Edgar Filing: BROOKS-PRI AUTOMATION INC

SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 8-K

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

Date of Report (Date of earliest event reported) May 14, 2002

Brooks-PRI Automation, Inc.
--------------------------------------------------------------------------------
(Exact Name Of Registrant As Specified In Its Charter)

Delaware
--------------------------------------------------------------------------------
(State or Other Jurisdiction of Incorporation)

0-25434 04-3040660
------------------------------------ -------------------------------------
(Commission File Number) (I.R.S. Employer Identification No.)

15 Elizabeth Drive, Chelmsford, Massachusetts 01824
--------------------------------------------- -----------------------------
(Address of Principal Executive Offices) (Zip Code)

(978) 262-2400
--------------------------------------------------------------------------------
(Registrant's Telephone Number, Including Area Code)

N/A
--------------------------------------------------------------------------------
(Former Name or Former Address, if Changed Since Last Report)

ITEM 2 ACQUISITION OF ASSETS

On May 14, 2002, Brooks Automation, Inc. ("Brooks" or the
"Registrant") completed the previously announced acquisition of PRI Automation,
Inc. ("PRI"). PRI supplies advanced factory automation systems, software and
services that optimize the productivity of semiconductor and precision
electronics manufacturers, as well as OEM process tool manufacturers. Pursuant
to the Amended and Restated Agreement and Plan of Merger between the parties,
PRI was merged with and into Brooks. Stockholders of PRI received 0.52 shares of
Brooks common stock for each share of PRI common stock held. Approximately
[13,528,000] shares of Brooks common stock were issued to PRI stockholders in
the merger. Brooks has reserved an additional [3,278,605] shares for issuance
upon the exercise of options, warrants or other rights to purchase PRI common
stock, which were assumed by Brooks and converted into options, warrants or
other rights to purchase Brooks common stock.

In connection with the merger, Brooks changed its name to Brooks-PRI
Automation, Inc., and increased the size of its board of directors from five to
seven members. Mitchell Tyson, the former president and chief executive officer
of PRI, and Kenneth Thompson, a former director of PRI, were appointed to fill
the new positions on the Brooks board.

The merger was structured as a tax-free reorganization within the
meaning of Section 368 of the Internal Revenue Code of 1986, as amended, and has
been accounted for as a purchase transaction.

The terms of the merger and the consideration received were the
result of arm's length negotiations by the parties, their representatives and
their financial advisors. Certain directors and executive officers of Brooks and
PRI had interests in the merger that were different from, or in addition to,
their interests solely as stockholders, including the following:

- Under his employment agreement with Brooks, upon completion of the
merger, Robert J. Therrien, Brooks' president and a member of its
board of directors, received an increase in salary from $500,000 to
$615,000 and more favorable supplemental retirement benefits, in the
form of an increase of $9,583 in his minimum monthly retirement
benefit and the payment of his retirement benefit in a single,
lump-sum payment rather than over a period of time;

- Brooks approved a new, more favorable compensation package for its
nonemployee directors, conditional upon completion of the merger,
which increases the annual pay to such directors from $1,000 to
$20,000, and also

increases annual compensation for nonemployee directors who serve on
a committee from $4,000 to $5,000 per year for each committee on
which they serve. The initial and annual option grants to
nonemployee directors have been increased from 10,000 and 5,000
shares of Brooks common stock to 25,000 and 10,000 shares,
respectively, and a one-time grant of 15,000 shares was made to
existing nonemployee directors;

- All officers and numerous other employees of PRI have retention
agreements under which they will be entitled to severance payments
if Brooks does not offer them employment after the merger at a
comparable salary. These officers and employees will also be
entitled to accelerated vesting of all of their outstanding options,
including the PRI options assumed by Brooks in the merger, if Brooks
does not offer them employment after the merger at a comparable
salary, or if Brooks offers them such employment and they remain in
their new positions for one year after the merger. As of December
31, 2001 (exclusive of Mr. Tyson's benefits described below), the
fair market value using the Black-Scholes option pricing model of
all of the options subject to possible accelerated vesting was
approximately $28.5 million and the maximum amount of severance
payments to be made was $10.4 million;

- Mitchell G. Tyson, the former president, chief executive officer and
director of PRI, entered into an employment agreement with Brooks
which became effective upon the completion of the merger under which
he is entitled to a six month salary of $182,000, 100% accelerated
vesting of all of his outstanding options (fair market value using
the Black-Scholes option pricing model of approximately $4.5 million
as of December 31, 2001), a retention bonus of $364,000 in the event
that he fulfills his six month employment obligation, and payments
of $546,000 per year in exchange for a two year non-competition
covenant;

- Brooks agreed to appoint Mitchell G. Tyson and Kenneth M. Thompson
to the board of directors of Brooks; and

- Brooks agreed to maintain all rights to indemnification existing
immediately prior to the completion of the merger in favor of the
directors and officers of PRI and its subsidiaries against
liabilities arising out of their service as officers and directors
of PRI before the merger.

The boards of directors of Brooks and PRI were aware of these interests
and took these interests into account in unanimously approving the merger and
the transactions contemplated in the merger agreement.

ITEM 7 FINANCIAL STATEMENTS AND EXHIBITS

(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED

Included with this report on Form 8-K are unaudited financial
statements of PRI Automation, Inc. and audited financial statements
of PRI Automation, Inc. as follows:

Unaudited Condensed Consolidated Balance Sheets as of December 30,
2001 and September 30, 2001

Unaudited Condensed Consolidated Statements of Operations for the
three months ended December 30, 2001 and December 31, 2000

Unaudited Condensed Consolidated Statements of Cash Flows for the
three months ended December 30, 2001 and December 31, 2000

Notes to Unaudited Condensed Consolidated Financial Statements

Report of Independent Accountants

Audited Consolidated Balance Sheets as of September 30, 2001 and
2000

Audited Consolidated Statements of Operations for the years ended
September 30, 2001, 2000 and 1999

Audited Consolidated Statements of Stockholder's Equity for the
years ended September 30, 2001, 2000 and 1999

Audited Consolidated Statements of Cash Flows for the years ended
September 30, 2001, 2000 and 1999

Notes to Audited Consolidated Financial Statements

(b) UNAUDITED PRO FORMA FINANCIAL INFORMATION

Pro Forma Combined Condensed Balance Sheet as of December 31, 2001

Pro Forma Combined Condensed Statement of Operations for the Year
ended September 30, 2001

Pro Forma Combined Condensed Statement of Operations for the Three
Months ended December 31, 2001

Notes to Unaudited Pro Forma Combined Condensed Financial Statements

ITEM NO. DESCRIPTION

23.1 Consent of PricewaterhouseCoopers LLP (Independent
Accountants for PRI Automation, Inc.)

PRI AUTOMATION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)

DECEMBER 30, 2001 SEPTEMBER 30, 2001
----------------- ------------------

ASSETS
Current assets:
Cash and cash equivalents ........................................ $ 62,502 $ 58,968
Trade accounts receivable, less allowance for doubtful
accounts of $1,294 at December 30, 2001 and
$1,777 at September 30, 2001 ..................... 18,080 31,561
Contracts in progress ............................................ 1,388 2,270
Inventories ...................................................... 80,777 90,038
Other current assets ............................................. 9,509 8,310
--------- ---------
Total current assets ..................................... 172,256 191,147
Property and equipment, net .............................................. 16,924 18,489
Investment in affiliate .................................................. 13,996 4,890
Other assets, net ........................................................ 4,914 4,429
--------- ---------
Total assets ............................................. $ 208,090 $ 218,955
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable ................................................. $ 11,119 $ 15,662
Accrued expenses and other liabilities ........................... 34,095 37,487
Accrued legal and restructuring costs ............................ 6,665 8,707
Billings in excess of revenues and customer advances ............. 48,278 52,589
--------- ---------
Total current liabilities ................................ 100,157 114,445
Other long-term liabilities .............................................. 729 753

Stockholders' equity:
Preferred stock, $.01 per value; 400,000 shares
authorized; none outstanding ............................. -- --
Common stock, $.01 par value; 75,000,000 shares
authorized; 25,673,870 and 25,593,329
issued and outstanding at December 30, 2001
and September 30, 2001, respectively ............... 257 256
Additional paid-in capital ....................................... 261,229 260,135
Accumulated other comprehensive income (loss) .................... 1,661 (7,445)
Accumulated deficit .............................................. (155,943) (149,189)
--------- ---------
Total stockholders' equity ............................... 107,204 103,757
--------- ---------
Total liabilities and stockholders' equity ............... $ 208,090 $ 218,955
========= =========

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

PRI AUTOMATION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)

THREE MONTHS ENDED
DECEMBER 30, DECEMBER 31,
2001 2000
---- ----

Net revenue:
Product and equipment ........................................... $ 40,404 $ 72,451
Services and maintenance ........................................ 14,489 12,253
-------- --------
Total net revenue ....................................... 54,893 84,704
-------- --------

Cost of revenue:
Product and equipment ........................................... 32,534 50,703
Services and maintenance ........................................ 9,654 7,950
-------- --------
Total cost of revenue ................................... 42,188 58,653
-------- --------
Gross profit ............................................................ 12,705 26,051
-------- --------
Operating expenses:
Research and development ........................................ 9,496 15,122
Selling, general and administrative ............................. 10,124 14,091
-------- --------
Total operating expenses ................................ 19,620 29,213
-------- --------
Operating loss .......................................................... (6,915) (3,162)
Other income (expense), net ............................................. 680 (421)
-------- --------
Loss before provision for income taxes and cumulative effect of change in
accounting principle ............................................ (6,235) (3,583)
Provision for income taxes .............................................. 519 425
-------- --------
Loss before cumulative effect of change in accounting principle ......... (6,754) (4,008)
Cumulative effect of change in accounting principle ..................... -- (5,748)
-------- --------
Net loss ................................................................ $ (6,754) $ (9,756)
======== ========
Net loss per common share, basic and diluted:

Loss before cumulative effect of change in accounting principle ......... $ (0.26) $ (0.16)
Cumulative effect of change in accounting principle, net of tax ......... -- (0.23)
======== ========
Net loss ................................................................ $ (0.26) $ (0.39)
======== ========
Weighted average number of shares
outstanding, basic and diluted .................................. 25,628 25,119
======== ========

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

PRI AUTOMATION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

THREE MONTHS ENDED
DECEMBER 30, DECEMBER 31,
2001 2000
---- ----

Cash flows provided by (used in) operating activities:
Net loss ............................................................... $ (6,754) $ (9,756)
Adjustments to reconcile net loss to net cash provided by (used in) operating
activities:
Depreciation and amortization expense .......................... 2,551 2,804
Loss on investment in affiliate ................................ -- 1,617
Provision for write-down of inventories ........................ 1,306 --
Other, net ..................................................... (457) (78)
Changes in operating assets and liabilities:
Trade accounts receivable .............................. 13,776 2,286
Contracts in progress .................................. 882 (1,283)
Inventories ............................................ 7,955 (29,106)
Other assets ........................................... (1,860) (4,317)
Accounts payable ....................................... (4,605) (1,256)
Accrued expenses and other liabilities ................. (5,356) (970)
Billings in excess of revenue and customer advances .... (4,331) 18,375
-------- --------
Net cash provided by (used in) operating activities ........................... 3,107 (21,684)
-------- --------
Cash flows used in investing activities:
Investment in affiliate ................................................ -- (11,467)
Purchases of property and equipment .................................... (875) (3,245)
Other .................................................................. (135) (68)
-------- --------
Net cash used in investing activities .......................................... (1,010) (14,780)
-------- --------

Cash flows provided by financing activities:
Repayment of capital lease obligations ................................. (31) (129)
Proceeds from exercise of stock options and Employee Stock Purchase Plan 1,185 194
-------- --------
Net cash provided by financing activities ...................................... 1,154 65
Effect of changes in exchange rates on cash .................................... 283 215
-------- --------
Net increase (decrease) in cash and cash equivalents ........................... 3,534 (36,184)
-------- --------
Cash and cash equivalents at beginning of period ............................... 58,968 92,484
-------- --------
Cash and cash equivalents at end of period ..................................... $ 62,502 $ 56,300
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest expense ............................................... $ 8 $ 17
Income taxes, net .............................................. $ 83 $ 183
Non-cash transactions:
Acquisition of Commotion Technology, Inc ............... -- $ 1,925

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

PRI AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

A. ACCOUNTING POLICIES

BASIS OF PRESENTATION

The condensed consolidated financial statements include the accounts of
PRI Automation, Inc., its wholly-owned domestic subsidiaries and its
wholly-owned and majority-owned foreign subsidiaries (collectively, the
"Company"). All significant intercompany transactions and balances have been
eliminated.

The results of operations for the three months ended December 31, 2000,
have been adjusted to reflect the adoption of Staff Accounting Bulletin No. 101,
"Revenue Recognition in Financial Statements." The Company's reported revenue
included $1,998,000 and $3,130,000 for the three months ended December 30, 2001
and December 31, 2000, respectively, of revenue that was part of the cumulative
effect adjustment for products that shipped during fiscal year 2000 but received
final customer acceptance subsequent to September 30, 2000.

PREPARATION OF FINANCIAL STATEMENTS

The interim financial data as of December 30, 2001 and for the three
months ended December 30, 2001 and December 31, 2000 are unaudited. In the
opinion of the Company, the interim data includes all adjustments, consisting
only of normal recurring adjustments, necessary for a fair statement of the
results for the interim periods. The results for interim periods are not
necessarily indicative of the results for the entire year. The condensed
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements of PRI Automation, Inc. for the year ended
September 30, 2001 included in its Annual Report on Form 10-K, filed with the
Securities and Exchange Commission.

For interim reporting purposes, the Company closes its first three fiscal
quarters on the Sunday nearest the last day of December, March and June in each
year. The Company's fiscal year ends on the last day of September.

B. INVENTORIES

DECEMBER 30, 2001 SEPTEMBER 30, 2001
----------------- ------------------
(IN THOUSANDS)

Raw materials .......... $20,450 $29,823
Work-in-process ........ 8,459 9,898
Finished goods ......... 51,868 50,317
------- -------
$80,777 $90,038
======= =======

C. ACCRUED EXPENSES AND OTHER LIABILITIES

DECEMBER 30, 2001 SEPTEMBER 30, 2001
----------------- ------------------
(IN THOUSANDS)

Accrued expenses ................ $ 4,275 $ 4,500
Income taxes payable ............ 3,828 3,313
Accrued compensation and benefits 7,034 7,903
Contract loss reserves .......... 5,663 5,830
Warranty accrual ................ 13,295 15,941
------- -------
$34,095 $37,487
======= =======

PRI AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

D. OTHER INCOME (EXPENSE), NET

THREE MONTHS ENDED
DECEMBER 30, 2001 DECEMBER 31, 2000
(IN THOUSANDS)

Interest income, net .............................. $ 368 $ 1,105
Net translation and foreign exchange gains (losses) (19) 90
Loss on investment in affiliate ................... -- (1,617)
Other, net ........................................ 331 1
----- -------
$ 680 $ (421)
===== =======

E. NET LOSS PER SHARE

Basic and diluted net loss per common share is computed using the weighted
average number of common shares outstanding. Options to purchase 6,545,519 and
5,175,695 shares of common stock were outstanding as of December 30, 2001 and
December 31, 2000, respectively, but were not included in the computation of
diluted net loss per common share because the Company was in a loss position and
the inclusion of such shares would have had an anti-dilutive effect.

F. ACCRUED LEGAL AND RESTRUCTURING COSTS:

A rollforward of accrued legal and restructuring costs from September 30, 2001
to December 30, 2001 is as follows:

Accrued Legal and Restructuring Costs
----------------------------------------------------------------
Employee Legal Facility Other
Costs Costs Exit Costs Costs Total
----------------------------------------------------------------

September 30, 2001 balance $ 3,586 $2,741 $2,335 $45 $ 8,707

Q1 FY2002 payments (1,870) (70) (102) -- (2,042)
----------------------------------------------------------------
December 30, 2001 balance $ 1,716 $2,671 $2,233 $45 $ 6,665
----------------------------------------------------------------

The Company expects the majority of the remaining accrued legal and
restructuring costs to be paid by the end of fiscal 2002.

G. OTHER COMPREHENSIVE INCOME

Total comprehensive income (loss) amounted to $2,352,000 and ($9,756,000) for
the three months ended December 30, 2001 and December 31, 2000, respectively.
Total comprehensive income (loss) differs from net income (loss) due to the
unrealized gains and losses on the Shinsung investment. The unrealized gain on
the Shinsung investment for the three months ended December 30, 2001, was
$9,106,000.

H. SEGMENT REPORTING

The Company operates in three primary segments, all within the semiconductor
manufacturing capital equipment industry, which serve both domestic and
international markets. These reportable operating segments consist of Factory
Systems, OEM Systems, and Software Systems. Each of the Company's operating
segments includes a product and service component and has no significant
intersegment revenues and expenses as all segments' revenues are generated from
sales to unaffiliated customers.

PRI AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Operating segment information for the three months ended December 30, 2001 and
December 31, 2000 is as follows:

THREE MONTHS ENDED
DECEMBER 30, DECEMBER 31,
2001 2000
(IN THOUSANDS)

TOTAL NET REVENUE TO UNAFFILIATED CUSTOMERS:
Factory Systems ............................ $ 40,263 $ 38,204
OEM Systems ................................ 9,080 38,611
Software Systems ........................... 5,550 7,889
-------- --------
Total net revenue .......................... $ 54,893 $ 84,704
======== ========

SEGMENT OPERATING PROFIT (LOSS):
Factory Systems ............................ $ (164) $ (9,413)
OEM Systems ................................ (4,318) 10,955
Software Systems ........................... (1,213) 301
Corporate and other expenses ............... (1,220) (5,005)
-------- --------
Consolidated operating loss ................ $ (6,915) $ (3,162)
======== ========

I. CONTINGENT LIABILITIES

Between October 1, 1998 and January 1, 2002 the Company issued an
aggregate of 896,521 shares of common stock to employees who exercised options
granted under the 1997 Non-Incentive Stock Option Plan and an aggregate of
129,547 shares of common stock to employees who participated in the 2000
Employee Stock Purchase Plan. These issuances were not registered under the Act,
due to an inadvertent failure to timely file Registration Statements on Form S-8
covering these transactions. The Company could be exposed to claims by some of
its employees for rescission of these purchases. A rescission right involves the
right of the employee to require the Company to repurchase the shares at the
original exercise price plus interest. However, based on an investigation by the
Company of these transactions, including subsequent dispositions by employees of
the shares at prices higher than they paid, such that they have no rescission
damages, the Company does not believe that the amount of any such potential
rescission liability would be material to its financial condition.

From November 2000 through January 2001, the Company and three of its
directors (one an officer) were named as defendants in five virtually identical
lawsuits filed in the United States District Court for the District of
Massachusetts claiming, among other things, that the defendants violated certain
securities laws and regulations. Each complaint sought certification as a class
action on behalf of virtually all purchasers of the Company's stock from January
27, 2000 through September 11, 2000. The five cases have been consolidated, and
the case is now entitled IN RE PRI AUTOMATION, INC. SECURITIES LITIGATION, Civil
Action No. 00-123958-REK. A group of five persons has been appointed as lead
plaintiff, and the court has approved the group's selection of lead counsel. A
consolidated amended complaint was filed on October 16, 2001. The amended
complaint claims that the defendants violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and SEC Rule 10b-5, and also Sections 11 and 15
of the Securities Act of 1933, by virtue of statements and omissions that the
plaintiffs claim were materially false or misleading. In substance, the amended
complaint alleges that, throughout the class period, senior management of the
Company knew that the Company's Factory Automation Systems division was
encountering manufacturing problems in preparing its new TurboStocker product
for higher-volume production, that those manufacturing problems were financially
material to the Company, and that the Company did not adequately disclose those
problems until the end of the class period. The amended complaint also alleges
that the registration statement for a securities offering by the Company in May
2000 failed adequately to disclose these manufacturing problems. The amended
complaint seeks damages, pre-judgment and post-judgment interest, costs and
attorneys' fees. The Company (together with the defendant directors) filed a
motion to dismiss and supporting papers on December 4, 2001. Argument on the
motion has been rescheduled, and a new date has not been set. The Company
strongly believes that the lawsuit lacks merit, and the Company intends to
defend against the claims vigorously. However, the Company could incur
substantial costs defending the lawsuit, has no insurance coverage relating to
these claims, and has undertaken to indemnify the individual defendants for any
losses they may suffer. Moreover, although the Company has established a reserve
of $3,000,000 for legal costs, the amount of that reserve may be

inadequate. The lawsuits could also divert the time and attention of the
Company's management. The Company cannot predict the outcome of the lawsuits at
this time, and there can be no assurance that the litigation will not have a
material adverse impact on its financial condition or results of operations.

From time to time the Company has been, and expects to continue to be,
subject to legal proceedings and claims in the ordinary course of its business.
Such claims, even if not meritorious, could result in the expenditure of
significant financial and managerial resources.

J. PENDING SALE OF THE COMPANY

On October 23, 2001, the Company entered into an Agreement and Plan of
Merger with Brooks Automation, Inc. ("Brooks"). Under the merger agreement,
holders of the Company's common stock will receive 0.52 shares of Brooks' common
stock for each share of the Company's common stock outstanding at the time of
the merger. The merger is intended to qualify as a tax-free reorganization
within the meaning of Section 368 of the Internal Revenue Code of 1986, as
amended, and will be accounted as a purchase transaction.

On December 13, 2001, Brooks and PRI received a request from the Antitrust
Division of the Department of Justice ("DOJ") for additional information
pertaining to the pending acquisition. The waiting period applicable to the
pending acquisition under the US Hart-Scott-Rodino ("HSR") Antitrust
Improvements Act will expire 30 days after substantial compliance with this
request, unless terminated earlier by the DOJ. The companies intend to respond
diligently and as quickly as possible. However, the companies cannot estimate
how long it will take to achieve substantial compliance with the request.
Subject to completion of the HSR process and satisfaction of other customary
closing conditions contained in the definitive merger agreement, including
Brooks and PRI stockholder approvals, the companies anticipate the acquisition
will close in late March or April 2002.

K. RECENT ACCOUNTING PRONOUNCEMENTS

In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 141 ("SFAS No. 141"), "Business
Combinations" and Statement of Financial Accounting Standards No. 142 ("SFAS No.
142"), "Goodwill and Other Intangible Assets." SFAS No. 141 requires that all
business combinations be accounted for under the purchase method only,
eliminating the pooling-of-interests method and that certain acquired intangible
assets in a business combination be recognized as assets apart from goodwill.
SFAS No. 142 requires, among other things, the discontinuance of goodwill
amortization, which is replaced with periodic tests of impairment of goodwill
and that intangible assets other than goodwill be amortized over their useful
lives. In addition, the standard includes provisions for the reclassification of
certain existing recognized intangibles as goodwill, reassessment of the useful
lives of existing recognized intangibles, reclassification of certain
intangibles out of previously reported goodwill and the identification of
reporting units for purposes of assessing potential future impairments of
goodwill. SFAS No. 142 also requires the Company to complete a transitional
goodwill impairment test six months from the date of adoption. SFAS No. 141 is
effective for all business combinations initiated after June 30, 2001 and for
all business combinations accounted for by the purchase method for which the
date of acquisition is after June 30, 2001. The provisions of SFAS No. 142 were
effective for fiscal years beginning after December 15, 2001, however early
adoption is permitted for companies with a fiscal year beginning after March 15,
2001 and was adopted by the Company on October 1, 2001. The impact of SFAS No.
142 did not have a material effect on the Company's financial position and
results of operations.

In October 2001, the FASB issued Statement of Financial Accounting
Standards No. 144 ("SFAS No. 144"), "Accounting for the Impairment or Disposal
of Long-Lived Assets." The objectives of SFAS No. 144 are to address significant
issues relating to the implementation of FASB Statement No. 121 ("SFAS No.
121"), "Accounting for the Impairment of Long-Lived Assets and for the
Long-Lived Assets to Be Disposed Of," and to develop a single accounting model,
based on the framework established in SFAS No. 121, for long-lived assets to be
disposed of by sale, whether previously held and used or newly acquired. SFAS
No. 144 is effective for financial statements issued for fiscal years beginning
after December 15, 2001 and generally, its provisions are to be applied
prospectively. The adoption of this standard is not expected to have a material
effect on the Company's financial position and results of operations.

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
PRI Automation, Inc.:

In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) present fairly, in all material respects, the
financial position of PRI Automation, Inc. and its subsidiaries at September 30,
2001 and 2000, and the results of their operations and their cash flows for each
of the three years in the period ended September 30, 2001 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 14(a)(2) 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 auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, 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 discussed in Note A to the consolidated financial statements, during
the year ended September 30, 2001 the Company changed its method of recognizing
revenue.

PricewaterhouseCoopers LLP

Boston, Massachusetts
November 19, 2001

PRI AUTOMATION, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE DATA)

SEPTEMBER 30
------------
2001 2000
---- ----

ASSETS
Current assets:
Cash and cash equivalents ...................................... $ 58,968 $ 92,484
Trade accounts receivable, less allowance for
doubtful accounts of $1,777 at
2001 and $2,881 at 2000 ..................................... 31,561 73,019
Contracts in progress .......................................... 2,270 23,668
Inventories .................................................... 90,038 59,104
Other current assets ........................................... 8,310 2,686
--------- ---------
Total current assets ................................... 191,147 250,961
Property and equipment, net ............................................ 18,489 24,065
Investment in affiliate ................................................ 4,890 --
Other assets, net ...................................................... 4,429 1,898
--------- ---------
Total assets ........................................... $ 218,955 $ 276,924
========= =========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
Accounts payable ............................................... $ 15,662 $ 28,536
Accrued expenses and other liabilities ......................... 37,487 32,809
Accrued legal and restructuring costs .......................... 8,707 --
Billings in excess of revenues and customer advances ........... 52,589 11,986
--------- ---------
Total current liabilities .............................. 114,445 73,331
Other long-term liabilities ............................................ 753 946
Commitments and contingencies (Notes F and I)
Stockholders' equity:
Preferred stock $.01 per value, 400,000 shares
authorized; none outstanding ........................... -- --
Common stock, $.01 par value; 75,000,000 shares
authorized; 25,593,329 and 25,011,938 issued
and outstanding at 2001 and 2000, respectively ...... 256 250
Additional paid-in capital ..................................... 260,135 252,542
Accumulated other comprehensive loss ........................... (7,445) --
Accumulated deficit ............................................ (149,189) (50,145)
--------- ---------
Total stockholders' equity ............................. 103,757 202,647
--------- ---------
Total liabilities and stockholders' equity ............. $ 218,955 $ 276,924
========= =========

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

PRI AUTOMATION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

YEAR ENDED SEPTEMBER 30
-----------------------
2001 2000 1999
---- ---- ----

Net revenue:
Product and equipment ......................................... $ 218,247 $ 258,755 $ 100,074
Services and maintenance ...................................... 50,311 41,017 36,222
--------- --------- ---------
Total net revenue ..................................... 268,558 299,772 136,296
--------- --------- ---------
Cost of revenue:
Product and equipment ......................................... 195,744 175,645 63,850
Services and maintenance ...................................... 37,484 28,954 19,904
--------- --------- ---------
Total cost of revenue ................................. 233,228 204,599 83,754
--------- --------- ---------
Gross profit .......................................................... 35,330 95,173 52,542
--------- --------- ---------
Operating expenses:
Research and development ...................................... 62,175 54,568 45,480
Selling, general and administrative ........................... 50,373 49,885 38,642
Restructuring and other costs ................................. 17,340 -- 6,375
--------- --------- ---------
Total operating expenses .............................. 129,888 104,453 90,497
--------- --------- ---------
Operating loss ........................................................ (94,558) (9,280) (37,955)
Other income, net ..................................................... 3,353 2,554 2,935
--------- --------- ---------
Loss before income taxes and cumulative effect of change in
accounting principle .......................................... (91,205) (6,726) (35,020)
Provision for income taxes ............................................ 2,091 1,227 1,065
--------- --------- ---------
Loss before cumulative effect of change in accounting principle ....... (93,296) (7,953) (36,085)
Cumulative effect of change in accounting principle, net of tax ....... (5,748) -- --
--------- --------- ---------
Net loss .............................................................. $ (99,044) $ (7,953) $ (36,085)
========= ========= =========
Net loss per common share, basic and diluted:
Loss before cumulative effect of change in accounting principle $ (3.69) $ (0.34) $ (1.67)
Cumulative effect of change in accounting principle, net of tax (0.23) -- --
--------- --------- ---------
Net loss ...................................................... $ (3.92) $ (0.34) $ (1.67)
========= ========= =========
Weighted average number of shares outstanding, basic and diluted ...... 25,265 23,645 21,628
========= ========= =========

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

PRI AUTOMATION, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(IN THOUSANDS)

ACCUMULATED
COMMON STOCK ADDITIONAL OTHER TOTAL
------------ PAID-IN ACCUMULATED COMPREHENSIVE STOCKHOLDERS'
SHARES AMOUNT CAPITAL DEFICIT LOSS EQUITY
------ ------ ------- ------- ---- ------

Balance, September 30, 1998 .................. 21,236 $212 $129,035 $ (6,107) $ -- $123,140
Exercise of stock options .................... 859 9 10,091 10,100
Issuance of common stock in connection
with the Employee Stock Purchase
Plan ................................. 171 2 2,385 2,387
Stock-based compensation ..................... 236 236
Reduction in paid-in capital for
contingent consideration ............. (278) (278)
Comprehensive loss:
Net loss ............................. (36,085) (36,085)
------ ---- -------- --------- ------- --------
Balance, September 30, 1999 .................. 22,266 223 141,469 (42,192) -- 99,500
Exercise of stock options .................... 1,091 11 18,030 18,041
Issuance of common stock in connection
with the Employee Stock Purchase
Plan ................................. 164 1 3,261 3,262
Issuance of common stock in connection
with offering (net of
expenses of $5.5
million) ........................... 1,491 15 89,890 89,905
Reduction in paid-in capital for
contingent consideration ..................... (108) (108)

Comprehensive loss:
Net loss ............................. (7,953) (7,953)
------ ---- -------- --------- ------- --------
Balance, September 30, 2000 .................. 25,012 250 252,542 (50,145) -- 202,647
Exercise of stock options .................... 142 1 1,949 1,950
Issuance of common stock in connection
with the Employee Stock Purchase
Plan ................................. 369 4 4,048 4,052
Reduction in paid-in capital for
contingent consideration ............. (328) (328)
Acquisitions and other ....................... 70 1 1,924 1,925

Comprehensive loss:
Net loss ............................. (99,044) (99,044)
Other comprehensive loss:
Unrealized loss on
investment in
affiliate .................. (7,445) (7,445)
--------
Total comprehensive loss ..................... (106,489)
------ ---- -------- --------- ------- --------
Balance, September 30, 2001 .................. 25,593 $256 $260,135 $(149,189) $(7,445) $103,757
====== ==== ======== ========= ======= ========

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

PRI AUTOMATION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)

YEAR ENDED SEPTEMBER 30,
------------------------
2001 2000 1999
---- ---- ----

Cash flows used in operating activities:
Net loss ............................................................... $(99,044) $ (7,953) $(36,085)
Adjustments to reconcile net loss to net cash (used in) provided by
operating activities:
Depreciation and amortization expense .......................... 13,410 9,870 8,679
Provision for write-down of inventories ........................ 11,154 7,759 785
Provision for bad debts ........................................ (983) 683 (523)
Deferred income taxes .......................................... -- -- 8,391
Write-downs of assets .......................................... 2,944 -- --
Gain on investment in affiliate ................................ (868) -- --
Translation (gains) losses, net ................................ 1,419 721 (854)
Other, net ..................................................... 87 128 147
Changes in operating assets and liabilities:
Trade accounts receivable .............................. 41,396 (42,353) 3,726
Contracts in progress .................................. 21,398 (17,650) 2,999
Inventories ............................................ (42,088) (38,512) (1,642)
Other assets ........................................... (5,664) 3,874 34
Accounts payable ....................................... (12,798) 12,042 4,760
Accrued expenses and other liabilities ................. 4,669 15,822 1,916
Accrued legal and restructuring costs .................. 8,707 -- --
Billings in excess of revenues and customer advances ... 40,621 59 (2,795)
-------- --------- --------
Net cash used in operating activities .......................................... (15,640) (55,510) (10,462)
-------- --------- --------
Cash flows used in investing activities:
Investment in affiliate ................................................ (11,467) -- --
Acquisitions ........................................................... (750) -- --
Purchases of property and equipment .................................... (10,235) (13,736) (6,249)
Other, net ............................................................. (329) (108) (574)
-------- --------- --------
Net cash used in investing activities .......................................... (22,781) (13,844) (6,823)
-------- --------- --------
Cash flows (used in) provided by financing activities:
Proceeds from common stock offering, net ............................... -- 89,905 --
Repayment of capital lease obligations ................................. (339) (526) (551)
Proceeds from exercise of stock options and Employee Stock Purchase Plan 6,002 21,303 12,487
Other, net ............................................................. (27) -- 188
-------- --------- --------
Net cash (used in) provided by financing activities ............................ 5,636 110,682 12,124
-------- --------- --------
Effect of changes in exchange rates on cash .................................... (731) (709) (21)
-------- --------- --------
Net (decrease) increase in cash and cash equivalents ........................... (33,516) 40,619 (5,182)
Cash and cash equivalents at beginning of year ................................. 92,484 51,865 57,047
-------- --------- --------
Cash and cash equivalents at end of year ....................................... $ 58,968 $ 92,484 $ 51,865
======== ========= ========
Supplemental disclosures of cash flow information:
Cash paid (received) during the year for:
Interest expense ....................................... $ 42 $ 92 $ 125
Income taxes, net ...................................... $ 946 $ (4,846) $ 908
Non-cash transactions:
Acquisition of Commotion Technology, Inc. .............................. $ 1,925 -- --

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

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

Principles of Consolidation

The consolidated financial statements include the accounts of PRI
Automation, Inc., its wholly owned domestic subsidiaries and its wholly owned
and majority-owned foreign subsidiaries (collectively, the "Company"). All
significant intercompany transactions and balances have been eliminated. Certain
reclassifications have been made to prior years' financial statements to conform
to the current presentation.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates and would
impact future results of operations and cash flows. Significant estimates are
inherent in determining revenue recognition and associated profits under the
percentage-of-completion method.

Cash Equivalents

Cash equivalents consist of money market mutual funds, commercial paper,
and other short-term investments with an original maturity of three months or
less. Cash equivalents are classified as held to maturity and valued at
amortized cost, which approximates fair market value.

Contracts in Progress

Contracts in progress include costs and estimated profits under
incomplete contracts accounted for using the percentage-of-completion method,
net of amounts billed. These amounts are expected to be collected within the
next twelve months as units are delivered.

Fair Value of Financial Instruments, Concentration of Credit Risk and
Significant Customers

Financial instruments that potentially subject the Company to significant
credit risk consist principally of cash, cash equivalents, investment in
affiliate, and trade accounts receivable. The Company generally invests its cash
equivalents in investment-grade securities. The carrying value of financial
instruments approximates their related fair values. The Company's customers are
primarily concentrated in one industry, the semiconductor manufacturing and
related capital goods industry. The Company's ten largest customers accounted
for approximately 61%, 54% and 54% of revenue in fiscal years 2001, 2000 and
1999, respectively. During fiscal year 2001, two customers accounted for 21% and
11% of total revenue. In fiscal year 2000, two customers accounted for 14% and
12% of total revenue. In fiscal year 1999, revenue from one customer accounted
for 21% of total revenue. Three customers accounted for 22%, 21% and 10% of
gross accounts receivable at September 30, 2001. Two customers accounted for 18%
and 12% of gross accounts receivable at September 30, 2000. The Company has not
historically experienced significant credit losses related to its receivables.

Income Taxes

The Company recognizes deferred tax assets and liabilities based on
temporary differences between the financial statement and tax bases of assets
and liabilities using the expected tax rates in the year in

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

which the differences are expected to reverse. The Company provides a valuation
allowance against net deferred tax assets if, based on the available evidence,
it is more likely than not that some or all of the deferred tax assets will not
be realized.

Inventories

Inventories, consisting of raw materials, work-in-process and finished
goods, are stated at the lower of cost (determined principally on a first-in,
first-out basis) or market.

Property and Equipment

Property and equipment are stated at cost. Betterments and major renewals
are capitalized and included in property and equipment, while repairs and
maintenance are charged to expense as incurred. Depreciation and amortization of
property and equipment is provided using the straight-line method over the
estimated useful lives of the assets. Upon retirement or sale, the cost of the
assets disposed and the related accumulated depreciation are removed from the
accounts and any resulting gain or loss is credited or charged to operations.

Intangible Assets

Other assets includes the carrying value of goodwill and other intangible
assets. Goodwill represents the excess of the purchase price over the fair value
of net assets acquired. Other intangible assets are amortized on a straight-line
basis over the estimated useful lives of the assets, ranging from two to five
years.

Impairment of Long-Lived Assets

The Company reviews long-lived assets for impairment whenever events or
changes in business circumstances indicate that the carrying amount of the
assets may not be fully recoverable or that the useful lives of these assets are
no longer appropriate. Each impairment test is based on a comparison of the
undiscounted cash flows to the recorded value of the asset. If an impairment is
indicated, the asset is written down to its estimated fair value on a discounted
cash flow basis. The cash flow estimates used to determine the impairment, if
any, reflect management's best estimates using appropriate assumptions and
projections at that time. Management believes that no significant impairment of
its long-lived assets has occurred at September 30, 2001.

Billings in Excess of Revenues and Customer Advances

Billings in excess of revenues and customer advances include amounts
billed on incomplete contracts, contracts accounted for using the
percentage-of-completion method net of costs and estimated profits recognized,
and customer service contracts paid in advance.

Revenue Recognition

Beginning October 1, 2000, revenue from certain systems at the Company's
Factory Systems segment is recognized upon customer acceptance in accordance
with the Securities and Exchange Commission ("SEC") Staff Accounting Bulletin
No. 101 ("SAB 101"). Prior to fiscal year 2001, revenue from such product sales
was generally recorded upon shipment to the customer. The Company reported this
accounting change in accordance with APB Opinion No. 20, "Accounting Changes,"
as a cumulative effect adjustment and recorded a non-cash charge of $5,748,000
(net of income taxes), or a charge of $0.23 per diluted share, to reflect the
cumulative effect of a change in accounting principle.

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The charge represents the net profit on $18,386,000 of products that shipped
during fiscal year 2000 but did not receive final customer acceptance during
fiscal year 2000. The Company's reported revenue for fiscal year 2001 included
$15,058,000 of revenue that was part of the cumulative effect adjustment for
products that shipped during fiscal year 2000 but did not receive final customer
acceptance until 2001. The Company adopted SAB 101 in the fourth quarter of
fiscal year 2001, retroactive to the beginning of the fiscal year (October 1,
2000) and therefore, the cumulative effect adjustment was reported in the first
quarter of fiscal year 2001. Financial information for the first three quarters
of fiscal year 2001 has been restated to reflect this change. Pro forma amounts
for prior years have not been presented to reflect the change in accounting
principle under SAB 101, primarily as a result of certain inherent limitations
in the Company's information systems. The Company's information systems were not
designed to track and accumulate the type of information required to fully
evaluate and apply the impact of SAB 101, and as such, the process for fiscal
year 2001 was largely a manual exercise. As a result, the Company did not
believe it could determine the amounts for periods prior to fiscal 2001.

For certain contracts eligible under Statement of Position No. 81-1,
"Accounting for Performance of Construction-Type and Certain Production-Type
Contracts" ("SOP 81-1"), revenue on product sales is recognized using the
percentage-of-completion accounting method based upon an efforts-expended
method. In all cases, changes to total estimated costs and anticipated losses,
if any, are recognized in the period in which determined. Revenue recognized
under the percentage-of-completion accounting method was approximately
$58,193,000, $72,927,000 and $23,383,000 during fiscal years 2001, 2000, and
1999, respectively. Product and installation revenue for systems in the
Company's Factory Systems segment that do not qualify for the
percentage-of-completion accounting method is recognized upon customer
acceptance in accordance with SAB 101. The fair value of all other elements,
including service and support revenue, is based upon the price charged when
these elements are sold separately and unaccompanied by other elements and is
generally recognized ratably over the applicable contract periods or as the
services are performed. Estimated warranty costs are accrued within cost of
revenue when revenue is recognized. The Company's arrangements do not typically
contain any right of return privileges other than warranties after shipment or
acceptance.

Revenue from product sales in the Company's OEM segment is generally
recognized upon shipment to the customer. Generally, product sales in the OEM
segment do not require installation or contain customer acceptance provisions,
however, the Company's policy is that where installation is required or customer
acceptance provisions are present, recognition of such revenue is deferred until
installation is complete and acceptance has occurred.

Software license revenue is recognized upon delivery of the software and
completion of a written agreement with the customer, provided fees are fixed or
determinable, and collectibility of the related receivable is deemed probable by
management. In the Company's software arrangements, service revenue and
post-contract customer support revenue are unbundled from software license sales
based upon the fair value of those services where such services are sold
separately. The Company recognizes such revenue as the services are provided or
ratably over the period of the related contract, as applicable. Where an
arrangement requires significant production, customization or modification of
software, and the service element does not meet the criteria for separate
accounting set forth in Statement of Position 97-2, "Software Revenue
Recognition" ("SOP 97-2"), the Company's accounting policy is to account for the
entire arrangement in conformity with SOP 81-1 pursuant to SOP 97-2 using the
percentage of completion method based on cost inputs. Revenues from training and
consulting are recognized as services are performed.

Product and equipment net revenue includes revenue from all equipment
sales, installation, project management and software licenses. Service and
maintenance net revenue consists of service contracts,

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

spare part sales, repairs and upgrades, software maintenance contracts and
consulting and training services.

Research and Development Costs

The Company expenses all engineering, research and development costs as
incurred. Expenses subject to capitalization in accordance with Statement of
Financial Accounting Standards ("SFAS") No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased, or Otherwise Marketed," were insignificant
for all periods presented.

Foreign Currency Translation

The Company's functional currency is the U.S. dollar. Assets and
liabilities of foreign subsidiaries that are denominated in foreign currencies
are remeasured into U.S. dollars at rates of exchange in effect at the end of
the fiscal year, except for nonmonetary assets and liabilities, which are
remeasured using historical exchange rates. Revenue and expense amounts are
remeasured using an average of exchange rates in effect during the period,
except those amounts related to nonmonetary assets and liabilities, which are
remeasured at historical exchange rates. Net realized and unrealized gains and
losses resulting from foreign currency remeasurement are included in the
consolidated statements of operations as other income or expense.

Legal Expenses

The Company accrues estimated amounts for legal fees expected to be
incurred in connection with loss contingencies when the fees to be incurred are
both probable and estimable.

Accounting for Stock-Based Compensation

The Company continues to apply the accounting provisions of Accounting
Principles Board ("APB") Opinion No. 25 and has elected the disclosure-only
alternative permitted under SFAS No. 123, "Accounting for Stock-Based
Compensation." The Company has disclosed pro forma net loss and pro forma net
loss per share in Note H using the fair value based method.

Net Loss Per Common Share

Basic and diluted net loss per common share is computed using the
weighted average number of common shares outstanding. Stock options to purchase
5,392,725, 3,886,926 and 3,759,387 shares were outstanding as of September 30,
2001, 2000, and 1999 respectively, but were not included in the computation of
diluted loss per share because the Company was in a loss position and the
inclusion of such shares would have had an anti-dilutive effect.

Comprehensive Loss

The Company presents comprehensive loss in its Consolidated Statement of
Stockholders' Equity. Accumulated other comprehensive loss as of September 30,
2001 consists of the unrealized loss of $7,445,000 on the Shinsung investment.

New Accounting Pronouncements

In July 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 141 ("SFAS No. 141"),
"Business Combinations" and Statement of Financial

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Accounting Standards No. 142 ("SFAS No. 142"), "Goodwill and Other Intangible
Assets." SFAS No. 141 requires that all business combinations be accounted for
under the purchase method only, eliminating the pooling-of-interests method and
that certain acquired intangible assets in a business combination be recognized
as assets apart from goodwill. SFAS No. 142 requires, among other things, the
discontinuance of goodwill amortization, which is replaced with periodic tests
of impairment of goodwill and that intangible assets other than goodwill be
amortized over their useful lives. In addition, the standard includes provisions
for the reclassification of certain existing recognized intangibles as goodwill,
reassessment of the useful lives of existing recognized intangibles,
reclassification of certain intangibles out of previously reported goodwill and
the identification of reporting units for purposes of assessing potential future
impairments of goodwill. SFAS No. 142 also requires the Company to complete a
transitional goodwill impairment test six months from the date of adoption. SFAS
No. 141 is effective for all business combinations initiated after June 30, 2001
and for all business combinations accounted for by the purchase method for which
the date of acquisition is after June 30, 2001. The provisions of SFAS No. 142
will be effective for fiscal years beginning after December 15, 2001, however
early adoption is permitted for companies with a fiscal year beginning after
March 15, 2001 and was adopted by the Company on October 1, 2001. The impact of
SFAS No. 142 will not have a material effect on the Company's financial position
and results of operations.

B. CASH AND CASH EQUIVALENTS:

Cash and cash equivalents consisted of the following at September 30:

2001 2000
---- ----
(IN THOUSANDS)

Cash on hand and deposited with banks $ 4,772 $ 7,450
Money market funds .................. 44,133 38,431
Short-term investments .............. 10,063 46,603
------- -------
$58,968 $92,484
======= =======

C. INVENTORIES:

Inventories consisted of the following at September 30:

2001 2000
---- ----
(IN THOUSANDS)

Raw materials . ............. $29,823 $43,981
Work-in-process ............. 9,898 6,248
Finished goods .............. 50,317 8,875
------- -------
$90,038 $59,104
======= =======

PRI AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

D. PROPERTY AND EQUIPMENT:

Property and equipment consisted of the following at September 30:

DEPRECIABLE LIFE 2001 2000
---------------- ---- ----
(IN THOUSANDS)

Machinery and equipment ...... 2-7 years $ 38,626 $ 41,232
Furniture and fixtures ....... 5-7 years 7,931 7,415
Leasehold improvements ....... Shorter of life of lease or useful life 13,112 8,583
-------- --------
59,669 57,230
Accumulated depreciation and
amortization .............. (41,180) (33,165)
-------- --------
$ 18,489 $ 24,065
======== ========

Depreciation expense was $12,858,000, $8,245,000, and $7,364,000 for the
fiscal year 2001, 2000 and 1999, respectively.

E. OTHER INCOME, NET:

Other income, net, consisted of the following for the three years ended
September 30:

2001 2000 1999
---- ---- ----
(IN THOUSANDS)

Interest income, net .............................. $3,349 $3,283 $2,110
Net translation and foreign exchange gains (losses) (624) (721) 854
Gain on investment in affiliate ................... 868 -- --
Other, net ........................................ (240) (8) (29)
------ ------ ------
$3,353 $2,554 $2,935
====== ====== ======

F. LEASE COMMITMENTS:

The Company leases manufacturing and office facilities and equipment
under noncancelable operating leases expiring through the year 2011. Rent
expense under operating leases was $6,317,000, $5,651,000, and $4,418,000, for
fiscal years 2001, 2000, and 1999, respectively. Obligations under capital
leases were insignificant at September 30, 2001.

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

At September 30, 2001, future minimum payments required under all
noncancelable operating leases were as follows:

OPERATING
FISCAL YEAR LEASES
----------- ------
(IN THOUSANDS)

2002 .......................................... $ 6,235
2003 .......................................... 7,295
2004 .......................................... 6,471
2005 .......................................... 4,875
2006 .......................................... 3,983
2007 and thereafter . ........................ 13,359
-------
Total minimum lease payments .................. $42,218
=======

G. ACCRUED EXPENSES AND OTHER LIABILITIES:

The significant components of accrued expenses and other liabilities
consisted of the following at September 30:

2001 2000
---- ----
(IN THOUSANDS)

Accrued expenses ................................ $ 4,500 $ 8,764
Income taxes payable ............................ 3,313 1,199
Accrued compensation and benefits ............... 7,903 9,910
Contract loss reserves .......................... 5,830 3,765
Warranty accrual ................................ 15,941 9,171
------- -------
$37,487 $32,809
======= =======

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

H. STOCKHOLDERS' EQUITY:

Stock Options

The Company's stock option plans provide for the granting of options to
qualified employees and non-employee directors to purchase the Company's common
stock at a price equal to the fair market value on the date of grant. Incentive
stock options generally vest over five years and expire six years after
issuance. Non-qualified stock options generally vest between zero and five years
and expire between five and ten years after issuance. There were 642,131 shares
available at September 30, 2001 for future grants of options. The Company
increased the number of shares available for grant under its plans by 2,800,000,
and 1,050,150 shares in fiscal years 2000 and 1999, respectively. Information
with respect to option activity for the three years ended September 30 is as
follows:

NUMBER OF WEIGHTED AVERAGE
SHARES EXERCISE PRICE
------ --------------

Outstanding at September 30, 1998 3,545,670 $13.78
Granted ................. 1,532,805 32.37
Canceled ................ (460,354) 17.24
Exercised ............... (858,734) 11.76
---------- ------
Outstanding at September 30, 1999 3,759,387 19.17
Granted ................. 1,949,850 49.95
Canceled ................ (730,919) 28.39
Exercised ............... (1,091,392) 16.53
---------- ------
Outstanding at September 30, 2000 3,886,926 33.53
Granted ................. 2,482,348 17.10
Canceled ................ (834,282) 31.39
Exercised ............... (142,267) 13.71
---------- ------
Outstanding at September 30, 2001 5,392,725 $26.80
========== ======

SEPTEMBER 30,
-------------
2001 2000 1999
---- ---- ----

Options exercisable ........... 1,630,087 999,217 1,025,154
Weighted average exercise price $ 25.61 $ 23.74 $ 14.40

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Summarized information about stock options outstanding at September 30, 2001 is
as follows:

OPTIONS OUTSTANDING OPTIONS EXERCISABLE
------------------- -------------------
WEIGHTED
AVERAGE WEIGHTED
NUMBER REMAINING WEIGHTED NUMBER AVERAGE
RANGE OF OUTSTANDING CONTRACTUAL AVERAGE EXERCISABLE EXERCISE
EXERCISE PRICES AT 9/30/01 LIFE (YEARS) EXERCISE PRICE AT 9/30/01 PRICE
--------------- ---------- ------------ -------------- ---------- -----

$ 2.03 -- $14.75 983,798 3.21 $13.96 476,620 $13.73
14.90 -- 17.69 903,310 4.95 15.79 203,610 16.99
17.75 -- 17.75 1,120,385 5.06 17.75 149,378 17.75
17.81 -- 29.75 923,386 4.06 25.45 465,484 25.37
30.00 -- 47.38 1,145,096 4.47 45.32 247,386 45.89
48.06 -- 85.68 316,750 4.52 67.12 87,609 67.58
---------------- --------- ---- ------ --------- ------
$ 2.03 -- $85.68 5,392,725 4.38 $26.80 1,630,087 $25.61
================ ========= ==== ====== ========= ======

On October 29, 1997, the Company granted Interval Logic Corporation
("ILC"), a subsidiary of the Company, common stock options in accordance with
the Board of Directors' adoption of the 1997 Interval Logic Corporation
Incentive and Non-Qualified Stock Option Plan, and reserved 5,000,000 shares of
ILC authorized common stock. These options give ILC employees the option to
purchase shares of ILC common stock at exercise prices ranging from $0.10 to
$1.00 per share. The options vest over four years and expire after ten years.
There were 3,693,610 shares available at September 30, 2001 for future grants of
options. Information with respect to ILC option activity for the three years
ended September 30 is as follows:

NUMBER OF WEIGHTED AVERAGE
SHARES EXERCISE PRICE
------ --------------

Outstanding at September 30, 1998 2,015,250 $0.10
Granted ................. 391,750 0.19
Canceled ................ (154,765) 0.11
Exercised ............... (24,018) 0.10
--------- -----
Outstanding at September 30, 1999 2,228,217 0.11
Granted ................. 434,000 1.00
Canceled ................ (244,741) 0.48
Exercised ............... (52,159) 0.10
--------- -----
Outstanding at September 30, 2000 2,365,317 0.24
Granted ................. 101,500 1.00
Canceled ................ (1,236,604) 0.16
Exercised ............... (13,262) 0.33
--------- -----
Outstanding at September 30, 2001 1,216,951 $0.39
========= =====

SEPTEMBER 30,
-------------
2001 2000 1999
---- ---- ----

Options exercisable ........... 825,723 1,442,035 938,632
Weighted average exercise price $ 0.21 $ 0.10 $ 0.10

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Summarized information about ILC stock options outstanding at September 30, 2001
is as follows:

$ 0.10 830,501 6.31 $0.10 724,062 $0.10
1.00 386,450 8.61 1.00 101,661 1.00
------------- --------- ---- ----- ------- -----
$0.10 -- $1.00 1,216,951 7.04 $0.39 825,723 $0.21
============= ========= ==== ===== ======= =====

Employee Stock Purchase Plan

The Company offers an Employee Stock Purchase Plan ("ESPP") under which
rights are granted to purchase shares of common stock at a price of 85% of the
lesser of the market value of such shares at either the beginning or the end of
each six-month offering period. The plan permits employees to purchase common
stock through payroll deductions, which may not exceed 10% of an employee's
compensation as defined in the plan. The Company reserved 70,000 shares of
common stock for issuance under its plan during fiscal year 2000, and also
adopted a new plan under which it reserved 350,000 shares. During fiscal year
2001, the Company authorized an additional 500,000 shares under the new plan.
Shares purchased during fiscal years 2001, 2000 and 1999 were 368,949, 164,120,
and 171,436, respectively, at average prices ranging from $8.51 to $28.90 per
share. Shares available for future purchase under the ESPP totaled 370,453 at
September 30, 2001.

Pro Forma Information

For purposes of determining pro forma compensation cost under SFAS No.
123, the fair value of both the Company and ILC options granted are estimated on
the date of grant using the Black-Scholes valuation model with the following
assumptions:

SEPTEMBER 30,
-------------
2001 2000 1999
---- ---- ----

Weighted average fair value of Company options ..... $ 12.25 $ 35.42 $ 16.86
Weighted average fair value of ILC options ......... $ 0.66 $ 0.54 $ 0.13
Options granted--Company ........................... 2,482,348 1,949,850 1,532,805
Options granted--ILC ............................... 101,500 434,000 391,750

Assumptions:
Expected life of grants (years) .................... 5 5 5
Risk-free interest rate ............................ 4% 6% 5%
Expected volatility ................................ 90% 85% 71%
Dividend yield ..................................... None None None

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For purposes of determining pro forma compensation cost under SFAS No.
123, the fair value of each ESPP purchase right was estimated using the
Black-Scholes valuation model with the following assumptions:

SEPTEMBER 30,
-------------
2001 2000 1999
---- ---- ----

Weighted average fair value of purchase
rights ..................................... $8.08 $18.98 $6.60
ESPP purchase rights granted ................. 368,949 164,120 171,436
Assumptions:
Expected life of purchase rights (years) ... 0.5 0.5 0.5
Risk-free interest rate .................... 2.71% and 4.44% 6.11% and 6.25% 4.59% and 5.86%
Expected volatility ........................ 90% and 128% 72% and 120% 83% and 99%
Dividend yield ............................. None None None

Had compensation costs for the Company's stock plans been determined on
the fair market value at the grant dates for such awards, the Company's net loss
and loss per share would approximate the pro forma amounts below:

YEARS ENDED SEPTEMBER 30,
-------------------------
2001 2000 1999
---- ---- ----
(IN THOUSANDS)

Loss before cumulative effect of change in accounting principle:
As reported ............................................ $ (93,296) $ (7,953) $(36,085)
Pro forma .............................................. $(117,832) $(29,160) $(50,304)
Loss per share before cumulative effect of change in accounting
principle:
Basic and diluted:
As reported ............................................ $ (3.69) $ (0.34) $ (1.67)
Pro forma .............................................. $ (4.66) $ (1.23) $ (2.33)

The effects of applying SFAS No. 123 in this pro forma disclosure are not
likely to be representative of the effects on reported net income (loss) for
future years.

Rights Agreement

The Board of Directors of the Company adopted a Rights Agreement, dated
as of December 9, 1998, between the Company and State Street Bank and Trust
Company, as Rights Agent. In connection with this agreement, the Board
distributed one purchase right for each share of common stock then or thereafter
outstanding. The rights will become exercisable only under certain
circumstances, such as if a person or group acquires beneficial ownership of 20%
or more of the outstanding common shares of the Company or attempts to acquire
such ownership through an unsolicited tender offer. Each right, when it becomes
exercisable, will entitle the holder to purchase from the Company one
one-hundredth of a share of Series A Participating Cumulative Preferred Stock,
par value $0.01 per share, of the Company, at a price of $140. If a person or
group acquires beneficial ownership of 20% or more of the outstanding common
shares of the Company, each right will entitle its holder to purchase shares of
the Company's Series A Participating Cumulative Preferred Stock with a value of
twice the purchase price. Prior to any party acquiring 20% or more of the
outstanding common shares of the Company or prior to the expiration date, the
Board of Directors of the Company may redeem the rights in whole, but not

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

in part, at a price, in cash or common shares or other securities of the Company
deemed by the Board of Directors to be at least equivalent in value, of $.001
per right. The rights expire on December 9, 2008 unless otherwise redeemed by
the Company prior to that date.

I. CONTINGENT LIABILITIES:

Between October 1, 1998 and January 1, 2002 the Company issued an
aggregate of 896,521 shares of common stock to employees who exercised options
granted under the 1997 Non-Incentive Stock Option Plan and an aggregate of
129,547 shares of common stock to employees who participated in the 2000
Employee Stock Purchase Plan. These issuances were not registered under the
Securities Act of 1933, as amended, due to an inadvertent failure to timely file
Registration Statements on Form S-8 covering these transactions. The Company
could be exposed to claims by some of its employees for rescission of these
purchases. A rescission right involves the right of the employee to require the
Company to repurchase the shares at the original exercise price plus interest.
However, based on an investigation by the Company of these transactions,
including subsequent dispositions by employees of the shares at prices higher
than they paid, such that they have no rescission damages, the Company does not
believe that the amount of any such potential rescission liability would be
material to its financial condition or results of operations.

From November 2000 through January 2001, the Company and three of its
directors (one an officer) were named as defendants in five virtually identical
lawsuits filed in the United States District Court for the District of
Massachusetts claiming, among other things, that the defendants violated certain
securities laws and regulations. Each complaint sought certification as a class
action on behalf of virtually all purchasers of the Company's stock from January
27, 2000 through September 11, 2000. The five cases have been consolidated, and
the case is now entitled In re PRI Automation, Inc. Securities Litigation, Civil
Action No. 00-123958-REK. A group of five persons has been appointed as lead
plaintiff, and the court has approved the group's selection of lead counsel. A
consolidated amended complaint was filed on October 16, 2001. The amended
complaint claims that the defendants violated Sections 10(b) and 20(a) of the
Securities Exchange Act of 1934 and SEC Rule 10b-5, and also Sections 11 and 15
of the Securities Act of 1933, by virtue of statements and omissions that the
plaintiffs claim were materially false or misleading. In substance, the amended
complaint alleges that, throughout the class period, senior management of the
Company knew that the Company's Factory Automation Systems division was
encountering manufacturing problems in preparing its new TurboStocker product
for higher-volume production, that those manufacturing problems were financially
material to the Company, and that the Company did not adequately disclose those
problems until the end of the class period. The amended complaint also alleges
that the registration statement for a securities offering by the Company in May
2000 failed adequately to disclose these manufacturing problems. The amended
complaint seeks damages, pre-judgment and post-judgment interest, costs and
attorneys' fees. The Company (together with the defendant directors) filed a
motion to dismiss and supporting papers on December 4, 2001. Argument on the
motion has been rescheduled, and a new date has not yet been set. The Company
strongly believes that the lawsuit lacks merit, and the Company intends to
defend against the claims vigorously. However, the Company could incur
substantial costs defending the lawsuit, has no insurance coverage relating to
these claims, and has undertaken to indemnify the individual defendants for any
losses they may suffer. Moreover, although the Company has established a reserve
of $2,980,000 for legal costs, the amount of that reserve may be inadequate. The
lawsuits could also divert the time and attention of the Company's management.
The Company cannot predict the outcome of the lawsuits at this time, and there
can be no assurance that the litigation will not have a material adverse impact
on its financial condition or results of operations.

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

J. INCOME TAXES:

Income (loss) before income taxes for domestic and foreign operations for
the years ended September 30 was as follows:

2001 2000 1999
---- ---- ----
(IN THOUSANDS)

Domestic ................ $(95,058) $(12,012) $(36,637)
Foreign ................. 3,853 5,286 1,617
-------- -------- --------
Total ................... $(91,205) $ (6,726) $(35,020)
======== ======== ========

The following summarizes the Company's provision for (benefit from)
income taxes for the years ended September 30:

2001 2000 1999
---- ---- ----
(IN THOUSANDS)

Current tax (benefit) provision:
Federal ................. $ -- $ 78 $(7,667)
State ................... 100 221 21
Foreign ................. 1,991 928 320
------ ------ -------
Total current (benefit) provision 2,091 1,227 (7,326)

Deferred provision (benefit):
Federal ................. -- -- 4,570
State ................... -- -- 2,643
Foreign ................. -- -- 1,178
------ ------ -------
Total deferred provision ........ -- -- 8,391
------ ------ -------
Total provision for income taxes $2,091 $1,227 $ 1,065
====== ====== =======

The differences between the effective tax rates and the U.S. federal
statutory tax rates were as follows:

2001 2000 1999
---- ---- ----

U.S. federal income tax statutory rate .......... (34.0)% (34.0)% (34.0)%
Change in valuation allowance ................... 34.1 60.5 43.4
State income taxes, net of federal benefit ...... -- 2.8 (0.4)
Foreign rate differential ....................... 1.4 (8.5) (0.1)
U.S. and foreign tax credits .................... -- (5.9) (9.6)
Acquisition costs not deductible for tax purposes -- -- 3.9
Other ........................................... 0.8 3.3 (0.2)
---- ---- ----
Effective tax rate .............................. 2.3% 18.2% 3.0%
==== ==== ====

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

At September 30, the components of net deferred tax assets (liabilities) were as
follows:

2001 2000
---- ----
(IN THOUSANDS)

Gross deferred tax assets:
Accruals and reserves .................. $ 33,777 $ 10,819
Intangible assets ...................... 1,893 2,135
Tax credits ............................ 6,593 8,376
Canadian R&D and capital cost allowances 8,209 8,709
Net operating losses ................... 31,946 22,777
Depreciation ........................... 2,014 --
Other .................................. 515 6,474
-------- --------
Total gross deferred tax assets ..... 84,947 59,290
-------- --------
Gross deferred tax liabilities:
Long-term contracts .................... (18) (4,040)
Accounts receivable .................... -- (349)
Depreciation ........................... -- (2,147)
-------- --------
Total gross deferred tax liabilities . (18) (6,536)
Valuation allowance ....................... (84,929) (52,754)
-------- --------
Net deferred tax assets ................... $ -- $ --
======== ========

The Company experienced net operating losses during fiscal years 1998 and
1999 and, as a result, it believed that sufficient uncertainty existed regarding
the realizability of the net deferred tax assets and accordingly it established
a full valuation allowance in fiscal 1999. Due to the net operating losses in
fiscal years 2000 and 2001, the Company has continued to maintain a full
valuation allowance against its net deferred tax assets as of the end of fiscal
2001. The net increase in the valuation allowance during fiscal years 2001 and
2000 was $32,175,000 and $19,406,000, respectively.

At September 30, 2001, the Company had an aggregate U.S. federal net
operating loss (NOL) of $84,183,000 that is available to offset future taxable
income. Approximately $46,300,000 of the NOL is attributable to the exercise of
stock options for which the tax benefit, when realized, will be recorded
directly to stockholders' equity. The U.S. federal net operating loss available
for carryforward begins to expire in fiscal year 2020. The Company also has U.S.
federal credit carryforwards of $2,582,000 that begin to expire in fiscal year
2005. The Company has available state net operating losses of $64,000,000 that
expire in fiscal year 2004 to fiscal year 2022 and state credit carryforwards of
$4,448,000 that expire beginning in fiscal year 2013. The Company also has
non-U.S. credits of $1,075,000 that begin to expire in fiscal year 2005.
Ownership changes, as defined in the Internal Revenue Code, may have limited the
amount of net operating loss carryforwards and research and development credit
carryforwards that can be utilized annually to offset future taxable income and
taxes payable. Subsequent ownership changes could further affect the limitation
in future years.

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

K. DEFINED CONTRIBUTION PLANS:

Eligible employees can participate in the Company's 401(k) Savings and
Retirement Plan by making voluntary contributions to the plan in amounts up to
the statutory limit or 15% of their annual compensation. Currently, the Company
has elected to match a portion of the employee deferral up to certain prescribed
limits, and these matching contributions vest at a rate of 20% per year. The
Company's contribution expense under these plans amounted to $1,779,000,
$1,321,000, and $1,118,000 for fiscal years 2001, 2000, and 1999, respectively.

Canadian employees are eligible to participate in the Registered
Retirement Savings Plan ("RRSP") that allows voluntary contributions up to the
statutory limit. The Company has elected to match a portion of the employee
contributions, up to a maximum of $5,000 per employee per year. These
contributions are fully vested when made. The Company's contribution expenses
under the RRSP were approximately $363,000, $332,000, and $255,000 in fiscal
years 2001, 2000, and 1999, respectively.

L. SEGMENT REPORTING AND GEOGRAPHIC INFORMATION:

The Company operates in three primary segments, all within the
semiconductor manufacturing and OEM equipment supply industry, which serve both
domestic and international markets. These reportable operating segments consist
of Factory Systems, OEM Systems, and Software Systems. These businesses are
segregated into their respective reportable segments based on the Company's
management reporting structure and its method of internal resource allocations.
Additionally, the Company's product development processes and customers were
evaluated in determination of the segments.

The Factory Systems segment provides automation products for interbay,
intrabay and lithography automation as well as integration and support services
to semiconductor manufacturers. The OEM Systems segment provides wafer-handling
systems, software and services for semiconductor equipment suppliers. The
Software Systems segment primarily provides manufacturing execution system
("MES") software and advanced planning and scheduling software to semiconductor
manufacturers. This segment, however, does not include all of the Company's
software products, as material control software ("MCS") and tool connectivity
software are components of the other segments.

The Company's operating segments have no significant intersegment
revenues and expenses, as revenues from all segments are generated from sales to
unaffiliated customers. External revenues and expenses are allocated between the
applicable segments. The Company's segments are evaluated on an operating profit
basis, and other income and expenses and income tax provisions or benefits are
not calculated for the specific segments. Any results of operations or assets
not specifically allocated to these segments are included in the Corporate and
Other category. The Corporate and Other category assets include all
non-identifiable assets, primarily cash and investments, deferred income taxes,
and other current and non-current assets. Activity related to strategic
technology development, corporate marketing, general corporate administrative
expenses, merger costs and certain special charges, are included in the
Corporate and Other segment. Depreciation expense and expenditures for
long-lived assets by segment are not presented below as amounts are not used in
measuring segment operating performance by the Company's chief operating
decision maker. The accounting policies of the reportable segments are the same
as those described in Note A, "Summary of Significant Accounting Policies."

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SUMMARY OF BUSINESS SEGMENTS

YEAR ENDED SEPTEMBER 30,
2001 2000 1999
(IN THOUSANDS)

TOTAL NET REVENUE TO UNAFFILIATED CUSTOMERS:

Factory Systems ............................ $ 136,201 $ 144,219 $ 70,046
OEM Systems ................................ 105,071 118,210 41,496
Software Systems ........................... 27,286 37,343 24,754
--------- --------- ---------
Total net revenue .......................... $ 268,558 $ 299,772 $ 136,296
========= ========= =========

SEGMENT OPERATING (LOSS) PROFIT*:

Factory Systems ............................ $ (76,970) $ (35,710) $ (21,454)
OEM Systems ................................ 9,873 33,063 1,426
Software Systems ........................... (5,782) 10,401 (3,062)
Other reconciling items:
Corporate and other expenses ............... (21,679) (17,034) (14,865)
--------- --------- ---------
Consolidated operating loss ................ $ (94,558) $ (9,280) $ (37,955)
========= ========= =========

IDENTIFIABLE SEGMENT ASSETS:

Factory Systems ............................ $ 117,520 $ 121,664
OEM Systems ................................ 25,911 37,703
Software Systems ........................... 12,774 15,413
--------- ---------
Identifiable segment assets ................ 156,205 174,780
Corporate and other ........................ 62,750 102,144
--------- ---------
Consolidated total assets .................. $ 218,955 $ 276,924
========= =========

* Special charges by segment for fiscal year 2001 were $41,417,000 and
consisted of $30,949,000 for Factory Systems, $3,735,000 for OEM Systems,
$2,878,000 for Software Systems and $3,855,000 for Corporate. Significant
special charges recorded within the Factory Systems segment included $8,153,000
for contract losses, $2,944,000 for a write-off of specialized demonstration
equipment and a significant portion of the $6,263,000 for warranty provisions
primarily associated with the TurboStocker product. Special charges recorded
within the Software Systems segment included $545,000 for costs related to a
terminated software development project. Special charges included within
Corporate and other expenses were $2,980,000 for a reserve for legal costs to
defend against a pending shareholder class action lawsuit and $875,000 for
acquisition-related fees. Special charges of $9,661,000 related to inventory
write-downs and costs associated with order cancellations consisted of
$7,561,000 at Factory Systems and $2,100,000 at OEM Systems. Employee severance
costs of $7,460,000 consisted of $4,319,000, $935,000, and $2,206,000 for
Factory Systems, OEM Systems, and Software Systems, respectively. Costs for
exiting leased facilities of $2,536,000 consisted of $2,409,000 for Factory
Systems and $127,000 for Software Systems. Segment operating loss in fiscal year
2000 includes special charges of $25,337,000 for Factory Systems consisting of
$14,657,000 related to inventory provisions and write- downs, $4,765,000 for
contract losses, $4,113,000 charged to revenue primarily for provisions for late
delivery penalties $1,233,000 for warranty expense and other items, and $569,000
for employee severance costs. Segment operating loss in fiscal year 1999
includes special charges of $6,375,000 for Software Systems consisting of legal,
accounting and investment banking fees and other costs incurred in consolidating
the Company's business unit structure. See Note N for further information.

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

SUMMARY OF GEOGRAPHIC INFORMATION

Information as to the Company's revenues in different geographical areas
for the years ended September 30 were as follows. Sales are attributable to
geographic areas based on location of customers.

2001 2000 1999
---- ---- ----
REVENUES % REVENUES % REVENUES %
-------- ----- -------- - -------- -----
($ IN THOUSANDS)

United States ... $167,059 62.2% $191,570 63.9% $ 91,632 67.2%
Korea ........... 18,331 6.8% 19,604 6.5% 1,010 0.7%
Germany ......... 13,531 5.0% 15,024 5.0% 15,990 11.7%
China ........... 13,073 4.9% 302 0.1% -- 0.0%
Taiwan .......... 11,559 4.3% 24,477 8.2% 6,012 4.4%
Rest of world ... 45,005 16.8% 48,795 16.3% 21,652 16.0%
-------- ----- -------- ----- -------- -----
Total net revenue $268,558 100.0% $299,772 100.0% $136,296 100.0%
======== ===== ======== ===== ======== =====

Long-lived assets, including property and equipment, goodwill,
intellectual property and other intangible assets by geographical areas as of
September 30 were as follows:

2001 2000
---- ----
(IN THOUSANDS)

United States ......... $25,038 $21,575
Canada ................ 1,308 2,991
Rest of world ......... 465 453
------- -------
Total long-lived assets $26,811 $25,019
======= =======

M. INVESTMENTS:

During fiscal year 2001 the Company acquired two companies, Commotion
Technology, Inc. in exchange for 103,852 shares of the Company's common stock
and WaferState Controls, Inc. for $1,500,000 in cash of which $750,000 was paid
in the year. Both of these acquisitions were accounted for as purchases, and the
results of operations of these acquired companies are reflected in the Company's
statements of operations from the dates of the acquisitions. The Company
recorded intangible assets of $2,027,000 and goodwill of $1,393,000 related to
these acquisitions. These acquisitions did not materially impact consolidated
results; and therefore, no pro forma information is provided.

On December 1, 2000, the Company signed a strategic alliance agreement
with Shinsung Engineering Co. Ltd. ("Shinsung"), a South Korean manufacturer of
semiconductor clean room equipment and other industrial systems, to assemble the
Company's automated storage and retrieval systems. As part of the strategic
alliance, the Company made a minority investment of $11,467,000 in Shinsung in
exchange for 3,109,091 common shares and warrants to purchase an additional
3,866,900 common shares. The 3,109,091 common shares represented approximately
11% of the outstanding common shares of Shinsung at the time of the investment.
The cost of the investment was allocated to the common shares and warrants based
on their respective fair values at the time of the investment. The common shares
and warrants are included in investment in affiliate on the Consolidated Balance
Sheet at their fair market values of $2,399,000 and $2,491,000, respectively, at
September 30, 2001. The change in the fair market value of the common shares
resulted in an unrealized loss of $3,015,000 for

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

the year ended September 30, 2001, and is reported as a separate component of
other comprehensive loss. The fair value of the common stock of Shinsung was
determined using the closing price per share on the Korean stock exchange at the
end of each reporting period. The fair value of the Shinsung warrants was
determined using the Black-Scholes valuation model assuming an exercise price of
3200 Korean Won, contractual term of 10 years, dividend rate of zero, volatility
of 100% and risk free interest rate of 6.92%.

Prior to February 23, 2001 the warrants were being accounted for as a
derivative instrument under SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities" since the warrants met the criteria for treatment as a
derivative as defined by paragraphs 6-9 of SFAS No. 133 and in particular, the
warrants were readily convertible into cash. The increase in the fair value of
the warrants of $868,000 between the beginning of fiscal year 2001 and the
amendment of the warrant agreement on February 23, 2001 is therefore included in
other income in the consolidated statement of operations for the year ended
September 30, 2001.

On February 23, 2001, the Company and Shinsung amended the warrant
agreement to provide that upon exercise of the warrants into common stock, the
Company is restricted from selling or transferring the stock for a period of 33
days after the date of exercise and the warrants may not be transferred or sold
to any third party. Following the amendments, the warrants are no longer readily
convertible into cash and therefore no longer fall within the scope of SFAS No.
133. Since February 23, 2001 the warrants are being accounted for in accordance
with SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities", pursuant to EITF 96-11, "Accounting for Forward Contracts and
Purchased Options to Acquire Securities Covered by FASB Statement 115."
Accordingly, the decline in the fair value of the warrants after February 23,
2001 through September 30, 2001 of $4,430,000 is reported as a separate
component of other comprehensive loss.

The warrants and common stock were not deemed to be other than
temporarily impaired at September 30, 2001, as defined by SAB 59, "Accounting
for Noncurrent Marketable Equity Securities," primarily due to the fact that the
fair value of the warrants and common stock at September 30, 2001 had been less
than the initial investment for a period of less than three months, combined
with the recovery in the quoted share price of Shinsung subsequent to September
30, 2001.

N. SPECIAL CHARGES:

For the year ended September 30, 2001, the Company recorded special
charges of $41,417,000 in its second and fourth fiscal quarters. These charges
consisted of $24,077,000 charged to cost of sales and $17,340,000 charged to
restructuring and other costs.

Special charges to cost of sales of $24,077,000 in fiscal year 2001
included contract losses of $8,153,000, $6,263,000 for additional warranty
provisions, and $9,661,000 for inventory write-downs and costs associated with
order cancellations. The $8,153,000 charge for contract losses was recorded in
the fourth quarter of fiscal year 2001, when the Company determined that an
additional reserve was required in connection with the Company's first full
factory automation system in a 300 mm production fab. The increased reserve was
required due to higher estimates of the costs to complete the project, including
the impact of various engineering design modifications and the completion of
certain project scope changes in the fourth quarter. This contract is expected
to be completed during fiscal year 2002. The warranty provision of $6,263,000
related primarily to increased material and service costs for a program
initiated in the fourth quarter of fiscal year 2001 to repair and retrofit
TurboStocker product already installed in the field. The retrofit program
resulted from certain operational problems at selected customers. The $9,661,000
charge for inventory write-downs and costs associated with order

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

cancellations consisted of $6,596,000 for a general increase in excess and
obsolete inventory due to a significant decline in new business orders as well
as order cancellations resulting from the semiconductor capital equipment
industry downturn during fiscal year 2001, combined with $3,065,000 of obsolete
inventory for a discontinued product line in the fourth quarter at Factory
Systems.

Restructuring and other costs of $17,340,000 in fiscal year 2001
consisted of $7,460,000 for employee severance costs, $2,980,000 for a reserve
for legal costs to defend against a pending shareholder class action lawsuit
(see Note I for further information), $2,944,000 for the write-off of
specialized demonstration equipment taken out of service in the second quarter,
$2,536,000 for costs associated with exiting leased facilities, $875,000 for
acquisition-related fees, and $545,000 for costs related to a software
development project that was terminated in the second quarter. The Company
initiated during the second and fourth quarters of fiscal year 2001 a series of
cost-cutting programs in response to the industry downturn that included
workforce reductions and a reduction in a number of leased facilities. The
reduction in the Company's worldwide workforce in fiscal year 2001 was
approximately 620 people or 35%, consisting of both temporary and full-time
employees. Annualized savings associated with the workforce reductions are
anticipated to be approximately $36,000,000. The Company expects the majority of
the remaining accrued restructuring and other costs to be paid by the end of
2002.

For the year ended September 30, 2000, the Company recorded special
charges of $25,337,000 in its fourth fiscal quarter. These costs consisted of
$4,113,000 charged to revenue, $20,655,000 charged to cost of sales, and
$569,000 charged to operating expenses for employee severance.

The $4,113,000 charge to revenue represented primarily a provision for
customer late delivery penalties at the Company's Factory System segment.
Special charges to cost of sales recorded in the fourth quarter of fiscal year
2000 were $20,655,000, and included $14,657,000 related to inventory provisions
and write-downs, $4,765,000 for contract losses, and $1,233,000 for provisions
for warranty expense and other items. The $14,657,000 of inventory reserves and
write-downs related to an additional excess and obsolete inventory provision of
$6,659,000 and an inventory cost valuation adjustment of $7,998,000. The
inventory provision of $6,659,000 primarily resulted from design changes related
to the Company's TurboStocker product following certain manufacturing and supply
chain problems. The inventory cost valuation adjustment of $7,998,000 primarily
resulted from significant fourth quarter manufacturing inefficiencies due to
increased manufacturing, assembly, and test time for the TurboStocker product to
meet specifications. The contract loss reserve of $4,765,000 consisted of
$3,765,000 related to a new order in the fourth quarter of fiscal year 2000 for
the Company's first full factory automation system in a 300 mm production fab,
where total cost estimates exceeded the contract value, and $1,000,000 for one
additional loss making contract. The additional warranty accrual of $1,233,000
was primarily due to an increase in warranty costs for TurboStocker product
installed in the field.

For the year ended September 30, 1999, the Company recorded restructuring
and other costs of $6,375,000. The Company recorded special charges of $650,000
in the first quarter, as a provision for severance relating to the termination
of 62 employees. This workforce reduction occurred in response to a downturn in
the semiconductor equipment industry. In the second quarter, the Company
recorded costs of $3,950,000 related to the acquisition of Promis, primarily
consisting of legal, accounting and investment banking fees. Additionally, in
the second quarter, the Company recorded special charges of $1,850,000
consisting of $1,406,000 for compensation-related costs for five management
personnel in the selling, general, and administrative functions to satisfy
existing contractual obligations related to the acquired companies; $196,000 of
costs associated with exiting leased facilities; and $248,000 for other

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

legal costs. In the fourth quarter, the Company recognized a credit of $75,000
to adjust estimated costs to reflect actual costs incurred through September 30,
1999.

Rollforward of Restructuring and Other Costs:

BALANCE SHEET
----------------------------------------------------------------------------------------------
VALUATION
ALLOWANCES ACCRUED LEGAL AND RESTRUCTURING COSTS
---------- -------------------------------------
RESTRUCTURING
AND OTHER FACILITY ACQUISITION
COSTS FIXED EMPLOYEE LEGAL EXIT RELATED OTHER
PROVISIONS ASSETS COSTS COSTS COSTS COSTS COSTS
---------- ------ ----- ----- ----- ----- -----
(IN THOUSANDS)

Q1 FY99 charges ............ $ 650 $ -- $ 650 $ -- $ -- $ -- $ --
Q2 FY99 charges ............ 5,800 -- 1,406 248 196 3,950
Q4 FY99 credits ............ (75) -- -- -- -- (75)
FY99 Payments/Disposal ..... -- -- (1,632) (248) (196) (3,875) --
-------- ------- ------- ------- ------- ------- -----
Sept. 30, 1999 Balance . 6,375 -- 424 -- -- -- --
========
FY00 Payments/Disposals .... -- (352) -- -- -- --
------- ------- ------- ------- ------- -----
Sept. 30, 2000 Balance . -- 72 -- -- -- --
Q2 FY01 charges ............ 11,888 2,944 4,093 2,980 451 875 545
Q4 FY01 charges ............ 5,452 -- 3,367 -- 2,085 -- --
Payments/Disposals ......... -- (2,944) (3,946) (239) (201) (875) (500)
-------- ------- ------- ------- ------- ------- -----
Sept. 30, 2001 Balance . $ 17,340 $ -- $ 3,586 $ 2,741 $ 2,335 $ -- $ 45
======== ======= ======= ======= ======= ======= =====

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

O. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED):

The following unaudited selected quarterly financial data reflect the
effect on the Company's previously reported results for the first three quarters
of fiscal year 2001 of the implementation of SAB 101. Pro forma amounts for
prior years have not been presented as the effect of the change in accounting
principle could not be reasonably determined.

YEAR ENDED SEPTEMBER 30, 2001
----------------------------------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER(A) QUARTER QUARTER(B) YEAR
------- ---------- ------- ---------- ----
(IN THOUSANDS, EXCEPT SHARE DATA)

Net revenue:
As reported ................................ $ 94,852 $ 91,191 $ 75,190 $ 49,086 $ 310,319
Effect of change in accounting principle ... (10,148) (18,249) (13,364) -- (41,761)
-------- -------- -------- -------- ---------
After the impact of SAB 101 ................ 84,704 72,942 61,826 49,086 $ 268,558
-------- -------- -------- -------- ---------
Gross profit:
As reported ................................ 31,273 15,000 12,801 (11,111) 47,963
Effect of change in accounting principle ... (5,222) (3,752) (3,659) -- (12,633)
-------- -------- -------- -------- ---------
After the impact of SAB 101 ................ 26,051 11,248 9,142 (11,111) 35,330
-------- -------- -------- -------- ---------
Net income (loss):
As reported ................................ 1,214 (26,006) (14,177) (41,694) (80,663)
Effect of change in accounting principle ... (5,222) (3,752) (3,659) -- (12,633)
Cumulative effect of change in accounting
principle ................................. (5,748) -- -- -- (5,748)
-------- -------- -------- -------- ---------
After the impact of SAB 101 ................ $ (9,756) $(29,758) $(17,836) $(41,694) $ (99,044)
Basic and diluted net income (loss) per share:
As reported ................................ $ 0.05 $ (1.03) $ (0.56) $ (1.64) $ (3.19)
Effect of change in accounting principle ... (0.21) (0.15) (0.14) -- (0.50)
-------- -------- -------- -------- ---------
After the impact of SAB 101 ................ (0.16) (1.18) (0.70) (1.64) (3.69)
Cumulative effect of change in accounting
principle ................................. (0.23) -- -- -- (0.23)
-------- -------- -------- -------- ---------
Net income (loss) per share ................ $ (0.39) $ (1.18) $ (0.70) $ (1.64) $ (3.92)
======== ======== ======== ======== =========

YEAR ENDED SEPTEMBER 30, 2000
-----------------------------------------------------------------------
FIRST SECOND THIRD FOURTH TOTAL
QUARTER QUARTER QUARTER QUARTER(C) YEAR
------- ------- ------- ---------- ----

Net revenue ................ $58,693 $76,669 $88,873 $ 75,537 $299,772
Gross profit ............... 21,378 30,050 36,444 7,301 95,173
Net income (loss) .......... $ 294 $ 5,806 $ 9,831 $(23,884) $ (7,953)
Net income (loss) per share:
Basic .................. $ 0.01 $ 0.25 $ 0.41 $ (0.96) $ (0.34)
Diluted ................ $ 0.01 $ 0.23 $ 0.38 $ (0.96) $ (0.34)

PRI AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(a) The results of the second quarter of fiscal year 2001 were affected by
special charges related to inventory write-downs of $4,496,000, employee
severance costs of $4,093,000, a reserve for legal costs to defend
against a pending shareholder class action lawsuit of $2,980,000, a
write-down of impaired assets of $2,944,000 and facilities exit costs and
other costs including product discontinuance of $1,871,000.

(b) The results of the fourth quarter of fiscal year 2001 were affected by
special charges related to contract losses of $8,153,000, warranty
provisions of $6,263,000, inventory provisions and write-downs of
$5,165,000, employee severance costs of $3,367,000, and facilities exit
costs of $2,085,000.

(c) The results of the fourth quarter of fiscal year 2000 were affected by
special charges related to inventory provisions and write-downs of
$14,657,000, provisions for contract losses and customer penalties of
$8,878,000 and provisions for warranty and other items of $1,802,000, due
to manufacturing and supply chain problems encountered during the quarter
within the Company's Factory Systems segment.

P. SUBSEQUENT EVENT:

On October 23, 2001, the Company entered into an Agreement and Plan of
Merger with Brooks Automation, Inc. ("Brooks") and its wholly owned subsidiary,
Pontiac Acquisition Corp. Under the merger agreement, holders of the Company's
common stock will receive 0.52 shares of Brooks common stock for each share of
the Company's common stock outstanding at the time of the merger. The merger,
expected to close in the first calendar quarter of 2002, is subject to certain
conditions, including regulatory approvals, the approval of the merger by the
Company's stockholders, and the approval by Brooks' stockholders of the issuance
of the common stock of Brooks in the merger. The merger is intended to qualify
as a tax-free reorganization within the meaning of Section 368 of the Internal
Revenue Code of 1986, as amended, and will be accounted for as a purchase
transaction.

BROOKS AUTOMATION, INC.

UNAUDITED PRO FORMA COMBINED CONDENSED FINANCIAL STATEMENTS

On October 23, 2001, Brooks and PRI entered into the merger agreement.
Pursuant to the merger agreement and subject to its terms and conditions, PRI
common stockholders will receive 0.52 shares of Brooks common stock for each
share of PRI common stock.

The merger, which is expected to close in the first calendar quarter of
2002, is contingent upon the fulfillment of specified conditions, including all
required regulatory approvals, the approval of the merger by the stockholders of
PRI and the approval of the issuance of Brooks common stock in connection with
the merger by the stockholders of Brooks. The merger will be accounted for as a
purchase of assets.

On October 5, 2001, Brooks acquired certain of the assets of General
Precision, Inc., or GPI, in exchange for 850,000 shares of Brooks common stock,
with a market value of approximately $26.2 million at the time of issuance
(based upon the average closing price for two days before and the day of the
consummation of the transaction), subject to post-closing adjustments. GPI,
located in Valencia, California, is a supplier of high-end environmental
solutions for the semiconductor industry. The transaction was accounted for as a
purchase of assets. The consolidated balance sheet of Brooks at December 31,
2001 includes the assets acquired and liabilities assumed of GPI. The results of
operations of GPI for the period subsequent to October 5, 2001 are included
within the unaudited historical consolidated statement of operations data of
Brooks for the quarter ended December 31, 2001.

The following tables show summary unaudited pro forma financial information
as if Brooks, GPI and PRI had been combined as of the beginning of the period
for statement of operations purposes and as if Brooks and PRI had been combined
as of December 31, 2001 for balance sheet purposes.

The unaudited pro forma combined financial information is based on
estimates and assumptions, which are preliminary and have been made solely for
purposes of developing such pro forma information. The estimated pro forma
adjustments arising from the acquisitions of PRI and GPI are derived from the
estimates of purchase price paid and estimated fair values of the assets
acquired and liabilities assumed. The final determination of purchase price,
fair value and resulting goodwill may differ significantly from that reflected
in the pro forma statement of operations and balance sheet. The pro forma
information is presented for illustrative purposes only and is not necessarily
indicative of the operating results or financial position that would have
occurred if each transaction had been consummated as of October 1, 2000 for
statement of operations or December 31, 2001, for financial position,
respectively, nor is it necessarily indicative of future operating results or
financial position. The unaudited pro forma combined financial information
should be read in conjunction with the historical consolidated financial
statements of Brooks and PRI and related notes thereto, and "Management's
Discussion and Analysis of Financial Condition and Results of Operations" of
Brooks and PRI contained in their respective annual reports and quarterly
reports, and other information Brooks and PRI have filed with the SEC, and the
audited financial statements of GPI included in Brooks' current report on Form
8-K/A filed April 4, 2002.

The fiscal year end of GPI was December 31. The pro forma statement of
operations for the year ended September 30, 2001 includes the unaudited results
for the fourth quarter of the fiscal year ended December 31, 2000 and the first,
second and third quarters of fiscal 2001 of GPI.

BROOKS AUTOMATION, INC.

UNAUDITED PRO FORMA COMBINED CONDENSED BALANCE SHEET

DECEMBER 31, 2001
(IN THOUSANDS)

PRI
ACQUISITION
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
BROOKS(A) PRI(B) ADJUSTMENTS COMBINED
---------- ---------- -------------- ----------

ASSETS
Current assets
Cash and equivalents................................. $130,151 $ 62,502 $ -- $ 192,653
Marketable securities................................ 40,013 -- -- 40,013
Accounts receivable, net............................. 85,937 19,468 -- 105,405
Inventories.......................................... 54,450 80,777 (2,750)(1) 132,477
Prepaid expenses and other current assets............ 12,460 9,509 -- 21,969
Deferred income taxes................................ 25,679 -- 24,987(1) 50,666
-------- -------- ---------- ----------
Total current assets............................... 348,690 172,256 22,237 543,183
Fixed assets, net...................................... 69,488 16,924 (3,200)(1) 83,212
Intangible assets, net................................. 55,760 1,834 213,744(1) 271,338
Goodwill, net.......................................... 86,665 1,438 230,304(1) 318,407
Long-term marketable securities........................ 132,474 -- -- 132,474
Deferred income taxes.................................. 21,167 -- 58,324(1) 79,491
Other assets........................................... 16,156 15,638 -- 31,794
-------- -------- ---------- ----------
Total assets....................................... $730,400 $208,090 $ 521,409 $1,459,899
======== ======== ========== ==========
LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS'
EQUITY
Current liabilities
Notes payable........................................ $ 19,249 $ -- $ -- $ 19,249
Current portion of long-term debt.................... 79 -- -- 79
Accounts payable..................................... 15,018 11,119 -- 26,137
Accrued expenses and other current liabilities....... 69,037 89,038 38,791(1) 196,866
-------- -------- ---------- ----------
Total current liabilities.......................... 103,383 100,157 38,791 242,331
Long-term debt......................................... 175,564 -- -- 175,564
Deferred income taxes.................................. 5,536 -- 86,242(1) 91,778
Other long-term liabilities............................ 2,198 729 546(1) 3,473
-------- -------- ---------- ----------
Total liabilities.................................... 286,681 100,886 125,579 513,146
-------- -------- ---------- ----------
Minority interests..................................... 705 -- -- 705
-------- -------- ---------- ----------
Stockholders' equity
Common stock......................................... 200 257 (124)(1) 333
Additional paid-in capital........................... 503,853 261,229 265,196(1) 1,030,278
Accumulated other comprehensive income (loss)........ (6,267) 1,661 (1,661)(1) (6,267)
Deferred compensation................................ (1,618) -- (23,524)(1) (25,142)
Retained earnings (accumulated deficit).............. (53,154) (155,943) 155,943(1) (53,154)
-------- -------- ---------- ----------
Total stockholders' equity......................... 443,014 107,204 395,830 946,048
-------- -------- ---------- ----------
Total liabilities, minority interests and
stockholders' equity............................. $730,400 $208,090 $ 521,409 $1,459,899
======== ======== ========== ==========

See Notes to Unaudited Pro Forma Combined Condensed Financial Statements
---------------

(A) As reported in Brooks' quarterly report on Form 10-Q/A for the three months
ended December 31, 2001 as filed with the SEC.

(B) As reported in PRI's quarterly report on Form 10-Q/A for the three months
ended December 30, 2001 as filed with the SEC.

BROOKS AUTOMATION, INC.

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS

FOR THE YEAR ENDED SEPTEMBER 30, 2001
(IN THOUSANDS, EXCEPT PER SHARE DATA)

GPI PRI
ACQUISITION PRO FORMA ACQUISITION
HISTORICAL HISTORICAL PRO FORMA COMBINED HISTORICAL PRO FORMA PRO FORMA
BROOKS(A) GPI ADJUSTMENTS BROOKS/GPI PRI(B) ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------- ---------- ----------- ---------

Revenues................... $381,716 $15,487 $ -- $397,203 $268,558 $ -- $ 665,761
Cost of revenues........... 229,332 8,748 -- 238,080 233,228 1,264(5) 472,572
-------- ------- ------- -------- -------- -------- ---------
Gross profit............. 152,384 6,739 -- 159,123 35,330 (1,264) 193,189
-------- ------- ------- -------- -------- -------- ---------
Operating expenses
1,436(5)
Research and
development............ 60,868 -- -- 60,868 62,175 (552)(6) 123,927
3,045(5)
Selling, general and
administrative......... 95,919 5,157 -- 101,076 50,373 148(7) 154,642
Amortization of acquired
intangible assets...... 30,187 -- 3,619(2) 33,806 -- 71,859(2) 105,665
Acquisition-related,
restructuring and other
costs.................. 9,314 -- -- 9,314 17,340 -- 26,654
-------- ------- ------- -------- -------- -------- ---------
Total operating
expenses............. 196,288 5,157 3,619 205,064 129,888 75,936 410,888
-------- ------- ------- -------- -------- -------- ---------
Income (loss) from
operations............... (43,904) 1,582 (3,619) (45,941) (94,558) (77,200) (217,699)
Interest (income)
expense, net........... (8,471) (153) -- (8,624) (3,349) -- (11,973)
Other (income) expense,
net.................... 1,090 -- -- 1,090 (4) -- 1,086
-------- ------- ------- -------- -------- -------- ---------
Income (loss) before income
taxes and minority
interests................ (36,523) 1,735 (3,619) (38,407) (91,205) (77,200) (206,812)
704(3) (59)(7)
Income tax provision
(benefit)................ (6,439) 42 (1,556)(4) (7,249) 2,091 (36,261)(8) (41,478)
-------- ------- ------- -------- -------- -------- ---------
Income (loss) before
minority interests....... (30,084) 1,693 (2,767) (31,158) (93,296) (40,880) (165,334)
Minority interests in loss
of consolidated
subsidiary............... (424) -- -- (424) -- -- (424)
-------- ------- ------- -------- -------- -------- ---------
Income (loss) from
continuing operations.... $(29,660) $ 1,693 $(2,767) $(30,734) $(93,296) $(40,880) $(164,910)
======== ======= ======= ======== ======== ======== =========
Loss per share from
continuing operations:
Basic.................... $ (1.65) $ (1.63) $ (5.12)
Diluted.................. $ (1.65) $ (1.63) $ (5.12)
Shares used to compute loss
per share from continuing
operations:
Basic.................... 18,015 850 18,865 13,350 32,215
Diluted.................. 18,015 850 18,865 13,350 32,215

See Notes to Unaudited Pro Forma Combined Condensed Financial Statements
---------------
(A) As reported in Brooks' annual report on Form 10-K/A for fiscal 2001 as filed
with the SEC.

(B) As reported in PRI's annual report on Form 10-K/A for fiscal 2001 as filed
with the SEC.

BROOKS AUTOMATION, INC.

UNAUDITED PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED DECEMBER 31, 2001
(IN THOUSANDS, EXCEPT PER SHARE DATA)

PRI
ACQUISITION
HISTORICAL HISTORICAL PRO FORMA PRO FORMA
BROOKS(A) PRI(B) ADJUSTMENTS COMBINED
---------- ---------- ----------- ---------

Revenues.............................. $ 61,455 $54,893 $ -- $116,348
Cost of revenues...................... 37,341 42,188 314(5) 79,843
-------- ------- -------- --------
Gross profit........................ 24,114 12,705 (314) 36,505
-------- ------- -------- --------

Operating expenses
357(5)
Research and development............ 14,134 9,496 (206)(6) 23,781
756(5)
Selling, general and
administrative................... 18,905 10,124 37(7) 29,822
Amortization of acquired intangible
assets........................... 3,633 -- 17,965(2) 21,598
Acquisition-related, restructuring
and other costs.................. 100 -- -- 100
-------- ------- -------- --------
Total operating expenses............ 36,772 19,620 18,909 75,301
-------- ------- -------- --------
Income (loss) from operations......... (12,658) (6,915) (19,223) (38,796)
Interest (income) expense, net...... (246) -- -- (246)
Other (income) expense, net......... (553) (680) -- (1,233)
-------- ------- -------- --------
Income (loss) before income taxes and
minority interests.................. (11,859) (6,235) (19,223) (37,317)
(15)(7)
Income tax provision (benefit)........ (4,068) 519 (2,412)(8) (5,976)
-------- ------- -------- --------
Income (loss) before minority
interests........................... (7,791) (6,754) (16,796) (31,341)
Minority interests in loss of
consolidated subsidiary............. (57) -- -- (57)
-------- ------- -------- --------
Income (loss) from continuing
operations.......................... $ (7,734) $(6,754) $(16,796) $(31,284)
======== ======= ======== ========
Loss per share from continuing
operations:
Basic............................... $ (0.39) $ (0.94)
Diluted............................. $ (0.39) $ (0.94)
Shares used to compute loss per share
from continuing operations:
Basic............................... 19,886 13,350 33,236
Diluted............................. 19,886 13,350 33,236

See Notes to Unaudited Pro Forma Combined Condensed Financial Statements
---------------
(A) As reported in Brooks' quarterly report on Form 10-Q/A for the three months
ended December 31, 2001 as filed with the SEC.

(B) As reported in PRI's quarterly report on Form 10-Q/A for the three months
ended December 30, 2001 as filed with the SEC.

BROOKS AUTOMATION, INC.

NOTES TO UNAUDITED PRO FORMA COMBINED CONDENSED
FINANCIAL STATEMENTS

(1) To record the purchase accounting of the assets to be acquired and the
liabilities to be assumed of PRI subject to adjustment pending the
completion of a post-closing review of the purchased assets. The pro forma
information assumes that Brooks will issue 13,350,412 shares of its common
stock as the consideration for the acquisition of PRI, based upon the
outstanding shares of PRI common stock at December 31, 2001 of 25,673,870 at
a conversion rate of 0.52 shares of Brooks common stock per share of PRI
common stock and will exchange PRI stock options for Brooks stock options at
the same conversion rate. The fair value of Brooks common stock per share
was calculated as $33.60 per share, which represents the average closing
price for two days before, the day of and two days after the announcement of
the merger, on October 24, 2001. Brooks has calculated the fair value of the
options to be exchanged to be $78.0 million as of December 31, 2001 using
the Black-Scholes option pricing model, a fair value of Brooks common stock
of $33.60 per share, volatility of 100%, an expected option life of four
years, zero dividends and a risk free rate of 4.12%, in accordance with
Financial Accounting Standards Board Interpretation No. 44, "Accounting for
Certain Transactions Involving Stock Compensation -- an interpretation of
APB Opinion No. 25." Brooks also has accounted for $15.8 million for
anticipated transaction fees, which include $7.2 million of legal and
accounting fees, $7.5 million of investment bankers fees, $0.4 million of
tax structuring fees, $0.5 million of intellectual property filing fees and
$0.2 million of due diligence fees.

The acquisition of PRI by Brooks will give rise to the consolidation and
elimination of certain PRI duplicate facilities and redundant PRI personnel.
Brooks has provided certain pro forma balance sheet adjustments in
accordance with Emerging Issue Task Force No. 95-3, "Recognition of
Liabilities in Connection with a Purchase Business Combination." Brooks
anticipates headcount reductions of approximately 300 people across all
functional areas of the combined company and, as such, has included an
estimated charge for workforce reductions of $10.4 million comprised of
severance, employee benefits, and outplacement support. These payments are
expected to occur during the six months following the merger. The former
chief executive officer of PRI has entered into a non-competition agreement
with Brooks which will become effective upon completion of the combination
and which will require a total payment of $1.1 million over a two-year
period, of which $0.6 million has been recorded as a long term liability.
The intrinsic value of the unvested options to be exchanged in the
acquisition has been estimated at $23.5 million and will be recorded as
deferred compensation. The deferred compensation will be recognized over the
remaining vesting period of the options, which range up to five years.
Brooks has preliminarily identified redundant facilities consisting of sales
and support offices, manufacturing facilities, and administrative offices.
As such, an accrual of $11.0 million to terminate lease obligations under
these agreements has been included as an adjustment. These payments
represent the minimum rental commitment on facilities with lease terms to
2011. Brooks has estimated fixed assets of approximately $3.2 million will
be abandoned or rendered obsolete and disposed of, related to the exiting of
facilities and the integration of PRI's business with Brooks' business and
financial systems. Brooks has identified certain of PRI's product lines
which compete directly with Brooks' existing product lines. These PRI
product lines will be discontinued and, as a result, an estimate reflecting
a charge for inventory obsolescence of $2.75 million was recorded to
inventory and $1.0 million was recorded to accrued expenses for future
purchase commitments for these product lines. These duplicate inventory and
fixed asset items will be disposed of through the use of third party asset
reclamation firms. The discontinuation of those product lines is not
expected to have a material adverse impact on the combined company. Brooks
has increased its net deferred tax assets by $83.3 million, less $86.2
million of deferred tax liabilities incurred related to the identifiable
intangible assets to be acquired, for a net deferred tax liability of $2.9
million.

Brooks believes the above actions are an integral component of the
acquisition plan to enable the benefits of the combined companies to be
optimized and the benefits of the acquisition to be realized. Brooks expects
to complete these restructuring efforts within one year.

A summary of the transaction is as follows (in thousands):

Estimated consideration:
Stock..................................................... $448,547
Stock options............................................. 78,011
Transaction costs......................................... 15,800
--------
Total estimated consideration.......................... 542,358
--------
Net tangible assets acquired................................ 103,932
--------
Estimated acquisition adjustments:
Workforce reductions...................................... 10,445
Non-competition agreement................................. 1,092
Deferred compensation..................................... (23,524)
Duplicate facilities and fixed assets..................... 14,200
Duplicate inventory and inventory purchase commitments.... 3,750
Deferred income taxes..................................... 2,931
--------
Total estimated acquisition adjustments................ 8,894
--------
Estimated excess of purchase price over net tangible
assets acquired........................................ $447,320
========
Preliminary allocation of excess of purchase price over net
tangible assets acquired:
Identifiable intangible assets............................ $215,578
Goodwill.................................................. 231,742
--------
Estimated excess of purchase price over net tangible
assets acquired........................................ $447,320
========

Brooks believes the $215,578,000 of identifiable intangible assets will be
allocated to completed technology, customer relationships, patents,
non-competition and license agreements.

Adjustments to PRI historical data made in determining the net tangible
assets acquired of $103,932,000 include the elimination of $1,834,000 of
intangible assets and $1,438,000 of goodwill previously recognized as assets
by PRI.

(2) To record amortization expense for the identifiable intangible assets.
Finalization of the allocation of the purchase price to tangible and
identifiable intangible assets acquired and liabilities assumed is
preliminary pending collection of data to evaluate estimates of future
revenues and earnings to determine a discounted cash flow valuation of
certain intangibles that meet the separate recognition criteria of FAS 141.
Brooks expects this process and subsequent allocation of purchase price to
be complete within 60 days of the closing of the transaction. Brooks'
preliminary assessment is that the weighted average useful life of the
acquired identifiable intangible assets will be three years. The acquired
identifiable intangible assets will be amortized using the straight-line
method. A change in the allocation between the acquired identifiable
intangible assets and goodwill for both GPI and PRI of $1,000,000 would
result in a change in pro forma annual amortization expense of approximately
$333,000. An increase in the weighted average useful life of the acquired
identifiable intangible assets from three years to four years would result
in a decrease in pro forma annual amortization expense of approximately
$18,869,000 and $4,717,000 for the year ended September 30, 2001 and the
three months ended December 31, 2001, respectively. A decrease in the
weighted average useful life of the acquired identifiable intangible assets
from three years to two years would result in an increase in pro forma
annual amortization expense of approximately $37,739,000 and $9,435,000 for
the year ended September 30, 2001 and the three months ended December 31,
2001, respectively.

(3) To adjust the income tax expense recorded by GPI in its historical
statements of operations to reflect the 43.0% tax rate applicable to a
subsidiary of Brooks operating in California. This adjustment results in
additional pro forma tax expense of $704,000 for the year ended September
30, 2001.

(4) To record the income tax effect of the pro forma adjustment to amortization
of acquired intangible assets. This adjustment was recorded at 43.0%, and
results in a reduction of pro forma tax expense by $1,556,000 for the year
ended September 30, 2001.

(5) To record amortization of deferred compensation arising from the proposed
acquisition. Incremental pro forma compensation expense of $1,264,000,
$1,436,000, and $3,045,000 was recorded to cost of revenues, research and
development, and selling, general and administrative expenses, respectively,
for the year ended September 30, 2001 and $314,000, $357,000, and $756,000,
respectively, for the three months ended December 31, 2001.

(6) To reverse amortization expense related to intangible assets of PRI existing
prior to the proposed acquisition. Amortization expense of $552,000 and
$206,000 was reversed from research and development expense for the year
ended September 30, 2001 and the three months ended December 31, 2001,
respectively.

(7) To record additional pro forma compensation expense of $148,000 and related
income tax benefit of $59,000 for the year ended September 30, 2001 and
$37,000 and related income tax benefit of $15,000 for the three months ended
December 31, 2001, calculated at the applicable tax rate of 40%, related to
the terms of the employment agreement between Brooks and its president,
Robert J. Therrien. This salary increase is effective upon completion of the
merger of Brooks with PRI.

(8) To record temporary tax differences arising on acquisition of PRI and to
record the pro forma benefit of taxable losses of $36,261,000 for the year
ended September 30, 2001 and $2,412,000 for the three months ended December
30, 2001 which would have been capitalized if the acquisition had occurred
on October 1, 2000 and October 1, 2001, respectively. Adjustments were
recorded utilizing the Brooks applicable tax rate of 40%.

The acquisition of PRI by Brooks Automation will give rise to the consolidation
and elimination of certain duplicate Brooks facilities and redundant Brooks
personnel. Brooks anticipates headcount reductions of approximately 90 people
across all functional areas of the business and will include an estimated charge
for workforce reductions related to its current operations of $12.9 million
comprised of severance, employee benefits, and outplacement support. Brooks has
preliminarily identified redundant facilities consisting of sales and support
offices, manufacturing facilities, and administrative offices. As such, an
accrual of $2.0 million to terminate lease obligations under these agreements
will be included as an adjustment. Brooks has estimated fixed assets of
approximately $5.0 million will be abandoned or rendered obsolete and disposed
of, related to the exiting of facilities and the integration of PRI onto Brooks'
business and financial systems. In addition, incremental capital expenditures of
$8.8 million are estimated for incremental leasehold improvements and
information technology requirements. Brooks has identified certain of its
product lines that compete directly with PRI's existing product lines. These
Brooks' product lines will be discontinued and, as such, an estimate reflecting
a charge for inventory obsolescence of $13.6 million will be recorded to
inventory. These duplicate inventory and fixed asset items will be disposed of
through the use of third party asset reclamation firms. The exiting of those
product lines is not expected to have a material adverse impact on the combined
company. Brooks expects to incur integration and transition related expenses of
$12.1 million. As a result of the merger, Brooks' chief executive officer will
vest in certain incremental retirement benefits, and as such an incremental
accrual of $2.8 million will be provided.

SIGNATURE

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

Dated: May 14, 2002 BROOKS AUTOMATION, INC.

By: /s/ Ellen B. Richstone
---------------------------------------
Ellen B. Richstone
Senior Vice President of Finance and
Administration and Chief Financial Officer

EXHIBIT INDEX

ITEM NO. DESCRIPTION

23.1 Consent of PricewaterhouseCoopers LLP (Independent
Accountants for PRI Automation, Inc.)