer has been President, Chief Executive Officer and a director of the Company
since November 1987. Mr. Archer also served as President from November 1987 to
June 1998.

Mr. Sicari has been President & Chief Operating Officer of the Company since
June 1998. Mr. Sicari served as Vice President, Finance and Administration and
Chief Financial Officer of the Company sincefrom December 1985 hasuntil June 1998,
served as Treasurer of the Company since July 1988 and has been a Director
since 1993.

8
Ms. Barletta has been Vice President, Chief Financial Officer of the Company
since June 1998. Ms. Barletta served as Vice President, Corporate Controller
from August 1997 to June 1998 and has served as Corporate Controller since
1993.

Mr. GrayMurray has been Vice President, Worldwide Customer Support since June
1998. Mr. Murray served as Director of Worldwide Customer Support from
February 1997 until June 1998. From January 1992 to January 1997, Mr. Murray
was Director of Worldwide Support at Optronics, a division of Intergraph, a
manufacturer of laser image setters and scanners.

Mr. Sandberg has been Vice President, Sales since June 1998. While working
at Aseco, Mr. Sandberg served as Director of WED Worldwide Sales from April
1998 to June 1998, Director of Asian Operations from April 1997 to April 1998,
Far East Sales Manager from April 1996 to April 1997 and Marketing sinceEastern Region Sales
Manager from January 1990.
From October 19831994 to April 1996. Prior to January 1990,1994, Mr. GraySandberg
was Marketing Manager of Sales and
Marketing, Eastern U.S. and Europe, of Micro Component Technology,at Symtek Systems, Inc., a manufacturer of automatic
test equipment, including test handlers.

Mr. LegalVillari has been Vice President, Engineering & Manufacturing Operations
since August 1996. From May
1986 to August 1996,June 1998. Mr. Legal was the Division Engineering Manager of
Teradyne Automatic Test Equipment, a manufacturer of automatic test equipment,
including test handlers.

Mr. Aronis has beenVillari served as Vice President, Manufacturing
Operations sincefrom April 1997.1998 until June 1998. From 1985July 1995 to 1997,March 1998, Mr.
AronisVillari was Vice President, Operations of
Xylogics,Director and General Manager, Semiconductor Business Unit, Electro
Scientific Industries, Inc., a manufacturer of communications equipment.laser based equipment for
circuit fine tuning, memory repair along with equipment for testing surface
mount capacitors. From February 1993 to June 1995 Mr. O'Connor has been ViceVillari served as
President Device Process Equipment Marketing
since April 1997. From 1994 to 1997, Mr. O'Connor led the Company's
development program for its newest test handler model. Prior to joining Aseco,
Mr. O'Connor was Executive Vice President at Symtek Systems,and CEO of XRL, Inc. a manufacturer of automatic test handlers.laser based capital
equipment.

Executive officers of the Company are elected by the Board of Directors and
serve until their successors have been duly elected and qualified. There are
no family relationships among any of the executive officers or directors of
the Company.

11
PART II

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

Aseco Corporation's common stock is traded on the NasdaqNASDAQ National Market
under the symbol "ASEC." The table below sets forth the high and low sale
prices of the common stock during the two most recent fiscal years:

19971998
-------------
PERIOD HIGH LOW
- ------ ------ ------

First Quarter................................................Quarter..................................................... $13.38 $ 8.63
Second Quarter.................................................... 19.00 10.63
Third Quarter..................................................... 18.88 8.38
Fourth Quarter.................................................... 11.38 7.25

1997
-------------
HIGH LOW
------ ------

First Quarter..................................................... $14.63 $ 9.50
Second Quarter...............................................Quarter.................................................... 11.50 8.25
Third Quarter................................................Quarter..................................................... 10.38 7.00
Fourth Quarter...............................................Quarter.................................................... 11.88 9.50
1996
-------------

First Quarter................................................ $18.25 $ 9.38
Second Quarter............................................... 22.00 15.75
Third Quarter................................................ 21.25 13.50
Fourth Quarter............................................... 16.63 10.00

On May 30, 1997,1998, the closing price of the Company's common stock was $12.75$4.937
per share. On such date there were 3,672,0173,731,718 shares outstanding held of record
by 9294 persons. This number does not include stockholders for whom shares are
held in a "nominee" or "street" name.

The Company has not paid cash dividends on its common stock and does not
intend to do so in the foreseeable future. The Company's bank line of credit
prohibits the payment of cash dividends without the bank's consent.

9
ITEM 6. SELECTED FINANCIAL DATA

YEAR ENDED
-----------------------------------------------
MARCH 29, MARCH 30, MARCH 31, APRIL 2, APRIL 3,
MARCH 28,1998 1997 1996 1995 1994
1993--------- --------- --------- -------- -------- ---------
(IN THOUSANDS EXCEPT PER SHARE DATA)

STATEMENT OF INCOMEOPERATIONS DATA
Net sales..................... $44,246 $34,320 $41,569 $29,192 $20,264
$15,869
Income (loss) from
operations........operations................... (8,411) 2,623 6,397 3,987 2,445
1,635
Net income....................income (loss)............. (8,143) 2,288 4,406 3,088 1,980
1,060
Earnings (loss) per share............share,
diluted...................... (2.20) .62 1.17 .85 .55 .47
BALANCE SHEET DATA
Total assets.................. $33,691 $36,640 $36,681 $29,267 $23,792
$21,166
Long term capital lease
obli-
gations......................obligations.................. 25 29 42 53 --
73
Stockholders' equity.......... 23,582 31,113 28,416 22,711 19,513 16,566

Net loss for the year ended March 29, 1998 includes i) $1.8 million of
charges resulting from valuation adjustments for inventory being carried in
excess of normal replacement cost and the discontinuation of certain products,
ii) acquired in process research and development costs totaling $6.1 million,
and the write down of goodwill and other intangible assets totaling $963,000,
related to the Company's 1998 acquisition of WED, and iii) approximately
$500,000 of expenses related to the layoff of 40 employees.

The earnings per share amounts prior to fiscal 1998 have been restated as
required to comply with Statement of Financial Accounting Standards No. 128,
"Earnings Per Share". (See Notes to Consolidated Financial Statements.)

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

ResultsRESULTS OF OPERATIONS -- FISCAL 1998 VERSUS FISCAL 1997

Net sales for fiscal 1998 increased 29% to $44.2 million from $34.3 million
in fiscal 1997. The increase in net sales resulted from a 34% increase in
units shipped during fiscal 1998 compared to fiscal 1997 offset in part by a
decrease in average selling price of Operations--Fiscalequipment resulting from large quantity
order discounts earned by customers during fiscal 1998. Although unit sales
increased in each of the first three quarters of fiscal 1998 from the previous
quarter, unit sales declined 10% in the fourth quarter compared to the third
quarter of fiscal 1998 as a result of a drop in the demand for semiconductors
and semiconductor capital equipment experienced in the fourth quarter.

International sales declined to 36% of net sales in fiscal 1998 compared to
52% of sales in the prior fiscal year. International sales, which represented
approximately 46% of sales through the third quarter of fiscal 1998, decreased
substantially to 20% of sales in the fourth quarter as orders from countries
in the Far East slowed.

As noted above, the Company began experiencing declining bookings and, as a
result, lower net sales in the fourth quarter of fiscal 1998 as a result of
adverse market conditions in the semiconductor industry. The Company expects
that such market conditions will continue into the foreseeable future and as a
result, will unfavorably impact bookings and net sales levels for some period
of time. (See Liquidity and Capital Resources)

Gross profit for fiscal 1998 was $17.5 million, or 40% of net sales,
compared to $16.2 million, or 47% of net sales, in fiscal 1997. Fiscal 1998
gross profit was impacted by a special charge, recorded in the fourth quarter,
of $1.8 million, or 4% of net sales, resulting from valuation adjustments for
VT8000 inventory being carried in excess of normal replacement cost, and to a
lesser extent, the discontinuation of certain product lines.

Excluding the special charge, fiscal 1998 gross profit was $19.3 million, or
44% of net sales, a decrease of 3% from the prior fiscal year gross profit
margin percentage. The decrease in gross margin percentage was a result of
higher than normal discount rates earned by customers on larger quantity
orders shipped during fiscal 1998, a shift in product mix away from older
product lines with higher gross margins and manufacturing excess capacity
experienced in the fourth quarter of fiscal 1998.

Research and development costs increased approximately 30% to $6.8 million
in fiscal 1998 from $5.2 million in fiscal 1997. Research and development
costs were 15% of net sales in both fiscal years. The increase in such
spending resulted from the addition of WED in the first quarter of fiscal 1998
(see Note L to the Consolidated Financial Statements), and the hiring of
additional engineering personnel and procurement of prototype material for
continuing development projects.

Selling, general and administrative expenses increased 56% to $13.0 million
in fiscal 1998 from $8.4 million in fiscal 1997. As a percentage of net sales,
selling, general and administrative expenses increased to 29% of net sales in
fiscal 1998 compared to 24% of net sales in fiscal 1997. Selling, general and
administrative expenses were affected by a special charge of $1.5 million
recorded in the fourth quarter of fiscal 1998. Components of the special
charge were $963,000 related to the writedown of certain intangible assets
associated with the acquisition of WED, as discussed below, and approximately
$500,000 related to costs associated with the layoff of 40 employees.
Excluding the special charge, selling, general and administrative expense for
fiscal 1998 was $11.5 million or 26% of net sales. The balance of the increase
in selling, general and administrative expenses was a result of the addition
of WED in the first quarter of fiscal 1998, increased promotional and trade
show costs related to the VT8000 introduction, increased costs of travel, an
increase to the bad debt reserve to cover potential exposure in accounts
receivable on Far East shipments and costs related to the establishment of a
new sales and service office in Singapore.

The Company's initial allocation of purchase price at the date of its
acquisition of WED resulted in an estimate of acquired in-process research and
development of $4.9 million, and developed technology, goodwill

and other intangibles totaling $3.0 million. However, during 1998, the Company
determined that certain acquired technology was not as developed as originally
expected, and certain in-process technology would require more time to develop
than originally anticipated. At the end of fiscal 1998, the Company completed
the allocation of the purchase price and estimated the fair values of the
acquired in-process research and development, developed technology, goodwill
and other intangibles using estimated future discounted cash flows. The final
allocation resulted in an additional in-process research and development
charge of $1.2 million recorded in the fourth quarter, resulting in an
aggregate year to date charge of $6.1 million. The acquired in-process
research and development had not yet reached technological feasibility and had
no alternative future use. The Company estimates that $1.2 million will be
expensed over the next three years in connection with the completion of
acquired research and development. Since WED incurred operating losses in
fiscal 1998 which were not originally anticipated, the year end assessments
for developed technology and related goodwill indicated that the amounts
originally recorded for these assets would not be recovered and thus were
impaired. Therefore, these assets were written down to their estimated fair
values, resulting in a separate fourth quarter charge of $963,000, which is
included in selling, general and administrative expenses in the accompanying
statement of operations.

As a result of the above, the Company generated an operating loss of $8.4
million for fiscal 1998 (including $9.4 million of fiscal 1998 special
charges) compared to operating income of $2.6 million for fiscal 1997.

Other income, net consists principally of interest income earned on cash and
cash equivalents which decreased in fiscal 1998 because of the lower average
cash balance maintained during the year after the acquisition of WED.

The Company recorded a tax benefit of $139,000 in fiscal 1998 compared to a
tax provision of $1.0 million in fiscal 1997. The Company's tax rate was
affected by the inability to offset losses incurred by WED against income
earned in the United States and the write-off of acquired in process research
and development and goodwill associated with the acquisition of WED, both of
which are not deductible for tax purposes. Furthermore, the Company recorded a
valuation allowance principally representing net operating loss carryforwards
and other deferred tax assets at WED which the Company does not deem the
realization of these assets to be more likely than not. The effective tax rate
for fiscal 1997 versus Fiscalwas 30%.

Net loss for fiscal 1998 was $8.1 million, or $2.20 per diluted share,
compared to net income for fiscal 1997 of $2.3 million, or $.62 per diluted
share.

RESULTS OF OPERATIONS -- FISCAL 1997 VERSUS FISCAL 1996

Net sales for fiscal 1997 decreased 17% to $34.3 million from $41.6 million
in fiscal 1996. The decrease resulted primarily from a reduction in unit
shipments due to an industry wide slowdown in the semiconductor market during
fiscal 1997.

International sales, which increased 2.5% during fiscal 1997 to $17.8
million from $17.4 million in fiscal 1996, represented approximately 52% of
net sales in fiscal 1997 versus 42% in fiscal 1996. Sales in the Pacific Rim
region were particularly strong, representing 83% of all international sales.

Gross profit for fiscal 1997 was $16.2 million, or 47% of net sales,
compared to $20.4 million, or 49% of net sales, in fiscal 1996. The decrease
in gross profit as a percentage of net sales resulted from a reduction in
manufacturing overhead spending which was disproportionate with the reduction
in units produced during fiscal 1997. Although cost control measures,
including a reduction in workforce and discretionary spending constraints,
were made early in fiscal 1997, the savings realized were partially offset by
spending on operation infrastructure enhancements incurred to enable the
Company to respond effectively to production demands in the future.

Research and development costs increased 10% to $5.2 million in fiscal 1997
from $4.7 million in fiscal 1996. As a percentage of net sales, research and
development costs were 15% and 11% in fiscal 1997 and fiscal

14
1996, respectively. Research and development spending in fiscal 1997 focused
primarily on the development of a new test handler system design and the
enhancement of existing products through additional automation and product
versatility through additional conversion kits.

Selling, general and administrative expenses for fiscal 1997 decreased
approximately 10% to $8.4 million from $9.3 million in fiscal 1996. As a
percentage of net sales, selling, general and administrative costs were 24%
and 22% during fiscal 1997 and 1996, respectively. The decrease in selling,
general and administrative expenses resulted primarily from a decrease in
sales commissions earned during the year. The decrease in commission expense
resulted from both the decrease in net sales and a decrease in commission
rates resulting from the Company's efforts to transition more customers to a
direct sales relationship. The decrease in selling, general and administrative
costs were partially offset by spending incurred to support the installation
of the Company's new business information system.

As a result of the above, operating income for fiscal 1997 declined 59% to
$2.6 million from $6.4 million in fiscal 1996.

10
Other income, net of $668,000 in fiscal 1997 and $549,000 in fiscal 1996 was
derived primarily from interest income earned on cash and cash equivalents.

The Company's effective tax rate for fiscal 1997 was 30.5% compared to 36.6%
in fiscal 1996. The fiscal 1997 tax rate was lower than the fiscal 1996 rate
principally because of a higher percentage of net sales coming from
international markets and a greater R&D tax credit which resulted as the
Company accelerated its spending on certain qualified development expenses.

Net income for fiscal 1997 decreased 48% to $2.3 million, or $.62 per share
with 3,717,000 weighted average shares outstanding, from $4.4 million, or
$1.17 per share with 3,776,000 weighted average shares outstanding, in fiscal
1996.

ResultsLIQUIDITY AND CAPITAL RESOURCES

The Company's cash position at the end of Operations--Fiscal 1996 versus Fiscal 1995

Net sales for fiscal 1996 increased 42% to $41.61998 was $4.4 million from $29.2 million
in fiscal 1995. During fiscal 1996, net sales of the Company's earlier
designed models (S-130) grew slightly over fiscal 1995 net sales levels while
net sales of the Company's more recently introduced machines (S-170, S-200 and
S-450), which generally have higher average selling prices, increased 94% from
fiscal 1995.

International sales increased 42% during fiscal 1996 to $17.4 million from
$12.3 million in fiscal 1995, keeping pace with overall sales growth.
International sales represented approximately 42% of net sales in both fiscal
1996 and 1995. Sales in the Pacific Rim region were particularly strong with
74% of all export sales originating in the region.

Gross profit for fiscal 1996 was $20.4 million, or 49% of net sales,
compared to $13.8$14.1 million or 47% of net sales, in fiscal 1995. The increase
in gross profit as a percentage of net sales resulted from improved
manufacturing efficiencies generated by improved production flow and cost
savings generated by increased outsourcing and vendor management programs.

Research and development costs increased 41% to $4.7 million in fiscal 1996
from $3.4 million in fiscal 1995 primarily due toat the hiring of additional
engineering personnel in each of the Company's critical technical disciplines.
As a percentage of net sales, research and development costs remained
relatively consistent at 11% of net sales in fiscal 1996 and fiscal 1995.
Research and development spending in fiscal 1996 focused primarily on the
development of new test handler system designs and the enhancement of existing
products through additional automation and product versatility through
additional conversion kits.

Selling, general and administrative expenses for fiscal 1996 increased 43%
to $9.3 million from $6.5 million in fiscal 1995, but remained constant at 22%
of net sales in both fiscal 1996 and 1995. The increase in selling, general
and administrative expenses resulted primarily from increased headcount
related expenses and travel expenses incurred to address the sales and service
demands of an expanded customer and installed equipment base throughout the
world. Additionally, the Company incurred higher costs of information
technology and administration necessary to support the Company's substantial
growth and increased headcount during fiscal 1996.

As a result of the above, operating income for fiscal 1996 grew 60% to $6.4
million from $4.0 million in fiscal 1995.

Other income, net of $549,000 in fiscal 1996 and $414,000 in fiscal 1995 was
derived primarily from interest income earned on cash and cash equivalents.

The Company's effective tax rate for fiscal 1996 was 36.6% compared to 29.8%
in fiscal 1995. The fiscal 1995 tax rate was lower than the fiscal 1996 rate
principally because during the fourth quarterend of fiscal 1995, the Company
successfully completed an Internal Revenue Service audit of its fiscal 1993
tax year. As a result, an

increased amount of credits became available for the Company to utilize in the
fourth quarter causing the fourth quarter 1995 tax rate to be 17%.

Net income for fiscal 1996 increased 43% to $4.4 million, or $1.17 per share
with 3,776,000 weighted average shares outstanding, from $3.1 million, or $.85
per share with 3,616,000 weighted average shares outstanding, in fiscal 1995.

Liquidity and Capital Resources

The Company maintained a strong liquidity position in fiscal 1997, closing
fiscal 1997 with a cash balance of $14.1 million (See "Subsequent Events"
below).1997. Additionally, the Company
had an unsecured line of credit with a bank in the amount of $5.0 million
against which there were no borrowings at the end of fiscal 1998.

The Company's largest single use of cash during the year was for the
purchase of its wafer automation equipment subsidiary, WED, for approximately
$6.1 million in the first quarter of fiscal 1997.1998. (See Note L to the
Consolidated Financial Statements.)

The Company generatedused approximately $1$1.4 million in cash fromfor operating activities
during fiscal 1997.1998. The primary working capital factors affecting cash from
operations were inventory levels, accounts receivable, and accounts payable
and accrued expenses. During fiscal 1997,1998, inventory levels increased by
approximately $2.2$4.6 million, offset by a fourth quarter fiscal 1998 special
charge of $1.8 million related to $9.2 million aslower of cost or market issues with VT8000
inventory and the Company purchaseddiscontinuation of certain products. The increase in
inventory duringresulted from the addition of WED in the first quarter of fiscal
1998, the year to fulfillreceipt of inventory for the initial quantity build plansof the VT8000
and an increase in finished units built in anticipation of receipt of machine
orders in the fourth quarter of fiscal 1998 which were subsequently revised downward as market conditions softened.did not book. Accounts
receivable decreased approximately $3.2 million, or 26%, because ofwere relatively comparable with the declineprior year despite the 29%
increase in net sales forin fiscal 1998 versus fiscal 1997, driving days sales in
accounts receivable down to 75 days at the end of fiscal year.1998 compared to 97
at the end of fiscal 1997. Accounts payable and accrued expenses decreasedincreased
during the fiscal year as a result of the increase in business volume in
fiscal 1998 and, to a decrease in material receipts inlesser extent, the second halffirst quarter addition of fiscal 1997 compared to fiscal 1996, a decrease in sales
commissions earned and a decrease in amounts accrued for compensation benefits
and other performance based compensation.WED.

The Company used approximately $992,000$2.1 million in cash during fiscal 19971998 to
fund the acquisition of capital equipment which included a new enterprise-wide
management information system and $243,000 to fundadditions of equipment used in the
manufacturing and engineering areas and internal software development costs.

The Company generated cash from financing activities in fiscal 19971998 of
approximately $192,000 primarily$450,000 from employee stock purchases under the Company's
employee stock option and stock purchase plans.plans and used approximately $477,000
to pay down a line of credit which the Company assumed with the purchase of
WED.

The Company expects to continue to experience a slowdown in the volume of
business due to adverse market conditions in the semiconductor industry.
However, the Company intends to reduce further its expenses to a level
consistent with its projected lower net sales. Although the Company
anticipates that it will incur losses in future quarters which will negatively
impact its liquidity position, the Company believes that funds generated from
operations, existing cash balances and available borrowing capacity will be
sufficient to meet the Company's cash requirements at least through the end of
fiscal 1998.

Subsequent Events

On May 23,1999.

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

In July 1997, the Company acquired 100%Financial Accounting Standards Board issued Statement No.
130 (SFAS 130) "Reporting Comprehensive Income" which establishes standards
for reporting and display of comprehensive income and its components in a full
set of general-purpose financial statements. Under this standard, certain
revenues, expenses, gains and losses recognized during the outstanding stockperiod are included
in comprehensive income, regardless of Western Equipment Developments (Holdings) Ltd. ("WED") in Plymouth, England
for approximately $6,000,000 in cash. WED designs, manufactures and markets
integrated circuit wafer handling robot systems usedwhether they are considered to load, sort and
transport wafers during inspection in the semiconductor manufacturing process.
The acquisition will be accounted for as a purchase and, accordingly, the
results of operations of the acquired business will be included inperiod. SFAS 130, which becomes effective for the
Company's consolidated financial statements commencing May 23, 1997. In
connection with the acquisition, the Company expects to allocate a portion of
the purchase price to in-process research and development resulting in a one-
time charge to operations of approximately $3.5-$4.3 million in the first quarter of fiscal 1998 (see Note M1999, is not expected to Consolidated Financial Statements--
Subsequent Events).

Impacthave a
material impact on the consolidated financial statements of Recently Issued Accounting Standardsthe Company.
Presently, the only additional item to be included in comprehensive income is
the Company's cumulative translation adjustment.

In FebruaryJune 1997, the Financial Accounting Standards Board (FASB) issued Statement No.
128 "Earnings per Share"131 (SFAS 131) "Disclosures About Segments of an Enterprise and Related
Information" which is required to be adoptedestablishes standards for the way that public companies
report selected information about operating segments in annual financial
statements and requires that those companies report selected information about
operating segments in interim financial reports to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. This statement becomes effective for the
Company in the first quarter ending December 28, 1997. Atof fiscal 1999. The Company is in the process of
assessing the impact of SFAS 131 on its footnote disclosures.

YEAR 2000 COMPLIANCE

Historically certain computer programs have been written using two digits
rather than four to define the applicable year, which could result in a
computer recognizing a date using "00" as the year 1900 rather than the year
2000. This, in turn, could result in major system failures or miscalculations,
and is generally referred to as the "Year 2000 Problem".

The Company is in the process of implementing a new enterprise-wide
management information system that time,the vendor has represented is Year 2000
compliant. In addition, the Company has completed an initial assessment of
other software used by the Company for Year 2000 compliance. The Company also
reviews each of its new hardware and software purchases to ensure that they
are Year 2000 compliant. Based on the foregoing, the Company believes that the
computer systems used by it are Year 2000 compliant or will become Year 2000
compliant without materially and adversely affecting the Company's financial
position or results of operations. However, there can be no assurance that the
Company will not be requiredmaterially and adversely affected by the failure of its
significant vendors or customers to change the method currently usedsuccessfully and timely achieve Year 2000
compliance with respect to compute earnings per share and to
restate all prior periods. Under the new requirements for calculating primary
earnings per share, the dilutive effect of stock options will be excluded. The
impact is expected to result in an increase in primary earnings per share for
the first quarter ended June 29, 1997 and June 30, 1996 of approximately $.01
per share for each of these quarters. The impact of Statement 128 on the
calculation of fully diluted earnings per share for these quarters is not
expected to be material.

12
their own computer systems.

The impact of inflation on the Company's business during the past three
fiscal years has not been significant.

Cautionary Statement for Purposes of "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995

The Company wishesThis Annual Report on Form 10K contains forward-looking statements relating
to caution readers that the following important factors
and those important factors described elsewhere in other Securities and
Exchange Commission filings, in some cases, have affected, and infuture events or the future could affect,financial performance of the Company's actual consolidated quarterlyCompany, including
but not limited to statements contained in Item 1

- --"BUSINESS," Item 2--"PROPERTIES" and Item 7--"MANAGEMENTS' DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS". Readers are
cautioned that such statements, which maybe identified by words including
"anticipates," "believes," "intends," "estimates," "plans," and other similar
expressions, are only predictions or annual operating
resultsestimations and are subject to known and
unknown risks and uncertainties, over which the Company has little or no
control. In evaluating such statements, readers should consider the various
factors identified below which could cause those actual consolidated quarterlyevents, performance or annual
operating
results to differ materially from those expressed in any forward
looking statements madeindicated by or on behalf of, the Company.such statements.

Semiconductor Market Fluctuations--The semiconductor market has historically
been cyclical and subject to significant economic downturns at various times,
which often have a disproportionate effect on manufacturers of semiconductor
capital equipment. As a result, there can be no assurance that the Company
will not experience material fluctuations in future quarterly or annual
operating results as a result of such a market fluctuation. The semiconductor
industry in recent periods has experienced decreased demand, and it is
uncertain how long these conditions will continue.

Integration of WED--In May 1997 the Company acquired WED, a maker of
integrated circuit wafer handling and inspection systems. The process of
integrating WED's business into the Company has and may continue to result in
ongoing and extraordinary operating difficulties and expenditures, has and may
continue to absorb significant management attention that would otherwise be
available for ongoing development of the Company's business and has and may
continue to result in charges to operating results. In addition, there are
certain risks inherent in the fact that prior to the acquisition of WED, the
Company had limited direct experience with the market for integrated circuit
wafer handling and inspection systems.

Variability in Quarterly Operating Results--During each quarter, the Company
customarily sells a limited number of systems, thus a change in the shipment
of a few systems in a quarter can have a significant impact on results of
operations for a particular quarter. To achieve sales objectives, the Company
must generally obtain orders for systems to be shipped in the same quarter in
which the order is obtained. Moreover, customers may cancel or reschedule
shipments with limited or no penalty, and production difficulties could delay
shipments. Accordingly, the Company's operating results are subject to
significant variability from quarter to quarter and could be adversely
affected for a particular quarter if shipments for that quarter were lower
than anticipated. Moreover, since the Company ships a significant quantity of
products at or near the end of each quarter, the magnitude of fluctuation is
not known until late in or at the end of any given quarter.

New Product Introductions--The Company's success depends in part on its
continued ability to develop and market new products. There can be no
assurance that the Company will be able to develop and introduce new products
including, in particular, continued iterations of its newest belt-conveyance
test handler, in a timely manner or that such products, if developed, will
achieve market acceptance. Additionally there can be no assurance that the
Company will be able to manufacture such products at profitable levels or in
sufficient quantities to meet customer requirements. The inability of the
Company to do any of the foregoing could have a material adverse effect on the
Company's operating results.

International Operations--In fiscal 1997, 52%1998, 36% of the Company's net sales
were derived from customers in international markets. The Company is therefore
subject to certain risks common to many export activities, such as
governmental regulations, export license requirements, air transportation
disruptions, freight rates and the risk of imposition of tariffs and other
trade barriers. AllA portion of the Company's international sales are invoiced in
U.S.
dollarsforeign currencies and, accordingly, have not historically beenare subject to fluctuating currency
exchange rates. In the future, the Company may decide to conduct its
international business denominated in foreign currency in which caseAs such there can be no assurance that the Company wouldwill be
able to protect its position by hedging its exposure to currency exchange rate
fluctuations.

Competition--The markets for the Company's products are highly competitive.
The Company's competitors include a number of established companies that have
significantly greater financial, technical, manufacturing and marketing
resources than the Company. The Company also competes with a number of smaller
companies. There can be no assurance that the Company will be able to compete
successfully against current and future sources of

17
competition or that the competitive pressures faced by the Company will not
adversely effect its profitability or financial performance.

Customer Concentrations--Although the Company has a growing customer base,
from time to time, an individual customer may account for 10% or more of the
Company's quarterly or annual net sales. During the 13
year ended March 30, 1997, one customer29, 1998,
two customers accounted for 17%23% and 16% of net sales.sales, respectively. The
Company expects that such customer concentration of net sales will continue to
occur from time to time as customers place large quantity orders with the
Company. As a result, the loss of, or significant reduction in purchases by,
any such customer could have an adverse effect on the Company's annual or
quarterly financial results.

Investments in Research & Development and Selling General & Administrative
Expenses--The Company is currently investing in specific time-sensitive
strategic programs related to both the research and development and selling,
general and administrative areas which the Company believes are critical to
its future ability to compete effectively in the market. As such the Company
plans to continue to invest in such programs at a planned rate and not to
reduce or limit the increase in such expenditures until such programs are
completed. As a result there can be no assurance that such expenditures will
not adversely affect the Company's quarterly or annual profitability or
financial performance.

Reliance on Third Party Distribution Channels--The Company markets and sells
its products primarily through third-party manufacturers' representative
organizations which are not under the direct control of the Company. The
Company has limited internal sales personnel. A reduction in the sales efforts
by the Company's current manufacturers' representatives or a termination of
their relationships with the Company could adversely affect the Company's
operations and financial performance. There can be no assurance that the
Company will be able to retain its current manufacturers' representatives or
its distribution channels by selling directly through its sales employees or
enter into arrangements with new manufacturers' representatives.

Dependence on Key Personnel--The Company's success depends to a significant
extent upon a number of senior management and technical personnel. These
persons are not bound by employment agreements. The loss of the services of a
number of these key persons could have a material adverse effect on the
Company. The Company's future success will depend in large part upon its
ability to attract and retain highly skilled technical, managerial and
marketing personnel. Competition for such personnel in the Company's industry
is intense. Although the Company has been successful to date in this endeavor,
there can be no assurance that the Company will continue to be successful in
attracting and retaining the personnel it requires to successfully develop new
and enhanced products and to continue to grow and operate profitably.

Dependence on Proprietary Technology--The Company's success is dependent
upon proprietary software and hardware which the Company protects primarily
through patents and restrictions on access to its trade secrets. There can be
no assurance that the steps taken by the Company to protect its proprietary
rights will be adequate to prevent misappropriation of its technology or
independent development by others of similar technology. Although the Company
believes that its products and technology do not infringe any existing
proprietary rights of others, the use of patents to protect software and
hardware has increased and there can be no assurance that third parties will
not assert infringement claims against the Company in the future.

1418

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Financial Statements included in ItemCONSOLIDATED FINANCIAL STATEMENTS INCLUDED IN ITEM 8:

PAGE
----

Report of Independent Auditors............................................ 16Auditors............................................. 20
Consolidated Balance Sheets as of March 29, 1998 and
March 30, 1997............................................................ 21
Consolidated Statements of Operations for the years
ended March 29, 1998, March 30, 1997, and March 31, 1996....... 17
Consolidated Statements of Income for the years ended March 30, 1997,
March 31, 1996, and April 2, 1995........................................ 181996.................. 22
Consolidated Statements of Changes in Stockholders'
Equity for the years ended March 29, 1998,
March 30, 1997, and March 31, 1996 and April 2, 1995................... 191996........................................ 23
Consolidated Statements of Cash Flows for the years
endedEnded March 29, 1998, March 30, 1997, and March 31, 1996 and April 2, 1995......................................... 201996.................. 24
Notes to Consolidated Financial Statements................................ 21Statements................................. 25
Supplementary Quarterly Financial Data (unaudited)........................ 30......................... 34

1519

REPORT OF INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Aseco Corporation

We have audited the accompanying consolidated balance sheets of Aseco
Corporation as of March 30, 199729, 1998 and March 31, 1996,30, 1997, and the related
consolidated statements of income,operations, changes in stockholders' equity and
cash flows for each of the three years in the period ended March 30, 1997.29, 1998. Our
audits also included the financial statement schedule listed in the Index at
Item 14(a). These financial statements and schedule are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.

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 provide a reasonable basis
for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of Aseco Corporation at March 30, 199729, 1998 and March 31, 199630, 1997 and the consolidated
results of its operations and its cash flows for each of the three years in
the period ended March 30, 199729, 1998 in conformity with generally accepted
accounting principles. Also, in our opinion, the related financial statement
schedule, when considered in relation to the basic financial statements taken
as a whole, presents fairly in all material respects the information set forth
therein.

LOGOErnst & Young LLP

Boston, Massachusetts
May 9, 1997, except for Note M as
to which the date is May 23, 1997

168, 1998

ASECO CORPORATION

CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

MARCH 29, MARCH 30,
MARCH 31,1998 1997 1996
--------- ---------

ASSETS
Current Assetsassets
Cash and cash equivalents................................ $ 4,431 $14,082 $14,083
Accounts receivable, less allowance for doubtful accounts
of $781 in 1998 and $407 in 1997 and $397 in 1996........................1997........................ 9,140 9,153 12,346
Inventories, net......................................... 11,875 9,238 7,059
Prepaid expenses......................................... 533 273 212
Deferred taxes........................................... 1,603 1,003 598
Other current assets..................................... 625 138 54
------- -------
Total current assets................................... 28,207 33,887 34,352
Plant and equipment, less accumulated depreciation and
amortization.............................................. 4,041 2,227
2,011
Other assets...............................................assets, net.......................................... 1,443 526 318
------- -------
$33,691 $36,640 $36,681
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable......................................... $ 2,0914,591 $ 3,4412,091
Accrued expenses......................................... 4,886 2,608 3,923
Income taxes payable..................................... -- 321 476
Current portion of capital lease obligations............. 13 13
------- -------
Total current liabilities.............................. 9,490 5,033 7,853
Deferred taxes payable..................................... 594 465 370
Long-term capital lease obligations........................ 25 29 42
Stockholders' equity
Preferred stock, $.01 par value, 1,000,000 shares
authorized, none issued and outstanding...................outstanding................. -- --
Common stock, $.01 par value,value: 15,000,000 shares
authorized, 3,664,5193,731,718 and 3,611,5013,664,519 shares issued and
outstanding in 1998 and 1997, and 1996, respectively...............................respectively.............. 38 37 36
Additional paid in capital................................. 18,203 17,642 17,234
Retained earnings.......................................... 5,291 13,434
11,146Foreign currency translation adjustment.................... 50 --
------- -------
Total stockholders' equity............................. 23,582 31,113 28,416
------- -------
$33,691 $36,640 $36,681
======= =======

See notes to consolidated financial statements.

1721

ASECO CORPORATION

CONSOLIDATED STATEMENTS OF INCOMEOPERATIONS

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

YEAR ENDED
----------------------------------
MARCH 29, MARCH 30, MARCH 31,
APRIL 2,1998 1997 1996 1995
---------- ---------- ----------

Net sales..................................sales................................. $ 44,246 $ 34,320 $ 41,569
$ 29,192
Cost of sales..............................sales............................. 26,761 18,113 21,174 15,374
---------- ---------- ----------
Gross profit.............................profit............................ 17,485 16,207 20,395 13,818
Research and development costs...........costs.......... 6,773 5,227 4,748 3,356
Selling, general and administrative
expenses................................expenses............................... 13,023 8,357 9,250
6,475Acquired in process research and
development costs...................... 6,100 -- --
---------- ---------- ----------
Income (loss) from operations...................operations........... (8,411) 2,623 6,397 3,987
Other income (expense):
Interest income..........................income......................... 309 664 560
416
Interest expense.........................expense........................ (119) (7) (14)
(3)
Other, net...............................net.............................. (61) 11 3 1
---------- ---------- ----------
129 668 549 414
---------- ---------- ----------
Income (loss) before income taxes.................taxes......... (8,282) 3,291 6,946
4,401
Income tax expense.........................expense (benefit).............. (139) 1,003 2,540 1,313
---------- ---------- ----------
Net income.................................income(loss).......................... $ (8,143) $ 2,288 $ 4,406
$ 3,088
========== ========== ==========
Earnings (loss) per share.........................share, basic.......... $ (2.20) $ .63 $ 1.24
========== ========== ==========
Shares used to compute earnings (loss) per
share, basic............................. 3,695,000 3,640,000 3,542,000
Earnings (loss) per share, diluted........ $ (2.20) $ .62 $ 1.17
$ .85
========== ========== ==========
Weighted average common and common
equivalent shares outstanding...........Shares used to compute earnings (loss) per
share, diluted........................... 3,695,000 3,717,000 3,776,000 3,616,000
========== ========== ==========

See notes to consolidated financial statements.

1822

ASECO CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS, EXCEPT SHARE DATA)

COMMON STOCK FOREIGN
--------------- ADDITIONAL CURRENCY
PAR PAID-IN RETAINED TRANSLATION
SHARES VALUE CAPITAL EARNINGS ADJUSTMENT TOTAL
--------- ----- ---------- -------- ----------- -------
Balance at April 3, 1994........... 3,412,497
BALANCE AT APRIL 2,
1995................... 3,437,380 $34 $15,827 $ 3,652 $19,513$15,937 $6,740 $-- $22,711
Issuance of shares under
stock plans........................... 24,883 -- 110 -- 110
Net income....................... -- -- -- 3,088 3,088
--------- --- ------- ------- -------
Balance at April 2, 1995........... 3,437,380 34 15,937 6,740 22,711
Issuance of shares under stock
plans...........................plans............ 174,121 2 634 -- -- 636
Tax benefit from
exercise of stock
options...................options................ -- -- 663 -- -- 663
Net income.......................income.............. -- -- -- 4,406 -- 4,406
--------- --- ------- ------ ---- -------
-------
Balance at MarchBALANCE AT MARCH 31,
1996..........1996................... 3,611,501 36 17,234 11,146 -- 28,416
Issuance of shares under
stock plans...........................plans............ 53,018 1 344 -- -- 345
Tax benefit from
exercise of stock
options...................options................ -- -- 64 -- -- 64
Net income.......................income.............. -- -- -- 2,288 -- 2,288
--------- --- ------- ------ ---- -------
BALANCE AT MARCH 30,
1997................... 3,664,519 37 17,642 13,434 -- 31,113
Issuance of shares under
stock plans............ 67,199 1 449 -- -- 450
Tax benefit from
exercise of stock
options................ -- -- 112 -- -- 112
Net loss................ -- -- -- (8,143) -- (8,143)
Foreign currency
translation
adjustment............. -- -- -- -- 50 50
--------- --- ------- Balance at March 30, 1997.......... 3,664,519 $37 $17,642 $13,434 $31,113------ ---- -------
BALANCE AT MARCH 29,
1998................... 3,731,718 $38 $18,203 $5,291 $ 50 $23,582
========= === ======= ============= ==== =======

See notes to consolidated financial statements.

1923

ASECO CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

YEAR ENDED
---------------------------------------------------------
MARCH 29, MARCH 30, MARCH 31,
APRIL 2,1998 1997 1996
1995
--------- --------- -----------------

Operating activities:
Net income.....................................income (loss)............................. $(8,143) $ 2,288 $ 4,406 $ 3,088
Adjustments to reconcile net income (loss) to
net cash (used in) provided by operating activities:
Depreciation...................................activ-
ities:
Depreciation................................ 1,238 776 558
378
Amortization...................................Amortization................................ 484 166 221
254
Deferred taxes.................................taxes.............................. (471) (310) 4
(277)Lower of cost or market and other inventory
adjustments................................ 1,777 -- --
Acquired in process research and development
costs and write down of goodwill and other
intangibles................................ 7,063 -- --
Changes in assets and liabilities:
Accounts receivable............................receivable........................... 639 3,193 (3,371)
(3,599)
Inventories, net...............................net.............................. (4,595) (2,179) 626
(935)
Prepaid expenses...............................expenses.............................. (33) (61) 36 (83)
Accounts payable and accrued expenses..........expenses......... 1,296 (2,665) 1,808
1,965
Income taxes payable...........................payable.......................... (184) (91) 544
438
Other current assets...........................assets.......................... (469) (84) 171
188
Other assets...................................assets, net............................. -- 9 -- --
------- ------- -------
Total adjustments............................adjustments......................... 6,745 (1,246) 597 (1,671)
------- ------- -------
Cash (used in) provided by operating
activities........activities............................... (1,398) 1,042 5,003
1,417
Investing activities:
Acquisition, net of cash acquired............. (6,079) -- --
Acquisition of machinery and equipment.........equipment........ (1,768) (992) (728)
(918)Proceeds from sale of machinery and
equipment.................................... 17 -- --
Increase in software development costs and
other assets..................................costs........ (383) (243) (117) (211)
------- ------- -------
Cash used in investing activities............activities......... (8,213) (1,235) (845) (1,129)
Financing activities:
Loan to officer................................officer............................... -- (140) -- --
Net proceeds from issuance of common stock.....stock.... 450 345 636
110Reduction of borrowings of working line of
capital...................................... (477) -- --
Reductions of capital lease obligations........obligations....... (15) (13) (12) (83)
------- ------- -------
Cash (used in) provided by financing
activities........activities............................... (42) 192 624
27
------- ------- -------
Effect of exchange rate changes........... 2 -- --
Net increase (decrease) in cash and cash
equivalents.................................equivalents.............................. (9,651) (1) 4,782 315
Cash and cash equivalents at the beginning of
the year............................................year....................................... 14,082 14,083 9,301 8,986
------- ------- -------
Cash and cash equivalents at the end of the
year............................................year........................................... $ 4,431 $14,082 $14,083
$ 9,301
======= ======= -------
Supplemental information:
Noncash investing and financing activities:
Capital lease obligations incurred........... -- -- $ 69 =======

See notes to consolidated financial statements

2024

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(ALL TABULAR AMOUNTS IN THOUSANDS EXCEPT SHARE AND PER SHARE AMOUNTS)

NOTE A--NATURE OF BUSINESS

Aseco Corporation (the "Company") designs, manufactures and markets test
handlers used to automate the testing of surface mount integrated circuits,
integrated circuit packages.lead inspection equipment and wafer handling and wafer
inspection equipment. The Company markets its products principally in North
America, the Asia Pacific region and Western Europe and sells its products
principally to integrated circuit manufacturers.

(See Note M--Subsequent Events)

NOTE B--SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation: The consolidated financial statements include
the accounts of the Company and its wholly-ownedwholly owned subsidiaries. All
intercompany balances and transactions are eliminated.

Use of Estimates: The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the amounts reported in the
consolidated financial statements and accompanying notes. Actual results could
differ from those estimates.

Cash and Cash Equivalents: The Company considers all highly liquid
investments with maturities of three months or less at the time of purchase to
be cash equivalents.

The Company invests its excess cash in high quality commercial paper ($7,212,8830 at
March 29, 1998 and $7,213,000 at March 30, 1997 and $6,997,521 at March 31, 1996)1997) and money market funds
($1,943,278885,000 at March 29, 1998 and $1,943,000 at March 30, 1997 and $1,714,706 at March 31, 1996)1997), all of which
are cash equivalents as of March 30, 1997.fiscal year end. Management determines the
appropriate classification of these investments at the time of purchase as
either held-to-maturity, available-for-sale or trading and re-evaluates such
designation at each balance sheet date. Given the short-term nature of the
Company's investments at March 30, 199729, 1998 and their availability for use in the
Company's current operations, these amounts are considered to be available-
for-sale. Available-for-sale securities are carried at fair market value and
unrealized gains or losses are reported as a separate component of
stockholders' equity. At March 30, 199729, 1998 and March 31, 1996,30, 1997, the cost of the
Company's investments in cash equivalents approximated their fair market
value.

Inventories: Inventories are stated at the lower of cost or market, using
the first-in, first-out method to determine cost.

Plant and Equipment: Plant and equipment are stated at cost. Depreciation is
provided using the straight linestraight-line method over the estimated useful lives of the
applicable assets which isare generally three to seven years. Leasehold
improvements and equipment under capital leases are being amortized over the
lives of the leases.

The Company adopted Statement of Financial Accounting Standards (SFAS) No.
121, "Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed Of" effective as of the beginning of fiscal 1997. This adoption
had no material affect on the Company's financial statements.

Intangible Assets and Goodwill: The Company has certain intangible assets
including software development costs, developed technology and goodwill. The
Company amortizes these assets over their estimated useful lives as follows:

Software development costs....................................... 3 years
Developed technology, goodwill and others........................ 15 years

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Accumulated amortization associated with these assets was $1,604,000 and
$151,000 at March 29, 1998 and March 30, 1997, respectively. In determining
the value of impaired goodwill, the Company has adopted the use of estimated
future discounted cash flows as the method for estimating the related write-
down.

Warranty Costs: Estimated warranty costs are accrued upon shipment of
product.

Revenue Recognition: Revenue is recognized generally upon shipment of
product, and when special contractual criteria apply, upon acceptance.

Earnings Per Share: Earnings per share data are computed usingIn the weighted
average numberthird quarter of sharesfiscal 1998, the Company adopted
Statement of common stock and common stock equivalents during
each year. Common stock equivalents include options

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

to purchase shares of common stock and are computed using the treasury stock
method. Fully diluted earnings per share do not differ materially from primary
earnings per share.

In February 1997, the Financial Accounting Standards Board (FASB) issued
Statement No. 128 "Earnings Per Share" (SFAS
128) which is required to be adopted forreplaced the quarter ending December 28, 1997. At that time, the Company will be required
to change the method currently used to compute earnings per sharepreviously reported primary and to
restate all prior periods. Under the new requirements for calculating primary
earnings per share, the dilutive effect of stock options will be excluded. The
impact is expected to result in an increase in primary earnings per share for
the first quarter ended June 29, 1997 and June 30, 1996 of approximately $.01
per share for each quarter. The impact of Statement 128 on the calculation of fully diluted earnings
per share with basic and diluted earnings per share. Unlike primary earnings
per share, basic earnings per share excludes the dilutive effects of options,
warrants, and convertible securities. Diluted earnings per share is very
similar to the previously reported fully diluted earnings per share. All
earnings per share amounts for these quarters is not expectedall periods have been presented, and where
necessary, restated to be
material.conform to the SFAS 128 requirements. The effect of
dilutive stock options on the total shares used to compute diluted earnings
per share was 77,000 in fiscal 1998 and 234,000 in fiscal 1997.

Stock Based Compensation: The Company has elected to follow Accounting
Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
(APB 25) and related Interpretations in accounting for its stock-based
compensation plans, rather than the alternative fair value accounting provided
for under Financial Accounting Standards Board Statement No. 123, "Accounting
for Stock-Based Compensation." Under ABP 25, for those options granted in
which the exercise price equals or exceeds the market price of the underlying
stock on the date of grant, no compensation expense is recognized.

Recent Accounting Pronouncements: In July 1997, the Financial Accounting
Standards Board issued Statement No. 130 (SFAS 130) "Reporting Comprehensive
Income" which establishes standards for reporting and display of comprehensive
income and its components in a full set of general-purpose financial
statements. Under this standard, certain revenues, expenses, gains and losses
recognized during the period are included in comprehensive income, regardless
of whether they are considered to be results of operations of the period. SFAS
130, which becomes effective for the Company in the first quarter of fiscal
1999, is not expected to have a material impact on the consolidated financial
statements of the Company. Presently, the only additional item to be included
in comprehensive income is the Company's cumulative translation adjustment.

In June 1997, the Financial Accounting Standards Board issued Statement No.
131 (SFAS 131) "Disclosures About Segments of an Enterprise and Related
Information" which establishes standards for the way that public companies
report selected information about operating segments in annual financial
statements and requires that those companies report selected information about
operating segments in interim financial reports to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. This statement becomes effective for the
Company in the first quarter of fiscal 1999. The Company is in the process of
assessing the impact of SFAS 131 on its footnote disclosures.

NOTE C--INVENTORIES, NET

Net inventories consisted of the following:

MARCH 29, MARCH 30,
MARCH 31,1998 1997 1996
--------- ---------

Raw materials..........................................materials............................................ $ 5,612 $4,996 $3,491
Work in process........................................process.......................................... 4,712 1,612
2,218
Finished goods.........................................goods........................................... 1,551 2,630
1,350------- ------
------$11,875 $9,238
$7,059
============= ======

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE D--PLANT AND EQUIPMENT

Plant and equipment consisted of the following:

MARCH 29, MARCH 30,
MARCH 31,1998 1997 1996
--------- ---------

Machinery and equipment................................equipment.................................. $4,365 $2,289 $2,082
Office furniture and equipment.........................equipment........................... 3,602 2,203 1,446
Property under capital lease...........................lease............................. 578 578
Leasehold improvements.................................improvements................................... 251 109 81
------ ------
8,796 5,179 4,187
Less accumulated depreciation and amortization ........amortization........... 4,755 2,952 2,176
------ ------
$4,041 $2,227 $2,011
====== ======

During the year ended March 29, 1998, the Company transferred approximately
$790,000 of equipment from inventory to fixed assets for use as manufacturing
test equipment.

NOTE E--INDEBTEDNESS

The Company has a revolving credit facility with a bank which expires on
September 1, 1997.1998. Under the facility, the Company may borrow up to $5,000,000
on an unsecured basis, conditioned upon meeting certain financial covenants,
including maintaining specified levels of quarterly and annual earnings,
tangible net worth 22

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

and restrictions on dividend payments. Borrowings bear
interest at the bank's prime rate which was 8.5% at March 30, 1997.29, 1998. There were
no borrowings outstanding at March 30, 199729, 1998 and March 31, 1996.30, 1997.

Cash payments of interest were approximately $119,000, $7,000, $14,000, and $ 3,000$14,000
for the years ended March 29, 1998, March 30, 1997, and March 31, 1996 April 2, 1995,
respectively.

NOTE F--LEASES

The Company leases a building in Marlboro, Massachusetts for its corporate
and test handler manufacturing activities. The Company also leases facilities
in Plymouth, England for its wafer handling and inspection manufacturing
activities and a sales officeoffices in Santa Clara, California.California and Singapore.

The operating lease for the Massachusetts facility expires in the year 2000,
subject to the Company's option to extend the term for an additional threethree-
year period. Rent expense for this lease is approximately $350,000 per year.
In addition, the lease is subject to escalation for increases in operating
expenses and real estate taxes. The operating lease for the Company's facility
in Plymouth, England expires in November 2002, subject to the Company's option
to extend the term through 2012. Rent expense for the lease is approximately
$109,000 per year through December 1999 and $150,000 per year through December
2002.

The Company also leases equipment under capital and non-cancelable operating
leases expiring through the year 2001.

The following is a schedule of required minimum lease payments under capital
and operating leases at March 30, 1997:29, 1998:

CAPITAL OPERATING
LEASES LEASES
------- ---------

1998..................................................... 17 387
1999..................................................... 17 405
2000.....................................................1999....................................................... $27 $ 569
2000....................................................... 13 412
2001.....................................................583
2001....................................................... -- 34
----210
2002....................................................... -- 152
2003....................................................... -- 101
--- ------
Total minimum lease payments............................. 47 $1,238payments............................... 40 $1,615
======
Less amounts representing interest....................... (5)
----interest......................... (2)
---
Present value of minimum lease payments.................. $ 42
====payments.................... $38
===

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Total rent expense for the years ended March 29, 1998, March 30, 1997, and
March 31, 1996 and
April 2, 1995 was approximately $510,000, $372,000, $450,000, and $459,000,$450,000,
respectively.

NOTE G--STOCKHOLDERS' EQUITY

The Board of Directors may, at its discretion, designate one or more series
of preferred stock and establish the voting, dividend, liquidation, and other
rights and preferences of the shares of each series, and provide for the
issuance of shares of any series. At March 30, 1997,29, 1998, no shares of preferred
stock were outstanding.

NOTE H--STOCK PLANS AND EMPLOYEE BENEFITS

1986 Incentive Stock Plan: The Company's 1986 Incentive Stock Option Plan
(the "1986 Plan") provides for the issuance of up to an aggregate of 416,666
shares of common stock upon the exercise of incentive stock options granted to
employees of the Company. The exercise price of options granted under the 1986
Plan must be at least equal to the fair market value of the underlying shares
of common stock at the time of grant. Options are exercisable either in full
immediately, or in installments, as the Board of Directors may determine. No
additional options may be granted under this Plan.

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

the Company for the purchase of up to an aggregate of 165,000 shares of common
stock. Under the Director Plan, each non-employee director is entitled to
receive, when first elected to serve as a director, an option to purchase
15,000 shares. In addition, each non-employee director is entitled to receive
on April 30 of each year an option to purchase 2,500 shares. The exercise
price of the options is equal to the fair market value of the underlying
common stock on the date of grant. Options granted under the plan may only be
exercised with respect to vested shares. One-half of the shares subject to
such options vest on the first anniversary of the date of the grant and the
balance vest on the second anniversary of the grant.

Omnibus Stock Plan: The Company's 1993 Omnibus Stock Plan ( the(the "Omnibus
Plan") is administered by the Compensation Committee of the Board of Directors
and provides for the issuance of up to 1,230,000 shares of common stock
pursuant to the exercise of options or in connection with awards or direct
purchases of stock. Options granted under the Omnibus Plan may be either
incentive stock options or non-qualified stock options. Incentive stock
options may only be granted under the Omnibus Plan to employees and officers
of the Company. Non-qualified stock options may be granted to, awards of stock
may be made to, and direct purchases of stock may be made by, employees,
officers, consultants or directors of the Company. The terms of the awards or
grants, including the number of shares, the duration and rate of exercise of
each option, the option price per share, and the determination of any
restrictions to be placed on the grants or awards, are determined by the
Compensation Committee of the Board of Directors.

Non-Employee Director Stock Option Plan: The Company's 1993 Non-Employee
Director Stock Option Plan (the "Director Plan") provides for the grant of
non-qualified stock options to non-employee directors of the Company for the
purchase of up to an aggregate of 165,000 shares of common stock. Under the
Director Plan, each non-employee director is entitled to receive, when first
elected to serve as a director, an option to purchase 15,000 shares. In
addition, each non-employee director is entitled to receive on April 30 of
each year an option to purchase 2,500 shares. The exercise price of the
options is equal to the fair market value of the underlying common stock on
the date of grant. Options granted under the plan may only be exercised with
respect to vested shares. One-half of the shares subject to such options vest
on the first anniversary of the date of the grant and the balance vest on the
second anniversary of the grant.

The following is a summary of activity with respect to the Company's stock
option plans:

WEIGHTED
AVERAGE
OPTIONS EXERCISE
-------- --------

Outstanding at April 3, 1994.............................. 432,400 $ 4.45
Granted................................................. 29,000 7.17
Exercised............................................... (7,400) 1.46
Canceled................................................ (11,100) 6.92
-------- ------
Outstanding at April 2, 1995.............................. 442,900 $ 4.59
Granted................................................. 477,000 17.76
Exercised............................................... (157,400) 3.04
Canceled................................................ (18,000) 7.17
-------- ------
Outstanding at March 31, 1996............................. 744,500 13.30
Granted................................................. 458,000 10.37
Exercised............................................... (33,400) 5.67
Canceled................................................ (449,000) 17.72
-------- ------
Outstanding at March 30, 1997............................. 720,100 8.91
Granted................................................. 317,500 9.92
Exercised............................................... (38,600) 6.16
Canceled................................................ (130,200) 10.11
-------- ------
Outstanding at March 29, 1998............................. 868,800 $ 8.919.33
======== ======

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

As of March 29, 1998, March 30, 1997, and March 31, 1996, and April 2, 1995, there were
outstanding options exercisable for approximately 538,000, 430,000, 393,000, and
224,000,393,000, respectively. As of March 30, 1997,29, 1998, shares available for future grant
were 90,00094,000 shares in the Director Plan and 497,000305,700 shares in the Omnibus
Plan. No additional shares were available for grant in the 1986
Plan.

The range of exercises prices for options outstanding at March 30, 199729, 1998 was
$.29-$.29--$18.69. The range of exercise prices is wide due to the inclusion of
options granted at a lower fair market value in years preceding the Company's
initial public offering in March 1993.

In fiscal 1997, 391,000 options outstanding under the Company's 1993 Omnibus
Stock Plan having an exercise price of $18.69 per share were cancelled and
290,250 new shares were issued at a price of $10.38 per 24

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

share representing the
fair value on the date of issuance. All other terms of these options,
including the vesting period associated with each option remained the same.

The following table summarizes information about options outstanding at
March 30, 1997:29, 1998:

WEIGHTED
WEIGHTED WEIGHTED AVERAGE
RANGE OF OPTIONS AVERAGE OPTIONS AVERAGE WEIGHTED AVERAGE
EXERCISE PRICESCONTRACTUAL
XERCISE PRICESE OUTSTANDING PRICE EXERCISABLE PRICE CONTRACTUAL LIFE
- --------------- ----------- -------- ----------- -------- ---------------------------

$ .29-$ .48 8,300.48............ 1,000 $ .46 8,300.38 1,000 $ .46 4 years.38 2 Years
$ 5.38-$ 9.88 309,6009.94............ 498,200 $ 6.76 229,4008.12 275,000 $ 5.756.75 6 Years
$10.38-$18.69............ 369,600 $10.98 262,000 $10.96 8 years
$10.38-$18.69 402,200 $10.97 192,300 $11.02 9 yearsYears
------- -------
720,100 430,000
======= =======868,800 538,000

Employee Stock Purchase Plan: The Company's Employee Stock Purchase Plan
(the "Purchase Plan") is administered by the Board of Directors or by its
designee (the "Administrator") and entitles employees of the Company to
purchase shares of the Company's common stock through payroll deductions over
offering periods specified by the Administrator. Shares may be purchased at a
price equal to the lesser of 85% of the fair market value of the common stock
on the first day of the offering period, or 85% of the fair market value of
the common stock on the last day of the offering period. A total of 100,000
shares have been reserved for issuance under the Purchase Plan. During fiscal
19971998 and 1996,1997, a total of approximately 19,60028,600 and 16,80019,600 shares of common
stock, respectively, were issued under this plan. Shares available for future
grant were approximately 46,60018,000 shares.

Disclosure of pro forma information regarding net income and earnings per
share is required by FASB Statement No. 123 "Accounting for Stock-Based
Compensation", and has been determined as if the Company had accounted for its
employee stock plans under the fair value method of that Statement. The fair
value for these options was estimated at the date of grant using a Black-
Scholes option pricing model with the following weighted-average assumptions
for fiscal years 1998, 1997 and 1996, respectively: risk-free interest rates
of 6.28%, 4.73% and 5.97%; dividend yields of 0% in bothall years; volatility
factors of the expected market price of the Company's common stock of .475,
.485 and .520; and a weighted-average expected life of the options of 4, 3 and
5 years.

The Black-Scholes option valuation model was developed for use in estimating
the fair value of traded options which have no vesting restrictions and are
fully transferable. In addition, option valuation models require the input of
highly subjective assumptions including the expected stock price volatility.
Because the Company's employee stock options have characteristics
significantly different from those of traded options, and because changes in
the subjective input assumptions can materially affect the fair value
estimate, in management's opinion, the existing models do not necessarily
provide a reliable single measure of the fair value of its employee stock
options.

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The weighted average grant date fair value of options granted during fiscal
1998, 1997 and 1996 was $4.34, $4.12 and $9.21, respectively. The weighted
average grant date fair value of options associated with the Company's
Employee Stock Purchase Plan for fiscal 1998, 1997 and 1996 was $1.17, $1.47
and $2.42, respectively.

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

For purposes of pro forma disclosures, the estimated fair value of the
options is amortized to expense over the options' vesting period. The
Company's pro forma information follows:

MARCH 29, MARCH 30,
MARCH 31,1998 1997 1996
--------- ---------

Pro forma net income...................................income (loss).............................. $(9,165) $1,633 $3,741
Pro forma earnings (loss) per share...........................share...................... $ (2.48) $ .44 $ .99

Savings Plan: Under the Company's Savings Plan (the "401(k) Plan"), eligible
employees are permitted to make pre-tax contributions up to 15% of their
salary, subject to certain limitations imposed by Section 401(k) of the
Internal Revenue Code. In addition, employees may contribute up to 10% of
their salary to the 401(k) Plan on an after tax basis. The Company may, but is
not required to, contribute for the benefit of the employees of the Company an
amount determined each year by the Company. For the years ended March 29,
1998, March 30, 1997, and March 31, 1996, and April 2, 1995 the Company contributed
approximately $131,000, $110,000, $80,000 and $40,000,$80,000, respectively to the 401(k)
Plan.

Stockholder Rights Plan: On August 15, 1996, the Board of Directors adopted
a Stockholder Rights Plan. Pursuant to the Stockholder Rights Plan, each share
of common stock has an associated right. Under certain circumstances, each
right entitles the holder to purchase from the Company one one-thousandth of a
share of junior preferred stock at an exercise price of $55.00 per one one-
thousandth of a share, subject to adjustment.

The rights are not exercisable and cannot be transferred separately from the
common stock until ten days after a person acquires or obtains the right to
acquire 15% or more or makes a tender offer for 30% or more of the Company's
common stock. Upon exercise, each right will entitle the holder to purchase,
in lieu of preferred stock, at the right exercise price, common stock having a
value of two times the exercise price of the right. In addition, if the
Company is either (i) acquired in a merger or other business combination in
which the Company is not the surviving entity, or (ii) sells or transfers 50%
or more of its assets or earning power to another party, each right will
entitle its holder to purchase, upon exercise, common stock of the acquiring
Company having a value equal to two times the exercise price of the right.

The rights have certain anti-takeover effects, in that they would cause
substantial dilution to a person or group that attempts to acquire a
significant interest in the Company on terms not approved by the Board of
Directors. The rights expire on August 15, 2006 but may be redeemed by the
Company for $.01 per right at any time prior to the tenth day following a
person's acquisition of 15% or more of the Company's common stock. So long as
the rights are not separately transferable, the Company will issue one right
with each new share of common stock issued.

2630

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE I--INCOME TAXES

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components
of the Company's deferred tax liabilities and assets as of March 30, 199729, 1998 and
March 31, 199630, 1997 are as follows:

1998 TOTAL CURRENT NON-CURRENT
---- ------ ------- -----------

Deferred tax liabilities:
Tax over book depreciation................... $ (398) $(398)
Capitalized software......................... (196) (196)
Capital vs. operating lease.................. (78) $ (78)
Other........................................ (32) (32)
------ ------ -----
Total deferred tax liabilities................. (704) (110) (594)
Deferred tax assets:
Asset valuation allowances................... 1,384 1,384
Product warranty............................. 152 152
Net operating loss carryforwards............. 571 571
Other........................................ 368 291 77
------ ------ -----
Total deferred tax assets...................... 2,475 1,827 648
Valuation allowance for deferred tax assets.... (762) (114) (648)
------ ------ -----
Net deferred tax assets........................ 1,713 1,713 --
------ ------ -----
Net deferred tax assets (liabilities).......... $1,009 $1,603 $(594)
====== ====== =====

1997 TOTAL CURRENT NON-CURRENT
---- ------ ------- -----------

Deferred tax liabilities:
Tax over book depreciation....................depreciation................... $ (308) $(308)
Capitalized software..........................software......................... (157) (157)
Capital vs. operating lease...................lease.................. (98) $ (98)
Other.........................................Other........................................ (35) (35)
------ ------ -----
Total deferred tax liabilities..................liabilities................. (598) (133) (465)
Deferred tax assets:
Asset valuation allowances....................allowances................... 1,013 1,013
Product warranty..............................warranty............................. 62 62
Other.........................................Other........................................ 61 61
------ ------
Total deferred tax assets.......................assets...................... 1,136 1,136
------ ------ -----
Net deferred tax assets (liabilities)..................... $ 538 $1,003 $(465)
====== ====== =====

1996 TOTAL CURRENT NON-CURRENT
---- ------ ------- -----------

Deferred tax liabilities:
Tax over book depreciation.................... $ (247) $(247)
Capitalized software.......................... (123) (123)
Capital vs. operating lease................... (97) $ (97)
Other......................................... (33) (33)
------ ------ -----
Total deferred tax liabilities.................. (500) (130) (370)
Deferred tax assets:
Asset valuation allowances.................... 555 555
Product warranty.............................. 113 113
Other......................................... 60 60
------ ------
Total deferred tax assets....................... 728 728
------ ------ -----
Net deferred tax assets (liabilities)........... $ 228 $ 598 $(370)
====== ====== =====

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

Significant components of the provision (benefit) for income taxes are as
follows:

YEAR ENDED
---------------------------------------------------------
MARCH 29, MARCH 30, MARCH 31,
APRIL 2,1998 1997 1996
1995
--------- --------- -----------------

Current federal tax.............................tax............................ $ 318 $1,211 $2,106
$1,416
Current state tax...............................tax.............................. 14 102 438
174
Deferred federal tax............................tax........................... (451) (258) (3)
(214)
Deferred state tax .............................tax............................. (20) (52) (1)
(63)----- ------ ------
------$(139) $1,003 $2,540
$1,313
=========== ====== ======

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The reconciliation of income tax computed at the U.S. federal statutory rate
to income tax expense is as follows:

YEAR ENDED
---------------------------------------------------------
MARCH 29, MARCH 30, MARCH 31,
APRIL 2,1998 1997 1996
1995
--------- --------- -----------------

Tax at U.S. statutory rates.................... 34.0%rates.................. (34.0%) 34.0% 34.0%
State income taxes, net of federal benefit.....benefit... -- 3.1 4.6
4.4
Foreign sales corporation......................corporation.................... (1.6%) (3.7) (2.7)
(2.4)
Tax credits....................................credits.................................. (.8%) (4.9) (1.1)
(6.3)Acquired in-process research and
development................................. 25.0% -- --
Non deductible goodwill and other
intangibles................................. 4.6% -- --
Unbenefitted foreign net operating losses.... 4.8% -- --
Other, net.....................................net................................... .3% 2.0 1.8
.1------ ---- ----
----(1.7%) 30.5% 36.6%
29.8%
========== ==== ====

During the year ended March 30, 199729, 1998 the Company recorded a tax benefit of
approximately $64,000$112,000 related to the exercise of non-qualified stock options
which amounts have been credited to additional paid-in capital.

The Company has foreign net operating losses of $2,700,000 which will
continue indefinitely. Of these carryforwards, $1,550,000 resulted from the
acquisition of WED, which have been reserved for as part of the valuation
allowance. When realized, the tax benefit for these items will be applied to
reduce goodwill and other intangibles related to the acquisition.

Income taxes paid in the years ended March 29, 1998, March 30, 1997, and
March 31, 1996, were $827,000, $1,404,000, and April 2, 1995 were $1,404,000, $2,010,000, and $1,152,000, respectively.

NOTE J--ACCRUED EXPENSES

Accrued expenses consist of the following:

MARCH 29, MARCH 30,
MARCH 31,1998 1997 1996
--------- ---------

Accrued commissions...................................... $1,199 $1,467 $2,187
Accrued compensation and benefits........................ 1,215 595
1,088Accrued warranty......................................... 823 --
Other.................................................... 1,649 546 648
------ ------
$4,886 $2,608 $3,923
====== ======

28During 1998 the Company accrued approximately $500,000 related to costs
associated with the layoff of 40 employees, which are included in selling,
general and administrative expense in the accompanying Statement of
Operations.

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE K--SEGMENT, GEOGRAPHIC, CUSTOMER INFORMATION AND CONCENTRATION OF CREDIT
RISK

The Company operates in one industry segment.segment and in two major geographic
areas. Information on the Company's industry segments and geographic
operations is set forth in the table below.

MARCH 29, 1998 NET SALES OPERATING LOSS IDENTIFIABLE ASSETS
-------------- --------- -------------- -------------------

Domestic Operations............. $41,855 $ (202) $29,461
European Operations............. 2,391 (8,209) 4,230
------- ------- -------
Total......................... $44,246 $(8,411) $33,691
======= ======= =======

Prior to fiscal 1998 the Company operated in one geographic area.

Export sales from the United States were approximately as follows:

YEAR ENDED
---------------------------------------------------------
MARCH 29, MARCH 30, MARCH 31,
APRIL 2,1998 1997 1996
1995
--------- --------- -----------------

Pacific Rim.....................................Rim.................................... $13,094 $14,785 $12,845
$10,026
Europe..........................................Europe......................................... 2,697 2,512 3,567
1,983
Other...........................................Other.......................................... 308 528 984 270
------- ------- -------
$16,099 $17,825 $17,396 $12,279
======= ======= =======

The Company sells its products principally to integrated circuit
manufacturers. The Company performs periodic credit evaluations of its
customers' financial condition, and historically, credit losses have been
small. The Company's accounts receivable included balances owed by two
customers which represented 16% and 26% of total trade accounts receivable as
of March 29, 1998, and two customers which represented 11% and 18% of total
trade accounts receivable as of March 30, 1997,1997.

Two customers accounted for 23% and one customer which represented 18%16% of total trade
accounts receivable as ofnet sales for the year ended
March 31, 1996.29, 1998. One customer accounted for 17% of net sales for the year ended
March 30, 1997. One customer accounted for 12% of net sales for the year ended
March 31, 1996.

No single customerNOTE L--ACQUISITION AND WRITEDOWN OF GOODWILL AND RELATED INTANGIBLES

On May 23, 1997, the Company acquired 100% of the outstanding stock of
Western Equipment Developments (Holdings) Ltd. ("WED"), located in Plymouth,
England, for approximately $6,100,000 in cash. WED designs, manufacturers and
markets integrated circuit wafer handling robot and inspection systems used to
load, sort, transport and inspect wafers during the semiconductor
manufacturing process. The acquisition was accounted for more than 10%as a purchase and
accordingly, the results of net salesoperations of the acquired business have been
included in the Company's consolidated financial statements commencing May 23,
1997.

The purchase price was allocated to the tangible and intangible assets
acquired and liabilities assumed based on their estimated fair values.
Intangible assets acquired consisting of developed technology, and acquired
in-process research and development were valued using risk adjusted cash flow
models under which estimated future cash flows were discounted taking into
account risks related to existing and future target markets and to the
completion of the products expected to be ultimately marketed by the Company,
and assessments of the life expectancy of the underlying technology. The
Company's initial allocation of purchase price at the date of acquisition
resulted in an estimate of acquired in-process research and development of
$4,900,000 and developed technology, goodwill and other intangibles totaling
$3,005,000.

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

However, during fiscal 1998 the Company determined that certain acquired
technology was not as developed as originally expected, and certain in-process
technology would require more time to develop than originally anticipated. At
the end of fiscal 1998, the Company completed the allocation of the purchase
price and estimated the fair values of the acquired in-process research and
development, developed technology, goodwill and other intangibles using
estimated future discounted cash flows. The final allocation resulted in an
additional in-process research and development charge of $1,200,000 recorded
in the fourth quarter, resulting in an aggregate year ended April 2, 1995.to date charge of
$6,100,000. Since WED incurred operating losses in fiscal 1998 which were not
originally anticipated, the year end assessments for developed technology and
related goodwill indicated that the amounts originally recorded for these
assets would not be recovered and thus were impaired. Therefore, these assets
were written down to their estimated fair values, resulting in a separate
fourth quarter charge of $963,000, which is included in Selling, General and
Administrative expenses in the accompanying statement of operations.

The following table summarizes the unaudited pro-forma consolidated results
of operations as if the acquisition had been made at the beginning of each of
the periods presented.

MARCH 29, MARCH 30,
1998 1997
--------- ---------

Net sales............................................... $45,274 $39,303
Net loss................................................ (9,519) (4,878)
Earnings (loss) per share:.............................. $ (2.58) $ (1.31)

NOTE L--RELATEDM--RELATED PARTY TRANSACTIONS

On April 15, 1996, the Company loaned $140,000 to an executive officer, who
is also a director of the Company. The loan bears interest at the rate of
5.33% per annum, compounded annually, and is due and payable in full on the
earlier of the termination of the executive officer's employment with the
Company or April 15, 1999. The loan is secured by shares of the Company's
common stock owned by the executive officer.

NOTE M--SUBSEQUENT EVENTS

On May 23, 1997, the Company acquired 100% of the outstanding stock of
Western Equipment Developments (Holdings) Ltd. ("WED") in Plymouth, England
for approximately $6,000,000 in cash. WED designs, manufactures and markets
integrated circuit wafer handling robot systems used to load, sort and
transport wafers during inspection in the semiconductor manufacturing process.
The acquisition will be accounted for as a purchase and, accordingly, the
results of operations of the acquired business will be included in the
Company's consolidated financial statements commencing May 23, 1997. In
connection with the acquisition, the Company expects to allocate a portion of
the purchase price to in-process research and development resulting in a one-
time charge to operations of approximately $3.5-$4.3 million in the first
quarter of fiscal 1998. The following table summarizes the unaudited pro-forma
consolidated results of operations as if the acquisition had been made at the
beginning of each of the periods presented:

YEAR ENDED
-------------------
MARCH 30, MARCH 31,
1997 1996
--------- ---------

Net sales.............................................. $39,303 $48,013
Net income............................................. (3,078) 196
Earnings per share..................................... $ (.83) $ .05

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

NOTE N--SUPPLEMENTARY QUARTERLY FINANCIAL DATA (UNAUDITED)

The following is a summary of unaudited quarterly results for the fiscal
years ended March 30, 199729, 1998 and March 31, 1996.30, 1997.

FIRST SECOND THIRD FOURTH
FISCAL 1998 QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
------------- -------------- ------------- ------------------------- ------- ------- ------- -------

Net sales................................. $ 8,865 $11,557 $13,551 $10,273
Gross profit.............................. 4,045 5,304 6,113 2,023
Net income (loss)......................... (4,740) 418 488 (4,309)
------- ------- ------- -------
Earnings (loss) per share, diluted........ $ (1.29) $ .11 $ .13 $ (1.16)
======= ======= ======= =======

FIRST SECOND THIRD FOURTH
FISCAL 1997 QUARTER QUARTER QUARTER QUARTER
----------- ------- ------- ------- -------
Net sales...............sales................................. $11,001 $8,989$ 8,989 $ 6,722 $ 7,608
Gross profit............profit.............................. 5,387 4,184 3,127 3,509
Net income..............income................................ 1,275 538 234 241
------- ------- ------- -------
Earnings per share......share, diluted............... $ .34 $ .15 $ .06 $ .06

FIRST QUARTER SECOND QUARTER THIRD QUARTER FOURTH QUARTER
------------- -------------- ------------- --------------

FISCAL 1996
Net sales............... $ 9,136 $9,741 $10,998 $11,694
Gross profit............ 4,532 4,731 5,565 5,567
Net income.............. 926 1,053 1,165 1,262
Earnings per share...... $ .25 $ .28 $ .31 $ .34======= ======= ======= =======

3034

ASECO CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--(CONTINUED)

The results of the first quarter of the fiscal year ended March 29, 1998
include $4.9 million of acquired in process research and development costs
related to the Company's 1998 acquisition of WED. The results of the fourth
quarter of the year ended March 29, 1998 include 1) $1.8 million of charges
resulting from valuation adjustments for inventory being carried in excess of
normal replacement cost and the discontinuation of certain products, 2)
acquired in-process research and development costs totaling $1.2 million and
the writedown of goodwill and intangible assets totaling $963,000, related to
the Company's 1998 acquisition of WED and 3) approximately $500,000 of expense
related to the layoff of 40 employees.

Earnings (loss) per share amounts for fiscal 1997 and the first two quarters
of 1998 have been restated to comply with Statement of Accounting Standards
No. 128, "Earnings Per Share".

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

Not applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information required by this item is included in the Company's Proxy
Statement to be filed in connection with the Company's 19971998 Annual Meeting of
Stockholders to be held on August 6, 1997,11, 1998, under the section captioned
"Election of Directors"Officers" and is incorporated herein by reference thereto.

The information required by this item with respect to executive officers of
the Company is set forth under the caption "Executive Officers of the
Registrant" in Part I of this Report on Form 10-K.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this item is included in the Company's Proxy
Statement to be filed in connection with the Company's 19971998 Annual Meeting of
Stockholders to be held on August 6, 1997,11, 1998, under the section captioned
"Executive Officer Compensation" and is incorporated herein by reference
thereto.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this item is included in the Company's Proxy
Statement to be filed in connection with the Company's 19971998 Annual Meeting of
Stockholders to be held on August 6, 1997,11, 1998, under the section captioned "Stock
Ownership of Directors, Nominees, Executive Officers and Principal
Stockholders" and is incorporated herein by reference thereto.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS

On April 15, 1996, the Company loaned $140,000 to Sebastian J. Sicari, a
director and executive officer of the Company. The loan bears interest at the
rate of 5.33% per annum, compounded annually, and is due and payable in full
on the earlier of the termination of Mr. Sicari's employment with the Company
or April 15, 1999. At March 30, 1997,29, 1998, principal and accrued interest on the
loan totaled $147,384.$154,846. The loan is secured by shares of the Company's common
stock owned by Mr. Sicari.

3136

PART IV

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

(a)(A) 1. FINANCIAL STATEMENTS

The following consolidated financial statements are included in Item 8:

Consolidated Balance Sheets as of March 29, 1998 and March 30, 1997
Consolidated Statements of Operations for the years ended March 29,
1998, March 30, 1997, and March 31, 1996

Consolidated Statements of Income for the years ended March 30, 1997,
March 31, 1996, and April 2, 1995
Consolidated Statements of Changes in Stockholders' Equity for the
years ended March 29, 1998, March 30, 1997 and March 31, 1996 and April 2, 1995
Consolidated Statements of Cash Flows for the years ended March 29,
1998, March 30, 1997 and March 31, 1996

and April 2, 1995

(a)(A) 2. FINANCIAL STATEMENT SCHEDULES

PAGE
----

Schedule II--Valuation and Qualifying Accounts........................ F-1

All other schedules have been omitted since the required information is not
present or not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements or the notes thereto.

(a)(A) 3. LISTING OF EXHIBITS

EXHIBIT NO. DESCRIPTION
----------- -----------

*3.2 Third Restated Certificate of Incorporation of the CompanyCompany.
3.3 Amended and Restated By-laws of the Company, filed as Exhibit
4.2 to the Registration Statement on Form S-8 (SEC File No.
333-18337) filed with the Commission on December 19, 1996 and
incorporated herein by reference.
4.2 Rights Agreement dated August 15, 1996 between the Company and
State Street Bank & Trust Company as Rights Agent (including
the exhibits thereto), incorporated by reference from the
Company's Registration Statement on Form 8-A filed with the
Commission on August 26, 1996.
4.3 Amendment Number One to the Rights Agreement dated January 2,
1997 between the Company and American Stock Transfer & Trust
Company, filed as Exhibit 4.2 to the Company's Form 10-Q for
the quarter ended December 29, 1996 and incorporated herein by
reference.
*10.1 1986 Incentive Stock Option Plan.
**10.2 1993 Non-Employee Director Stock Option Plan, as amended and
restated as of October 18, 1996 filed herewith.
*10.3 1993 Employee Stock Purchase Plan.
10.4 1993 Omnibus Stock Plan, as amended and restated as of June
14, 1996, filed as Exhibit 10.1 to the Registration Statement
on Form S-8 (SEC File No. 333-18337) filed with the Commission
on December 19, 1996 and incorporated herein by reference.
*10.5 Lease dated April 13, 1993, between the Company and CIGNA
Investments, Inc.
*10.7 Letter Agreement dated November 27, 1992, between the Company
and Fleet Bank of Massachusetts, N.A.
10.9 Amended Letter Agreement dated July 30, 1993, between the
Company and Fleet Bank of Massachusetts, N.A., filed as an
exhibit to the Company's Form 10-K for the fiscal year ended
April 3, 1994 and incorporated herein by reference.reference
***10.10 Severance agreement, dated December 30, 1996, between the
Company and Carl S. Archer, Jr., filed herewith.

EXHIBIT NO. DESCRIPTION
----------- -----------

***10.11 Severance agreement, dated December 30, 1996, between the
Company and Sebastian J. Sicari
filed herewith.

EXHIBIT NO. DESCRIPTION
----------- -----------
***10.12 Form of Key Employee Stock Option Agreement, filed as Exhibit
10.12 to the Company's Form 10-K for the fiscal year ended
April 3, 1994 and incorporated herein by reference.
10.13 Amended Letter Agreement dated August 30, 1996,22, 1997, between the
Company and Fleet Bank of Massachusetts, N.A., filed as Exhibit
10.13 to the Company's Form 10-Q for the quarter ended September
29, 1996 and incorporated herein by reference.herewith.
10.14 Promissory Note between the Company and Sebastian J. Sicari
dated April 15, 1996 and filed as Exhibit 10.1410.13 to the
Company's Form 10-Q for the quarter ended December 29, 1996 and incorporated
herein by reference.1996.
10.15 Pledge Agreement between the Company and Sebastian J. Sicari
dated April 15, 1996, filed as Exhibit 10.15 to the Company's
Form 10-Q for the quarter ended December 29, 1996 and
incorporated herein by reference.
***10.16 Severance agreement, dated March 18, 1997, between C. Kenneth
Gray and the Company
filed herewith.
***10.17 Severance agreement, dated December 30, 1996, between Dennis
A. Legal and the Company
***10.18 Severance agreement, dated April 21, 1998, between Phillip J.
Villari and the Company, filed herewith.
***10.19 Severance agreement, dated October 16, 1997, between Mary R.
Barletta and the Company, filed herewith.
10.20 Share Purchase Agreement dated as of May 23, 1997 by and among
the Company and each of the shareholders of Western Equipment
Developments (Holdings) Limited filed as Exhibit 2.1 to the
Company's Form 8-K dated May 23, 1997.
10.21 Tax Deed dated May 23, 1997 by and among the company and
certain shareholders of Western Equipment Developments
(Holdings) Limited filed as Exhibit 2.2 to the Company's Form
8-K dated May 23, 1997.
10.22 Escrow Agreement dated as of May 23, 1997 by and among the
Company and David Carr and Philip Steven Walsh as
representatives for certain shareholders of Western Equipment
Developments (Holdings) Limited filed as Exhibit 2.3 to the
Company's Form 8-K dated May 23, 1997.
21 Subsidiaries of the Company, filed herewith.
23.1 Consent of Ernst & Young LLP, filed herewith.
27 Financial Data Schedule, filed herewith.

- --------
* Incorporated by reference to the same exhibit number to the Registration
Statement on Form S-1 (SEC File No. 33-57644) filed with the Securities and
Exchange Commission on January 29, 1993.
** Incorporated by reference to the same exhibit number to the Company's Form
10K for its fiscal year ended March 30, 1997
*** Management contract or compensation plan or arrangement required to be
filed as an exhibit pursuant to Item 14( c)14(c) of Form 10-K.

(b)(B) REPORTS ON FORM 8-K

The Company filed no reports on Form 8-K with the Securities and Exchange
Commission during the fiscal quarter ended March 30, 1997.

3329, 1998.

SIGNATURES

PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED.

AsecoASECO Corporation

/s/ Carl S. Archer, Jr.
By: _________________________________
CARL S. ARCHER, JR.
PRESIDENT AND
CHIEF EXECUTIVE OFFICER
June 27, 1997JUNE 29, 1998

PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BELOW BY THE FOLLOWING PERSONS ON BEHALF OF THE
REGISTRANT AND IN THE CAPACITIES AND ON THE DATES INDICATED.

SIGNATURE TITLE(S) DATE

/s/ Carl S. Archer, Jr. President, Chief June 27, 1997
- ------------------------------------- Executive Officer
CARL S. ARCHER, JR. and Director
(Principal
Executive Officer)

/s/ Sebastian J. Sicari Vice President, June 27, 1997
- ------------------------------------- Finance and
SEBASTIAN J. SICARI Administration,
Chief Financial
Officer, Treasurer
and Director
(Principal
Financial and
Accounting Officer)

/s/ Dr. Sheldon Buckler Director June 27, 1997
- -------------------------------------
DR. SHELDON BUCKLER

/s/ Dr. Gerald Wilson Director June 27, 1997
- -------------------------------------
DR. GERALD WILSON

/s/ Dr. Sheldon Weinig Director June 27, 1997
SIGNATURE TITLE(S)
DATE

/s/ Carl S. Archer, Jr. Chief Executive June 29, 1998
- ------------------------------------- Officer and
CARL S. ARCHER, JR. Director (Principal
Executive Officer)

/s/ Sebastian J. Sicari President, Chief June 29, 1998
- ------------------------------------- Operating Officer,
SEBASTIAN J. SICARI Treasurer and
Director

/s/ Mary R. Barletta Vice President, June 29, 1998
- ------------------------------------- Chief Financial
MARY R. BARLETTA Officer (Principal
Financial and
Accounting Officer)

/s/ Dr. Sheldon Buckler Director June 29, 1998
- -------------------------------------
DR. SHELDON BUCKLER

/s/ Dr. Gerald Wilson Director June 29, 1998
- -------------------------------------
DR. GERALD WILSON

/s/ Dr. Sheldon Weinig Director June 29, 1998
- -------------------------------------
DR. SHELDON WEINIG
34

SCHEDULE II

ASECO CORPORATION

VALUATION AND QUALIFYING ACCOUNTS

TOTAL ADDITIONS
---------------------
BALANCE AT CHARGES TO
BEGINNING OF COSTS AND OTHER BALANCE AT
CLASSIFICATION YEAR EXPENSES CHANGES(1) DEDUCTIONS END OF YEAR
-------------- ------------ ---------- ---------- ---------- -----------

YEAR ENDED MARCH 29,
1998
Allowance for doubtful
accounts............. $ 407,000 $ 407,000 $ 325,000 $ 358,000 $ 781,000
YEAR ENDED MARCH 30,
1997
Allowance for doubtful
accounts...................... $397,000 $100,000 $90,000 $407,000accounts............. $ 397,000 $ 100,000 -- $ 90,000 $ 407,000
YEAR ENDED MARCH 31,
1996
Allowance for doubtful
accounts...................... $133,000 $264,000accounts............. $ 133,000 $ 264,000 -- $397,000-- $ 397,000
YEAR ENDED APRIL 2, 1995
Allowance for doubtful
accounts......................accounts............. $ 78,000 $ 55,000 -- $133,000-- $ 133,000

35- --------
(1) Represents the balance of the allowance for doubtful accounts of WED as of
the acquisition date May 23, 1997. (See Note L to Consolidated Financial
Statements.)

S-1