Asyst 10K/A 2006 Annual report (amended)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K/A

Amendment No. 3

(Mark One)


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

For the fiscal year ended March 31, 2006


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

Commission file number 0-22430

Asyst Technologies, Inc.

(Exact name of registrant as specified in its charter)


California		94-2942251
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

46897 Bayside Parkway, Fremont, California 94538
(Address of principal executive offices)

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

Securities registered pursuant to Section 12(b) of the Act:


Title of Each Class		Name of Each Exchange on Which Registered

Common Stock		The NASDAQ Stock Market LLC (NASDAQ Global Market)

Securities registered pursuant to Section 12(g) of the Act:
None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yeso Noþ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yeso Noþ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yesþ Noo

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filero Accelerated filerþ Non-accelerated filero

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yeso Noþ

The aggregate market value of the voting and non-voting common equity held by non-affiliates as reported by the NASDAQ Global Market as of the last business day (September 28, 2007) of the registrant’s most recently completed second fiscal quarter was $171,164,000, and as of the last business day (September 30, 2005) of the registrant’s fiscal 2006 second quarter was $223,507,000.

There were 49,693,855 shares of common stock, no par value, outstanding as of January 29, 2008.

ASYST TECHNOLOGIES, INC.
Explanatory Note:

This Form 10-K/A is filed as a further amendment (Amendment No. 3), to the Annual Report on Form 10-K for the year ended March 31, 2006 filed by Asyst Technologies, Inc. on October 13, 2006. In January 2007, subsequent to the filing of our Form 10-K for the year ended March 31, 2006, the Securities and Exchange Commission released additional guidance on the preparation of restated financial statements for errors in accounting for stock awards. In response to this guidance, we are providing additional disclosures of stock-based compensation expense in the form of the table appearing under PART II, Item 8, Note 2, “Results of Independent Directors’ Stock Option Investigation,” on page 11 of this Annual Report. The additional information provided in this Amendment reconciles stock-based compensation charges previously recorded along with the impact of these errors to the total restated stock-based compensation for all periods impacted. We are filing herewith (i) a currently dated Consent of Independent Registered Public Accounting Firm as Exhibit 23.1 and (ii) currently dated certifications in Exhibits 31.1, 31.2 and 32.1, all listed in the exhibit index below. Except as described above, no other changes have been made to the Annual Report, and this Form 10-K/A does not amend or update any other information contained in that original filing.

ASYST TECHNOLOGIES, INC.
TABLE OF CONTENTS


			Page No.
PART II
Item 8. Financial Statements and Supplementary Data			4
PART IV
Item 15. Exhibits, Financial Statement Schedules			44
Signatures			48
EXHIBIT 23.1
EXHIBIT 31.1
EXHIBIT 31.2
EXHIBIT 32.1

Item 8 —Financial Statements and Supplementary Data

Consolidated Financial Statements


			Page
Consolidated Balance Sheets			5
Consolidated Statements of Operations			6
Consolidated Statements of Shareholders’ Equity			7
Consolidated Statements of Cash Flows			8
Notes to Consolidated Financial Statements			9
Report of Independent Registered Public Accounting Firm			41

Financial Statement Schedule

Schedule II Valuation and Qualifying Accounts for the years ended March 31, 2006, 2005 and 2004 appear on page 122 of this Annual Report and should be read in conjunction with the consolidated financial statements and related notes thereto and the report of our independent registered public accounting firm filed herewith.

All other schedules are omitted because they are not applicable or the required information is shown in the Financial Statements or the notes thereto.

ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS


	March 31,
	2006			2005
	(As restated)
	(In thousands, except
	share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	94,622		$	55,094
Short-term investments		15,304			46,086
Accounts receivable, net		141,453			189,943
Inventories		33,219			33,515
Prepaid expenses and other current assets		26,831			33,971

Total current assets		311,429			358,609
Property and equipment, net		23,108			15,458
Goodwill		58,840			64,014
Intangible assets, net		19,334			40,898
Other assets		2,583			4,795

	$	415,294		$	483,774

LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term loans and notes payable	$	1,443		$	20,563
Current portion of long-term debt and capital leases		1,368			2,757
Accounts payable		75,376			83,913
Accounts payable-related parties		13,409			39,242
Accrued and other liabilities		62,902			70,645
Deferred margin		5,335			6,013

Total current liabilities		159,833			223,133

LONG-TERM LIABILITIES
Long-term debt and capital leases, net of current portion		87,168			88,750
Deferred tax liability		3,119			8,548
Other long-term liabilities		10,974			9,771

Total long-term liabilities		101,261			107,069

COMMITMENTS AND CONTINGENCIES (see Notes 13 and 15)
MINORITY INTEREST		66,521			63,855

SHAREHOLDERS’ EQUITY
Common stock, no par value:
Authorized shares — 300,000,000 Outstanding shares — 48,462,235 and 47,779,539 shares at March 31, 2006 and 2005, respectively		473,422			469,201
Deferred stock-based compensation		(1,319	)		(1,879	)
Accumulated deficit		(385,178	)		(385,074	)
Accumulated other comprehensive income		754			7,469

Total shareholders’ equity		87,679			89,717

Total liabilities, minority interest and shareholders’ equity	$	415,294		$	483,774

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

ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS


	Fiscal Year Ended March 31,
	2006			2005			2004
				(As restated)			(As restated)
	(In thousands, except per share data)
NET SALES	$	459,221		$	612,987		$	301,642
COST OF SALES		297,975			490,772			248,272

GROSS PROFIT		161,246			122,215			53,370

OPERATING EXPENSES:
Research and development		27,913			34,809			35,933
Selling, general and administrative		84,503			78,344			70,332
Amortization of acquired intangible assets		16,590			20,436			20,160
Restructuring and other charges (credits)		(46	)		1,810			6,581
Asset impairment charges		—			4,645			6,853

Total operating expenses		128,960			140,044			139,859

INCOME (LOSS) FROM OPERATIONS		32,286			(17,829	)		(86,489	)

INTEREST AND OTHER INCOME (EXPENSE), NET:
Interest income		2,527			1,722			815
Interest expense		(6,746	)		(6,747	)		(7,213	)
Other income (expense), net		5,172			4,296			(237	)

Interest and other income (expense), net		953			(729	)		(6,635	)

INCOME (LOSS) BEFORE BENEFIT FROM (PROVISION FOR) INCOME TAXES AND MINORITY INTEREST		33,239			(18,558	)		(93,124	)
BENEFIT FROM (PROVISION FOR) INCOME TAXES		(18,746	)		1,916			6,150
MINORITY INTEREST		(14,597	)		(1,101	)		4,358

NET LOSS	$	(104	)	$	(17,743	)	$	(82,616	)

BASIC AND DILUTED NET LOSS PER SHARE	$	(0.00	)	$	(0.37	)	$	(1.98	)

SHARES USED IN THE PER SHARE CALCULATION:
Basic and diluted		47,972			47,441			41,805

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

ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY


													Accumulated
							Deferred						Other
	Common Stock						Stock-Based			Accumulated			Comprehensive
	Shares			Amount			Compensation			Deficit			Income (Loss)			Total
				(As restated)			(As restated)			(As restated)						(As restated)
							(In thousands, except share data)
BALANCES, MARCH 31, 2003, as previously reported		38,412,031		$	332,569		$	(3,992	)	$	(265,248	)	$	4,705		$	68,034
Cumulative effect of restatement		—			18,713			(4,658	)		(19,467	)		—			(5,412	)

BALANCES, MARCH 31, 2003, as restated		38,412,031			351,282			(8,650	)		(284,715	)		4,705			62,622
Components of comprehensive loss:
Net loss		—			—			—			(82,616	)		—			(82,616	)
Foreign currency translation		—			—			—			—			3,748			3,748
Unrealized losses on investments		—			—			—			—			(9	)		(9	)

Total comprehensive loss											—						(78,877	)
Issuance of common stock from secondary stock offering, net of issuance costs of $5.7 million		6,900,000			98,945			—			—			—			98,945
Issuance of common stock under employee stock option and employee stock purchase plans		1,859,717			13,194			—			—			—			13,194
Deferred stock-based compensation related to stock option grants and the issuance of restricted stock to employees		—			2,279			(2,279	)		—			—			—
Tax benefit relating to stock options					2,213												2,213
Amortization of deferred stock-based compensation		—			—			2,900			—			—			2,900
Stock-based compensation expense relating to modification of stock options		—			189			—			—			—			189
Non-employee stock-based compensation		—			1,066			—			—			—			1,066
Reversal of deferred stock-based compensation due to forfeitures		(118,000	)		(3,262	)		3,262			—			—			—

BALANCES, MARCH 31, 2004, as restated		47,053,748			465,906			(4,767	)		(367,331	)		8,444			102,252
Components of comprehensive loss:
Net loss		—			—			—			(17,743	)		—			(17,743	)
Foreign currency translation		—			—			—			—			(842	)		(842	)
Unrealized losses on investments		—			—			—			—			(133	)		(133	)

Total comprehensive loss																	(18,718	)
Issuance of common stock under employee stock option and employee stock purchase plans		749,391			3,710			—			—			—			3,710
Deferred stock-based compensation related to issuance of restricted stock to employees		—			1,240			(1,240	)		—			—			—
Amortization of deferred stock-based compensation		—			—			2,376			—			—			2,376
Non-employee stock-based compensation		—			97			—			—			—			97
Reversal of deferred stock-based compensation due to forfeitures		(23,600	)		(1,752	)		1,752			—			—			—

BALANCES, MARCH 31, 2005, as restated		47,779,539			469,201			(1,879	)		(385,074	)		7,469			89,717
Components of comprehensive loss:
Net income		—			—			—			(104	)					(104	)
Foreign currency translation		—			—			—			—			(6,946	)		(6,946	)
Unrealized gains on investments		—			—			—			—			231			231

Total comprehensive loss																	(6,819	)
Issuance of common stock under employee stock option and employee stock purchase plans		682,696			2,611			—			—			—			2,611
Deferred stock-based compensation related to issuance of restricted stock to employees		—			1,389			(1,389	)		—			—			—
Amortization of deferred stock-based compensation		—			—			1,819			—			—			1,819
Non-employee stock-based compensation		—			351			—			—			—			351
Reversal of deferred stock-based compensation due to forfeitures		—			(130	)		130			—			—			—

BALANCES, MARCH 31, 2006		48,462,235		$	473,422		$	(1,319	)	$	(385,178	)	$	754		$	87,679

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

ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS


	Fiscal Year Ended March 31,
	2006			2005			2004
				(As restated)			(As restated)
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS	$	(104	)	$	(17,743	)	$	(82,616	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		23,339			28,442			28,843
Non-cash restructuring charges		—			—			190
Allowance for doubtful accounts		6,791			4,862			222
Asset impairment charges		—			4,645			6,853
Minority interest in net income (loss) of consolidated subsidiaries		14,597			1,101			(4,358	)
Loss on disposal of fixed assets		876			571			431
Stock-based compensation expense		2,170			2,473			4,155
Amortization of lease incentive payments		(208	)		—			—
Deferred taxes, net		(4,929	)		(15,439	)		(6,394	)
Changes in assets and liabilities, net of acquisitions:		—			—			—
Accounts receivable, net		29,081			(48,446	)		(59,370	)
Inventories		(2,046	)		(5,206	)		(2,392	)
Prepaid expenses and other assets		8,072			(5,645	)		1,222
Accounts payable, accrued liabilities and deferred margin		(33,929	)		32,644			45,401

Net cash provided by (used in) operating activities		43,710			(17,741	)		(67,813	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments		(34,985	)		(84,744	)		(38,462	)
Sales or maturity of investments		65,650			79,709			8,500
Release of restricted cash and cash equivalents		—			1,904			1,403
Purchases of property and equipment		(8,524	)		(4,152	)		(6,119	)
Net proceeds from sale of land		—			—			12,106
Net cash used in acquisitions		—			(31	)		(1,179	)

Net cash provided by (used in) investing activities		22,141			(7,314	)		(23,751	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit		429,573			279,885			—
Payments to line of credit		(441,973	)		(271,519	)		(25,000	)
Payments of short-term loans		—			—			(1,923	)
Dividends paid to minority shareholder of ASI		(5,939	)		—			—
Principal payments on long-term debt and capital leases		(8,312	)		(7,920	)		1,939
Proceeds from issuance of common stock		2,611			3,710			112,139

Net cash provided by (used in) financing activities		(24,040	)		4,156			87,155
Effect of exchange rate changes on cash and cash equivalents		(2,283	)		(414	)		(3,898	)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		39,528			(21,313	)		(8,307	)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		55,094			76,407			84,714

CASH AND CASH EQUIVALENTS, END OF YEAR	$	94,622		$	55,094		$	76,407

Supplemental disclosures:
Cash paid during the year for interest	$	6,229		$	5,690		$	6,751
Cash paid (received) during the year for income taxes, net of refunds	$	14,380		$	3,153		$	(573	)

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

ASYST TECHNOLOGIES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. Organization of the Company:

The accompanying consolidated financial statements include the accounts of Asyst Technologies, Inc., or Asyst, which was incorporated in California on May 31, 1984, our subsidiaries and our majority-owned joint venture. We develop, manufacture, sell and support integrated automation systems, primarily for the semiconductor and secondarily for the flat panel display (“FPD”) manufacturing industries.

In October 2002, we purchased a 51.0 percent interest in Asyst Shinko, Inc (“ASI”) a joint venture with Shinko Electric, Co. Ltd. (“Shinko”) of Japan.

On July 14, 2006, we purchased an additional 44.1% of outstanding capital stock of ASI (see Note 15)

In April 2003, our majority-owned joint venture, ASI, acquired that portion of Shinko that provides ongoing support to ASI’s North American Automated Material Handling Systems (“AMHS”) customers. ASI renamed this subsidiary Asyst Shinko America (“ASAM”).

The above transactions, which were unrelated, were accounted for using the purchase method of accounting. Accordingly, our Consolidated Statements of Operations and of Cash Flows for each of the years in the three-year period ended March 31, 2006 include the results of these acquired entities for the periods subsequent to the date of the respective acquisitions. We consolidate fully the financial position and results of operations of ASI and account for the minority interest in the consolidated financial statements.

2. Results of Independent Directors’ Stock Option Investigation

In May 2006, certain analysts published reports suggesting that Asyst may have granted stock options in the past with favorable exercise prices in certain periods compared to stock prices before or after grant date. In response to such reports, management began an informal review of the Company’s past stock option grant practices. On June 7, 2006, the SEC sent a letter to the Company requesting a voluntary production of documents relating to past option grants. On June 9, 2006, the Company’s Board of Directors appointed a special committee of three independent directors to conduct a formal investigation into past stock option grants and practices. The Special Committee retained independent legal counsel and independent forensic and technical specialists to assist in the investigation.

The Special Committee’s investigation was completed on September 28, 2006, with the delivery of the Committee’s final report on that date. The investigation covered option grants made to all employees, directors and consultants during the period from January 1995 through June 2006. The Special Committee found instances wherein incorrect measurement dates were used to account for certain option grants. The Special Committee concluded that none of the incorrect measurement dates was the result of fraud. The last stock option for which the measurement date was found to be in error was granted in February 2004.

Specifically, the Special Committee determined that (1) there was an insufficient basis to rely on the Company’s process and relating documentation to support recorded measurement dates used to account for most stock options granted primarily during calendar years 1998 through 2003, (2) the Company had numerous grants made by means of unanimous written consents signed by Board or Compensation Committee members wherein all the signatures of the members were not received on the grant date specified in the consents; (3) the Company made several company-wide grants pursuant to an approval of the Board or Compensation Committee, but the list of grantees and number of options allocated to each grantee was not finalized as of the stated grant date.

The Special Committee also found that, during the period from April 2002 through February 2004, the Company set the grant date and exercise price of rank and file employee option grants for new hires and promotions at the lowest price of the first five business days of the month following the month of their hire or promotion. The net impact of this practice was an aggregate charge of less than $400,000.

The Special Committee identified isolated instances where stock option grants did not comply with applicable terms and conditions of the stock plans from which the grants were issued. For example, the Committee determined that on two occasions, the Company granted options to directors that exceeded the annual “automatic” grant amount specified in the applicable plan. On another occasion, a grant to a director was approved one day before the individual became a director. In addition, one grant was made to an officer of the

Company by the chief executive officer under delegated authority; however, under the terms of the applicable plan, the option grant should have been made by the Company’s Board or its Compensation Committee. There were also isolated instances where option grants were made below fair market value. The applicable stock option plans require that option grants must be made at fair market value on the date of grant. However, the Committee did not find any evidence that these violations were fraudulent or committed for improper purposes.

The Special Committee’s investigation also identified less frequent errors in other categories, such as grants made to a small number of employees who had not formally commenced their employment as of the grant approval date, and modifications or amendments to existing options that had not been appropriately accounted for.

The Special Committee concluded that the errors in measurement dates it reviewed resulted primarily from a combination of unintentional errors, lack of attention to timely paperwork, and insufficient internal control over aspects of equity plan administration (including lack of oversight in applying the accounting rule described below in connection with determining measurement dates) during the period in which the errors occurred. The Special Committee found no evidence that any incorrect measurement dates were the result of fraud.

To determine the correct measurement dates under applicable accounting principles for these options, the Committee followed the guidance in Accounting Principles Board Opinion No. 25 (“APB No. 25”), which deems the “measurement date” as the first date on which all of the following are known: (1) the individual employee who is entitled to receive the option grant, (2) the number of options that an individual employee is entitled to receive, and (3) the option’s exercise price. In instances where the Special Committee determined it could not rely on the original stock option grant date, the Special Committee determined corrected measurement dates based on its ability to establish or confirm, whether through other documentation, consistent or established Company practice or processes, or credible circumstantial information, that all requirements for the proper granting of an option had been satisfied under applicable accounting principles.

Based on the results of the Special Committee’s investigation, the Company recorded stock-based compensation charges and additional payroll taxes with respect to its employee stock option grants for which the measurement dates were found to be in error. While the impact of recording these charges was not material to the fiscal years ended March 31, 2005 and 2004, the Company deemed it appropriate to record the charges in the relevant periods, since recording the cumulative out of period charges in fiscal 2006 would be material to that period. Accordingly, the Company restated the results of fiscal years 2005 and 2004, to record a net charge of approximately $0.2 million or $0.00 per share in fiscal 2005 and a net benefit of $0.8 million or $(0.02) per share in fiscal 2004. Additionally, the Company recorded a net charge of $19.5 million to its accumulated deficit as of April 1, 2003 for cumulative charges relating to fiscal years prior to fiscal 2004.

The following table reconciles stock-based compensation charges previously recorded and the impact of these errors to the total restated stock-based compensation for all periods impacted:

Restatement — By Fiscal Year

The increase in stock-based compensation expense resulting from the restatement is as follows (in thousands):


	Total			Total
	Stock-Based			Stock-Based
	Compensation			Compensation
	Expense			Expense			Fiscal Year Ending March 31,
	(1995 - 2005)			(1995 - 2003)			2005		2004			2003		2002			2001			2000			1999			1998			1997			1996			1995
Originally reported amounts:
Stock-based compensation expense, net of tax (originally reported)	$	5,765		$	2,661		$	1,524	$	1,580		$	1,905	$	305		$	326		$	125		$	—		$	—		$	—		$	—		$	—

Restatement adjustments:

Stock-based compensation expense, pre-tax		21,735			22,367			201		(833	)		2,978		4,039			6,315			4,441			2,940			1,247			311			95			1

Tax effect		(2,900	)		(2,900	)		—		—			4,855		(1,615	)		(2,526	)		(1,776	)		(1,176	)		(499	)		(124	)		(38	)		(1	)


Impact of restatment adjustments on net loss	$	18,835	(a)	$	19,467		$	201	$	(833	)	$	7,833	$	2,424		$	3,789		$	2,665		$	1,764		$	748		$	187		$	57		$	(0	)


Restated amounts:
Stock-based compensation expense, net of tax (restated)	$	24,600		$	22,128		$	1,725	$	747		$	9,738	$	2,729		$	4,115		$	2,790		$	1,764		$	748		$	187		$	57		$	(0	)

(a) - Represents the cumulative adjustment through March 31, 2005 presented in the Consolidated Balance Sheet as of March 31, 2005.

During the fiscal year ended March 31, 2006, the Company recorded a net charge of approximately $0.3 million relating to the re-measurement of stock options resulting from the investigation. At March 31, 2006, the remaining unamortized deferred stock-based compensation charge to be recognized in future periods was less than $0.1 million.

In view of its history of operating losses, the Company has maintained a full valuation allowance on its US deferred tax assets since fiscal 2003. As a result, there is no material income tax impact relating to the stock-based compensation and payroll tax expenses recorded by the Company resulting from the investigation of the Special Committee during fiscal years 2004, 2005 and 2006. Additionally, there was no material impact of Section 409A and Section 162(m) limitations on deduction of executive stock compensation for fiscal years 2004, 2005 and 2006.

The following tables set forth the effects of the restatement on the Company’s consolidated financial statements for the years ended March 31, 2005 and 2004:

CONSOLIDATED BALANCE SHEET


	March 31, 2005
	(As reported)			(Adjustments)			(As restated)
	(In thousands, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	55,094		$	—		$	55,094
Short-term investments		46,086			—			46,086
Accounts receivable, net		189,943			—			189,943
Inventories		33,515			—			33,515
Prepaid expenses and other current assets		33,971			—			33,971

Total current assets		358,609			—			358,609
Property and equipment, net		15,458			—			15,458
Goodwill		64,014			—			64,014
Intangible assets, net		40,898			—			40,898
Other assets		4,795			—			4,795

	$	483,774		$	—		$	483,774

LIABILITIES, MINORITY INTEREST AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES:
Short-term loans and notes payable	$	20,563		$	—		$	20,563
Current portion of long-term debt and capital leases		2,757			—			2,757
Accounts payable		83,913			—			83,913
Accounts payable-related parties		39,242			—			39,242
Accrued and other liabilities		70,439			206			70,645
Deferred margin		6,013			—			6,013

Total current liabilities		222,927			206			223,133

LONG-TERM LIABILITIES
Long-term debt and capital leases, net of current portion		88,750			—			88,750
Deferred tax liability		8,548			—			8,548
Other long-term liabilities		9,771			—			9,771

Total long-term liabilities		107,069			—			107,069

COMMITMENTS AND CONTINGENCIES MINORITY INTEREST		63,855			—			63,855

SHAREHOLDERS’ EQUITY
Common stock, no par value:
Authorized shares — 300,000,000 Outstanding shares — 47,779,539		450,005			19,196			469,201
Deferred stock-based compensation		(1,312	)		(567	)		(1,879	)
Accumulated deficit		(366,239	)		(18,835	)		(385,074	)
Accumulated other comprehensive income		7,469			—			7,469

Total shareholders’ equity		89,923			(206	)		89,717

Total liabilities, minority interest and shareholders’ equity	$	483,774		$	—		$	483,774

CONSOLIDATED STATEMENTS OF OPERATIONS


	Fiscal Year Ended March 31,
	2005									2004
	(As reported)			(Adjustments)			(As restated)			(As reported)			(Adjustments)			(As restated)
	(In thousands, except per share data)
NET SALES	$	612,987		$	—		$	612,987		$	301,642		$	—		$	301,642
COST OF SALES		490,730			42			490,772			248,453			(181	)		248,272

GROSS PROFIT		122,257			(42	)		122,215			53,189			181			53,370

OPERATING EXPENSES:
Research and development		34,747			62			34,809			36,376			(443	)		35,933
Selling, general and administrative		78,247			97			78,344			70,541			(209	)		70,332
Amortization of acquired intangible assets		20,436			—			20,436			20,160			—			20,160
Restructuring and other charges (credits).		1,810			—			1,810			6,581			—			6,581
Asset impairment charges		4,645			—			4,645			6,853			—			6,853

Total operating expenses		139,885			159			140,044			140,511			(652	)		139,859

INCOME (LOSS) FROM OPERATIONS		(17,628	)		(201	)		(17,829	)		(87,322	)		833			(86,489	)

INTEREST AND OTHER INCOME (EXPENSE), NET:
Interest income		1,722			—			1,722			815			—			815
Interest expense		(6,746	)		—			(6,746	)		(7,213	)		—			(7,213	)
Other income (expense), net		4,296			—			4,296			(237	)		—			(237	)

Interest and other (expense), net		(729	)		—			(729	)		(6,635	)		—			(6,635	)

LOSS BEFORE BENEFIT FROM INCOME TAXES AND MINORITY INTEREST		(18,357	)		(201	)		(18,558	)		(93,957	)		833			(93,124	)
BENEFIT FROM INCOME TAXES		1,916			—			1,916			6,150			—			6,150
MINORITY INTEREST		(1,101	)		—			(1,101	)		4,358			—			4,358

NET LOSS	$	(17,542	)	$	(201	)	$	(17,743	)	$	(83,449	)	$	833		$	(82,616	)

BASIC AND DILUTED NET LOSS PER SHARE	$	(0.37	)	$	(0.00	)	$	(0.37	)	$	(2.00	)	$	0.02		$	(1.98	)

SHARES USED IN THE PER SHARE CALCULATION:
Basic and diluted		47,441			47,441			47,441			41,805			41,805			41,805

CONSOLIDATED STATEMENTS OF CASH FLOWS


	2005									2004
	(As reported)			(Adjustments)			(As restated)			(As reported)			(Adjustments)			(As restated)
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
NET LOSS	$	(17,542	)	$	(201	)	$	(17,743	)	$	(83,449	)	$	833		$	(82,616	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization		28,442			—			28,442			28,843			—			28,843
Non-cash restructuring charges		—			—			—			190			—			190
Allowance for doubtful accounts		4,862			—			4,862			222			—			222
Asset impairment charges		4,645			—			4,645			6,853			—			6,853
Minority interest in net income (loss) of consolidated subsidiaries		1,101			—			1,101			(4,358	)		—			(4,358	)
Loss on disposal of fixed assets		571			—			571			431			—			431
Stock-based compensation expense		1,621			852			2,473			2,646			1,509			4,155
Amortization of lease incentive payments		—			—			—			—			—			—
Deferred taxes, net		(15,439	)		—			(15,439	)		(6,394	)		—			(6,394	)
Changes in assets and liabilities, net of acquisitions:								—									—
Accounts receivable, net		(48,446	)		—			(48,446	)		(59,370	)		—			(59,370	)
Inventories		(5,206	)		—			(5,206	)		(2,392	)		—			(2,392	)
Prepaid expenses and other assets		(5,645	)		—			(5,645	)		1,222			—			1,222
Accounts payable, accrued liabilities and deferred margin		33,295			(651	)		32,644			47,743			(2,342	)		45,401

Net cash provided by (used in) operating activities		(17,741	)		—			(17,741	)		(67,813	)		—			(67,813	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of investments (See Note 5)		(84,744	)		—			(84,744	)		(38,462	)		—			(38,462	)
Sales or maturity of investments (See Note 5)		79,709			—			79,709			8,500			—			8,500
Release of restricted cash and cash equivalents		1,904			—			1,904			1,403			—			1,403
Purchases of property and equipment, net		(4,152	)		—			(4,152	)		(6,119	)		—			(6,119	)
Net proceeds from sale of land		—			—			—			12,106			—			12,106
Net cash used in acquisitions		(31	)		—			(31	)		(1,179	)		—			(1,179	)

Net cash provided by (used in) investing activities		(7,314	)		—			(7,314	)		(23,751	)		—			(23,751	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from line of credit		279,885			—			279,885			—			—			—
Payments to line of credit		(271,519	)		—			(271,519	)		(25,000	)		—			(25,000	)
Payments of short-term loans		—			—			—			(1,923	)		—			(1,923	)
Principal payments on long-term debt and capital leases		(7,920	)		—			(7,920	)		1,939			—			1,939
Proceeds from issuance of common stock		3,710			—			3,710			112,139			—			112,139

Net cash provided by (used in) financing activities		4,156			—			4,156			87,155			—			87,155
Effect of exchange rate changes on cash and cash equivalents		(414	)		—			(414	)		(3,898	)		—			(3,898	)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS		(21,313	)		—			(21,313	)		(8,307	)		—			(8,307	)

CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR		76,407			—			76,407			84,714			—			84,714

CASH AND CASH EQUIVALENTS, END OF YEAR (See Note 5)	$	55,094		$	—		$	55,094		$	76,407		$	—		$	76,407

3. Liquidity:

Since inception, we have incurred aggregate consolidated net losses of approximately $385.2 million, and have incurred losses during each of the last 5 years. In recent years, we have funded our operations primarily from cash generated from the issuance of debt or equity securities. Cash, cash equivalents and short-term investments aggregated $109.9 million at March 31, 2006. We believe that our current cash position and the availability of additional financing via existing lines of credit will be sufficient to meet our expected cash requirements for at least the next 12 months.

We received a letter dated August 16, 2006, from the trustee under the indenture relating to our convertible notes asserted that Asyst is in default under the notes’ indenture because of the previously announced delays in filing with the SEC and the trustee this report on Form 10-K and in filing with the SEC our the Form 10-Q for the fiscal quarter ended June 30, 2006. The letter stated that this asserted default was not an “Event of Default” under the indenture if the Company cures the default within 60 days after receipt of the notice, or if the default were waived by the holders of a majority in aggregate principal amount of the notes outstanding. If an Event of Default were to occur, and is continuing under the indenture, the trustee or the holders of at least 25% in aggregate principal amount of the notes at the time outstanding may accelerate maturity of the notes.

Asyst does not agree with the trustee’s assertion that the delayed filing of the annual and quarterly reports is a default under the indenture. However, in conjunction with the filing of this report on Form 10-K we also intend to file with the SEC our report on Form 10-Q for the fiscal quarter ended June 30, 2006. Upon completion of those filings, we intend to deliver to the trustee copies of the reports on Forms 10-K and 10-Q, and that delivery will cure any purported defaults under the indenture and asserted by the trustee in its letter referenced above.

As a result also of our filing delays, we have received notices from the NASDAQ Global Market to the effect that our common stock would be de-listed unless, prior to November 30, 2006, we filed this Form 10-K and the Form 10-Q for the fiscal quarter ended June 30, 2006, with any required restatements (further conditioned upon our providing supplemental information requested by the panel, which we timely provided).

As a result of the delay in filing this report and the Form 10-Q for our fiscal quarter ended June 30, 2006, we are not eligible to register any of our securities on Form S-3 for sale by us or resale by others until we have timely filed all reports required to be filed under the Securities Exchange Act of 1934 during the 12 months, and any portion of a month, immediately preceding the filing of a registration statement on Form S-3. This condition may adversely affect our ability to restructure outstanding indebtedness, to raise capital by other means, or to acquire other companies by using our securities to pay the acquisition price.

Under certain circumstances, Shinko can accelerate upon thirty (30) days written notice our obligation to purchase the remaining 4.9% equity it holds in ASI (see Note 15). These circumstances include (a) when AJI’s equity ownership in ASI falls below 50%; (b) when bankruptcy or corporate reorganization proceedings are filed against the Company or AJI; (c) when a merger or corporate reorganization has been approved involving all or substantially all of the Company’s assets; (d) when Shinko’s equity ownership in ASI falls below 4.9%; or (e) when the Company has failed to make any payment when due in respect of any loan secured by a pledge of the Company’s right, title and interest in and to the shares of ASI (and the holder of such security interest elects to exercise its rights against AJI in respect of such shares). In any such event, an acceleration could impose on us an unforeseen payment obligation, which could impact our liquidity or which payment could be subject to restrictions or covenants, or be subject to third party approvals under our debt facilities. Our inability to purchase the remaining ASI equity held by Shinko, when and as required, could significantly impact our continued control and ownership of ASI. Due to the cyclical and uncertain nature of cash flows and collections from our customers, the Company (or its subsidiaries) may from time to time incur borrowings which could cause the Company to exceed the permitted total leverage ratios under the credit agreement. Under any such scenario, the Company may pay down the outstanding borrowings from cash to maintain compliance with its financial covenants.

The cyclical nature of the semiconductor industry makes it very difficult for us to predict future liquidity requirements with certainty. Any upturn in the semiconductor industry may result in short-term uses of cash in operations as cash may be used to finance additional working capital requirements such as accounts receivable and inventories. Alternatively, continuation or further softening of demand for our products may cause us to fund additional losses in the future. At some point in the future we may require additional funds to support our working capital and operating expense requirements or for other purposes. We may seek to raise these additional funds through public or private debt or equity financings, or the sale of assets. These financings may not be available to us on a timely basis, if at all, or, if available, on terms acceptable to us or not dilutive to our shareholders. If we fail to obtain acceptable additional financing, we may be required to reduce planned expenditures or forego investments, which could reduce our revenues, increase our losses, and harm our business.

4. Significant Accounting Policies:

Basis of Preparation

The accompanying consolidated financial statements include the accounts of Asyst and its subsidiaries. All significant inter-company accounts and transactions have been eliminated. Minority interest represents the minority shareholders’ proportionate share of the net assets and results of operations of our majority-owned joint venture, ASI, and our majority-owned subsidiary, Asyst Japan, Inc. (“AJI”.)

Effective as of February 18, 2005, we changed our fiscal year-end date from the last Saturday in March to March 31. Accordingly, fiscal years 2005 and 2006 ended on March 31, 2005 and 2006, respectively, and fiscal year 2004 ended on March 27, 2004. For convenience of presentation and comparison to current and prior fiscal years ended March 31, we refer throughout this report to a fiscal year ended March 31, 2004. However, all references to our fiscal year ended March 31, 2004 mean our actual fiscal year ended March 27, 2004.

Revisions to Prior Year Financial Statements

The classification of certain prior year amounts in the consolidated financial statements and the notes thereto has been revised where necessary to conform to the current year’s presentation. In particular, we have revised the classification of certain auction rate securities, for which interest rates reset in less than three months, but for which the maturity date is longer than three months. This resulted in a revision in the consolidated statements of cash flows for the fiscal years ended March 31, 2005 and 2004, to reflect the gross purchases and sales of these securities as investing activities rather than as a component of cash and cash equivalents (see Note 5). The revisions did not have an effect on the prior periods’ net loss or cash flow from operations.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates include revenues and costs under long-term contracts, collectibility of accounts receivable, obsolescence of inventory, cost of product warranties, recoverability of depreciable assets, intangibles and deferred tax assets and the adequacy of acquisition-related and restructuring reserves. Although we regularly assess these estimates, actual results could differ from those estimates. Changes in estimates are recorded in the period in which they become known.

Foreign Currency Translation

Our subsidiaries located in Japan and their subsidiaries operate using the Japanese Yen as their functional currency. Accordingly, all assets and liabilities of these subsidiaries are translated using exchange rates in effect at the end of the period, and revenues and costs are translated using average exchange rates for the period. The resulting translation adjustments are presented as a separate component of accumulated other comprehensive income (loss).

All other foreign subsidiaries use the U.S. dollar as their functional currency. Accordingly, assets and liabilities of those subsidiaries are translated using exchange rates in effect at the end of the period, except for non-monetary assets, such as inventories and property, plant and equipment that are translated using historical exchange rates. Revenues and costs are translated using average exchange rates for the period, except for costs related to those balance sheet items that are translated using historical exchange rates. The resulting translation gains and losses are included in the Consolidated Statements of Operations as incurred.

Cash and Cash Equivalents

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

Short-term Investments

As of March 31, 2006, our short-term investments consisted of equity securities and debt investments with maturities, at the time of purchase, greater than three months. Auction rate debt securities with interest rates that reset in less than three months but with maturity dates longer than three months, are classified as short-term investments. All such investments have been classified as “available-for-sale” and are carried at fair value. Unrealized holding gains and losses, net of taxes reported, are recorded as a component of other comprehensive income (loss). The cost of debt securities is adjusted for amortization of premiums and accretion of discounts to maturity. Such amortization, interest income, realized gains and losses and declines in value that are considered to be other than temporary, are included in interest and other income (expense), net, in the Consolidated Statements of Operations. There have been no declines in value that are considered to be other than temporary for any of the three years in the period ended March 31, 2006. The cost of investments sold is based on specific identification. We do not intend to hold individual securities for greater than one year.

Fair Value of Financial Instruments

The carrying amounts of our financial instruments, including cash and cash equivalents, accounts receivable, short-term notes payable, and accounts payable and accrued expenses, approximate fair value due to the short maturities of these financial instruments. At March 31, 2006, the carrying amount of long-term debt, including current portion, was $88.5 million and the estimated fair value was $81.5 million. At March 31, 2005, the carrying amount of long-term debt, including current portion, was $91.5 million and the estimated fair value was $90.6 million. The estimated fair value of long-term debt is based primarily on quoted market prices for the same or similar issues.

Concentration of Credit Risk

Financial instruments that potentially subject us to concentration of credit risk consist primarily of trade receivables, cash equivalents and short-term investments in treasury bills, certificates of deposit and commercial paper. We restrict our investments to repurchase agreements with major banks, U.S. government and corporate securities, and mutual funds that invest in U.S. government securities, which are subject to minimal credit and market risk. Our customers are concentrated in the semiconductor and flat panel display industries, and relatively few customers account for a significant portion of our revenues. We regularly monitor the credit worthiness of our customers and believe that we have adequately provided for exposure to potential credit losses. During fiscal year 2006, Taiwan Semiconductor Manufacturing Corp. accounted for 12 percent of net sales. During fiscal year 2005, AU Optronics Corp. and Taiwan Semiconductor Manufacturing Corp. accounted for approximately 20 percent and 12 percent of net sales, respectively. During fiscal year 2004, L.G. Philips and Taiwan Semiconductor Manufacturing Corp. accounted for approximately 18 percent and 10 percent of net sales, respectively. No customers accounted for more than 10 percent of our total billed and unbilled accounts receivable at March 31, 2006 and 2005, respectively.

Allowance for Doubtful Accounts

We estimate our allowance for doubtful accounts based on a combination of specifically identified amounts, as well as a portion of the reserve calculated based on the aging of receivables. If circumstances change (such as an unexpected material adverse change in a major customer’s ability to meet its financial obligations to us or its payment trends), we may adjust our estimates of the recoverability of amounts due to us.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or market and include materials, labor and manufacturing overhead costs. Provisions, when required, are made to reduce excess and obsolete inventories to their estimated net realizable values. Such provisions, once established, are not reversed until the related inventories have been sold or scrapped.

Goodwill and Other Intangible Assets

Intangible assets subject to amortization are being amortized over the following estimated useful lives using the straight-line method: purchased technology, three to eight years; customer lists and other intangible assets, five to 10 years; and licenses and patents, five to 10 years.

We have completed annual impairment tests in accordance with SFAS No. 142 during the quarter ended December 31, 2006, 2005 and 2004, respectively, and concluded that there was no impairment of goodwill in fiscal years 2006, 2005 and 2004. To determine the amount of any possible impairment, we estimated the fair value of our reporting units that contained goodwill (based primarily on expected future cash flows), reduced the amount by the fair value of identifiable intangible assets other than goodwill (also based primarily on expected future cash flows), and then compared the unallocated fair value of the business to the carrying value of goodwill. To the extent goodwill exceeded the unallocated fair value of the business; an impairment expense would have been recognized. In connection with the annual impairment analysis for goodwill, we also assessed the recoverability of the intangible assets subject to amortization in accordance with SFAS No. 144 and concluded that there was no impairment of intangible assets.

Property and Equipment

Property and equipment are recorded at cost or in the case of property and equipment purchased through corporate acquisitions at fair value based upon the allocated purchase price on the acquisition date. Depreciation and amortization are computed using the straight-line method over the estimated useful lives of the assets. The useful lives of our property and equipment are as follows:


Land		none
Buildings		38 to 50 years
Leasehold improvements		7 years or lease term, if shorter
Machinery and equipment		2 to 5 years
Office equipment, furniture and fixtures		5 years

Warranty Reserve

We provide for the estimated cost of product warranties at the time revenue is recognized. The table below summarizes the movement in the warranty reserve for the fiscal years ended March 31, 2006, 2005 and 2004 (in thousands):


	Fiscal Year Ended March 31,
	2006			2005			2004
Beginning Balance	$	13,509		$	8,185		$	7,561
Reserve for warranties issued during the period		10,338			19,780			4,881
Settlements made (in cash or in kind)		(14,966	)		(14,443	)		(4,257	)
Foreign currency translation		(914	)		(13	)		—

Ending Balance	$	7,967		$	13,509		$	8,185

Revenue Recognition

We recognize revenue when persuasive evidence of an arrangement exists, product delivery has occurred or service has been rendered, the seller’s price is fixed or determinable, and collectibility is reasonably assured. Some of our products are large volume consumables that are tested to industry and/or customer acceptance criteria prior to shipment and delivery. Our primary shipping terms are FOB shipping point. Therefore, revenue for these types of products is recognized when title transfers. Certain of our product sales are accounted for as multiple-element arrangements. We allocate consideration to multiple element transactions based on relative objective evidence of fair values, which we determine based on prices charged for such items when sold on a stand alone basis. If we have met defined customer acceptance experience levels with both the customer and the specific type of equipment, we recognize the product revenue at the time of shipment and transfer of title, with the remainder when the other elements, primarily installation, have been completed. Some of our other products are highly customized systems and cannot be completed or adequately tested to customer specifications prior to shipment from the factory. We do not recognize revenue for these products until formal acceptance by the customer. Revenue for spare parts sales is recognized at the time of shipment and the transfer of title. Deferred revenue consists primarily of product shipments creating legally enforceable receivables that did not meet our revenue recognition policy. Revenue related to maintenance and service contracts is recognized ratably over the duration of the contracts. Unearned maintenance and service contract revenue is not significant and is included in accrued liabilities and other.

We recognize revenue for long-term contracts at ASI in accordance with the American Institute of Certified Public Accountants’ (“AICPA”) Statement of Position (“SOP”) 81-1,Accounting for Performance of Construction-Type and Certain Production-Type Contracts.We use the percentage of completion method to calculate revenue and related costs of these contracts because they are long-term in nature and estimates of cost to complete and extent of progress toward completion of long-term contracts are available and reasonably dependable. We record revenue and unbilled receivables each period based on the percentage of completion to date on each contract, measured by costs incurred to date relative to the total estimated costs of each contract. Unbilled receivables amount is reclassified to trade receivables once invoice is issued. We disclose material changes in our financial results that result from changes in estimates.

We account for software revenue in accordance with the AICPA SOP 97-2,Software Revenue Recognition. Revenue for integration software work is recognized on a percentage-of-completion basis. Software license revenue, which is not material to the consolidated financial statements, is recognized when persuasive evidence of an arrangement exists, delivery has occurred or, the selling price is fixed or determinable and collectibility is probable.

Income Taxes

The provision for income taxes is determined using the asset and liability approach of accounting for income taxes. Under this approach, deferred taxes represent the future tax consequences expected to occur when the reported amounts of assets and liabilities are recovered or paid. The provision for income taxes represents income taxes paid or payable for the current year plus the change in deferred taxes during the year. Deferred taxes result from differences between the financial and tax basis of our assets and liabilities and are adjusted for changes in tax rates and tax laws when changes are enacted. Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.

We have completed the analysis of the impact of the one-time favorable foreign dividend provision recently enacted as part of the American Jobs Creation Act of 2004. Based on the analysis performed, we have decided not to take actions by repatriating our foreign earnings at the current moment. As of March 31, 2006, and based on the tax laws in effect at that time, we intended to continue to indefinitely reinvest our undistributed foreign earnings and accordingly, no deferred tax liability has been recorded on these undistributed foreign earnings.

The calculation of tax liabilities involves dealing with uncertainties in the application of complex global tax regulations. The Company recognizes potential liabilities for anticipated tax audit issues in the U.S. and other tax jurisdictions based on its estimate of whether, and the extent to which, additional taxes will be due. If payment of these amounts ultimately proves to be unnecessary, the reversal of the liabilities would result in tax benefits being recognized in the period when the Company determines the liabilities are no longer necessary. If the estimate of tax liabilities proves to be less than the ultimate assessment, a further charge to expense would result.

Net Income (Loss) Per Share

Basic net income (loss) per share is computed using the weighted average number of common shares outstanding, while diluted net income (loss) per share is computed using the sum of the weighted average number of common and common equivalent shares outstanding. Common equivalent shares used in the computation of diluted earnings per share result from the assumed exercise of stock options and warrants, using the treasury stock method. For periods for which there is a net loss, the numbers of shares used in the computation of diluted net income (loss) per share are the same as those used for the computation of basic net income (loss) per share as the inclusion of dilutive securities would be anti-dilutive.


	Fiscal Year Ended March 31,
	2006			2005			2004
				(As restated)			(As restated)
Basic and diluted net loss per share:
Numerator:
Net loss	$	(104	)	$	(17,743	)	$	(82,616	)

Denominator:
Weighted average common shares outstanding, excluding unvested restricted stock units		47,972			47,441			41,805

Denominator for basic and diluted calculation		47,972			47,441			41,805

Net loss per share, basic and diluted	$	(0.00	)	$	(0.37	)	$	(1.98	)

The following table summarizes securities outstanding which were not included in the calculation of diluted net loss per share as to do so would be anti-dilutive (in thousands):


	Fiscal Year Ended March 31,
	2006		2005		2004
Restricted stock awards and units		9		136		59
Stock options		6,879		6,827		8,212
Convertible notes		5,682		5,682		5,682

Total		12,570		12,645		13,953

Stock-Based Compensation

We account for employee stock-based compensation arrangements in accordance with the provisions of Accounting Principles Board Opinion (“APB”) No. 25,Accounting for Stock Issued to Employees, Financial Accounting Standards Board (“FASB”) Interpretation (“FIN”) No. 44,Accounting for Certain Transactions Involving Stock Compensation, an Interpretation of APB Opinion No. 25and FIN No. 28,Accounting for Stock Appreciation Rights and Other Variable Stock Option or Award Plans, and comply with the disclosure provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123,Accounting for Stock-Based Compensation, and SFAS No. 148,Accounting for Stock Based Compensation — Transition and Disclosure — an amendment of FAS No. 123.Under APB No. 25, compensation expense is based on the difference, if any, on the date of grant, between the estimated fair value of our common stock and the exercise price. SFAS No. 123 defines a fair value based method of accounting for an employee stock option or similar equity instrument. We amortize stock-based compensation using the straight-line method over the remaining vesting periods of the related options, which is generally three years.

The Company has decided to use the Modified Prospective Application (“MPA”) method. By using the MPA, the Company will not restate its prior period financial statements. Instead, the Company applies SFAS 123(R) for new options granted after the adoption of SFAS 123(R), i.e. April 1, 2006, and any portion of options that were granted after December 15, 1994 and have not vested by April 1, 2006. The Company uses a Black-Scholes option pricing model for calculating its option grant date fair value under SFAS 123(R).

We account for equity instruments issued to non-employees in accordance with the provisions of SFAS No. 123 and the Emerging Issues Task Force (“EITF”) 96-18,Accounting for Equity Instruments That Are Issued to Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or Servicesand value awards using the Black-Scholes option pricing model as of the date at which the non-employees performance is complete. We recognize the fair value of the award as a compensation expense as the non-employees interest in the instrument vests.

Had compensation expense for our stock options, employee stock purchase plan and the restricted stock issuances been determined based on the fair value of the grant date for awards in fiscal years 2006, 2005 and 2004 consistent with the provision of SFAS No. 123, and SFAS No. 148, our net loss for fiscal years 2006, 2005 and 2004 would have increased to the pro forma amounts indicated below (in thousands, except per share amounts):


	Fiscal Year Ended March 31,
	2006			2005			2004
				(As restated)			(As restated)
Net loss — as reported	$	(104	)	$	(17,743	)	$	(82,616	)
Add: employee stock-based compensation expense included in reported net loss, net of tax		1,819			2,376			3,089
Less: total employee stock-based compensation expense determined under fair value, net of tax		(6,838	)		(12,383	)		(14,436	)

Net loss — as adjusted	$	(5,123	)	$	(27,750	)	$	(93,963	)

Basic and diluted net loss per share — as reported	$	(0.00	)	$	(0.37	)	$	(1.98	)

Basic and diluted net loss per share — as adjusted	$	(0.11	)	$	(0.58	)	$	(2.25	)

SHARES USED IN THE PER SHARE CALCULATION:
Basic and diluted		47,972			47,441			41,805

Recent Accounting Pronouncements

In November 2004, the FASB issued SFAS No. 151,Inventory Costs — an Amendment of ARB No. 43, Chapter 4(“SFAS No. 151”). SFAS No. 151 amends ARB 43, Chapter 4, to clarify those abnormal amounts of idle facility expense, freight, handling costs, and wasted materials (spoilage) that should be recognized as current-period charges. In addition, this Statement requires that allocation of fixed production overheads to the costs of conversion be based on the normal capacity of the production facilities. The provisions of this Statement are effective for inventory costs incurred during fiscal years beginning after June 15, 2005. We do not believe the impact of the adoption of the provisions of SFAS No. 151 will materially impact our financial position or results of operations.

In December 2004, the FASB issued SFAS No. 153,Exchange of Nonmonetary Assets — an amendment of APB Opinion No. 29(“SFAS No. 153”). SFAS No. 153 amends APB Opinion No. 29 to eliminate the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges of nonmonetary assets that do not have commercial substance. A nonmonetary exchange has commercial substance if the future cash flows of the entity are expected to change significantly as a

result of the exchange. The provisions of this Statement are effective for nonmonetary asset exchanges occurring in fiscal periods beginning after June 15, 2005. The adoption of the provisions of SFAS No. 153 did not have a material impact on our financial position or results of operations.

In December 2004, the FASB issued SFAS No. 123(R), which replaces SFAS No. 123, “Accounting for Stock-Based Compensation,” and supersedes APB Opinion No. 25. Under SFAS No. 123(R), companies are required to measure the compensation costs of share-based compensation arrangements based on the grant-date fair value and recognize the costs in the financial statements over the period during which employees are required to provide services. Share-based compensation arrangements include stock options, restricted share plans, performance-based awards, share appreciation rights and employee share purchase plans. In April 2005, the SEC postponed the implementation date to the fiscal year beginning after June 15, 2005. The Company will adopt SFAS No. 123(R) in the first quarter of fiscal 2007.

The adoption of SFAS No. 123(R) will have a significant adverse impact on the Company’s results of operations, although it will have no impact on its overall financial position. SFAS No. 123(R) also requires the benefits of tax deductions in excess of recognized compensation cost to be reported as a financing cash flow, rather than as an operating cash flow as required under current literature. This requirement will reduce net operating cash flows and increase net financing cash flows in periods after adoption. While the Company cannot estimate what those amounts will be in the future (because they depend on, among other things, when employees exercise stock options), the amount of operating cash flows recognized for such excess tax deductions was zero for fiscal years 2006, 2005 and 2004.

In March 2005, the SEC issued Staff Accounting Bulletin (“SAB”) No. 107, which provides guidance on the implementation of SFAS No. 123(R), “Share-Based Payment” (see discussion below). In particular, SAB No. 107 provides key guidance related to valuation methods (including assumptions such as expected volatility and expected term), the accounting for income tax effects of share-based payment arrangements upon adoption of SFAS No. 123(R), the modification of employee share options prior to the adoption of SFAS No. 123(R), the classification of compensation expense, capitalization of compensation cost related to share-based payment arrangements, first-time adoption of SFAS No. 123(R) in an interim period, and disclosures in Management’s Discussion and Analysis subsequent to the adoption of SFAS No. 123(R). SAB No. 107 became effective on March 29, 2005. It did not have a material impact on the Company’s financial position or results of operations.

In June 2005, the FASB issued SFAS No. 154,Accounting Changes and Error Corrections: a Replacement of Accounting Principles Board Opinion No. 20 (“APB 20”) and FASB Statement No 3 (“SFAS No. 154”.) SFAS No. 154 requires retrospective application for voluntary changes in accounting principle unless it is impracticable to do so. Retrospective application refers to the application of a different accounting principle to previously issued financial statements as if that principle had always been used. SFAS No. 154’s retrospective-application requirement replaces APB 20’s requirement to recognize most voluntary changes in accounting principle by including in net income of the period of the change the cumulative effect of changing to the new accounting principle. This Statement defines retrospective application as the application of a different accounting principle to prior accounting periods as if that principle had always been used or as the adjustment of previously issued financial statements to reflect a change in the reporting entity. This Statement also redefines restatement as the revising of previously issued financial statements to reflect the correction of an error. The requirements are effective for accounting changes made in fiscal years beginning after December 15, 2005 and will only impact the consolidated financial statements in periods in which a change in accounting principle is made.

In October 2005, the FASB issued FASB Staff Position (“FSP”) No. FAS 13-1,Accounting for Rental Costs Incurred during a Construction Period, (“FSP 13-1”). FSP 13-1 addresses the accounting for rental costs associated with operating leases that are incurred during a construction period. The guidance in FSP 13-1 is effective for the first fiscal period after December 15, 2005 and its adoption in the three-month period ended March 31, 2006, did not have a material impact on our financial position or results of operations.

In November 2005, the FASB issued FSP Nos. FAS 115-1 and FAS 124-1,The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments,(“FSP 115-1 and 124-1”) which addresses the determination as to when an investment is considered impaired, whether that impairment is other than temporary, and the measurement of an impairment loss. FSP 115-1 and

124-1 also includes accounting considerations subsequent to the recognition of an other-than-temporary impairment and requires certain disclosures about unrealized losses that have not been recognized as other-than-temporary impairments. The guidance in FSP 115-1 and 124-1 amends FASB Statements No. 115, Accounting for Certain Investments in Debt and Equity Securities, and No. 124, Accounting for Certain Investments Held by Not-for-Profit Organizations, and APB Opinion No. 18, The Equity Method of Accounting for Investments in Common Stock. The guidance in FSP 115-1 and 124-1 is effective for the first fiscal period after December 15, 2005 and its adoption in the three-month period ended March 31, 2006, did not have a material impact on our financial position or results of operations.

In June 2006, the FASB issued Interpretation No. 48,Accounting for Uncertainty in Income Taxes: An Interpretation of FASB Statement No. 109(FIN No. 48). This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with SFAS No. 109. FIN No. 48 prescribes a recognition threshold and measurement principles for the financial statement recognition and measurement of tax positions taken or expected to be taken on a tax return. This interpretation is effective for fiscal years beginning after December 15, 2006 and as such, the Company will adopt FIN No. 48 in the year ended March 31, 2007. We are currently assessing the impact the adoption of FIN No. 48 will have on our financial position or results of operations.

In June 2006, the FASB ratified the Emerging Issues Task Force (EITF) consensus on EITF Issue No. 06-2, “Accounting for Sabbatical Leave and Other Similar Benefits Pursuant to FASB Statement No. 43” (EITF 06-2). EITF 06-2 requires companies to accrue the cost of such compensated absences over the requisite service period. The company currently accounts for the cost of compensated absences for sabbatical programs when the eligible employee completes the requisite service period, which is 10 to 20 years of service. The company is required to apply the provisions of EITF 06-2 at the beginning of fiscal 2008. EITF 06-02 allows for adoption through retrospective application to all prior periods or through a cumulative effect adjustment to retained earnings if it is impracticable to determine the period-specific effects of the change on prior periods presented. The company is currently evaluating the financial impact of this guidance and the method of adoption which will be used.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108 (“SAB No. 108”). SAB No. 108 addresses the process and diversity in practice of quantifying financial statement misstatements resulting in the potential build up of improper amounts on the balance sheet. We will be required to adopt the provisions of SAB No. 108 in the year ending March 31, 2007. We currently do not believe that the adoption of SAB No. 108 will have a material impact on our financial position or results of operations.

In September 2006, the FASB issued SFAS No. 157,Fair Value Measurements, (“SFAS No. 157”). SFAS No. 157 establishes a framework for measuring fair value and expands disclosures about fair value measurements. The changes to current practice resulting from the application of this Statement relate to the definition of fair value, the methods used to measure fair value, and the expanded disclosures about fair value measurements. The Statement is effective for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years. We do not believe that the adoption of the provisions of SFAS No. 157 will materially impact our financial position or results of operations.

In September 2006, the FASB issued SFAS No. 158, EmployersAccounting for Defined Benefit Pension and Other Postretirement Plans — an amendment of FASB Statements No. 87, 88, 106, and 132(R), (“SFAS No. 158”). SFAS No. 158 requires an employer to recognize the over-funded or under-funded status of a defined benefit postretirement plan (other than a multiemployer plan) as an asset or liability in its statement of financial position. To recognize changes in that funded status in the year in which the changes occur through comprehensive income of a business entity or changes in unrestricted net assets of a not-for-profit organization. The provisions of this Statement are effective for an employer with publicly traded equity securities are required to recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. We do not believe that the adoption of the provisions of SFAS No. 158, in the year ending March 31, 2007, will materially impact our financial position or results of operations.

5. Balance Sheet Components:

Cash and Cash Equivalents

Cash equivalents as end of March 31, 2006 and 2005, by type are as follows (in thousands):


			Unrealized
2006	Cost		Gains (Losses)			Fair Value
Institutional money market funds	$	19,656	$	100		$	19,756
Commercial paper		2,994		(1	)		2,993

Total cash equivalents	$	22,750	$	99		$	22,749


			Unrealized
2005	Cost		Loss			Fair Value
Institutional money market funds	$	5,280	$	—		$	5,280
Commercial paper		4,995		(1	)		4,994

Total cash equivalents	$	10,275	$	(1	)	$	10,274

Short-term Investments

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


			Unrealized
	Cost		Loss			Fair Value
March 31, 2006
Auction rate securities	$	8,300	$	—		$	8,300
Corporate debt securities		6,014		(9	)		6,005
Federal agency notes		1,000		(1	)		999

	$	15,314	$	(10	)	$	15,304


March 31, 2005
Auction rate securities	$	19,803	$	—		$	19,803
Corporate debt securities		9,915		(47	)		9,868
Municipal debt securities		501		(1	)		500
International debt securities		1,009		(2	)		1,007
Federal agency notes		15,000		(92	)		14,908

	$	46,228	$	(142	)	$	46,086

Contractual maturities of available-for-sale debt securities as of March 31, 2006 were as follows (in thousands):


Due within one year	$	12,064
Due within 39 years		3,250

Total	$	15,314

All of the investments in the table above were in a continuous unrealized loss position for less than twelve months and these unrealized losses were considered not to be other-than-temporary due primarily to their nature, quality and short-term holding. None of the investments in the table above had unrealized gains as of March 31, 2006 and 2005.

As more fully described in Note 4 the following table summarizes the cash and cash equivalents balances as previously reported in the Consolidated Statements of Cash Flows and as revised as of March 31, 2004 (in thousands):


	As Reported		As Revised
	Cash and Cash		Cash and Cash
	Equivalents		Equivalents
March 31, 2004	$	101,907	$	76,407

As a result of these changes, we revised the following line items in the Consolidated Statements of Cash Flows for the years ended March 31, 2005 and 2004 (in thousands):


	As Reported								As Revised
				Sales/								Sales/
	Purchase of			Maturities of					Purchase of			Maturities of
	Available for			Available for					Available for			Available for
Fiscal Year Ended	Sale Securities			Sale Securities		Net			Sale Securities			Sale Securities		Net
March 31, 2005	$	(71,594	)	$	41,059	$	(30,535	)	$	(84,744	)	$	79,709	$	(5,035	)
March 31, 2004	$	(12,962	)	$	8,500	$	(4,462	)	$	(38,462	)	$	8,500	$	(29,962	)

Accounts Receivable, net of allowance for doubtful accounts

Accounts receivable, net of allowance for doubtful accounts were as follows (in thousands):


	March 31,
	2006			2005
Trade receivables	$	83,008		$	77,196
Trade receivables-related party		90			100
Unbilled receivables		63,435			110,778
Other receivables		6,788			8,849
Less: Allowance for doubtful accounts		(11,868	)		(6,980	)

Total	$	141,453		$	189,943

We estimate our allowance for doubtful accounts based on a combination of specifically identified amounts and an additional reserve calculated based on the aging of receivables. The additional reserve is provided for the remaining accounts receivable after specific allowances at a range of percentages from 1.25 percent to 100.0 percent based on the aging of receivables. If circumstances change (such as an unexpected material adverse change in a major customer’s ability to meet its financial obligations to us or its payment trends), we may adjust our estimates of the recoverability of amounts due to us. During the fiscal year ended March 31, 2006, we wrote off $1.2 million of accounts receivable which we determined to be uncollectible and for which we had recorded specific reserves in previous quarters. We do not record interest on outstanding and overdue accounts receivable.

All of our unbilled receivables are from our majority-owned joint venture, ASI. Payments related to these unbilled receivables are expected to be received within one year from March 31, 2006 and as such the balances are classified within current assets on our consolidated balance sheet.

Other receivables include notes receivable from customers in Japan and Korea in settlement of trade accounts receivable balances.

We offer both open accounts and letters of credit to our customer base. Our standard open account terms range from net 30 days to net 90 days; however, the customary local industry practices may differ and prevail where applicable.

Our subsidiaries in Japan, AJI and ASI have agreements with certain Japanese financial institutions to sell certain trade receivables. For the fiscal years ended March 31, 2006 and 2005, AJI and ASI combined sold approximately $77.8 million and $46.6 million, respectively, of accounts receivable without recourse, and $1.4 million and $0.4 million, respectively, with recourse. At March 31, 2006, the Company had approximately $1.4 million of borrowings, secured by accounts receivable balances, for which the Company did not meet the true sale criteria.

Inventories

Inventories consisted of the following (in thousands):


	March 31,
	2006		2005
Raw materials	$	9,882	$	14,040
Work-in-process		22,180		17,905
Finished goods		1,157		1,570

Total	$	33,219	$	33,515

At March 31, 2006 and 2005, we had a reserve of $13.3 million and $15.3 million, respectively, for estimated excess and obsolete inventory.

We outsourced a majority of our Fab Automation Product manufacturing to Solectron Corporation (“Solectron.”) As part of the arrangement, Solectron purchased inventory from us and we may be obligated to reacquire inventory purchased by Solectron for our benefit if the inventory is not used over certain specified period of time per the terms of our agreement. No revenue was recorded for the sale of this inventory to Solectron and any inventory buyback in excess of our demand forecast is fully reserved. At March 31, 2006 and 2005, total inventory held by Solectron was $13.0 million and $14.5 million, respectively. During the fiscal years ended March 31, 2006 and 2005, we repurchased $14.1 million and $7.1 million of this inventory, respectively, that was not used by Solectron in manufacturing our products.

Prepaid expenses and other

Prepaid expenses and other consisted of the following (in thousands):


	March 31,
	2006		2005
Prepaid expenses	$	7,078	$	3,146
Deferred tax assets		16,886		16,379
Other		2,867		14,446

Total	$	26,831	$	33,971

Intangible assets

Intangible assets were as follows (in thousands):


	March 31, 2006						March 31, 2005
	Gross						Gross
	Carrying		Accumulated				Carrying		Accumulated
	Amount		Amortization		Net		Amount		Amortization		Net
Amortizable intangible assets:
Developed technology	$	58,289	$	44,275	$	14,014	$	62,626	$	34,069	$	28,557
Customer base and other intangible assets		31,935		29,419		2,516		33,767		25,167		8,600
Licenses and patents		6,316		3,512		2,804		6,989		3,248		3,741

Total	$	96,540	$	77,206	$	19,334	$	103,382	$	62,484	$	40,898

Amortization expense was $16.6 million, $20.4 million and $20.2 million for the years ended March 31, 2006, 2005 and 2004, respectively.

Expected future intangible amortization expense, based on current balances is as follows (in thousands):


Fiscal Year ending March 31,
2007	$	11,920
2008		5,939
2009		677
2010		317
2011 and thereafter		481

	$	19,334

Goodwill

Goodwill balances by segment were as follows (in thousands):


	Fab Automation		AMHS			Total
Balance at March 31, 2005	$	3,397	$	60,617		$	64,014
Foreign currency translation		—		(5,174	)		(5,174	)

Balances at March 31, 2006	$	3,397	$	55,443		$	58,840

The changes in the carrying amount of goodwill for the years ended March 31, 2006 and 2005, respectively, are as follows (in thousands):


Balances at March 31, 2004	$	71,973
Purchase accounting adjustments		(6,953	)
Foreign currency translation		(1,006	)

Balances at March 31, 2005		64,014
Foreign currency translation		(5,174	)

Balances at March 31, 2006	$	58,840

The purchase accounting adjustments in fiscal 2005 were primarily for the adjustment of deferred tax asset valuation allowance relating to pre-acquisition deferred tax assets.

Property and Equipment

Depreciation expense was $5.8 million, $6.8 million and $8.7 million for the fiscal years ended March 31, 2006, 2005 and 2004, respectively. Property and equipment consisted of the following (in thousands):


	March 31,
	2006			2005
Land	$	2,115		$	2,312
Buildings		7,332			8,231
Leasehold improvements		21,174			12,608
Machinery and equipment		29,325			28,050
Office equipment, furniture and fixture		36,377			34,947

Sub-total		96,323			86,148
Less accumulated depreciation		(73,215	)		(70,690	)

Total	$	23,108		$	15,458

Accrued and other liabilities

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


	March 31,
	2006		2005
			(As restated)
Income taxes payable	$	23,818	$	18,378
Other taxes payable		405		5,877
Warranty reserve		7,967		13,509
Contract loss reserve		—		248
Restructuring reserve		105		883
Employee compensation		9,308		8,822
Customer deposits		1,984		2,918
Other accrued expenses		19,315		20,010

Total	$	62,902	$	70,645

Other long-term liabilities

Other long-term liabilities consisted of the following (in thousands):


	March 31,
	2006		2005
Accrued pension benefit liability	$	6,975	$	9,463
Lease Incentive		3,747		—
Other		252		308

Total	$	10,974	$	9,771

Accumulated Comprehensive Income (Loss)

Comprehensive income (loss) is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investments by owners and distributions to owners and is to include unrealized gains and losses that have historically been excluded from net loss and reflected instead in equity. The following table presents our accumulated other comprehensive income (loss) items (in thousands):


	March 31,
	2006		2005
Unrealized gain (losses) on investments	$	89	$	(142	)
Foreign currency translation adjustments		665		7,611

Accumulated other comprehensive income	$	754	$	7,469

6. Restructuring and Other Charges (Credits):

Restructuring and other charges accrual and the related utilization for the fiscal years ended March 31, 2006, 2005 and 2004 were (in thousands):


	Severance and			Excess			Fixed Assets
	Benefits			Facilities			Impairment			Total
Balance, March 31, 2003	$	291		$	3,617		$	192		$	4,100
Additional (reduction in) accruals		5,460			1,075			46			6,581
Non-cash related utilization		70			(444	)		(205	)		(579	)
Amounts paid in cash		(5,757	)		(2,058	)		(33	)		(7,848	)

Balance, March 31, 2004		64			2,190			—			2,254
Additional (reduction in) accruals		1,803			7			—			1,810
Amounts paid in cash		(1,803	)		(1,390	)		—			(3,193	)
Foreign currency translation adjustment		3			9			—			12

Balance, March 31, 2005		67			816			—			883
Additional (reduction in) accruals		(7	)		(39	)		—			(46	)
Non-cash related utilization		(60	)		(96	)		—			(156	)
Amounts paid in cash		—			(573	)		—			(573	)
Foreign currency translation adjustment		—			(3	)		—			(3	)

Balance, March 31, 2006	$	—		$	105		$	—		$	105

During fiscal year 2006, we experienced certain minor changes in estimates to our restructuring and other charges accrual as a result of completion of various lease and sub-lease agreements, as well as final payments and adjustments on severance and benefit programs that were included in prior restructurings. The outstanding accrual balance of $0.1 million at March 31, 2006 consists of future lease obligations on operating leases which will be paid over the next two fiscal years. All remaining accrual balances are expected to be settled in cash.

In fiscal year 2005, we recorded net severance and other charges of $1.8 million, primarily for severance costs from a reduction in workforce in December 2004. In December 2004, we announced a restructuring initiative in our Fab Automation reporting segment, which involved the termination of employment of approximately 70 employees. The total costs of this restructuring were approximately $1.8 million in termination benefits.

In fiscal year 2004, we recorded net severance and other charges of $5.5 million, primarily related to $3.4 million in severance costs from a reduction in workforce in April 2003, and a $1.0 million charge related to the settlement and release of claims arising from the termination of a former officer. Included also were $1.1 million of severance expenses, primarily from headcount reductions in our Japanese operations. In addition to the severance charges, we recorded $1.1 million for exiting a facility in connection with our restructuring activities and for future lease obligations on a vacated facility in excess of estimated future sublease proceeds. As a result of these restructuring activities, we terminated the employment of approximately 245 employees from our U.S. as well as international operations.

7. Asset Impairment Charges:

In conjunction with the restructuring in fiscal 2005, we had removed from service and made available for sale certain land and a building owned by AJI. The building had been underutilized since a prior decision to outsource the manufacturing of our next-generation robotics products, part of an overall strategy to outsource the manufacture of all our Fab Automation segment products. As a result, we recorded an impairment charge of $4.6��million to write the assets down to their estimated fair value, based on a market valuation, less cost to sell. We accounted for these assets as held-for-sale under SFAS No. 144.

In the third quarter of fiscal year 2006, we re-evaluated the status of the AJI facility discussed above and based on an assessment of our expected future business needs, we reclassified the assets, as held-and-used.

In the fiscal year ended March 31, 2004, we completed the sale of land in Fremont, California. The net proceeds from the sale were $12.1 million. We had intended to construct corporate headquarters facilities on the land and subsequently decided not to build these facilities. In fiscal year 2004, we recorded a $6.9 million write-down based on our latest estimate of market value as supported by the pending sale agreement at the time.

8. Income Taxes:

The provision for (benefit from) income taxes is based upon income (loss) before income taxes, minority interest and discontinued operations as follows (in thousands):


	Fiscal Year Ended March 31,
	2006			2005			2004
Domestic	$	(18,553	)	$	(25,004	)	$	(72,995	)
Foreign		51,792			6,446			(20,129	)

	$	33,239		$	(18,558	)	$	(93,124	)

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


	Fiscal Year Ended March 31,
	2006			2005			2004
Current:
Federal	$	(537	)	$	(334	)	$	—
State		41			—			31
Foreign		22,671			15,388			2,272

Total Current		22,175			15,054			2,303

Deferred:
Federal		—			—			—
State		—			—			—
Foreign		(3,429	)		(16,970	)		(8,453	)

Total Deferred		(3,429	)		(16,970	)		(8,453	)

Total provision for (benefit from) income taxes	$	18,746		$	(1,916	)	$	(6,150	)

The provision for (benefit from) income taxes is reconciled with the Federal statutory rate as follows:


	Fiscal Year Ended March 31,
	2006			2005			2004
Tax provision (or benefit) at federal statutory rate		35.0	%		(35.0	)%		(35.0	)%
State taxes, net of Federal benefit		0.1	%		(3.9	)%		(5.7	)%
Foreign income and withholding taxes in excess of statutory rate		3.4	%		(20.7	)%		0.9	%
Non-deductible expenses and other		(1.4	)%		(1.4	)%		(0.8	)%
Change in valuation allowance		19.3	%		50.7	%		40.0	%

Effective income tax rate		56.4	%		(10.3	)%		(6.6	)%

The components of the net deferred tax assets and liabilities are as follows (in thousands):


	Fiscal Year Ended March 31,
	2006			2005
				(As restated)
Net operating loss and credit carryforwards	$	110,479		$	106,353
Reserves and accruals		36,975			40,089
Depreciation and Amortization		2,360			2,612
Capitalized R&D		2,971			3,506

Gross deferred tax assets		152,785			152,560
Valuation allowance		(132,666	)		(130,211	)

Net deferred tax assets	$	20,119		$	22,349

Deferred tax liabilities:
Intangible assets	$	(6,022	)	$	(12,748	)

At March 31, 2006, we had federal and state net operating losses of $275.4 million and $76.8 million, respectively. The federal net operating losses expire at various dates beginning 2012 through March 2026. The state net operating losses expire at various dates through 2016. Approximately $17 million of net operating losses relate to stock options which when realized will be credited primarily to equity.

At March 31, 2006, we had federal and state research and development tax credits of $4.1 million and $4.3 million, respectively. The federal research and development tax credits will begin to expire in 2022, while the state research and development tax credits may be carried forward indefinitely.

Utilization of the net operating losses and credit carryovers may be subject to a substantial annual limitation due to the ownership change limitation provided be the Internal Revenue Code of 1986, as amended and similar state provisions. The annual limitation may result in the expiration of net operating loss and credit carry forwards before utilization.

Based on the available objective evidence, we cannot conclude that it is more likely than not that the U.S. deferred tax assets, including the net operating losses, will be realizable. Accordingly, we have provided a full valuation allowance against the U.S. deferred tax assets at March 31, 2006.

Undistributed earnings of our foreign subsidiaries are indefinitely reinvested in foreign operations. No provision has been made for taxes that might be payable upon remittance of such earnings, nor is it practicable to determine the amount of this liability.

9. Debt:

We had $1.4 million of short-term debt issued by banks in Japan as of March 31, 2006, owed by our Japanese subsidiary, AJI and was guaranteed by the Company in the United States. As of March 31, 2006, the interest rate ranged from 1.4 percent to 2.0 percent. Substantially all of the debt is guaranteed by Asyst in the United States.

Long-term debt and capital leases consisted of the following (in thousands):


	March 31,
	2006			2005
Convertible subordinated notes	$	86,250		$	86,250
Long-Tern loans		1,762			4,397
Capital leases		524			860

Total long-term debt		88,536			91,507
Less: Current portion of long-term debt and capital leases		(1,368	)		(2,757	)

Long-term debt and capital leases net of current portion	$	87,168		$	88,750

At March 31, 2006, maturities of all long-term debt and capital leases are as follows (in thousands):


Fiscal Year Ending March 31,	Amount
2007	$	1,368
2008		724
2009		86,444
2010 and thereafter		—

	$	88,536

Convertible Subordinated Notes

On July 3, 2001, we completed the sale of $86.3 million of 5³/4 percent convertible subordinated notes that resulted in aggregate proceeds of $82.9 million to us, net of issuance costs. The notes are convertible, at the option of the holder, at any time on or prior to maturity into shares of our common stock at a conversion price of $15.18 per share, which is equal to a conversion rate of 65.8718 shares per $1,000 principal amount of notes. The notes mature on July 3, 2008, pay interest on January 3 and July 3 of each year and are redeemable at par and at our option after July 3, 2004. Debt issuance costs of $2.9 million, net of amortization are included in other assets. Issuance costs are being amortized over 84 months and are being charged to other income (expense). Debt amortization costs totaled $0.5 million during each of the fiscal years ended March 31, 2006, 2005 and 2004, respectively.

Asyst received a letter dated August 16, 2006, from U.S. Bank National Association, as trustee under the Indenture related to the notes, which asserts that Asyst is in default under the Indenture because of the delays in filing its Form 10-K for the fiscal year ended March 31, 2006 and Form 10-Q for the fiscal quarter ended June 30, 2006. Asyst does not agree with the trustee’s assertion that the delayed filing of the annual and quarterly reports is a default under the indenture. See Note 15 for further discussion.

Lines of Credit

At March 31, 2006, we had a two-year revolving line of credit with a commercial bank, with a then-current maturity date of July 31, 2007. We amended the line of credit during the first and third quarters of fiscal year 2006. As amended, the maximum borrowing available under the line was $40.0 million; however, only $25.0 million of borrowing was available to us as long as ASI maintained $65.0 million of aggregate available borrowing under its lines of credit in Japan. The line of credit required compliance with certain financial covenants, including a quarterly net income/loss target, calculated on an after-tax basis (excluding depreciation, amortization and other non-cash items), and a requirement that we maintain during the term of the line of credit a minimum cash and cash equivalents balance of $40.0 million held in the U.S., at least $20.0 million of which had to be maintained with the bank. The specific amount of borrowing available under the line of credit at any time, however, could have changed based on the amount of letters of credit the amount of aggregate borrowing by ASI and the cash balance held at the bank. As of March 31, 2006, there was no amount outstanding under the line of credit, but the maximum borrowing had been reduced by $0.8 million with the issuance of a letter of credit during November 2005. We were in compliance with all financial covenants and had available $29.7 million as of March 31, 2006. This line of credit was terminated in July 2006 (see Note 15).

At March 31, 2006, ASI had revolving lines of credit with five Japanese banks. These lines allow aggregate borrowing of up to 7 billion Japanese Yen, or approximately $60 million at the exchange rate as of March 31, 2006. As of March 31, 2006, ASI had no outstanding balance and a total of 7 billion Japanese yen available under these lines of credit. As of March 31, 2005, ASI had outstanding borrowings of 1.4 billion Japanese Yen, or approximately $13.0 million at the exchange rate as of March 31, 2005, which is recorded in short-term debt.

ASI’s lines of credit carry original terms of six months to one year, at variable interest rates based on the Tokyo Interbank Offered Rate (“TIBOR”) which was 0.06 percent at March 31, 2006 plus margins of 0.80 to 1.25 percent. Under the terms of certain of these lines of credit, ASI generally is required to maintain compliance with certain financial covenants, including requirements to report an annual net profit on a statutory basis and to maintain at least 80.0 percent of the equity reported as of its prior fiscal year-end.

ASI was in compliance with these covenants at March 31, 2006. None of these lines requires collateral and none of these lines requires guarantees from us or our subsidiaries in the event of default by ASI. In June 2006, we amended two of these lines of credit representing 4.0 billion Yen, or approximately $34 million, of borrowing capacity to extend the expiry dates to June 30, 2007, at which time all amounts outstanding under these lines of credit will be due and payable, unless the lines of credit are extended.

Our Japanese subsidiary, AJI, has terms loans outstanding with two Japanese banks. These loans are repayable monthly or quarterly through various dates ranging from May 2006 through May 2008. The loans carry annual interest rates between 1.4 to 3.0 percent and substantially all of these loans are guaranteed by the Company in the United States. As of March 31, 2006, AJI had outstanding borrowings of 0.2 billion Japanese Yen or approximately $1.8 million, at exchange rates as of March 31, 2006, that are recorded as short-term and long-term debt.

10. Common Stock:

As of March 31, 2006, the following shares of our common stock were available for issuance:


Employee Stock Option Plans			1,679,959
Employee Stock Purchase Plan			116,205

			1,796,164

Sale of Equity Securities

No equity securities were sold during fiscal year 2006, other than through exercise of stock options, restricted stock awards or through the Employee Stock Purchase Plan. In November 2003, we sold 6,900,000 shares of our common stock, including exercise of the underwriters’ over-allotment option, at an offering price to the public of $15.17 per share. We received total proceeds of $98.9 million, net of the related issuance fees and costs of $5.7 million.

Stock Option Plans

We have four stock option plans, the 1993 Employee Stock Option Plan (“the 93 Plan”), the 1993 Non-Employee Directors’ Stock Plan, the 2001 Non-Officer Equity Plan (“the 2001 Plan”) and the 2003 Equity Incentive Plan (“the 2003 Plan”). Under all of our stock option plans, options are currently granted for six year periods and become exercisable ratably typically over a vesting period of three years or as determined by the Board of Directors.

The 1993 Plan was terminated in 2003, and there are no further stock options available for issuance.

The 1993 Non-Employee Directors’ Stock Plan was terminated in 1999, and there are no further stock options available for issuance.

Under the 2001 Plan, adopted in January 2001, there were 2,100,000 shares of common stock which were reserved for issuance. The 2001 Plan provides for the grant of only non-qualified stock options to employees (other than officers or directors) and consultants (not including directors). Under the 2001 Plan, options may be granted at prices not less than the fair market value of our common stock at grant date.

Under the amended 2003 Plan, adopted in August 2005, 3,900,000 shares of common stock are reserved for issuance. The 2003 Plan provides for the grant of non-qualified stock options, incentive stock options and the issuance of restricted stock to employees. Under the 2003 Plan, options may be granted at prices not less than the fair market value of our common stock at grant date.

Total stock-based compensation expenses recorded during fiscal years 2006, 2005 and 2004 consisted of the following (in thousands):


	Fiscal Year Ended March 31,
	2006		2005		2004
			(As restated)		(As restated)
Cost of sales	$	157	$	281	$	267
Research and development		179		406		1,062
Selling, general and administrative		1,834		1,786		2,826

	$	2,170	$	2,473	$	4,155

During the fourth quarter of fiscal year 2005, the Board of Directors approved accelerating the vesting of 394,000 certain outstanding “out-of-the-money” unvested stock options with exercise prices of $10.11 per share granted to employees under the “All Employee Award” program of May 28, 2004. The decision to accelerate vesting of these options was made primarily to avoid recognizing the related compensation cost in future financial statements upon the adoption of SFAS No. 123(R). As these options’

vesting was accelerated in fiscal year 2005, additional compensation cost of $1.8 million, which represented the unamortized cost of accelerated unvested options, was included when calculating the pro forma net loss for disclosure under SFAS No. 123 and SFAS No. 148 for fiscal year 2005 in Note 4.

Activity in our stock option plans is summarized as follows:


	Fiscal Year Ended March 31,
	2006					2005					2004
				Weighted					Weighted					Weighted
				Average					Average					Average
				Exercise					Exercise					Exercise
	Shares			Price		Shares			Price		Shares			Price
Options outstanding, beginning of year		6,819,001		$	10.00		8,176,309		$	11.09		9,210,061		$	12.20
Granted		1,671,083			5.73		1,699,250			7.17		3,014,508			6.67
Exercised		(367,355	)		4.87		(460,148	)		5.64		(1,695,160	)		6.75
Cancelled		(1,246,317	)		10.23		(2,596,410	)		12.35		(2,317,904	)		12.80

Options outstanding, end of year		6,876,412		$	9.19		6,819,001		$	10.00		8,211,505		$	11.05

Exercisable, end of year		4,522,974		$	10.74		4,674,163		$	11.37		4,417,856		$	12.40

In addition, 436,500 shares, 27,286 shares and 886 shares of restricted stock and restricted stock units were granted during fiscal years ended March 31, 2006, 2005 and 2004, respectively, with a weighted average grant-date fair value of $4.00, $10.09 and $8.07 per share, respectively. There were 75,326 shares of restricted stock and restricted stock units issued during the fiscal year ended March 31, 2006, as a result of the lapse in the restriction due to fulfillment of the service period requirement.

The following table summarizes our outstanding and exercisable stock options as of March 31, 2006:


	Options Outstanding						Exercisable Options
			Weighted
			Average		Weighted				Weighted
	Number		Remaining		Average		Number		Average
Range of Exercise Prices	Outstanding		Contractual		Exercise Price		Exercisable		Exercise Price
$ 0.00 - $ 3.95		1,249,039		5.61	$	3.79		640,610	$	3.71
4.13 - 4.94		845,556		5.23		4.72		242,970		4.70
4.98 - 5.05		727,167		6.90		5.04		454,339		5.05
5.09 - 8.02		724,721		6.47		6.45		426,630		6.55
8.19 - 9.65		722,539		5.81		9.08		434,145		8.94
9.75 - 11.25		691,431		6.96		10.26		524,189		10.21
11.30 - 14.25		700,461		5.33		12.95		654,638		12.90
14.40 - 19.06		899,298		5.48		17.32		829,253		17.43
19.38 - 37.31		312,950		4.18		24.57		312,950		24.57
51.38 - 51.38		3,250		4.03		51.38		3,250		51.38

$ 0.00 - $ 51.38		6,876,412		5.83	$	9.19		4,522,974	$	10.74

The weighted-average grant date fair value of options during fiscal years ended March 31, 2006, 2005 and 2004 was $5.71, $5.09 and $4.37, respectively. The fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants in fiscal years ended March 31, 2006, 2005 and 2004:


	Fiscal Year Ended March 31,
	2006			2005			2004
Risk-free interest rate		4.7	%		3.4	%		3.0	%
Expected term of options (in years)		3.3			4.6			4.7
Expected volatility		83	%		91	%		81	%
Expected dividend yield		0	%		0	%		0	%

The volatility for fiscal year 2006 is a combination of historical volatility for the nine month period ended December 31, 2005 and a combination of historical and implied volatility for the three month period ended March 31, 2006. The volatility for fiscal years 2005 and 2004 was based on historical volatility.

Employee Stock Purchase Plan

Under the 1993 Employee Stock Purchase Plan (the “Plan”), as amended, 2,450,000 shares of common stock are reserved for issuance to eligible employees. The Plan permits employees to purchase common stock through payroll deductions, which may not exceed 10.0 percent of an employee’s compensation, at a price not less than 85.0 percent of the market value of the stock on specified dates. During fiscal years ended March 31, 2006, 2005 and 2004 the number of shares issued under the plan were 240,015, 261,399 and 163,671 shares, respectively. As of March 31, 2006 the number of shares purchased by employees under the Plan totaled 2,335,515.

The weighted-average fair value of stock purchases during fiscal years ended March 31, 2006, 2005 and 2004 was $4.04, $2.41 and $7.69, respectively. The fair value of each stock purchase is calculated on the date of purchase using the Black-Scholes model with the following weighted average assumptions used:


	Fiscal Year Ended March 31,
	2006			2005			2004
Risk-free interest rate		3.9	%		2.7	%		1.2	%
Expected life (in years)		0.5			0.5			0.5
Expected volatility		51	%		73	%		81	%
Expected dividend yield		0	%		0	%		0	%

11. Employee Benefit Plans:

Defined Benefit Pension Plans

Our joint venture, ASI, provides a defined benefit pension plan for its employees. The joint venture deposits funds for this plan with insurance companies, third-party trustees, or into government-managed accounts, and/or accrues for the unfunded portion of the obligation, in each case consistent with the requirements of Japanese law. The plan is managed jointly and its assets are commingled with those of the retired employees of Shinko, the minority shareholder of ASI.

The changes in the benefit obligations and plan assets for the plan described above were as follows (in thousands):


	Fiscal Year Ended March 31,
	2006			2005
Change in projected benefit obligation:
Beginning projected benefit obligation	$	18,842		$	18,703
Acquisitions/Employee Transfers		—			132
Service cost		781			738
Interest cost		350			364
Actuarial loss		135			1,268
Currency exchange rate changes		(1,593	)		(280	)
Benefits paid to plan participants		(1,641	)		(2,083	)

Ending projected benefit obligation	$	16,874		$	18,842

Change in Plan Assets:
Beginning fair value of plan assets	$	7,300		$	6,153
Actual return on plan assets		1,274			154
Employer contributions		2,371			2,515
Currency exchange rate changes		(722	)		(93	)
Benefits paid to participants		(1,155	)		(1,429	)

Ending fair value of plan assets	$	9,068		$	7,300

Funded Status:
Ending funded status	$	(7,806	)	$	(11,542	)
Unrecognized net actuarial loss		831			1,912

Net amount recognized	$	(6,975	)	$	(9,630	)

Amounts Recognized in the Balance Sheet:
Accrued pension liability	$	(6,975	)	$	(9,630	)

Plan asset allocations were as follows:


	March 31,
	2006			2005
Japanese equity securities		42.0	%		37.0	%
Japanese debt securities		25.0	%		27.0	%
Non-Japanese equity securities		22.0	%		21.0	%
Non-Japanese debt securities		8.0	%		9.0	%
Others		3.0	%		6.0	%

Total		100.0	%		100.0	%

The range of target allocation percentages for each major category of plan assets as of March 31, 2006 was as follows:


Japanese equity securities		30% to 45%
Japanese debt securities		20% to 30%
Non-Japanese equity securities		20% to 30%
Non-Japanese debt securities		10% to 20%
Others		0% to 10%

The discount rate is an assumption used to determine the actuarial present value of benefits attributed to the service rendered by participants in our pension plans. The rate used reflects our best estimate of the rate at which pension benefits could be effectively settled. We estimate this rate based on available rates of return on high-quality fixed-income investments currently available, primarily the yield on long-term Japanese government bonds with terms similar to the expected timing of payments to be made under our pension obligations.

Weight-average assumptions used to determine benefit obligations:


	March 31,
	2006			2005
Discount rate		2.0	%		2.0	%
Rate of compensation increase		2.5	%		2.5	%

Weight-average assumptions used to determine net periodic benefit cost for:


	Fiscal Year Ended March 31,
	2006			2005
Discount rate		2.0	%		2.0	%
Expected return on plan assets		3.5	%		3.5	%
Rate of compensation increase		2.5	%		2.5	%

Asset return assumptions are required by generally accepted accounting principles and are derived, following actuarial and statistical methodologies, from the analysis of long-term historical data relevant to Japan where the plan is in effect, and the investment applicable to the plan. Plans are subject to regulation under local law which may directly or indirectly affect the types of investment that the plan may hold.

The net periodic pension cost for the plan included the following components (in thousands):


	Fiscal Year Ended March 31,
	2006			2005			2004
Company service cost	$	781		$	738		$	688
Interest cost		350			364			352
Expected return on plan assets		(266	)		(246	)		(243	)
Amortization of unrecognized loss		2			—			—

Net periodic pension cost	$	867		$	856		$	797

Future expected benefit payments over the next ten fiscal years are as follows (in thousands):


Fiscal Year Ending March 31,
2007	$	889
2008		1,568
2009		2,560
2010		2,496
2011		2,121
2012 through 2016		4,128

Total	$	13,762

The net periodic pension cost for the fiscal year ending March 31, 2007 is expected to be approximately $0.9 million. Cash funding for benefits to be paid for fiscal year 2007 is expected to be approximately $0.3 million. The long-term portion of the benefit liability is included in other long-term liabilities, while the current portion is included in accrued and other liabilities.

At March 31, 2006, the plan’s accumulated benefit obligation of $13.8 million and the plan’s projected benefit obligation of $16.9 million exceed the plan assets of $9.1 million. At March 31, 2005, the plan’s accumulated benefit obligation of $15.6 million and the plan’s projected benefit obligation of $18.8 million exceed the plan assets of $7.3 million.

Our majority-owned Japanese subsidiary, AJI, has an unfunded defined benefit pension plan for its employees. At March 31, 2006, the projected benefit obligation and accrued benefit liability were $1.0 million and $0.8 million, respectively. The net periodic pension cost for the fiscal years ended March 31, 2006 and 2005 was $0.2 million and $0.3 million, respectively.

Employee Savings and Retirement Plan

We maintain a 401(k) retirement savings plan for our full-time employees. Participants in the 401(k) plan may contribute up to 20.0 percent of their annual salary, limited by the maximum dollar amount allowed by the Internal Revenue Code. Employer matching contributions were approximately $0.6 million and $0.5 million during fiscal years ended March 31, 2006 and 2005, respectively. There was no employer matching contribution during the fiscal year ended March 31, 2004.

12. Reportable Segments:

We have two reportable segments: Fab Automation and AMHS. Fab Automation Products include interface products, substrate-handling robotics, wafer and reticle carriers, auto-ID systems, sorters and connectivity software. AMHS products include automated transport and loading systems for semiconductor fabs and flat panel display manufacturers.

The segments represent management’s view of the Company’s business and how it evaluates performance and allocate resources based on revenues and operating income (loss). Income (loss) from operations for each segment includes selling, general and administrative expenses directly attributable to the segment. Amortization of acquired intangible assets, including impairment of these assets and of goodwill, and acquisition-related and restructuring charges are excluded from the segments’ income (loss) from operations. Our non-allocable overhead costs, which include corporate general and administrative expenses, are allocated between the segments based upon segment revenues.

Segment information is summarized as follows (in thousands):


	March 31,
	2006		2005
AMHS:
Fixed Assets Additions, fiscal year ended	$	3,721	$	2,636
Total Assets	$	251,477	$	312,391
Fab Automation Products:
Fixed Assets Additions, fiscal year ended	$	11,068	$	1,312
Total Assets	$	163,817	$	171,383
Consolidated:
Fixed Assets Additions, fiscal year ended	$	14,789	$	3,948
Total Assets	$	415,294	$	483,774


	Fiscal Year Ended March 31,
	2006			2005			2004
				(As restated)			(As restated)
AMHS:
Net sales	$	294,483		$	380,596		$	168,510
Cost of Sales		196,571			333,956			145,636

Gross Profit	$	97,912		$	46,640		$	22,874

Income (loss) from operations	$	47,782		$	844		$	(19,245	)

Amortization and Depreciation	$	14,461		$	17,284		$	17,048

Fab Automation Products:
Net sales	$	164,738		$	232,391		$	133,132
Cost of Sales		101,404			156,816			102,636

Gross Profit	$	63,334		$	75,575		$	30,496

Income (loss) from operations	$	(15,496	)	$	(18,673	)	$	(67,244	)

Amortization and Depreciation	$	7,901		$	10,325		$	12,183

Consolidated:
Net sales	$	459,221		$	612,987		$	301,642
Cost of Sales		297,975			490,772			248,272

Gross Profit	$	161,246		$	122,215		$	53,370

Income (loss) from operations	$	32,286		$	(17,829	)	$	(86,489	)

Amortization and Depreciation	$	22,362		$	27,609		$	29,231

Total loss from operations is equal to consolidated loss from operations for the periods presented.

Net sales by geography, based on the ship to location of the customers, were as follows (in thousands):


	Fiscal Year Ended March 31,
	2006		2005		2004
United States	$	87,266	$	112,923	$	63,863
Japan		183,079		146,752		83,778
Taiwan		109,174		230,334		46,211
Korea		21,123		30,240		45,785
Other Asia/Pacific		27,336		70,879		41,381
Europe		31,243		21,859		20,624

Total	$	459,221	$	612,987	$	301,642

Total property and equipment, net and other assets, excluding deferred tax assets, were as follows (in thousands):


	March 31,
	2006		2005
United States	$	12,057	$	6,243
Japan		12,992		11,915
Other		312		324

Total	$	25,361	$	18,482

13. Commitments and Contingencies:

Lease Commitments

We lease various facilities under non-cancelable capital and operating leases. At March 31, 2006, the future minimum commitments under these leases are as follows (in thousands):


Fiscal Year Ending March 31,	Capital Lease			Operating Lease
2007	$	231		$	3,292
2008		162			3,189
2009		148			1,585
2010		—			1,449
2011 and thereafter		—			4,238

Total	$	541		$	13,753

Less: interest		(17	)

Present value of minimum lease payments		524
Less: current portion of capital leases		(216	)

Capital leases, net of current portion	$	308

Rent expense under our operating leases was approximately $6.2 million, $5.8 million and $5.0 million for the years ended March 31, 2006, 2005 and 2004, respectively.

Purchase Commitments

At March 31, 2006, total non-cancelable purchase orders or contracts for the purchase of raw materials and other goods and services was $13.6 million.

Legal Commitments

On October 28, 1996, we filed suit in the United States District Court for the Northern District of California against Empak, Inc., Emtrak, Inc., Jenoptik AG, and Jenoptik Infab, Inc., alleging, among other things, that certain products of these defendants infringe our United States Patents Nos. 5,097,421 (“the ‘421 patent”) and 4,974,166 (“the ‘166 patent”). Defendants filed answers and counterclaims asserting various defenses, and the issues subsequently were narrowed by the parties’ respective dismissals of various claims, and the dismissal of defendant Empak pursuant to a settlement agreement. The remaining patent infringement claims against the remaining parties proceeded to summary judgment, which was entered against us on June 8, 1999. We thereafter took an appeal to the United States Court of Appeals for the Federal Circuit. On October 10, 2001, the Federal Circuit issued a written opinion, Asyst Technologies, Inc. v. Empak, 268 F.3d 1365 (Fed. Cir. 2001), reversing in part and affirming in part the decision of the trial court to narrow the factual basis for a potential finding of infringement, and remanding the matter to the trial court for further proceedings. The case was subsequently narrowed to the ‘421 patent, and we sought monetary damages for defendants’ infringement, equitable relief, and an award of attorneys’ fees. On October 9, 2003, the court: (i) granted defendants’ motion for summary judgment to the effect that the defendants had not infringed our patent claims at issue and (ii) directed that judgment be entered for defendants. We thereafter took a second appeal to the United States Court of Appeals for the Federal Circuit. On March 22, 2005, the Federal Circuit issued a second written opinion, Asyst Technologies, Inc. v. Empak, 402 F.3d 1188 (Fed. Cir. 2005), reversing in part and affirming in part the decision of the trial court to narrow the factual basis for a potential finding of infringement, and remanding the matter to the trial court for further proceedings.

Following remand, the Company filed a motion for summary judgment that defendants infringe several claims of the ‘421 patent, and defendants filed a cross-motion seeking a determination of non-infringement. On March 31, 2006, the Court entered an order granting in part, and denying in part, the Company’s motion for summary judgment and at the same time denied defendants’ cross motion for summary judgment. The Court found as a matter of law that defendants’ IridNet system infringed the ‘421 Patent under 35 U.S.C. § 271(a), but denied without prejudice that portion of the motion regarding whether defendants’ foreign sales infringed under 35 U.S.C. §271(f). At a case management conference held June 23, 2006, the Court set a trial date of December 1, 2006. In the interim, the defendants continue to assert certain defenses, and are seeking a reexamination by the Patent and Trademark Office of the claims in suit. A reexamination could significantly narrow or invalidate our patents in suit, or narrow or preclude damages recoverable by us in this action. We intend to continue to prosecute the matter before the trial court, seeking monetary damages for defendants’ infringement, equitable relief, and an award of attorneys’ fees.

On August 29, 2005, a suit was filed in the Osaka District Court, Japan, against Shinko and ASI. The suit, filed by Auckland UniServices Limited and Daifuku Corporation (“Plaintiffs”), alleges, among other things, that certain Shinko and ASI products infringe Japanese Patent No. 3304677 (the “ ‘677 Patent”), and seeks monetary damages against both Shinko and ASI in an amount to be determined. The suit alleges infringement of the ‘677 Patent by elements of identified Shinko products and of ASI’s Over-head Shuttle and Over-head Hoist Transport products. ASI has asserted various defenses, including non-infringement of the asserted claims under the ‘677 Patent, and intends to defend the matter vigorously. ASI is also consulting with Shinko concerning issues relating to a mutual defense of the claims.

As discussed in Note 2, the Company received a letter dated June 7, 2006, from the SEC requesting that Asyst voluntarily produce documents relating to stock options granted from January 1, 1997 to the present. The Company is cooperating in the SEC’s inquiry. On June 26, 2006, the Company received a grand jury subpoena of the same date from the United States District Court for the Northern District of California, requesting the production of documents relating to the Company’s past stock option grants and practices for the period from 1995 to the present. The Company intends to cooperate fully with the U.S. Attorney’s office and is responding to this subpoena. Due to the inherent uncertainties involved with such investigations, the Company cannot accurately predict the ultimate outcome of these governmental inquiries.

In addition, certain of the current and former directors and officers of the Company have been named as defendants in two consolidated shareholder derivative actions filed in the United States District Court of California, captionedIn re Asyst Technologies, Inc. Derivative Litigation(N.D. Cal.) (the “Federal Action”), and one similar shareholder derivative action filed in California state court, captionedForlenzo v. Schwartz, et al. (Alameda County Superior Court) (the “State Action”). Plaintiffs in the Federal and State Actions allege that certain of the current and former defendant directors and officers backdated stock option grants beginning in 1995. Both Actions assert causes of action for breach of fiduciary duty, unjust enrichment, corporate waste, abuse of control, gross mismanagement, accounting, rescission and violations of Section 25402et. seq.of the California Corporations Code. The Federal Action also alleges that certain of the current and former defendant directors and officers breached their fiduciary duty by allegedly violating Section 10(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Rule 10b-5 promulgated there under, Section 14(a) of the Exchange Act and Rule 14a-9 promulgated there under, and Section 20(a) of the Exchange Act. Both Actions seek to recover unspecified monetary damages, disgorgement of profits and benefits, equitable and injunctive relief, and attorneys’ fees and costs. The State Action also seeks the imposition of a constructive trust on all proceeds derived from the exercise of allegedly improper stock option grants. The Company is named as a nominal defendant in both the Federal and State Actions, thus no recovery against the Company is sought. The Company has engaged outside counsel to represent it in the government inquiries and pending lawsuits.

From time to time, we are also involved in other legal actions arising in the ordinary course of business. Litigation is inherently unpredictable, and we cannot predict the outcome of the legal proceedings described above with any certainty. Should there be an adverse judgment against us, it may have a material adverse impact on our financial statements. Because of uncertainties related to both the amount and range of losses in the event of an unfavorable outcome in the lawsuits listed above or in certain other pending proceedings for which loss estimates have not been recorded, we are unable to make a reasonable estimate of the losses that could result from these matters and hence have recorded no accrual in our financial statements as of March 31, 2006.

Indemnifications

We, as permitted under California law and in accordance with our Bylaws, indemnify our officers, directors and members of our senior management for certain events or occurrences, subject to certain limits, while they were serving at its request in such capacity. In this regard, we have received numerous requests for indemnification by current and former officers and directors, with respect to asserted liability under the governmental inquiries shareholder derivative actions described in the immediately preceding Legal Commitments section. The maximum amount of potential future indemnification is unlimited; however, we have a Director and Officer Insurance Policy that enables us to recover a portion of future amounts paid, subject to conditions and limitations of the polices. As a result of the insurance policy coverage, we believe the fair value of these indemnification agreements is not material.

Our sales agreements indemnify our customers for any expenses or liability resulting from claimed infringements of patents, trademarks or copyrights of third parties. The terms of these indemnification agreements are generally perpetual any time after execution of the agreement. The maximum amount of potential future indemnification is unlimited. However, to date, we have not paid any claims or been required to defend any lawsuits with respect to any claim.

14. Related Party Transactions:

At March 31, 2006 and 2005, we did not hold any outstanding loans due to us from current employees. At March 31, 2004, we held notes from two then current non-officer employees totaling $0.4 million, which were repaid during fiscal year 2005.

Our majority-owned subsidiary, ASI, has certain transactions with its minority shareholder, Shinko. Our majority-owned subsidiary, AJI, has certain transactions with MECS Korea, in which AJI is a minority shareholder. At March 31, 2006 and 2005, significant balances with Shinko and MECS Korea were (in thousands):


	March 31,
	2006		2005
Accounts payable due to Shinko	$	13,406	$	39,221
Accrued liabilities due to Shinko	$	59	$	450
Accounts receivable from MECS Korea	$	90	$	100
Accounts payable due to MECS Korea	$	3	$	21
Accrued liabilities due to MECS Korea	$	81	$	—

In addition, the consolidated financial statements reflect that ASI purchased various products, administrative and IT services from Shinko. AJI also purchased IT services from MECS Korea. During the fiscal years ended March 31, 2006, 2005 and 2004, sales to and purchases from Shinko and MECS Korea were (in thousands):


	Fiscal Year Ended March 31,
	2006		2005		2004
Material and service purchases from Shinko	$	57,043	$	96,097	$	42,511
Material and service purchases from MECS Korea	$	3	$	414	$	2
Sales to MECS Korea	$	568	$	378	$	138

As noted in more detail in Part III, below, the Company has appointed Richard H. Janney, as interim Chief Financial Officer and interim Principal Accounting Officer. From 2004 to September 2006, Mr. Janney served as Engagement Manager for Jefferson Wells, a global provider of professional services in the areas of risk, controls, compliance, and financial process improvement. During and after Asyst’s fiscal year ended March 31, 2006, Mr. Janney, and other consultants from Jefferson Wells worked closely with Asyst, advising Asyst on its internal controls and processes relating to its financial reporting and assisting it in its continuing efforts to comply with its requirements under Section 404 of the Sarbanes-Oxley Act. Asyst paid an aggregate amount of approximately $1.68 million to Jefferson Wells for these and other consulting services from April 2005 through July 2006. For the current period of his service to Asyst, Mr. Janney has agreed to devote his professional time to his positions at Asyst (but may provide limited services to Jefferson Wells that do not conflict with his agreed undertaking with Asyst).

15. Subsequent Events:

NASDAQ Delisting Proceedings

On June 22, 2006, the Company notified the NASDAQ National Market (renamed the NASDAQ Global Market on July 1, 2006) that Asyst would not file its Form 10-K for the year ended March 31, 2006, within the 15 calendar day extension period contemplated by its Form 12b-25 filed with the SEC on June 14, 2006. On June 30, 2006, the Company received a letter from the NASDAQ Listing Qualifications Department indicating that, because of the Company’s previously announced delay in timely filing its Annual Report on Form 10-K for its fiscal year ended March 31, 2006, the Company was not in compliance with the filing requirements for continued listing on NASDAQ as set forth in NASDAQ Marketplace Rule 4310(c)(14). The Company made a request for a hearing before a NASDAQ Listings Qualifications Panel to address the filing delay, which hearing was held on August 31, 2006. On September 21, 2006, the Company received a letter from the NASDAQ Listing Qualifications Hearings department stating that a NASDAQ Listing Qualifications Panel has determined to continue the listing of Asyst’s common stock on the NASDAQ Global Market, subject to the conditions that:

	•		On or before September 27, 2006, the Company submits supplemental information outlined in the letter concerning the previously announced Special Committee investigation into stock option grants and practices; and

	•		On or before November 30, 2006, the Company files its Form 10-K for the fiscal year ended March 31, 2006, its Form 10-Q for the quarter ended June 30, 2006, and all required restatements (if any).

On September 27, 2006, Asyst submitted to NASDAQ the supplemental information requested from the Company.

Acquisition and Related Debt Financing Facility

On July 14, 2006, Asyst and AJI purchased from Shinko shares of ASI representing an additional 44.1% of outstanding capital stock of ASI for a cash purchase price of JPY 11.7 billion (approximately US$102 million at the July 14 exchange rate). This purchase increased Asyst’s consolidated ownership of ASI to 95.1%.

At any time prior to the first anniversary of the closing, and subject to the other provisions of the agreement, either Shinko or AJI may give notice to the other, calling for AJI to purchase from Shinko shares representing the remaining 4.9% of outstanding capital stock of ASI for a fixed payment of JPY 1.3 billion (approximately US$11.3 million at the July 14 exchange rate).

On June 22, 2006, Asyst entered into a Credit Agreement with Bank of America, N.A., as Administrative Agent, and Banc of America Securities LLC, as Lead Arranger and Book Manager, and the other parties to the agreement. The $115 million senior secured credit facility under this agreement consists of a $90 million revolving credit facility, including a $20 million sub-limit for

letters of credit and $10 million sub-limit for swing-line loans, and a $25 million term loan facility. The credit agreement will terminate and all amounts outstanding will be due 3 years after the credit agreement closing date (provided that Asyst’s outstanding 5³/4% convertible subordinated notes due July 3, 2008, are redeemed or repurchased, or the maturity of the notes extended, on terms reasonably satisfactory to the administrative agent on or before March 31, 2008; otherwise, amounts outstanding under the credit agreement will be due on March 31, 2008).

Interest on the credit facility is based on the applicable margin plus either (i) LIBOR (or such other indices as may be agreed upon), or (ii) for dollar-denominated loans only, the higher of (a) the Bank of America prime rate, or (b) the Federal Funds rate plus 0.50%. The applicable margin ranges from 1% to 2.75%, depending on various factors set forth in the credit agreement. The agreement also requires a range of commitment, letter of credit and other fees.

��The credit agreement is a direct obligation of Asyst and its direct and indirect subsidiaries, and is guaranteed by Asyst’s direct and indirect domestic subsidiaries. The credit facility is secured by a lien on all of the assets of Asyst and its subsidiaries in which security interests can be granted.

In conjunction with executing the $115 million senior secured credit facility, Asyst terminated the $40 million revolving bank line of credit that was originally scheduled to expire on July 31, 2007.

Notice of default relating to Convertible Subordinated Notes

Asyst received a letter dated August 16, 2006, from U.S. Bank National Association, as trustee under the Indenture related to Asyst’s
5³/4% Convertible Subordinated Notes due 2008, which asserts that Asyst is in default under the Indenture because of the delays in filing its Form 10-K for the fiscal year ended March 31, 2006 and Form 10-Q for the fiscal quarter ended June 30, 2006.

The letter states that this asserted default is not an “Event of Default” under the Indenture if the company cures the default within 60 days after receipt of this notice, or the default is waived by the holders of a majority in aggregate principal amount of the notes outstanding. If an Event of Default were to occur, and is continuing under the indenture, the trustee of the holders of at least 25% in aggregate principal amount of the notes, of which $86.3 million principal amount is outstanding, may accelerate maturity of the notes.

Asyst does not agree with the trustee’s assertion that the delayed filing of the annual and quarterly reports is a default. Nonetheless, in conjunction with the filing of this report on Form 10-K, we also intend to file with the SEC our report on Form 10-Q for the fiscal quarter ended June 30, 2006. Upon completion of those filings, we intend to deliver to the trustee copies of the reports on Forms 10-K and 10-Q, and that delivery will cure any purported defaults under the indenture and asserted by the trustee in its letter referenced above.

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of
Asyst Technologies, Inc.:

We have completed integrated audits of Asyst Technologies, Inc.’s fiscal 2006 and fiscal 2005 consolidated financial statements and of its internal control over financial reporting as of March 31, 2006, and an audit of its fiscal 2004 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

Consolidated financial statements and financial statement schedule

In our opinion, the accompanying consolidated financial statements listed in the index appearing under Item 8 present fairly, in all material respects, the financial position of Asyst Technologies, Inc. and its subsidiaries (the “Company”) at March 31, 2006 and March 31, 2005, and the results of their operations and their cash flows for each of the three years in the period ended March 31, 2006 in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statement schedule listed in the index appearing under Item 8 presents fairly, in all material respects, the information set forth therein when read in conjunction with the related consolidated financial statements. These financial statements and financial statement schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and financial statement schedule based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit of financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

As described in Note 2 to the consolidated financial statements, the Company has restated its fiscal 2005 and fiscal 2004 consolidated financial statements.

Internal control over financial reporting

Also, we have audited management’s assessment, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A, that Asyst Technologies, Inc. did not maintain effective internal control over financial reporting as of March 31, 2006, because (1) the Company did not maintain effective controls over the completeness and accuracy of revenue and deferred revenue, and (2) the Company did not maintain effective controls over the completeness, accuracy and timeliness of recognition of accrued liabilities and deferred costs, based on criteria established inInternal Control — Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit.

We conducted our audit of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

A material weakness is a control deficiency, or combination of control deficiencies, that results in more than a remote likelihood that a material misstatement of the annual or interim financial statements will not be prevented or detected. The following material weaknesses have been identified and included in management’s assessment as of March 31, 2006:

1. The Company did not maintain effective controls over the completeness and accuracy of revenue and deferred revenue. Specifically, effective controls were not designed and in place to prevent or detect the Company’s (a) failure to properly defer revenue for post-delivery installation obligations at its wholly-owned subsidiary in Japan, Asyst Japan, Inc. (“AJI”), (b) failure to recognize installation revenue on a timely basis at its majority-owned joint venture in Japan, Asyst Shinko, Inc. (“ASI”), and (c) failure to properly defer revenue on one contract until the contract was signed. This control deficiency resulted in audit adjustments to the interim consolidated financial statements for the second and third quarter of fiscal 2006 and audit adjustments to the Company’s fiscal 2006 annual consolidated financial statements. Additionally, this control deficiency could result in a misstatement of revenue and deferred revenue that would result in a material misstatement to the Company’s interim or annual consolidated financial statements that would not be prevented or detected. Accordingly, management has determined that this control deficiency constitutes a material weakness.

2. The Company did not maintain effective controls over the completeness, accuracy and timeliness of recognition of accrued liabilities and deferred costs. Specifically, effective controls were not designed and in place to prevent or detect the Company’s (a) capitalization of certain operating expenses that should have been expensed, (b) failure to accrue certain freight charges on a timely basis and (c) failure to accurately and timely accrue certain cost of sales at ASI. This control deficiency resulted in audit adjustments to the interim consolidated financial statements for all quarters of fiscal 2006 and audit adjustments to the Company’s fiscal 2006 annual consolidated financial statements. Additionally, this control deficiency could result in a misstatement of prepaid costs, accrued liabilities, cost of sales and operating expenses that would result in a material misstatement to the Company’s interim or annual consolidated financial statements that would not be prevented or detected. Accordingly, management has determined that this control deficiency constitutes a material weakness.

These material weaknesses were considered in determining the nature, timing, and extent of audit tests applied in our audit of the fiscal 2006 consolidated financial statements, and our opinion regarding the effectiveness of the Company’s internal control over financial reporting does not affect our opinion on those consolidated financial statements.

In our opinion, management’s assessment that Asyst Technologies, Inc. did not maintain effective internal control over financial reporting as of March 31, 2006, is fairly stated, in all material respects, based on criteria established in Internal Control — Integrated Framework issued by the COSO. Also, in our opinion, because of the effects of the material weaknesses described above on the achievement of the objectives of the control criteria, Asyst Technologies, Inc. has not maintained effective internal control over financial reporting as of March 31, 2006, based on criteria established in Internal Control — Integrated Framework issued by the COSO.

/s/ PricewaterhouseCoopers LLP

San Jose, California
October 13, 2006

Supplementary Financial Data

Selected Quarterly Financial Data (Unaudited) for the two year period ended March 31, 2006.

QUARTERLY FINANCIAL DATA


	Year Ended March 31, 2006
	First			Second			Third			Fourth
	Quarter			Quarter			Quarter			Quarter
	(In thousands, except per share data)
As reported
Net sales	$	117,451		$	124,595		$	106,824		$	110,351
Gross profit		33,734			43,476			41,996			42,112
Net income (loss)	$	(3,587	)	$	(1,545	)	$	2,979		$	2,437

Basic net income (loss) per share	$	(0.08	)	$	(0.03	)	$	0.06		$	0.05

Diluted net income (loss) per share	$	(0.08	)	$	(0.03	)	$	0.06		$	0.05

Shares used in basic net income (loss) per share calculations		47,812			47,963			48,019			48,216
Shares used in diluted net income (loss) per share calculations		47,812			47,963			48,789			50,178
Adjustments
Net sales	$	—		$	—		$	—		$	—
Gross profit		(26	)		(26	)		(20	)		—
Net income (loss)	$	(107	)	$	(91	)	$	(190	)	$	—

Basic net income (loss) per share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Diluted net income (loss) per share	$	(0.00	)	$	(0.00	)	$	(0.00	)	$	(0.00	)

Shares used in basic net income (loss) per share calculations		47,812			47,963			48,019			48,216
Shares used in diluted net income (loss) per share calculations		47,812			47,963			48,789			50,178
As restated
Net sales	$	117,451		$	124,595		$	106,824		$	110,351
Gross profit		33,708			43,450			41,976			42,112
Net income (loss)	$	(3,694	)	$	(1,636	)	$	2,789		$	2,437

Basic net income (loss) per share	$	(0.08	)	$	(0.03	)	$	0.06		$	0.05

Diluted net income (loss) per share	$	(0.08	)	$	(0.03	)	$	0.06		$	0.05

Shares used in basic net income (loss) per share calculations		47,812			47,963			48,019			48,216
Shares used in diluted net income (loss) per share calculations		47,812			47,963			48,789			50,178


	Year Ended March 31, 2005
	First Quarter			Second Quarter			Third Quarter			Fourth Quarter
As reported
Net sales	$	139,425		$	168,606		$	161,383		$	143,573
Gross profit		27,095			30,848			27,569			36,745
Net loss	$	(2,286	)	$	(1,831	)	$	(11,644	)	$	(1,781	)

Basic and diluted net loss per share	$	(0.05	)	$	(0.04	)	$	(0.24	)	$	(0.04	)

Shares used in basic and diluted net loss per share calculations		47,179			47,428			47,553			47,678
Adjustments
Net sales	$	—		$	—		$	—		$	—
Gross profit		(21	)		(15	)		(1	)		(5	)
Net income (loss)	$	(98	)	$	(56	)	$	(27	)	$	(20	)

Basic and diluted net income (loss) per share	$	(0.00	)	$	(0.00	)	$	(0.01	)	$	(0.00	)

Shares used in basic and diluted net loss per share calculations		47,179			47,428			47,553			47,678
As restated
Net sales	$	139,425		$	168,606		$	161,383		$	143,573
Gross profit		27,074			30,833			27,568			36,740
Net loss	$	(2,384	)	$	(1,887	)	$	(11,671	)	$	(1,801	)

Basic and diluted net loss per share	$	(0.05	)	$	(0.04	)	$	(0.25	)	$	(0.04	)

Shares used in basic and diluted net loss per share calculations		47,179			47,428			47,553			47,678

Comparability of quarterly data is affected by the following items which occurred during fiscal years 2006 and 2005:

Asset impairment charges of $4.6 million were recorded in the third quarter of fiscal year 2005. These charges relate to write-downs in fixed assets, including land held for sale, by AJI.

Loss contract accruals of $1.9 million and $0.4 million were recorded in the second and fourth quarters of fiscal year 2005, respectively.

Restructuring and other charges of $0.2 million, $0.5 million and $1.1 million were recorded in the first, second and third quarters of fiscal year 2005, respectively. These charges were primarily for severance, excess facility and asset impairment charges related to workforce reductions and consolidation of our facilities.

The net loss for the fourth quarter of fiscal year 2005 included a net credit of $0.7 million relating to the first three quarters of fiscal 2005 to properly record certain inter-company sales and costs of ASI with its subsidiaries.

Stock-based compensation and related payroll tax expenses (benefits) of $107,000, $91,000, $74,000 and $(8,000) were recorded in cost of sales and other operating expenses in the first, second, third and fourth quarters of fiscal year 2006, respectively.

Stock-based compensation and related payroll tax expenses of $98,000, $56,000, $27,000 and $20,000 were recorded in cost of sales and other operating expenses in the first, second, third and fourth quarters of fiscal year 2005, respectively.

These charges were primarily related to the investigation which began in June 2006, relating to the dating of stock option awards granted from fiscal year 1995 through fiscal year 2004.

Refer to the consolidated financial statements contained in this Form 10-K for further disclosure of the above items.

PART IV

Item 15 —Exhibits and Financial Statement Schedules

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

(1) Financial Statements

See Index to Consolidated Financial Statements under Item 8 on page 4 of this Annual Report on Form 10-K/A (Amendment No. 3).

(2) Financial Statement Schedule

See Index to Consolidated Financial Statements under Item 8 on page 43 of the originally filed Annual Report on Form 10-K.

(3) Exhibits

The exhibits listed in the Index to Exhibits below in this Amendment No. 3 is incorporated herein by reference as the list of exhibits required as part of this report.

(b) Exhibits

Exhibit

Incorporated by Reference

Filed

Number

Exhibit Description

Form

Ex. No.

File No.

Filing Date

Herewith

2.1‡

Share Purchase Agreement dated as of June 22, 2006, between Shinko Electric Co., Ltd., Asyst Technologies, Inc. and Asyst Japan Inc. The schedules to the Share Purchase Agreement are omitted but will be furnished to the Securities and Exchange Commission supplementally upon request.

8-K

2.1

000-22430

7/20/2006

3.1

Amended and Restated Articles of Incorporation of the Company.

S-1

3.1

333-66184

7/19/1993

3.2

Bylaws of the Company.

S-1

3.2

333-66184

7/19/1993

3.3

Certificate of Amendment of the Amended and Restated Articles of Incorporation, filed September 24, 1999.

10-Q

3.2

000-22430

10/21/1999

Exhibit

Incorporated by Reference

Filed

Number

Exhibit Description

Form

Ex. No.

File No.

Filing Date

Herewith

3.4

Certificate of Amendment of the Amended and Restated Articles of Incorporation, filed October 5, 2000.

DEF 14A

App.

000-22430

7/31/2000

4.1

Rights Agreement among the Company and Bank of Boston, N.A., as Rights Agent, dated June 25, 1998.

8-K

99.2

000-22430

6/29/1998

4.2

Indenture dated as of July 3, 2001 between the Company, State Street Bank and Trust Company of California, N.A., as trustee, including therein the forms of the notes.

10-Q

4.3

000-22430

8/14/2001

4.3

Registration Rights Agreement dated as of July 3, 2001 between the Company and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith, Incorporated, and ABN Amro Rothschild LLC.

10-Q

4.4

000-22430

8/14/2001

4.4

Amendment to Rights Agreement among the Company and Bank of Boston, N.A. as Rights Agent, dated November 30, 2001.

10-K

4.5

000-22430

6/28/2002

10.1*

Form of Indemnity Agreement entered into between the Company and certain directors.

S-1

10.1

333-66184

7/19/1993

10.2*

Company’s 1993 Stock Option Plan and related form of stock option agreement.

S-1

10.2

333-88246

2/13/1995

10.3*

Company’s 1993 Employee Stock Purchase Plan and related offering document.

S-1

10.3

333-66184

7/19/1993

10.4*

Company’s 1993 Non-Employee Directors’ Stock Option Plan and related offering document

S-1

10.4

333-66184

7/19/1993

10.5

Hewlett-Packard SMIF License Agreement dated June 6, 1984.

S-1

10.5

333-66184

7/19/1993

10.6*

Employment Agreement between the Company and Stephen S. Schwartz, Ph.D., dated January 11, 2001.

10-K

10.27

000-22430

6/19/2001

10.7†

Agreement on Bank Transactions between Asyst Japan, Inc., or AJI, and Tokyo Mitsubishi Bank dated March 13, 2001.

10-Q

10.28

000-22430

8/14/2001

10.8†

Share Purchase Agreement between Shinko Electric Co., Ltd. and Asyst Japan Inc., dated as of May 24, 2002.

10-Q

10.38

000-22430

11/12/2002

10.9†

Shareholders Agreement between Shinko Electric Co., Ltd. and Asyst Japan Inc., dated as of May 24, 2002.

10-Q

10.39

000-22430

11/12/2002

10.10‡

Manufacturing Services and Supply Agreement among the Company and Solectron Corporation and its subsidiaries and affiliates, dated as of September 5, 2002.

10-Q

10.40

000-22430

11/12/2002

10.11†

Amendment No. 1 to Shareholders Agreement between Shinko Electric Co., Ltd. and Asyst Japan Inc., dated as of October 16, 2002.

10-Q

10.43

000-22430

2/11/2003

10.12‡

Patent Assignment and Cross-License and Trademark License Agreement among the Company, Entegris Cayman Ltd. And Entegris, Inc., dated as of February 11, 2003.

10-K/A

10.44

000-22430

10/29/2003

10.13*

Change-In-Control Agreement between the Company and Stephen S Schwartz dated as of October 20, 2003.

10-Q

10.47

000-22430

11/12/2003

Exhibit

Incorporated by Reference

Filed

Number

Exhibit Description

Form

Ex. No.

File No.

Filing Date

Herewith

10.14‡

Amendment and Modification Agreement to Manufacturing Services and Supply Agreement among the Company and Solectron Corporation and its subsidiaries and affiliates, effective as of September 22, 2003.

10-Q

10.50

000-22430

2/10/2004

10.15*

Form of Indemnity Agreement entered into between the Company and certain executive officers.

10-K

10.33

000-22430

6/10/2004

10.16*

Form of Agreement to Arbitrate Disputes and Claims entered into between the Company and its executive officers.

10-K

10.37

000-22430

6/10/2004

10.17*

Company’s Compensation Program for Non-employee Directors.

10-K

10.17

000-22430

10/13/2006

10.18*

Company’s Executive Deferred Compensation Plan.

10-K

10.39

000-22430

6/10/2004

10.19*

Employment Agreement between the Company and Stephen Debenham dated August 21, 2003.

10-K

10.40

000-22430

6/10/2004

10.20

Amended and Restated Loan and Security Agreement between the Company and Comerica Bank, dated May 15, 2004.

10-Q

10.47

000-22430

8/5/2004

10.21*

Forms of Stock Option Award Notice and Stock Option Award Agreement entered into between the Company and certain employees, directors, and consultants (2003 Equity Incentive Plan).

10-Q

10.50

000-22430

12/30/2004

10.22*

Forms of Restricted Stock Award Agreement for restricted stock awarded to directors, Restricted Stock Award Agreement for restricted stock units awarded to directors, Restricted Stock Award Agreement for restricted stock awarded to employees, and Restricted Stock Award Agreement for restricted stock units awarded to employees.

10-K

10.22

000-22430

10/13/2006

10.23*

Certificate of Amendment to Option Grants dated August 18, 2004.

10-Q

10.52

000-22430

12/30/2004

10.24

Company’s 2001 Non-Officer Equity Plan.

10-Q

10.53

000-22430

12/30/2004

10.25*

Employment Agreement between the Company and Warren Kocmond, Jr., (corrected as of May 16, 2005).

10-K

10.52

000-22430

6/29/2005

10.26*

Change-in-Control Agreement between the Company and Robert J. Nikl dated November 3, 2004.

10-K

10.53

000-22430

6/29/2005

10.27*

Change-in-Control Agreement between the Company and Anthony C Bonora dated November 3, 2004.

10-K

10.54

000-22430

6/29/2005

10.28‡

Amendment No. 2 to Manufacturing Services and Supply Agreement among the Company and Solectron Corporation and its subsidiaries and affiliates, effective February 17, 2005.

10-K

10.55

000-22430

6/29/2005

10.29

Amendment No. 3 to Manufacturing Services and Supply Agreement among the Company and Solectron Corporation and its subsidiaries and affiliates, effective June 10, 2005.

10-K

10.56

000-22430

6/29/2005

10.30*

Summary of Executive Bonus Plan (revised 2006)

10-K

10.30

000-22430

10/13/2006

10.31

Waiver and Amendment Number One to Amended and Restated Loan and Security Agreement between the Company and Comerica Bank, dated June 27, 2005.

10-K

10.58

000-22430

6/29/2005

Exhibit

Incorporated by Reference

Filed

Number

Exhibit Description

Form

Ex. No.

File No.

Filing Date

Herewith

10.32*

2003 Equity Incentive Plan as amended and approved by the Registrant’s shareholders through August 23, 2005.

8-K

99.1

000-22430

8/29/2005

10.33*

Employment Agreement dated as of August 29, 2005, between the Company and Alan S. Lowe

10-Q

10.60

000-22430

11/9/2005

10.34

Amendment Number Two to Amended and Restated Loan and Security Agreement between the Company and Comerica Bank, dated November 21, 2005.

10-Q

10.61

000-22430

2/6/2006

10.35

Industrial Space Lease (Single Tenant Net) between the Company and JER Bayside, LLC dated November 29, 2005.

10-Q

10.62

000-22430

2/6/2006

10.36*

First Amendment dated December 16, 2005, to Change-in-Control Agreement dated October 20, 2003, between the Company and Stephen S. Schwartz.

8-K

99.1

000-22430

12/16/2005

10.37‡

Amendment No. 4 to Manufacturing Services and Supply Agreement among the Company and Solectron Corporation and its subsidiaries and affiliates, effective August 1, 2005.

10-K

10.37

000-22430

10/13/2006

10.38‡

Amendment No. 5 to Manufacturing Services and Supply Agreement among the Company and Solectron Corporation and its subsidiaries and affiliates, effective March 20, 2006.

10-K

10.38

000-22430

10/13/2006

10.39*

Separation Agreement and Release of All Claims between the Company and Warren C. Kocmond, dated May 31, 2006.

10-K

10.39

000-22430

10/13/2006

10.40*

Change-in-Control Agreement between the Company and Steve Debenham, dated May 22, 2006.

10-K

10.40

000-22430

10/13/2006

10.41*

Change-in-Control Agreement between the Company and Alan S. Lowe, dated May 22, 2006

10-K

10.41

000-22430

10/13/2006

10.42

Credit Agreement among Asyst Technologies, Inc., Asyst Japan, Inc., Bank of America, N.A., Banc of America Securities LLC, Keybank National Association, and Comerica Bank dated as of June 22, 2006.

10-K

10.42

000-22430

10/13/2006

21.1

Subsidiaries of Asyst Technologies, Inc.

10-K

21.1

000-22430

10/13/2006

23.1

Consent of Independent Registered Public Accounting Firm

31.1

Certification of the Chief Executive Officer of the Registrant required by SEC Rule 13a-14(a) (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002).

31.2

Certification of the Chief Financial Officer of the Registrant required by SEC Rule 13a-14(a) (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002).

32.1

Combined Certification of the Chief Executive Officer and the Chief Financial Officer of the Registrant required by SEC Rule 13a-14(b) (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).


*		Indicates a management contract or compensatory plan or arrangement.

†		Indicates English translation of original document.

‡		Indicates confidential treatment has been requested for portions of this document

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.


		ASYST TECHNOLOGIES, INC.

		By:		/S/ MICHAEL A. SICURO

				Michael A. Sicuro
				Chief Financial Officer

		By:		/S/ AARON L. TACHIBANA

				Aaron L. Techibana
				Principal Accounting Officer

Date: February 1, 2008

EXHIBIT INDEX

Exhibit

Incorporated by Reference

Filed

Number

Exhibit Description

Form

Ex. No.

File No.

Filing Date

Herewith

2.1‡

8-K

2.1

000-22430

7/20/2006

3.1

Amended and Restated Articles of Incorporation of the Company.

S-1

3.1

333-66184

7/19/1993

3.2

Bylaws of the Company.

S-1

3.2

333-66184

7/19/1993

3.3

Certificate of Amendment of the Amended and Restated Articles of Incorporation, filed September 24, 1999.

10-Q

3.2

000-22430

10/21/1999

3.4

Certificate of Amendment of the Amended and Restated Articles of DEF Incorporation, filed October 5, 2000.

14A

App.

000-22430

7/31/2000

4.1

Rights Agreement among the Company and Bank of Boston, N.A., as Rights Agent, dated June 25, 1998.

8-K

99.2

000-22430

6/29/1998

4.2

Indenture dated as of July 3, 2001 between the Company, State Street Bank and Trust Company of California, N.A., as trustee, including therein the forms of the notes.

10-Q

4.3

000-22430

8/14/2001

4.3

Registration Rights Agreement dated as of July 3, 2001 between the Company and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith, Incorporated, and ABN Amro Rothschild LLC.

10-Q

4.4

000-22430

8/14/2001

4.4

Amendment to Rights Agreement among the Company and Bank of Boston, N.A. as Rights Agent, dated November 30, 2001.

10-K

4.5

000-22430

6/28/2002

10.1*

Form of Indemnity Agreement entered into between the Company and certain directors.

S-1

10.1

333-66184

7/19/1993

10.2*

Company’s 1993 Stock Option Plan and related form of stock option agreement.

S-1

10.2

333-88246

2/13/1995

10.3*

Company’s 1993 Employee Stock Purchase Plan and related offering document.

S-1

10.3

333-66184

7/19/1993

10.4*

Company’s 1993 Non-Employee Directors’ Stock Option Plan and related offering document.

S-1

10.4

333-66184

7/19/1993

10.5

Hewlett-Packard SMIF License Agreement dated June 6, 1984.

S-1

10.5

333-66184

7/19/1993

10.6*

Employment Agreement between the Company and Stephen S. Schwartz, Ph.D., dated January 11, 2001.

10-K

10.27

000-22430

6/19/2001

10.7†

Agreement on Bank Transactions between Asyst Japan, Inc., or AJI, and Tokyo Mitsubishi Bank dated March 13, 2001.

10-Q

10.28

000-22430

8/14/2001

10.8†

Share Purchase Agreement between Shinko Electric Co., Ltd. and Asyst Japan Inc., dated as of May 24, 2002.

10-Q

10.38

000-22430

11/12/2002

10.9†

Shareholders Agreement between Shinko Electric Co., Ltd. and Asyst Japan Inc., dated as of May 24, 2002.

10-Q

10.39

000-22430

11/12/2002

Exhibit

Incorporated by Reference

Filed

Number

Exhibit Description

Form

Ex. No.

File No.

Filing Date

Herewith

10.10‡

Manufacturing Services and Supply Agreement among the Company and Solectron Corporation and its subsidiaries and affiliates, dated as of September 5, 2002.

10-Q

10.40

000-22430

11/12/2002

10.11†

Amendment No. 1 to Shareholders Agreement between Shinko Electric Co., Ltd. and Asyst Japan Inc., dated as of October 16, 2002.

10-Q

10.43

000-22430

2/11/2003

10.12‡

Patent Assignment and Cross-License and Trademark License Agreement among the Company, Entegris Cayman Ltd. And Entegris, Inc., dated as of February 11, 2003.

10-K/A

10.44

000-22430

10/29/2003

10.13*

Change-In-Control Agreement between the Company and Stephen S Schwartz dated as of October 20, 2003.

10-Q

10.47

000-22430

11/12/2003

10.14‡

10-Q

10.50

000-22430

2/10/2004

10.15*

Form of Indemnity Agreement entered into between the Company and certain executive officers.

10-K

10.33

000-22430

6/10/2004

10.16*

Form of Agreement to Arbitrate Disputes and Claims entered into between the Company and its executive officers.

10-K

10.37

000-22430

6/10/2004

10.17*

Company’s Compensation Program for Non-employee Directors.

10-K

10.17

000-22430

10/13/2006

10.18*

Company’s Executive Deferred Compensation Plan.

10-K

10.39

000-22430

6/10/2004

10.19*

Employment Agreement between the Company and Stephen Debenham dated August 21, 2003.

10-K

10.40

000-22430

6/10/2004

10.20

Amended and Restated Loan and Security Agreement between the Company and Comerica Bank, dated May 15, 2004.

10-Q

10.47

000-22430

8/5/2004

10.21*

Forms of Stock Option Award Notice and Stock Option Award Agreement entered into between the Company and certain employees, directors, and consultants (2003 Equity Incentive Plan).

10-Q

10.50

000-22430

12/30/2004

10.22*

10-K

10.22

000-22430

10/13/2006

10.23*

Certificate of Amendment to Option Grants dated August 18, 2004.

10-Q

10.52

000-22430

12/30/2004

10.24

Company’s 2001 Non-Officer Equity Plan.

10-Q

10.53

000-22430

12/30/2004

10.25*

Employment Agreement between the Company and Warren Kocmond, Jr., (corrected as of May 16, 2005).

10-K

10.52

000-22430

6/29/2005

10.26*

Change-in-Control Agreement between the Company and Robert J Nikl dated November 3, 2004.

10-K

10.53

000-22430

6/29/2005

10.27*

Change-in-Control Agreement between the Company and Anthony C Bonora dated November 3, 2004.

10-K

10.54

000-22430

6/29/2005

Exhibit

Incorporated by Reference

Filed

Number

Exhibit Description

Form

Ex. No.

File No.

Filing Date

Herewith

10.28‡

Amendment No. 2 to Manufacturing Services and Supply Agreement among the Company and Solectron Corporation and its subsidiaries and affiliates, effective February 17, 2005.

10-K

10.55

000-22430

6/29/2005

10.29

Amendment No. 3 to Manufacturing Services and Supply Agreement among the Company and Solectron Corporation and its subsidiaries and affiliates, effective June 10, 2005.

10-K

10.56

000-22430

6/29/2005

10.30*

Summary of Executive Bonus Plan (revised 2006).

10-K

10/30

000-22430

10/13/2006

10.31

Waiver and Amendment Number One to Amended and Restated Loan and Security Agreement between the Company and Comerica Bank, dated June 27, 2005.

10-K

10.58

000-22430

6/29/2005

10.32*

2003 Equity Incentive Plan as amended and approved by the Registrant’s shareholders through August 23, 2005.

8-K

99.1

000-22430

8/29/2005

10.33*

Employment Agreement dated as of August 29, 2005, between the Company and Alan S. Lowe.

10-Q

10.60

000-22430

11/9/2005

10.34

Amendment Number Two to Amended and Restated Loan and Security Agreement between the Company and Comerica Bank, dated November 21, 2005.

10-Q

10.61

000-22430

2/6/2006

10.35

Industrial Space Lease (Single Tenant Net) between the Company and JER Bayside, LLC dated November 29, 2005.

10-Q

10.62

000-22430

2/6/2006

10.36*

First Amendment dated December 16, 2005, to Change-in-Control Agreement dated October 20, 2003, between the Company and Stephen S. Schwartz.

8-K

99.1

000-22430

12/16/2005

10.37‡

Amendment No. 4 to Manufacturing Services and Supply Agreement among the Company and Solectron Corporation and its subsidiaries and affiliates, effective August 1, 2005.

10-K

10.37

000-22430

10/13/2006

10.38‡

Amendment No. 5 to Manufacturing Services and Supply Agreement among the Company and Solectron Corporation and its subsidiaries and affiliates, effective March 20, 2006.

10-K

10.38

000-22430

10/13/2006

10.39*

Separation Agreement and Release of All Claims between the Company and Warren C. Kocmond, dated May 31, 2006.

10-K

10.39

000-22430

10/13/2006

10.40*

Change-in-Control Agreement between the Company and Steve Debenham, dated May 22, 2006.

10-K

10.40

000-22430

10/13/2006

10.41*

Change-in-Control Agreement between the Company and Alan S. Lowe, dated May 22, 2006.

10-K

10.41

000-22430

10/13/2006

10.42

Credit Agreement among Asyst Technologies, Inc., Asyst Japan, Inc., Bank of America, N.A., Banc of America Securities LLC, Keybank National Association, and Comerica Bank dated as of June 22, 2006.

10-K

10.42

000-22430

10/13/2006

21.1

Subsidiaries of Asyst Technologies, Inc.

10-K

21.1

000-22430

10/13/2006

23.1

Consent of Independent Registered Public Accounting Firm

31.1

Certification of the Chief Executive Officer of the Registrant required by SEC Rule 13a-14(a) (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002).

Exhibit

Incorporated by Reference

Filed

Number

Exhibit Description

Form

Ex. No.

File No.

Filing Date

Herewith

31.2

Certification of the Chief Financial Officer of the Registrant required by SEC Rule 13a-14(a) (pursuant to Section 302 of the Sarbanes-Oxley Act of 2002).

32.1

Combined Certification of the Chief Executive Officer and the Chief Financial Officer of the Registrant required by SEC Rule 13a-14(b) (pursuant to Section 906 of the Sarbanes-Oxley Act of 2002).


*		Indicates a management contract or compensatory plan or arrangement.

†		Indicates English translation of original document.

‡		Indicates confidential treatment has been requested for portions of this document

Asyst (ASYT) Inactive 10-K/A2006 FY Annual report (amended)