SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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FORM 10-Q
|X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 1, 2001
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM TO
---- ----
COMMISSION FILE NUMBER 0-24934
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PRI AUTOMATION, INC.
(Exact name of registrant as specified in its charter)
MASSACHUSETTS 04-2495703
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation)
805 MIDDLESEX TURNPIKE
BILLERICA, MA 01821-3986
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: (978) 670-4270
-----------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes |X| No |_|
The number of shares outstanding of each of the issuer's classes of common
stock as of April 1, 2001:
CLASS NUMBER OF SHARES OUTSTANDING
----- ----------------------------
Common Stock, $.01 par value 25,352,296
PRI AUTOMATION, INC.
INDEX
PAGE NO.
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of April 1, 2001
and September 30, 2000................................. 3
Consolidated Statements of Operations for the Three
and Six Months Ended April 1, 2001 and April 2, 2000... 4
Consolidated Statements of Cash Flows for the Six
Months Ended April 1, 2001 and April 2, 2000........... 5
Consolidated Statements of Comprehensive Operations
for the Three and Six Months Ended April 1, 2001
and April 2, 2000 ..................................... 6
Notes to Consolidated Financial Statements............. 7-12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.................... 13-19
Item 3. Quantitative and Qualitative Disclosures About
Market Risk............................................ 20
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...................................... 20
Item 2. Recent Sales of Unregistered Securities................ 20
Item 3. Defaults upon Senior Securities........................ 20
Item 4 Submission of Matters to Vote of Security Holders...... 20
Item 5. Other Information...................................... 21
Item 6. Exhibits and Reports on Form 8-K....................... 21
SIGNATURE...................................................... 22
Exhibit Index.................................................. 23
2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRI AUTOMATION, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
APRIL 1, SEPTEMBER 30,
2001 2000
-------- -------------
ASSETS
Current assets:
Cash and cash equivalents........................................ $ 42,485 $ 92,484
Trade accounts receivable, less allowance for doubtful
accounts of $2,510 at April 1, 2001 and $2,881 at
September 30, 2000.............................................. 91,335 73,019
Contracts in progress............................................ 17,816 23,668
Inventories...................................................... 72,208 59,104
Other current assets............................................. 4,872 2,686
-------- -------------
Total current assets.......................................... 228,716 250,961
Property and equipment, net....................................... 21,693 24,065
Investment in affiliate........................................... 11,484 --
Other assets, net................................................. 3,530 1,898
-------- -------------
Total assets.................................................. $265,423 $ 276,924
======== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................................................. $ 29,314 $ 28,536
Accrued expenses and other liabilities........................... 29,048 32,479
Accrued legal and restructuring costs............................ 7,637 --
Current portion of obligation under capital lease................ 188 330
Billings in excess of revenues and customer advances............. 16,333 11,986
-------- -------------
Total current liabilities..................................... 82,520 73,331
Obligation under capital lease.................................... -- 125
Other non-current liabilities..................................... 653 671
Minority interest................................................. 146 150
Stockholders' equity:
Preferred stock, 400,000 shares authorized; none outstanding..... -- --
Common stock, $.01 par value; 75,000,000 shares authorized;
25,352,296 and 25,011,938 issued and outstanding at April 1,
2001 and September 30, 2000, respectively....................... 254 250
Additional paid-in capital....................................... 257,638 252,542
Accumulated deficit.............................................. (74,937) (50,145)
Accumulated other comprehensive operations....................... (851) --
-------- -------------
Total stockholders' equity....................................... 182,104 202,647
-------- -------------
Total liabilities and stockholders' equity....................... $265,423 $ 276,924
======== =============
The accompanying notes are an integral part of the consolidated financial
statements.
3
PRI AUTOMATION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
APRIL 1, 2001 APRIL 2, 2000 APRIL 1, 2001 APRIL 2, 2000
------------- ------------- ------------- -------------
Net revenue:
Product and equipment............................. $ 79,197 $ 66,541 $ 161,796 $ 115,704
Services and maintenance.......................... 11,994 10,128 24,247 19,658
------------- ------------- ------------- -------------
Total net revenue............................ 91,191 76,669 186,043 135,362
Cost of revenue:
Product and equipment............................. 67,429 39,675 123,058 70,934
Services and maintenance.......................... 8,762 6,944 16,712 13,000
------------- ------------- ------------- -------------
Total cost of revenue:....................... 76,191 46,619 139,770 83,934
------------- ------------- ------------- -------------
Gross profit......................................... 15,000 30,050 46,273 51,428
Operating expenses:
Research and development.......................... 16,029 12,736 31,151 24,895
Selling, general and administrative............... 15,498 11,600 29,589 20,615
Restructuring and other costs..................... 11,888 -- 11,888 --
------------- ------------- ------------- -------------
Total operating expenses..................... 43,415 24,336 72,628 45,510
------------- ------------- ------------- -------------
Operating profit (loss).............................. (28,415) 5,714 (26,355) 5,918
Other income, net.................................... 124 292 1,320 492
Gain on investment in affiliate...................... 2,485 -- 868 --
------------- ------------- ------------- -------------
Income (loss) before income taxes.................... (25,806) 6,006 (24,167) 6,410
Provision for income taxes........................... 200 200 625 310
------------- ------------- ------------- -------------
Net income (loss).................................... $ (26,006) $ 5,806 $ (24,792) $ 6,100
============= ============= ============= =============
Net income (loss) per common share:
Basic............................................. $ (1.03) $ 0.25 $ (0.99) $ 0.27
Diluted........................................... $ (1.03) $ 0.23 $ (0.99) $ 0.24
Weighted average number of shares outstanding:
Basic............................................. 25,188 23,032 25,153 22,773
Diluted........................................... 25,188 25,353 25,153 24,918
The accompanying notes are an integral part of the consolidated financial
statements.
4
PRI AUTOMATION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
SIX MONTHS ENDED
APRIL 1, 2001 APRIL 2, 2000
------------- -------------
Cash flows from operating activities:
Net income (loss).............................................................. $ (24,792) $ 6,100
Adjustments to reconcile net income to net cash used in operating activities:
Depreciation and amortization ............................................ 7,151 4,520
Write-down of assets...................................................... 8,177 250
Gain on investment in affiliate........................................... (868) --
Other, net................................................................ 390 619
Changes in operating assets and liabilities:
Trade accounts receivable.............................................. (18,968) $ (27,284)
Contracts in progress.................................................. 5,852 (14,478)
Inventories............................................................ (18,087) (10,049)
Other assets........................................................... (2,212) 3,956
Accounts payable....................................................... 645 7,196
Accrued expenses and other liabilities................................. (3,109) 951
Accrued legal and restructuring costs.................................. 7,637 --
Billings in excess of revenue and customer advances.................... 4,391 2,026
------------- -------------
Net cash used in operating activities............................................. (33,793) (26,193)
Cash flows from investing activities:
Investment in affiliate........................................................ (11,467) --
Purchases of property and equipment............................................ (7,627) (6,134)
Cash paid for contingent consideration......................................... (156) (88)
------------- -------------
Net cash used in investing activities............................................. (19,250) (6,222)
Cash flows from financing activities:
Repayment of capital lease obligations......................................... (218) (355)
Proceeds from exercise of stock options and Employee Stock Purchase Plan....... 3,304 16,317
------------- -------------
Net cash provided by financing activities......................................... 3,086 15,962
Effect of changes in exchange rates on cash....................................... (42) (699)
------------- -------------
Net decrease in cash and cash equivalents......................................... (49,999) (17,152)
Cash and cash equivalents at beginning of period.................................. 92,484 51,865
------------- -------------
Cash and cash equivalents at end of period........................................ $ 42,485 $ 34,713
============= =============
Supplemental disclosure of cash flow information:
Non-cash transactions:
Acquisition of Commotion Technologies..................................... $ 2,002 $ --
The accompanying notes are an integral part of the consolidated financial
statements.
5
PRI AUTOMATION, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE OPERATIONS
(In thousands)
(Unaudited)
THREE MONTHS ENDED SIX MONTHS ENDED
------------------ ----------------
APRIL 1, 2001 APRIL 2, 2000 APRIL 1, 2001 APRIL 2, 2000
------------- ------------- ------------- -------------
Net income (loss).................................... $ (26,006) $ 5,806 $ (24,792) $ 6,100
Other comprehensive operations:
Unrealized loss on securities..................... (851) - (851) -
------------- ------------- ------------- -------------
Total other comprehensive operations:................ (851) - (851) -
------------- ------------- ------------- -------------
Comprehensive operations............................. $ (26,857) $ 5,806 $ (25,643) $ 6,100
============= ============= ============= =============
The accompanying notes are an integral part of the consolidated financial
statements.
6
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.
PREPARATION OF FINANCIAL STATEMENTS
The interim financial data as of April 1, 2001 and for the three and six
months ended April 1, 2001 and April 2, 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,
2000 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
APRIL 1, 2001 SEPTEMBER 30, 2000
------------- ------------------
(IN THOUSANDS)
Raw materials............... $ 39,970 $ 43,981
Work-in-process............. 21,213 6,248
Finished goods.............. 11,025 8,875
------------- ------------------
$ 72,208 $ 59,104
============= ==================
C. INVESTMENT IN AFFILIATE
On December 1, 2000, the Company signed a strategic alliance agreement with
Shinsung Engineering Co. Ltd. ("Shinsung"), a South Korean manufacturer of
semiconductor cleanroom 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 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 are being accounted for in accordance with SFAS No. 115,
"Accounting for Certain Investments in Debt and Equity Securities" and are
included in investment in affiliates on the consolidated balance sheet at their
fair market value. The change in fair market value of the common shares during
the second quarter
7
PRI AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
C. INVESTMENT IN AFFILIATE (CONTINUED)
resulted in an immaterial unrealized gain for the three and six months ended
April 1, 2001, and is included in other comprehensive operations.
On February 23, 2001, the Company amended the warrant agreement with
Shinsung to restrict the transfer of the warrants and the underlying shares
upon the warrants' exercise causing the warrants to no longer fall within the
scope of SFAS No. 133, "Accounting for Derivative Instruments and Hedging
Activities." The change in the fair value of the warrants between the
beginning of the quarter and the date of the amendment resulted in an
unrealized gain of $2,485,000 which is included in the consolidated statement
of operations. The change in the fair value of the warrants after February
23, 2001 resulted in an unrealized loss of $851,000 and is included in other
comprehensive operations in accordance with SFAS 115 pursuant to EITF 96-11.
The warrants are included in investment in affiliate on the consolidated
balance sheet at their fair value.
D. ACCRUED EXPENSES AND OTHER LIABILITIES
APRIL 1, 2001 SEPTEMBER 30, 2000
------------- ------------------
(IN THOUSANDS)
Accrued expenses........................... $ 6,431 $ 9,385
Accrued compensation....................... 8,779 9,910
Warranty and contract loss reserves........ 13,838 13,184
------------- ------------------
$ 29,048 $ 32,479
============= ==================
E. OTHER INCOME, NET
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------- -----------------------------
APRIL 1, 2001 APRIL 2, 2000 APRIL 1, 2001 APRIL 2, 2000
------------- ------------- ------------- -------------
(IN THOUSANDS)
Interest income, net.......................... $ 495 $ 484 $ 1,600 $ 1,000
Net translation and foreign exchange losses... (558) (173) (468) (414)
Other......................................... 187 (19) 188 (94)
------------- ------------- ------------- -------------
$ 124 $ 292 $ 1,320 $ 492
------------- ------------- ------------- -------------
F. NET INCOME (LOSS) PER SHARE
Basic net income (loss) per common share is computed based on the weighted
average number of common shares outstanding during the period. Diluted net
income (loss) per common share gives effect to all dilutive potential common
shares outstanding during the period. A reconciliation between basic and diluted
net income (loss) per common share is as follows:
8
PRI AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
F. NET INCOME (LOSS) PER SHARE (CONTINUED)
THREE MONTHS ENDED SIX MONTHS ENDED
----------------------------- -----------------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) APRIL 1, 2001 APRIL 2, 2000 APRIL 1, 2001 APRIL 2, 2000
------------- ------------- ------------- -------------
Net income (loss)................................. $ (26,006) $ 5,806 $ (24,792) $ 6,100
============= ============= ============= =============
Shares used in computation:
Weighted average common shares outstanding...... 25,188 23,032 25,153 22,773
Dilutive effect of stock options.................. - 2,321 - 2,145
------------- ------------- ------------- -------------
Weighted average diluted shares outstanding....... 25,188 25,353 25,153 24,918
============= ============= ============= =============
Basic net income (loss) per common share.... $ (1.03) $ 0.25 $ (0.99) $ 0.27
Diluted net income (loss) per common share.. $ (1.03) $ 0.23 $ (0.99) $ 0.24
Options to purchase 37,810 and 158,511 shares of common stock outstanding
during the three and six month periods ended April 2, 2000, respectively, were
not included in the computation of diluted net income per common share because
the options' exercise prices were greater than the average market price of the
common shares, and the options therefore, would be anti-dilutive under the
treasury stock method.
Options to purchase 3,341,632 and 3,247,663 shares of common stock
outstanding during the three and six month periods ended April 1, 2001,
respectively, 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 be anti-dilutive.
G. SPECIAL CHARGES
For the three months ended April 1, 2001, the Company recorded special
charges of $16.4 million related principally to cost reduction and
restructuring charges of which $11.9 million was charged to restructuring and
other costs in operating expenses, and $4.5 million was charged to cost of
product and equipment revenue. The charge of $11.9 million to operating
expenses consisted of the following: $4.1 million for employee severance
costs, $3.0 million for a reserve for legal costs to defend against a pending
shareholder class action lawsuit, $2.9 million for write-downs of impaired
assets, and $1.9 million for other costs including product discontinuance.
The charge of $4.5 million to cost of product and equipment revenue was for
inventory write-offs and costs associated with order cancellations at the
Factory Systems division. In March 2001, the Company initiated a series of
cost-cutting programs including a reduction in its worldwide workforce of
approximately 370 people, or 20%, consisting of both temporary and regular
full-time employees. Annualized savings associated with the workforce
reduction are anticipated to be approximately $20 million. The Company
anticipates that all actions required in the cost-cutting programs will be
substantially complete by September 30, 2001.
9
PRI AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
G. SPECIAL CHARGES (CONTINUED)
Rollforward of Restructuring and Other Costs:
BALANCE SHEET
-------------------------------------------------------------------------
VALUATION ALLOWANCES ACCRUED LEGAL AND RESTRUCTURING COSTS
------------------------- --------------------------------------------
EXIT AND
RESTRUCTURING AND PRODUCT
(IN THOUSANDS) OTHER COSTS FIXED LEGAL DISCONTINUANCE
PROVISION ASSETS EMPLOYEE COSTS COSTS COSTS
-------------------- ---------- -------------- ----------- -----------------
Q2 FY 01 Charge............... $ 11,888 $ 2,944 $ 4,093 $ 2,980 $ 1,871
FY 01 Payments/ Disposals..... (2,944) -- (181) (1,126)
-------------------- ---------- -------------- ----------- -----------------
April 1, 2001 Balance......... $ 11,888 $ -- $ 4,093 $ 2,799 $ 745
==================== ========== ============== =========== =================
H. OTHER COMPREHENSIVE OPERATIONS
SFAS No. 130 requires enterprises to report comprehensive income and its
components in general-purpose financial statements. Accordingly, the Company
has prepared Consolidated Statements of Comprehensive Operations for the
three and six month periods ended April 1, 2001 and April 2, 2000.
Accumulated other comprehensive operations as of April 1, 2001 consists of
the unrealized loss of $851,000 on the Shinsung investment.
10
PRI AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
I. 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 have no
significant intersegment revenues and expenses as all segments' revenues are
generated from sales to unaffiliated customers.
Operating segment information for the three and six months ended April 1,
2001 and April 2, 2000 is as follows:
THREE MONTHS ENDED SIX MONTHS ENDED
(IN THOUSANDS) APRIL 1, 2001* APRIL 2, 2000 APRIL 1, 2001* APRIL 2, 2000
-------------- ------------- -------------- -------------
TOTAL NET REVENUE TO UNAFFILIATED CUSTOMERS:
Factory Systems................................... $ 48,094 $ 40,482 $ 96,446 $ 73,006
OEM Systems....................................... 35,415 28,820 74,026 49,080
Software Systems.................................. 7,682 7,367 15,571 13,276
-------------- ------------- -------------- ----------
Total net revenue.................................... $ 91,191 $ 76,669 $ 186,043 $ 135,362
============== ============= ============== =============
SEGMENT OPERATING PROFIT (LOSS):
Factory Systems................................... $ (22,712) $ 28 $ (26,903) $ (1,604)
OEM Systems....................................... 5,568 8,341 16,523 12,890
Software Systems.................................. (2,308) 1,193 (2,007) 1,005
Corporate and other expenses...................... (8,963) (3,848) (13,968) (6,373)
-------------- ------------- -------------- -------------
Consolidated operating profit (loss)................. (28,415) 5,714 (26,355) 5,918
Other income, net.................................... 2,609 292 2,188 492
-------------- ------------- -------------- -------------
Consolidated income (loss) before income taxes....... $ (25,806) $ 6,006 $ (24,167) $ 6,410
* Segment operating profit (loss) includes special charges of $10.5 million,
$0.2 million, $1.8 million, and $3.9 million for Factory Systems, OEM Systems,
Software Systems and Corporate, respectively.
J. RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB 101"). SAB 101 summarizes the staff's view in applying generally accepted
accounting principles to selected revenue recognition issues. The application of
the guidance in SAB 101 is required to be adopted no later than the Company's
fourth quarter of fiscal year 2001. The effects of applying this guidance, if
any, will be reported as a cumulative effect adjustment resulting from a change
in accounting principle. The Company is still evaluating SAB 101 and its impact.
K. LEGAL PROCEEDINGS
On November 20, 2000, November 22, 2000, December 28, 2000 and December 29,
2000, the Company and three of its directors were named as defendants in
virtually identical lawsuits filed in the United States District Court for the
District of Massachusetts: (i) KAI CHAN ON BEHALF OF HIMSELF AND ALL OTHERS
SIMILARLY SITUATED VS.
11
PRI AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
K. LEGAL PROCEEDINGS (CONTINUED)
PRI AUTOMATION, INC., AMRAM RASIEL, MITCHELL G. TYSON AND MORDECHAI WIESLER,
Civil Action No. 00-123958-REK; (ii) JACOB J. SIEGAL ON BEHALF OF HIMSELF AND
ALL OTHERS SIMILARLY SITUATED VS. PRI AUTOMATION, INC., AMRAM RASIEL, MITCHELL
G. TYSON AND MORDECHAI WIESLER, Civil Action No. 00-12414-REK; (iii) PHILLIP
FRIEDMAN ON BEHALF OF HIMSELF AND ALL OTHERS SIMILARLY SITUATED VS. PRI
AUTOMATION, INC., AMRAM RASIEL, MITCHELL G. TYSON AND MORDECHAI WIESLER, Civil
Action No. 00-12628-REK; and (iv) HOWARD B. FISHER ON BEHALF OF HIMSELF AND ALL
OTHERS SIMILARLY SITUATED VS. PRI AUTOMATION, INC., AMRAM RASIEL, MITCHELL G.
TYSON AND MORDECHAI WIESLER, Civil Action No. 00-12637-REK. The named plaintiff
in each action purports to bring the complaint on behalf of a class consisting
of all purchasers of the Company's stock during the period January 27, 2000
through September 11, 2000. The plaintiffs claim that the defendants violated
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and SEC Rule
10b-5, by virtue of statements and omissions that the plaintiffs claim were
materially false or misleading. The plaintiffs each seek certification as a
class, damages, pre-judgment and post-judgment interest, costs, and attorneys'
fees. The Company strongly believes that the lawsuits lack merit and it intends
to defend against the claims vigorously. During the second quarter of fiscal
2001 the Company accrued $3.0 million for expected legal costs related to the
defense of the above litigation. 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.
12
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
The Company experienced a sudden deterioration in market conditions during
the second quarter of fiscal year 2001. A semiconductor industry downturn
resulted in order cancellations and delays of over $50 million for the second
quarter. Total backlog declined by 24% to $179 million at April 1, 2001,
compared with $237 million at December 31, 2000. The Company also incurred a
second quarter operating loss of $12.0 million, before special charges of
$16.4 million, principally due to manufacturing inefficiencies attributable
to excess manufacturing capacity and an unfavorable change in product mix at
Factory Systems. As a result of the long sales cycle for its products and the
current industry downturn, the Company does not expect to be able to quickly
replace orders that its customers cancel, reduce or postpone. The Company
expects to be adversely affected during the downturn cycle and report lower
revenues and an operating loss for the third quarter. The Company's cost
reduction programs may be insufficient to offset fixed costs associated with
excess manufacturing capacity, unfavorable changes in product mix and other
fixed operating expenses.
THREE MONTHS ENDED APRIL 1, 2001 VERSUS THREE MONTHS ENDED APRIL 2, 2000
The following table sets forth the percentage of net revenues and the yearly
percentage in certain financial data for the periods indicated:
ITEMS AS A PERCENTAGE OF NET REVENUES PERCENT CHANGES YEAR TO YEAR
----------------------------------------------- --------------------------------
PRO FORMA
PRO FORMA APRIL 1, 2001/ APRIL 1, 2001/
Three months ended APRIL 1, 2001* APRIL 1, 2001 APRIL 2, 2000 APRIL 2, 2000* APRIL 2, 2000
------------- ------------- ------------- -------------- --------------
Revenue
Factory Systems.................... 52.8% 52.8% 52.8% 18.8% 18.8%
OEM Systems........................ 38.8 38.8 37.6 22.9 22.9
Software Systems................... 8.4 8.4 9.6 4.3 4.3
------------- ------------- ------------- -------------- --------------
Total revenue........................ 100.0% 100.0% 100.0% 18.9% 18.9%
Cost of revenue...................... 78.6 83.6 60.8 53.8 63.4
------------- ------------- ------------- -------------- --------------
Gross profit......................... 21.4% 16.4% 39.2% (35.1)% (50.1)%
Operating expenses:
Research & development............. 17.6 17.6 16.6 25.9 25.9
Selling, general & administrative.. 17.0 17.0 15.1 33.6 33.6
Restructuring and other costs...... - 13.0 - - 100.0
------------- ------------- ------------- -------------- --------------
Total operating expenses............. 34.6% 47.6% 31.7% 29.5% 78.4%
============= ============= ============= ============== ==============
Operating profit (loss).............. (13.2)% (31.2)% 7.5% (310.6)% (597.3)%
Other income, net.................... 2.9 2.9 0.1 793.5 793.5
------------- ------------- ------------- -------------- --------------
Income (loss) before income taxes.... (10.3)% (28.3)% 7.6% (256.9)% (529.7)%
Tax provision........................ - - - - -
------------- ------------- ------------- -------------- --------------
Net income (loss).................... (10.3)% (28.3)% 7.6% (265.7)% (547.9)%
* Pro forma results exclude special charges
TOTAL NET REVENUE: Net revenue for the three months ended April 1, 2001
increased 18.9% to $91.2 million, compared with $76.7 million for the
corresponding period in fiscal year 2000. Revenue increased at each of the
Company's operating segments in the second quarter compared to the previous
year. Contributing to this revenue growth, OEM Systems net revenue increased by
22.9% and Factory Systems net revenue increased by 18.8% as
13
compared with the corresponding three-month period of fiscal year 2000. In
addition, net revenue for Software Systems increased by 4.3%, as compared with
the corresponding three-month period of fiscal year 2000. The improvement in
total net revenue in fiscal year 2001 was primarily due to higher unit sales of
product and equipment as the Company began the quarter with record order
backlog.
International revenues for the three months ended April 1, 2001 were $29.0
million, or 31.8% of total net revenue. This compares with $31.4 million, or
41.0% of total net revenue, for the corresponding period in fiscal year 2000.
The decrease in international sales for the three months ended April 1, 2001 was
a result of order cancellations and delays from several foreign customers during
the second half of the quarter.
GROSS PROFIT: Pro forma gross profit, excluding special charges of $4.5 million,
for the three months ended April 1, 2001 was $19.5 million. This compares with
$30.0 million for the corresponding period in fiscal year 2000. The pro forma
gross profit as a percentage of revenues for the three months ended April 1,
2001 was 21.4%, compared with 39.2% for the corresponding period in the prior
year. The margin decrease occurred principally at the Factory Systems division.
Factory Systems began the second quarter of fiscal 2001 increasing production
and adding capacity to satisfy a substantial order backlog. Midway through the
quarter, the division experienced sudden customer order cancellations and delays
in scheduled shipment beyond the quarter of over $50 million. As a result, the
division incurred significant manufacturing inefficiencies, an unfavorable
change in product mix, and was unable to react quickly enough to reduce
expenses.
RESEARCH AND DEVELOPMENT: Research and development expenses for the three months
ended April 1, 2001 were $16.0 million, representing 17.6% of total net revenue.
This compares to $12.7 million, or 16.6% of total net revenue for the
corresponding period in fiscal year 2000. The increase of $3.3 million in the
second quarter compared with the previous year's quarter is principally due to
the Company's investments in next-generation automation system products,
including inter-floor transport systems, automated storage and retrieval
systems, bare reticle stockers, and robotic wafer handling systems in the
Factory Systems and OEM Systems segments, as well as in its new software
products, including manufacturing execution systems.
SELLING, GENERAL AND ADMINISTRATIVE: Selling, general and administrative
expenses for the three months ended April 1, 2001 were $15.5 million,
representing 17.0% of total net revenue. This compares to $11.6 million, or
15.1% of total net revenue for the corresponding period in fiscal year 2000.
Selling, general and administrative expenses increased by $3.9 million compared
to the prior year's second quarter principally due to increased marketing
efforts and expenses associated with higher sales volume.
SPECIAL CHARGES: For the three months ended April 1, 2001 the Company
recorded special charges of $16.4 million related principally to cost
reduction and restructuring charges of which $11.9 million was charged to
restructuring and other costs in operating expenses, and $4.5 million was
charged to cost of product and equipment revenue. The charge of $11.9 million
to operating expenses consisted of the following: $4.1 million for employee
severance costs, $3.0 million for a reserve for legal costs to defend against
a pending shareholder class action lawsuit, $2.9 million for write-downs of
impaired assets, and $1.9 million for other costs including product
discontinuance. The charge of $4.5 million to cost of product and equipment
revenue was for inventory write-offs and costs associated with order
cancellations at Factory Systems division. The Company has instituted a
series of cost-cutting programs including a reduction in its worldwide
workforce of approximately 370 people, or 20 percent, consisting of both
temporary and regular full-time employees. Annualized savings associated with
the workforce reduction are anticipated to be $20 million.
OPERATING PROFIT (LOSS): As a result of the decline in gross profit and the
other previously mentioned increases in operating expenses, the pro forma
operating loss, before special charges, for the three months ended April 1, 2001
was $12.0 million, or 13.2% of total net revenue. This compares to operating
profit of $5.7 million, or 7.5% of total net revenue for the corresponding
period in fiscal year 2000.
14
GAIN ON INVESTMENT IN AFFILIATE: On December 1, 2000, the Company signed a
strategic alliance agreement with Shinsung Engineering Co. Ltd. ("Shinsung"), a
publicly traded South Korean manufacturer of semiconductor cleanroom equipment
and other industrial systems, to assemble automated storage and retrieval
systems for the Company. As part of the strategic alliance, the Company made a
minority investment in Shinsung in exchange for common shares and warrants to
purchase common shares. The change in the fair value of the warrants resulted in
a unrealized gain of $2,485,000 for the quarter ended April 1, 2001.
NET INCOME (LOSS): Net loss for the three months ended April 1, 2001 was $26.0
million or $1.03 per share compared with net income of $5.8 million or $0.23 per
share for the corresponding period in fiscal year 2000. Excluding special
charges of $16.4 million, pro forma net loss for the three months ended April 1,
2001 would have been $9.6 million or $0.38 per share.
SIX MONTHS ENDED APRIL 1, 2001 VERSUS SIX MONTHS ENDED APRIL 2, 2000
The following table sets forth the percentage of net revenues and the yearly
percentage in certain financial data for the periods indicated:
ITEMS AS A PERCENTAGE OF NET REVENUES PERCENT CHANGES YEAR TO YEAR
----------------------------------------------- --------------------------------
PRO FORMA
PRO FORMA APRIL 1, 2001/ APRIL 1, 2001/
Six months ended APRIL 1, 2001* APRIL 1, 2001 APRIL 2, 2000 APRIL 2, 2000* APRIL 2, 2000
------------- ------------- ------------- -------------- --------------
Revenue
Factory Systems 51.8% 51.8% 53.9% 32.1% 32.1%
OEM Systems 39.8 39.8 36.3 50.8 50.8
Software Systems 8.4 8.4 9.8 17.3 17.3
------------- ------------- ------------- -------------- --------------
Total revenue 100.0% 100.0% 100.0% 37.4 37.4
Cost of revenue 72.7 75.1 62.0 61.2 66.5
------------- ------------- ------------- -------------- --------------
Gross profit 27.3% 24.9% 38.0% (1.3)% (10.0)%
Operating expenses:
Research & development 16.8 16.8 18.4 25.1 25.1
Selling, general & 15.9 15.9 15.2 43.5 43.5
administrative
Restructuring and other costs - 6.4 - - 100.0
------------- ------------- ------------- -------------- --------------
Total operating expenses 32.7% 39.1% 33.6% 33.5% 59.6%
------------- ------------- ------------- -------------- --------------
Operating profit (loss) (5.4)% (14.2)% 4.4% (268.5)% (545.3)%
Other income, net 1.1 1.1 0.1 344.7 344.7
------------- ------------- ------------- -------------- --------------
Income (loss) before income taxes (4.3)% (13.1)% 4.5% (221.4)% (477.0)%
Tax provision 0.1 0.1 - 101.6 101.6
------------- ------------- ------------- -------------- --------------
Net income (loss) (4.4)% (13.2)% 4.5% (237.8)% (506.4)%
* Pro forma results exclude special charges
TOTAL NET REVENUE: Net revenue for the six months ended April 1, 2001 increased
37.4% to $186.0 million, compared with $135.4 million for the corresponding
period in fiscal year 2000. Revenue increased at each of the Company's operating
segments compared to the previous year. Contributing to this revenue growth, OEM
Systems net revenue increased by 50.8% and Factory Systems net revenue increased
by 32.1% as compared with the corresponding six-month period of fiscal year
2000. In addition, net revenue for Software Systems increased by 17.3% as
compared with the corresponding six-month period of fiscal year 2000. The
improvement in total net revenue was primarily due to increases in unit sales of
product and equipment.
15
International revenues for the six months ended April 1, 2001 were $67.8
million, or 36.4% of total net revenue. This compares with $56.3 million, or
41.6% of total net revenue, for the corresponding period in fiscal year 2000.
The overall decrease in the percentage of international sales compared to total
revenue for the six months ended April 1, 2001 was a result of order
cancellations and delays from several foreign customers during the second
quarter of fiscal year 2001.
GROSS PROFIT: Pro forma gross profit, excluding special charges, for the six
months ended April 1, 2001 was $50.8 million. This compares with $51.4 million
for the corresponding period in fiscal year 2000. The pro forma gross profit as
a percentage of revenues for the six months ended April 1, 2001 was 27.3%
compared with 38.0% for the corresponding period in the prior year. The gross
profit percentage decline occurred principally at the Factory Systems division.
Factory Systems began the second quarter of fiscal 2001 increasing production
and adding capacity to satisfy a substantial order backlog. Midway through the
second quarter, the division experienced sudden customer order cancellations and
delays in scheduled shipment beyond the quarter of over $50 million. As a
result, the division incurred significant manufacturing inefficiencies, an
unfavorable change in product mix, and was unable to react quickly enough to
reduce expenses.
RESEARCH AND DEVELOPMENT: Research and development expenses for the six months
ended April 1, 2001 were $31.2 million, representing 16.8% of total net revenue.
This compares with $24.9 million, or 18.4% of total net revenue for the
corresponding period in fiscal year 2000. The increase of $6.3 million in the
second quarter spending compared with the previous year's quarter is principally
due to the Company's investments in next-generation automation system products,
including inter-floor transport systems, automated storage and retrieval
systems, bare reticle stockers, and robotic wafer handling systems in the
Factory Systems and OEM Systems segments, as well as in its new software
products, including manufacturing execution systems.
SELLING, GENERAL AND ADMINISTRATIVE: Selling, general and administrative
expenses for the six months ended April 1, 2001 were $29.6 million, or 15.9% of
total net revenue. This compares with $20.6 million, or 15.2% of total net
revenue for the corresponding period in fiscal year 2000. Selling, general and
administrative expenses increased by $9.0 million compared to the prior year's
second quarter due to increased marketing efforts and the expenses associated
with higher sales volume.
SPECIAL CHARGES: For the six months ended April 1, 2001, the Company recorded
special charges of $16.4 million related principally to cost reduction and
restructuring charges of which $11.9 million was charged to restructuring and
other costs in operating expenses, and $4.5 million was charged to cost of
sales.
OPERATING PROFIT (LOSS): As a result of the previously mentioned increases in
operating expenses, the pro forma operating loss, before special charges, for
the six months ended April 1, 2001 was $10.0 million, or 5.4% of total net
revenue. This compares with operating profit of $5.9 million, or 4.4% of total
net revenue for the corresponding period in fiscal year 2000.
GAIN ON INVESTMENT IN AFFILIATE: The change in the fair value of the Shinsung
warrants for the six months ended April 1, 2001 was $868,000.
NET INCOME (LOSS): Net loss for the six months ended April 1, 2001 was $24.8
million or $0.99 per share compared with net income of $6.1 million or $0.24 per
share for the corresponding period in fiscal year 2000. Excluding special
charges, net loss for the six months ended April 1, 2001 would have been $8.4
million or $0.33 per share.
FINANCIAL CONDITION
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities for the six months ended April 1,
2001 was $33.8 million, compared to $26.2 million of net cash used
16
in operating activities for the corresponding period in fiscal 2000. Net cash
used in operating activities was primarily attributable to cash flow used by
the net loss of $24.8 million, increases to inventories of $18.1 million,
accounts receivable of $19.0 million, and a decrease in accrued expenses of
$3.1 million. These uses of cash were partially offset by the cash flow
provided by the decrease of contracts in progress of $5.9 million, and
increases in accrued legal and restructuring costs of $7.6 million, accounts
payable of $0.6 million and deferred revenue and customer deposits of $4.4
million. The net cash used in operations and the related decrease in working
capital was due to the prior growth in customer orders, revenues and overall
operations. However, due to customer order cancellations and delays and the
current industry downturn, the Company anticipates that its working capital
requirements will be decreased for the remainder of the current fiscal year.
Net cash used in investing activities for the six months ended April 1,
2001 was $19.3 million, compared to $6.2 million for the corresponding period in
fiscal year 2000. The increase is principally attributable to the Company's
$11.5 million minority investment in Shinsung Eng. Co. Ltd., to support its
strategic alliance with the Korean company.
Net cash provided by financing activities for the six months ended April 1,
2001 was $3.1 million, compared to $16.0 million for the corresponding period of
fiscal year 2000. This decrease is principally related to higher proceeds from
the exercise of stock options during the prior year.
On December 14, 2000, the Company entered into an amended revolving credit
facility agreement with Chase Manhattan Bank (the "Bank") which expired on March
31, 2001. The revolving credit facility allowed the Company to borrow up to
$20,000,000 on an unsecured basis. The Company is currently negotiating with
several financial institutions in order to secure a future financing facility.
The Company believes its existing cash balances and access to future financing
will be sufficient for at least the current fiscal year. However, there can be
no assurance that adequate financing will be available or at terms acceptable to
the Company.
CHANGES IN FINANCIAL CONDITION
As of April 1, 2001 the Company had working capital of $146.2 million,
including cash and cash equivalents of $42.5 million, compared to working
capital of $177.6 million including cash and cash equivalents of $92.5 million
as of September 30, 2000. The ratio of current assets to current liabilities was
2.77 : 1 at April 1, 2001 compared with 3.42 : 1 at September 30, 2000.
Accounts receivable at April 1, 2001 increased by $19.0 million from the
beginning of the fiscal year primarily due to the higher sales volume.
Receivable days sales outstanding were 90 days in the second quarter of fiscal
year 2001 compared with 69 days for the second quarter of fiscal year 2000.
Inventories at April 1, 2001 increased by $18.1 million from the beginning of
the fiscal year. The increase was primarily due to the Company's significant
order backlog at the beginning of the second quarter. Accrued legal and
restructuring costs increased by $7.6 million from the beginning of the fiscal
year due to the special charges the Company incurred during the second quarter.
RECENT ACCOUNTING PRONOUNCEMENTS
In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB 101"). SAB 101 summarizes the staff's view in applying generally accepted
accounting principles to selected revenue recognition issues. The application of
the guidance in SAB 101 is required to be adopted no later than the Company's
fourth quarter of fiscal year 2001. The effects of applying this guidance, if
any, will be reported as a cumulative effect adjustment resulting from a change
in accounting principle. The Company is still evaluating SAB 101 and its impact.
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS
From time to time, information provided by the Company, statements made by
its employees or information included in its filings with the Securities and
Exchange Commission may contain statements which are
17
not historical facts but which are "forward-looking statements" involving risks
and uncertainties. In particular, statements in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" relating to the
Company's expectations concerning its future results of operations and the
sufficiency of capital to meet working capital and capital expenditure
requirements are forward-looking statements. The words "expect," "anticipate,"
"internal," "plan," "believe," "seek," "estimate" and similar expressions are
intended to identify such forward-looking statements. Such statements are not
guarantees of future performance and involve certain risks, uncertainties and
assumptions that could cause the Company's future results to differ materially
from those expressed in any forward-looking statements made by or on behalf of
the Company. Many of these factors are beyond the Company's ability to control
or predict. Readers are accordingly cautioned not to place undue reliance on
forward-looking statements. The Company disclaims any intent or obligation to
update publicly any forward-looking statements, whether in response to new
information or future events or otherwise. Important factors that may cause the
Company's actual results to differ from such forward-looking statements include,
but are not limited to the factors discussed in the Company's Registration
Statement on Form S-3, file No. 333-60180, filed with the Securities and
Exchange Commission, and the other factors discussed below.
The Company's future results face the following risks and uncertainties:
the semiconductor industry has historically experienced downturns that adversely
affected the Company's operating results, and reduced demand for semiconductors
in the future could jeopardize the Company's plans; the Company may have
difficulty managing its operations in response to fluctuating demand; and the
Company has significant fixed costs, which are not easily reduced during a
downturn.
In addition to the foregoing, the following additional factors could cause
material fluctuations in the Company's future operating results on a quarterly
or annual basis, which could materially adversely affect its business, financial
condition, operating results and stock price; oversupply in the semiconductor
market may in the future reduce demand for capital equipment, including for the
Company's systems; the Company's lengthy sales cycle makes it difficult to
anticipate sales; the Company's operating results fluctuate significantly, and
its stock price could fall if its operating results are below the expectations
of analysts or investors; delay in the Company's shipment of a single system
could substantially decrease its sales for a period; new accounting guidance
could result in delayed recognition of the Company's revenues; the Company
typically charges a fixed price for a system, which leaves it vulnerable to cost
overruns; the Company has experienced and may continue to experience capacity
constraints during high growth periods which may limit the Company's ability to
take advantage of business opportunities during such periods, such as
manufacturing problems related to new products that may adversely affect the
Company's results of operations; during periods of high growth, the Company is
required to increase its cost structure to support anticipated customer services
and such cost increases may occur before related revenue increases; the Company
maintains inventory to support production which, due to the evolution of
products and the cyclical nature of demand, may be rendered obsolete; in order
to continually improve its technology to remain competitive, the Company must
expend substantial resources on research and development, even in periods during
industry downturns; the Company has a limited number of customers, and the loss,
cancellation or delay of any order by these customers could harm its business;
the Company does not have long-term purchase agreements with its customers, and
as a result its customers could stop purchasing its products and services at any
time; demand for less expensive semiconductors is increasing pressure to reduce
prices in the Company's industry; industry consolidation and outsourcing of the
manufacture of semiconductors to foundries could reduce the number of available
customers; the Company's ongoing investments in the Asia-Pacific market may not
be successful; the Company has invested heavily in 300mm wafer technology, which
is being adopted more slowly than expected, and competition for early 300mm
orders may be intense; it is difficult to hire and retain the managerial and
technical employees that the Company needs; the Company's international
operations create special risks; the volatility of the Company's investment in
its affiliate, Shinsung Engineering Co. Ltd., could result in significant gains
or losses in future periods; the Company faces significant competition from
other automation companies, which may limit the prices the Company can charge
for its systems and may cause it to lose sales; the Company must continually
improve its technology to remain competitive; the Company may experience delays
in product
18
development and technical difficulties that could delay new product
introductions; future acquisitions may disrupt the Company's operations; the
Company depends on subcontractors and one or a few suppliers for some components
and manufacturing processes; the Company depends on Mordechai Wiesler and
Mitchell G. Tyson; the Company's software products may contain errors or defects
that could result in lost revenue, delayed or limited market acceptance or
product liability claims with substantial litigation costs; the Company may be
unable to protect its proprietary technology; claims by others that the Company
infringes their proprietary technology could harm the Company's business; the
market price of the Company's common stock is volatile, which could result in
substantial losses for investors purchasing shares; the Company may need
additional financing, which could be difficult to obtain; provisions of the
Company's charter and by-laws and Massachusetts law make a takeover of the
Company more difficult.
19
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company has a minority investment in Shinsung, the common stock of
which trades on the Korean Stock Exchange. This investment consists of common
stock and warrants to purchase common stock denominated in Korean won.
Accordingly the Company is exposed to market risk attributable to adverse
movements in both the Korean stock market as well as the Korean won. There have
been no other significant changes in the Company's exposure to market risks
since September 30, 2000. For more information please read the consolidated
financial statements and notes thereto included in the Company's Annual Report
on Form 10-K for the fiscal year ended September 30, 2000.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
On November 20, 2000, November 22, 2000, December 28, 2000 and December 29,
2000, the Company and three of its directors were named as defendants in
virtually identical lawsuits filed in the United States District Court for the
District of Massachusetts: (i) Kai Chan On Behalf of Himself and All Others
Similarly Situated vs. PRI Automation, Inc., Amram Rasiel, Mitchell G. Tyson and
Mordechai Wiesler, Civil Action No. 00-123958-REK; (ii) Jacob J. Siegal On
Behalf of Himself and All Others Similarly Situated vs. PRI Automation, Inc.,
Amram Rasiel, Mitchell G. Tyson and Mordechai Wiesler, Civil Action No.
00-12414-REK; (iii) Phillip Friedman On Behalf of Himself and All Others
Similarly Situated vs. PRI Automation, Inc., Amram Rasiel, Mitchell G. Tyson and
Mordechai Wiesler, Civil Action No. 00-12628-REK; and (iv) Howard B. Fisher On
Behalf of Himself and All Others Similarly Situated vs. PRI Automation, Inc.,
Amram Rasiel, Mitchell G. Tyson and Mordechai Wiesler, Civil Action No.
00-12637-REK. The named plaintiff in each action purports to bring the complaint
on behalf of a class consisting of all purchasers of the Company's stock during
the January 27, 2000 through September 11, 2000. The plaintiffs claim that the
defendants violated Sections 10(b) and 20(a) of the Securities Exchange Act of
1934, and SEC Rule 10b-5, by virtue of statements and omissions that the
plaintiffs claim were materially false or misleading. The plaintiffs each seek
certification as a class, damages, pre-judgment and post-judgment interest,
costs, and attorneys' fees. The Company strongly believes that the lawsuits lack
merit and it intends to defend against the claims vigorously. Accordingly,
during the second quarter of fiscal 2001 the Company accrued $3.0 million for
expected legal costs related to the defense of the above litigation. 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.
ITEM 2. RECENT SALES OF UNREGISTERED SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not Applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The registrant's annual meeting of stockholders was held on March 16, 2001
at which one matter was submitted to a vote of security holders: the election of
Mordechai Wiesler, Mitchell G. Tyson, Amram Rasiel, Boruch B. Frustajer,
Alexander V. d'Arbeloff and Kenneth Thompson as directors of the Registrant for
a one year
20
term ending in 2002. As of February 9, 2001, the record date for the meeting,
there were outstanding 25,153,793 shares of the Registrant's common stock
entitled to vote at the meeting. At the meeting, 21,759,312 shares were
represented in person or by proxy. At the meeting, the vote with respect to the
matter proposed to the stockholders was as follows:
ELECTION OF DIRECTORS FOR WITHHELD
Mr. Wiesler 21,568,109 191,203
Mr. Tyson 21,565,591 193,721
Mr. Rasiel 21,561,636 197,676
Mr. Frustajer 21,541,781 217,531
Mr. d'Arbeloff 21,564,242 195,070
Mr. Thompson 21,542,135 217,177
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
EXHIBIT
NUMBER DESCRIPTION
3.1 Restated Articles of Organization and amendments thereto (filed as
Exhibit 3.1 to the Company's Annual Report on Form 10-K for Year
Ended September 30, 200 and incorporated herein by reference).
3.2 Amended and Restated By-Laws of the Company (filed as Exhibit 3.4 to
the Company's Registration Statement on Form S-1, File No. 33-81836
and incorporated herein by reference).
10.1 First Amendment to the Bond Subscription Agreement dated as of
February 23, 2001 by and between the Company and Shinsung Eng.
Co. Ltd.
- -----------
b) Reports on Form 8-K
On May 2, 2001, the Registrant filed a report on Form 8-K disclosing
that on April 19, 2001, the Registrant announced in a press release its
financial results for the fiscal quarter ended April 1, 2001.
21
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 thereunto duly authorized.
PRI AUTOMATION, INC.
Date: May 15, 2001 By:
Cosmo S. Trapani
Duly Authorized Officer and
Principal Financial Officer
22
EXHIBIT INDEX
EXHIBIT
NUMBER DESCRIPTION
3.1 Restated Articles of Organization and amendments thereto (filed as
Exhibit 3.1 to the Company's Annual Report on Form 10-K for Year
Ended September 30, 200 and incorporated herein by reference).
3.2 Amended and Restated By-Laws of the Company (filed as Exhibit 3.4
to the Company's Registration Statement on Form S-1, File No. 33-81836
and incorporated herein by reference).
10.1 First Amendment to the Bond Subscription Agreement dated as of
February 23, 2001 by and between the Company and Shinsung Eng.
Co. Ltd.
- -----------
23