<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
--------------------
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 June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from Commission File Number
______ to ______ 0-24934
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 01821
Billerica, MA (Zip Code)
(Address of principal executive offices)
Registrant's telephone number: (508) 663-8555
-----------------
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 August 3, 1996:
Class Number of Shares Outstanding
----- ----------------------------
Common Stock, $.01 par value 7,264,429
Page 1 of 24 pages
Exhibit Index Located on Page 12
<PAGE>
PRI AUTOMATION, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
Part I. Financial Information
----------------------
<S> <C> <C>
Item 1. Financial Statements
Condensed Consolidated Statements of Operations for
the Three and Nine Months Ended June 30, 1996 and
June 30, 1995 3
Condensed Consolidated Balance Sheets as of
June 30, 1996 and September 30, 1995 4
Condensed Consolidated Statements of Cash Flows for
the Nine Months Ended June 30, 1996 and
June 30, 1995 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-9
Part II. Other Information
-----------------
Item 6. Exhibits and Reports on Form 8-K 10
SIGNATURE 11
Exhibit Index 12
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PRI AUTOMATION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
June 30, June 30,
-------- --------
1996 1995 1996 1995
--------- ------- -------- -------
<S> <C> <C> <C> <C>
Net revenue............................. $28,440 $16,518 $76,677 $43,432
Cost of revenue......................... 14,648 8,604 39,422 22,694
------- ------- ------- -------
Gross profit............................ 13,792 7,914 37,255 20,738
Operating expenses:
Research and development............... 4,515 2,565 12,236 6,958
Selling, general and administrative.... 4,471 2,736 11,967 6,799
------- ------- ------- -------
Operating profit........................ 4,806 2,613 13,052 6,981
Other income, net....................... 531 269 1,648 573
------- ------- ------- -------
Income before income tax provision...... 5,337 2,882 14,700 7,554
Income tax provision.................... 1,815 922 4,686 2,511
------- ------- ------- -------
Net income.............................. $ 3,522 $ 1,960 $10,014 $ 5,043
======= ======= ======= =======
Net income per common share:
Primary................................ $0.46 $0.31 $1.32 $0.85
Assuming full dilution................. $0.46 $0.30 $1.32 $0.83
Weighted average number of common and
common equivalent shares outstanding:
Primary................................ 7,597 6,384 7,574 5,958
Assuming full dilution................. 7,618 6,468 7,598 6,054
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
<PAGE>
PRI AUTOMATION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
---- ----
(Unaudited)
ASSETS
Current assets:
<S> <C> <C>
Cash and cash equivalents....... $ 34,954 $38,005
Marketable securities........... 10,036 10,868
Trade accounts receivable, net.. 18,985 16,624
Contracts in progress........... 17,357 7,382
Inventories..................... 17,728 11,416
Deferred income taxes........... 1,323 1,038
Other current assets............ 2,099 1,431
-------- -------
Total current assets........... 102,482 86,764
Property and equipment, net..... 8,380 5,027
Marketable securities........... 3,510 3,179
Other assets.................... 1,765 29
-------- -------
Total assets................... $116,137 $94,999
======== =======
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
<S> <C> <C>
Accounts payable.................................... $ 13,149 $ 7,037
Accrued expenses.................................... 1,414 1,332
Accrued compensation................................ 4,573 2,616
Contract advances................................... 292 938
Billings in excess of costs and estimated earnings.. -- 239
Income taxes payable................................ 3,920 1,411
-------- -------
Total current liabilities.......................... 23,348 13,573
Stockholders' equity:
Common stock, $.01 par value; 12,000,000 shares
authorized; 7,255,204 and 6,998,266 issued and
outstanding at June 30, 1996 and
September 30, 1995, respectively.................. 73 70
Additional paid-in capital......................... 71,360 70,044
Unrealized gain on marketable securities, net...... 30 --
Retained earnings.................................. 21,326 11,312
-------- -------
Total stockholders' equity........................ 92,789 81,426
-------- -------
Total liabilities and stockholders' equity........ $116,137 $94,999
======== =======
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
4
<PAGE>
PRI AUTOMATION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended June 30,
----------------------------
1996 1995
------------- -------------
<S> <C> <C>
Net cash provided by (used in) operating
activities:..................................... $ 363 $(3,145)
------- -------
Cash flows from investing activities:
Purchases of marketable securities.............. (7,822) --
Proceeds from sales of marketable securities.... 1,900 --
Proceeds from maturities of marketable
securities..................................... 6,453 --
Purchases of property and equipment............. (4,715) (2,209)
------- -------
Net cash used in investing activities.......... (4,184) (2,209)
------- -------
Cash flows from financing activities:
Proceeds from borrowings........................ -- 1,330
Repayments of borrowings........................ -- (5,139)
Repayments of capital lease obligation.......... -- (224)
Proceeds from exercise of stock options......... 496 375
Proceeds from issuance of common stock, net of
issuance costs................................. 274 26,887
------- -------
Net cash provided by financing activities...... 770 23,229
------- -------
Net increase (decrease) in cash and cash
equivalents..................................... (3,051) 17,875
Cash and cash equivalents at beginning of period. 38,005 667
------- -------
Cash and cash equivalents at end of period....... $34,954 $18,542
======= =======
Supplemental disclosure of cash flow information:
Noncash transactions:
Conversion of Series A Redeemable Convertible
Preferred Stock................................ -- $ 4,063
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
5
<PAGE>
PRI AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
A. Basis of Presentation
The condensed consolidated financial statements include the accounts of PRI
Automation, Inc., and its wholly-owned subsidiaries (collectively, the
"Company"). All significant inter-company transactions and balances have been
eliminated.
While the financial information furnished is unaudited, the financial
statements included in this report reflect all adjustments (consisting only of
normal recurring adjustments) which the Company considers necessary for a fair
presentation of the results of operations for the interim periods covered and of
the financial condition of the Company at the date of the interim balance sheet.
The results for interim periods are not necessarily indicative of the results
for the entire year. The year-end condensed balance sheet data was derived from
audited financial statements but does not include all disclosures required by
generally accepted accounting principles. Therefore, the condensed consolidated
financial statements should be read in connection with the audited consolidated
financial statements of the Company for the year ended September 30, 1995
included in its Form 10-K for such year filed with the Securities and Exchange
Commission.
B. Inventories
Inventories consist of the following:
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
-------- -------------
<S> <C> <C>
Raw materials.................................... $13,726 $ 9,420
Work in process.................................. 4,002 1,996
------- -------
$17,728 $11,416
======= =======
</TABLE>
6
<PAGE>
PRI AUTOMATION, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
This report contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934. Actual results could differ materially from those projected in the
forward-looking statements. Factors which could cause such differences include
those set forth under "Risk Factors" in the Company's Registration Statement on
Form S-1, file no. 33-94070.
Results of Operations
Revenue: Net revenue for the three and nine months ended June 30, 1996 was
$28.4 million and $76.7 million, respectively, an increase of 72.2% and 76.5%,
respectively, over the corresponding periods in fiscal 1995. The increases
resulted from greater market acceptance of, and demand for, the Company's
flexible factory automation systems as a result of semiconductor manufacturers
continuing upgrades and expansions of existing fabrication facilities and
construction of new facilities, and from the Company's strong results from
Europe and the Asia Pacific region. Net export sales to unaffiliated customers
for the three and nine months ended June 30, 1996 were $3.0 million and $11.4
million, respectively, compared with $369,000 and $2.5 million, for the
corresponding periods in fiscal 1995, and accounted for 10.6% and 14.9% of net
revenue, respectively, compared with 2.4% and 5.8% for the corresponding periods
in fiscal 1995.
Gross profit: The gross profit margin for the three and nine months ended
June 30, 1996 was 48.5% and 48.6%, respectively, as compared to 47.9% and 47.7%
for the corresponding periods in fiscal 1995. The increases are largely
attributable to an increase in sales volume, which permitted increased
utilization of certain fixed and semi-variable components of the manufacturing
overhead cost structure.
Research and development: Research and development expenses for the three and
nine months ended June 30, 1996 were $4.5 million and $12.2 million,
representing 15.9% and 16.0% of net revenue, respectively, compared with
research and development expenses of $2.6 million and $7.0 million, representing
15.5% and 16.0% of net revenue, respectively, for the corresponding periods in
fiscal 1995. The increase in dollar amount primarily reflects an increase in
personnel and materials expense in response to the increasing demand for new
products and new product enhancements.
Selling, general and administrative: Selling, general and administrative
expenses for the three and nine months ended June 30, 1996 were $4.5 million and
$12.0 million, representing 15.7% and 15.6% of net revenue, respectively,
compared with selling, general and administrative expenses of $2.7 million and
$6.8 million, representing 16.6% and 15.7% of net revenue, respectively, for
the corresponding periods in fiscal 1995. The increase in dollar amount is
primarily due to an increase in personnel, commissions, and related expenses
associated with higher sales volume, expanding marketing, market research and
communications programs, and to increased sales and marketing efforts in the
Asia Pacific region.
7
<PAGE>
Operating profit: As a result of the foregoing factors, operating profit for
the three and nine months ended June 30, 1996 increased to $4.8 million and
$13.1 million, respectively, an increase of 83.9% and 87.0%, respectively, over
the corresponding periods in fiscal 1995.
Other income, net: Other income, net, for the three and nine months ended
June 30, 1996 was $531,000 and $1.6 million respectively, as compared to
$269,000 and $573,000, respectively for the corresponding periods in fiscal
1995. Interest income for the three and nine months ended June 30, 1996 was
$534,000 and $1.7 million, respectively, as compared to $281,000 and $772,000
for the corresponding periods in fiscal 1995. The increases are attributable to
the investment of a significant portion of the net proceeds from the Company's
public offering of common stock in July 1995 in marketable securities. Interest
expense for the three and nine months ended June 30, 1996 was $2,000 and
$21,000, respectively, as compared to $12,000 and $199,000 for the corresponding
periods in fiscal 1995. A significant portion of the interest expense for the
nine months ended June 30, 1995 is attributable to a prepayment charge on the
early retirement of a note in connection with the Company's initial public
offering in October 1994.
Income tax provision: The effective tax rate for the three and nine months
ended June 30, 1996 was 34.0% and 31.9%, respectively, compared to 32.0% and
33.2% for the corresponding periods in fiscal 1995. For the three months ended
June 30, 1996, the increase is due primarily to an expected lower proportion of
tax credits due to tax law changes. For the nine months ended June 30, 1996 the
decrease is largely attributable to a one-time benefit due to the elimination of
certain valuation allowances placed against certain deferred tax assets, partly
offset by an expected lower proportion of tax credits due to tax law changes.
Liquidity and Capital Resources
Since its inception, the Company has funded its operations primarily through
private equity financings, bank lines of credit, public stock offerings in
October 1994 and July 1995 and cash generated from operations.
As of June 30, 1996, the Company had working capital of $79.1 million,
including cash and cash equivalents of $35.0 million and short-term marketable
securities of $10.0 million.
Net cash provided by operating activities for the nine months ended June 30,
1996 was $363,000, compared to net cash used of $3.1 million for the
corresponding period in 1995. The net cash provided by operating activities for
the nine months ended June 30, 1996 was primarily attributable to net income of
$10.0 million, an increase in accounts payable of $6.1 million and an increase
in income taxes payable of $2.5 million, offset partially by an increase in
contracts in progress of $10.0 million, an increase in inventory of $6.3 million
and an increase in trade accounts receivable of $2.4 million.
Net cash used in investing activities for the nine months ended June 30, 1996
was $4.2 million as compared to $2.2 million for the corresponding period in
1995. The net cash used in investing activities for the nine months ended June
30, 1996 was primarily attributable to the purchase of property and equipment of
$4.7 million.
Net cash provided by financing activities for the nine months ended June 30,
1996 was $770,000 as compared to $23.2 million for the corresponding period in
fiscal 1995. Net cash
8
<PAGE>
provided by financing activities for the nine months ended June 30, 1996 was
attributable to the exercise of stock options and issuance of common stock
pursuant to the Company's Employee Stock Purchase Plan. Net cash provided by
financing activities for the nine months ended June 30, 1995 was due primarily
to $26.7 million of net proceeds from the Company's initial public offering, net
of application of a portion of these proceeds to repayments of borrowings.
Since December 31, 1995, the Company has had no borrowings under its working
capital line of credit from Fleet Bank of Massachusetts, N.A. (The "Bank"). The
line of credit enables the Company to borrow or grant letters of credit on an
unsecured basis up to the lesser of 80% of eligible accounts receivable or
$10,000,000 in revolving loans, with outstanding borrowings under revolving
loans bearing interest at the Bank's prime lending rate. The ability of the
Company to effect borrowings under such line of credit is conditioned upon,
among other things, the Company meeting certain financial covenants, including
covenants requiring the maintenance of specific levels of quarterly earnings,
working capital, tangible net worth, debt service coverage and liquidity. The
Company can elect to convert revolving loans into loans bearing interest at 1.5%
above the Bank's cost of funds. The working capital line of credit expires on
March 1, 1998.
The Company believes that anticipated cash flow from operations and existing
cash and marketable securities balances will be sufficient to meet the Company's
cash requirements to fund operations and expected capital expenditures during
the next twelve months.
9
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit
Number Description
------ -----------
*3.4 Amended and Restated By-Laws of the Company
*3.5 Restated Articles of Organization of The Company
*4.1 Specimen certificate for the Common Stock of the Company
10.16 Second Loan Modification Agreement dated as of March 1, 1996
between the Company and Fleet Bank of Massachusetts, N.A.
10.17 $10,000,000 Promissory Note dated as of March 1, 1996 made by the
Company to the order of Fleet Bank of Massachusetts, N.A.
11.1 Computation of Net Income Per Common Share
---------------
* Incorporated by reference to the similarly-numbered Exhibit to the
Company's Registration Statement on Form S-1, File No. 33-81836, as
declared effective by the Securities and Exchange Commission on October
13, 1994.
b) Reports on Form 8-K
No reports on Form 8-K were filed during the three months ended
June 30, 1996.
10
<PAGE>
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: August 5, 1996 By: /S/ John J. Schickling
--------------------------------------
John J. Schickling
Duly Authorized Officer and
Principal Financial Officer
11
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description Page
------ ----------- ----
10.16 Second Loan Modification Agreement dated as of March 1, 1996
between the Company and Fleet Bank of Massachusetts, N.A. 13-21
10.17 $10,000,000 Promissory Note dated as of March 1, 1996 made
by the Company to the order of Fleet Bank of Massachusetts, N.A. 22-23
11.1 Computation of Net Income Per Common Share 24
12
<PAGE>
EXHIBIT 10.16
PRI Automation, Inc.
SECOND LOAN MODIFICATION AGREEMENT
This Second Loan Modification Agreement ("this Agreement") is made as of
March 1, 1996 between PRI Automation, Inc., a Massachusetts corporation
(formerly known as "Precision Robots, Inc.") (the "Borrower") and Fleet Bank
of Massachusetts, N.A. (the "Bank"). For good and valuable consideration,
receipt and sufficiency of which are hereby acknowledged, the Borrower and the
Bank act and agree as follows:
1. Reference is made to (i) that certain letter agreement dated March 2, 1994
between the Borrower and the Bank, as amended by Modification Agreement and
Supplement No. 1 to Security Agreement dated as of September 1, 1995 (as so
amended, the "Letter Agreement"); (ii) that certain $5,000,000 face principal
amount promissory note dated March 2, 1994 (the "1994 Revolving Note") made by
the Borrower and payable to the order of the Bank; and (iii) that certain
$10,000,000 face principal amount promissory note of even date herewith (the
"1996 Revolving Note") made by the Borrower and payable to the order of the
Bank. The Letter Agreement and the 1996 Revolving Note are hereinafter
collectively referred to as the "Financing Documents".
2. The Bank acknowledges that the Term Loans (as defined in the Letter
Agreement) have been repaid in full and that the Security Agreement (as defined
in the Letter Agreement) has been terminated. The Borrower acknowledges that no
further Term Loans will be made under the Letter Agreement.
3. The Letter Agreement is hereby amended, effective as of the date hereof:
a. By deleting in its entirety clause (i) of Section 1.1 of the Letter
Agreement and by substituting in its stead the following:
"(i) that certain $10,000,000 face principal amount promissory note
(the 'Revolving Note') dated March 1, 1996 made by the Borrower and
payable to the order of the Bank,"
As a result, all references in the Letter Agreement to a "Revolving Note" will
be deemed to refer to the 1996 Revolving Note.
b. By deleting from the first sentence of Section 1.7 of the Letter
Agreement the amount "$5,000,000" and by substituting in its stead the
following:
"$10,000,000"
c. By deleting from the first sentence of Section 1.8 of the Letter
Agreement the words "the Security Agreement,".
13
<PAGE>
d. By deleting from clause (a) of the second grammatical paragraph of
Section 1.8 of the Letter Agreement the words "and/or Security Agreement".
e. By deleting from the first sentence of the second paragraph of Section
1.9 of the Letter Agreement the words "2.25% per annum" and by substituting in
their stead the following:
"1.5% per annum"
f. By deleting from the second sentence of Subsection 2.1(a) of the
Letter Agreement the words ", to grant the security interests contemplated by
the Security Agreement".
g. By deleting in its entirety Subsection 2.1(b) of the Letter Agreement.
h. By deleting from the introductory paragraph to Article III of the
Letter Agreement the words "in the Security Agreement or".
i. By deleting from the second sentence of Section 3.2 of the Letter
Agreement the words "all such insurance as may be required under the Security
Agreement and will also maintain".
j. By deleting from the first sentence of Section 3.3 of the Letter
Agreement the words "the Collateral,".
k. By deleting from clause (ii) of Section 3.6 of the Letter Agreement
the words "30 days after the end of each month" and by substituting in their
stead the following:
"45 days after the end of each fiscal quarter of the Borrower"
l. By deleting from clause (ii) of Section 3.6 of the Letter Agreement
the words "such monthly statements" and by substituting in their stead the
following:
"such quarterly statements"
m. By deleting from clause (ii) of Section 3.6 of the Letter Agreement
the words "such month", in both places where same appear, and by substituting in
their stead, in both such places, the following:
"such fiscal quarter"
n. By deleting from clause (iii) of Section 3.6 of the Letter Agreement
the word "monthly" and by substituting in its stead the following:
"quarterly"
14
<PAGE>
o. By adding to clause (iv) of Section 3.6 of the Letter Agreement, at
the end thereof, the following:
"Notwithstanding the foregoing, unless the Bank shall otherwise
request, the Borrower need not furnish such an aging report and
Borrowing Base certificate as at the end of any month if no Revolving
Loans are then outstanding."
p. By deleting in their entireties Sections 3.7 - 3.11, inclusive, of the
Letter Agreement and by substituting in their stead the following:
"3.7. Debt to Worth. The Borrower will maintain as at the end of
-------------
each fiscal quarter of the Borrower (commencing March 31, 1996) on a
consolidated basis a Leverage Ratio of not more than 1.0 to 1. As
used herein 'Leverage Ratio' means the ratio of (x) Senior Debt of the
Borrower and/or its Subsidiaries to (y) consolidated Capital Base of
the Borrower.
3.8. Net Worth. The Borrower will maintain as at the end of each
---------
fiscal quarter of the Borrower (commencing with March 31, 1996) a
consolidated Capital Base which shall not be less than the then-
effective Capital Base Requirement. As used herein, the 'Capital Base
Requirement' will be deemed to have been $80,000,000 as at December
31, 1995; and as at the last day of each fiscal quarter thereafter
beginning with March 31, 1996 (each, a 'Determination Date') the
Capital Base Requirement will be deemed to become an amount equal to
the sum of: (i) the Capital Base Requirement in effect on the last day
of the immediately preceding fiscal quarter, plus (ii) 50% of the
----
consolidated Net Income of the Borrower and Subsidiaries during the
fiscal quarter ending at such Determination Date (but without giving
effect to any Net Income which is less than zero for any fiscal
quarter), plus (iii) commencing with the fiscal quarter ending June
----
30, 1996, 50% of the net proceeds of any equity securities sold by the
Borrower (other than stock issued upon the exercise of employee stock
options, provided that the value of the stock so issued does not
exceed $1,000,000 per fiscal year) during the fiscal quarter ending at
such Determination Date and 50% of the proceeds of any Subordinated
Debt issued by the Borrower and/or its Subsidiaries during such fiscal
quarter ending at such Determination Date (nothing contained herein
being deemed to approve the issuance of any such Subordinated Debt).
3.9. Quick Ratio. The Borrower will maintain as at the end of each
-----------
fiscal quarter of the Borrower (commencing March 31, 1996) a ratio of
Net Quick Assets to Current Liabilities, which ratio shall be not less
than 1.5 to 1.
3.10. Profitability. The Borrower will not incur a quarterly Net
-------------
Loss in excess of $1,000,000 for any fiscal quarter (commencing with
its fiscal quarter ending March 31, 1996). Commencing with the two
fiscal quarters ended December 31, 1995 and March 31, 1996, and
without limitation of the
15
<PAGE>
foregoing, the Borrower will not incur a quarterly Net Loss for any
two consecutive fiscal quarters.
3.11. Debt Service Coverage. For each twelve-month period ending on
---------------------
a Determination Date (as defined above), the Borrower will achieve a
Debt Service Coverage Ratio of not less than 1.2 to 1. As used
herein, 'Debt Service Coverage Ratio' means the ratio of (x) the
Borrower's consolidated EBITDA for the twelve-month period ending at
such Determination Date to (y) the total of (A) all amounts paid or
payable or accrued during such twelve-month period by the Borrower
and/or any Subsidiary of the Borrower on account of interest on any
Debt plus (B) all amounts paid or payable during such twelve-month
period by the Borrower and/or any Subsidiary of the Borrower in
respect of principal of any Debt, to the extent that such amounts
constituted current maturities of long-term debt of the Borrower
and/or any such Subsidiary as at the date when so paid or payable."
q. By deleting from the introductory paragraph to Article IV of the
Letter Agreement the words "in the Security Agreement or".
r. By deleting in their entireties clauses (m) and (n) of Section 5.1 of
the Letter Agreement.
s. By deleting from Section 5.2 of the Letter Agreement the words "under
the Security Agreement".
t. By deleting from Section 6.1 of the Letter Agreement, in each place
where same appear, the words "the Security Agreement,".
u. By deleting from the second sentence of Section 6.3 of the Letter
Agreement the words "0.5% per annum" and by substituting in their stead the
following:
"0.25% per annum"
v. By deleting from Section 6.3 of the Letter Agreement, in each place
where same appears, the amount "$5,000,000" and by substituting in its stead, in
each such place, the following:
"$10,000,000"
w. By inserting into clause (i) of the definition of "EBITDA" appearing
in Section 7.1 of the Letter Agreement, immediately after the words "paid by the
Borrower or any Subsidiary of the Borrower", the following:
"in cash"
16
<PAGE>
x. By deleting from the definition of "Expiration Date" appearing in
Section 7.1 of the Letter Agreement the date "March 1, 1996" and by substituting
in its stead the following:
"March 1, 1998"
As a result, from and after the date hereof, for the purposes of the Letter
Agreement and the other Financing Documents, the "Expiration Date" will be
deemed to be March 1, 1998.
y. By deleting from the definition of "Loan Documents" appearing in
Section 7.1 of the Letter Agreement the words "the Security Agreement".
z. By deleting from the definition of "Maximum Revolving Amount"
appearing in Section 7.1 of the Letter Agreement the amount "$5,000,000" and by
substituting in its stead the following:
"$10,000,000"
aa. By deleting in its entirety the definition of "Permitted Acquisition"
appearing in Section 7.1 of the Letter Agreement and by substituting in its
stead the following:
"'Permitted Acquisition' - Any Acquisition made by the Borrower which
complies with all of the following criteria: (i) after giving effect
to such Acquisition and any related financing therefor, the resulting
entity would comply with each of (S)(S)3.7-3.11 of this letter
agreement, compliance with (S)(S)3.7, 3.8 and 3.9 being determined for
this purpose as at the date of closing of the Acquisition, whether or
not same is the end of a fiscal quarter, and compliance with (S)3.10
and (S)3.11 being determined for this purpose on the basis of the
twelve-month period ending with such closing date, whether or not same
is the last day of a fiscal quarter, (ii) the acquired entity must be
in the same line of business as the Borrower or a related line of
business, (iii) no change in the Chief Executive Office or Chief
Financial Officer of the Borrower shall result from such Acquisition
and (iv) such Acquisition shall not result in a change of control of
the Borrower. A 'change of control' will be deemed to have occurred
if an Acquisition results directly or indirectly in a change in a
majority of the directors of the Borrower serving immediately prior to
such Acquisition or if such an Acquisition results in the issuance or
transfer of shares of capital stock of the Borrower constituting more
than 50% of any class of voting stock of the Borrower."
bb. By deleting in its entirety Item 2.1(b) of the Disclosure Schedule
attached to the Letter Agreement.
4. Wherever in any Financing Document, or in any certificate or opinion
to be delivered in connection therewith, reference is made to a "letter
agreement" or to the "Letter
17
<PAGE>
Agreement", from and after the date hereof same will be deemed to refer to the
Letter Agreement, as hereby amended.
5. Simultaneously with the execution and delivery of this Agreement, the
Borrower is executing and delivering to the Bank the 1996 Revolving Note, in
substitution for the 1994 Revolving Note. The 1996 Revolving Note is a
$10,000,000 promissory note of the Borrower, substantially in the form attached
hereto as Exhibit 1. Wherever in any of the Financing Documents or in any
certificate or opinion to be delivered in connection therewith, reference is
made to a "Revolving Note", from and after the date hereof same will be deemed
to refer to the 1996 Revolving Note.
6. In order to induce the Bank to enter into this Agreement, the Borrower
further represents and warrants as follows:
a. The execution, delivery and performance of this Agreement and the 1996
Revolving Note have been duly authorized by the Borrower by all necessary
corporate and other action, will not require the consent of any third party and
will not conflict with, violate the provisions of, or cause a default or
constitute an event which, with the passage of time or the giving of notice or
both, could cause a default on the part of the Borrower under its charter
documents or by-laws or under any contract, agreement, law, rule, order,
ordinance, franchise, instrument or other document, or result in the imposition
of any lien or encumbrance on any property or assets of the Borrower.
b. The Borrower has duly executed and delivered each of this Agreement
and the 1996 Revolving Note.
c. Each of this Agreement and the 1996 Revolving Note is the legal, valid
and binding obligation of the Borrower, enforceable against the Borrower in
accordance with its respective terms.
d. The statements, representations and warranties made in the Letter
Agreement continue to be correct as of the date hereof; except as amended,
updated and/or supplemented by the attached Supplemental Disclosure Schedule.
e. The covenants and agreements of the Borrower contained in the Letter
Agreement have been complied with on and as of the date hereof.
f. No event which constitutes or which, with notice or lapse of time, or
both, could constitute, an Event of Default (as defined in the Letter Agreement)
has occurred and is continuing.
g. No material adverse change has occurred in the financial condition of
the Borrower from that disclosed in the annual financial statements of the
Borrower dated December 31, 1995, heretofore furnished to the Bank.
18
<PAGE>
7. Except as expressly affected hereby, the Letter Agreement and each of
the other Financing Documents remains in full force and effect as heretofore.
8. Nothing contained herein will be deemed to constitute a waiver or a
release of any provision of any of the Financing Documents. Nothing contained
herein will in any event be deemed to constitute an agreement to give a waiver
or release or agree to any amendment or modification of any provision of any of
the Financing Documents on any other or future occasion.
19
<PAGE>
Executed, as an instrument under seal, as of the day and year first above
written.
PRI AUTOMATION, INC.
By:/s/Mordechai Wiesler
---------------------------------
Name: Mordechai Wiesler
Title: Chief Executive Officer
Accepted and agreed:
FLEET BANK OF MASSACHUSETTS, N.A.
By:/s/Catherine Bruton
-------------------------------
Name: Catherine Bruton
Title: Vice President
20
<PAGE>
SUPPLEMENTAL DISCLOSURE SCHEDULE
2.1(a) The Borrower is qualified to do business in Arizona, California,
Massachusetts, New Jersey, New Mexico, Oregon, Pennsylvania, Texas
and Vermont and is in the process of qualifying in Georgia.
The Borrower has four subsidiaries:
- Precision Robots FSC Inc., a Virgin Islands corporation
- PRI Automation Taiwan Limited, a Taiwan corporation
- PRI Automation Korea, Inc., a Korea corporation
- PRI Security Corp., a Massachusetts corporation
4.1 None, as of the date of the Second Loan Modification Agreement
4.2 None, as of the date of the Second Loan Modification Agreement
21
<PAGE>
EXHIBIT 10.17
Pri Automation, Inc.
PROMISSORY NOTE
$10,000,000.00 Boston, Massachusetts
March 1, 1996
FOR VALUE RECEIVED, the undersigned PRI Automation, Inc., a Massachusetts
corporation (formerly known as "Precision Robots, Inc.") (the "Borrower") hereby
promises to pay to the order of FLEET BANK OF MASSACHUSETTS, N.A. (the "Bank")
the principal amount of Ten Million and 00/100 ($10,000,000.00) Dollars or such
portion thereof as has been advanced or may hereafter be advanced by the Bank
pursuant to (S)1.2 of that certain letter agreement dated March 2, 1994 between
the Bank and the Borrower, as amended (as so amended, the "Letter Agreement")
and remains outstanding from time to time hereunder ("Principal"), with
interest, at the rate hereinafter set forth, on the daily balance of all unpaid
Principal, from the date hereof until payment in full of all Principal and
interest hereunder.
Interest on all unpaid Principal shall be due and payable monthly in
arrears, on the first day of each month, commencing on the first such date after
the advance of any Principal and continuing on the first day of each month
thereafter and on the date of payment of this note in full, at a fluctuating
rate per annum (computed on the basis of a year of three hundred sixty (360)
days for the actual number of days elapsed) which shall at all times be equal to
the Prime Rate as in effect from time to time (but in no event in excess of the
maximum rate permitted by then applicable law). A change in the aforesaid rate
of interest shall become effective on the same day on which any change in the
Prime Rate is effective. Notwithstanding the foregoing, under the circumstances
described in (S)1.9 of the Letter Agreement, the interest rate payable under
this note may be fixed at a Fixed Rate (determined as provided in said (S)1.9)
for a Fixed Rate Period (as defined in said (S)1.9). Overdue Principal and, to
the extent permitted by law, overdue interest shall bear interest at a rate per
annum which at all times shall be equal to the sum of (i) two (2%) percent per
annum plus (ii) the per annum rate otherwise payable under this note (but in no
event in excess of the maximum rate permitted by then applicable law),
compounded monthly and payable on demand. As used herein, "Prime Rate" means
that rate of interest per annum announced by the Bank from time to time as its
prime rate, it being understood that such rate is merely a reference rate, not
necessarily the lowest, which serves as the basis upon which effective rates of
interest are calculated for obligations making reference thereto.
All outstanding Principal and all interest accrued thereon shall be due and
payable in full on the first to occur of: (i) an acceleration under (S)5.2 of
the Letter Agreement or (ii) March 1, 1998. The Borrower may at any time and
from time to time prepay all or any portion of said Principal, without premium
or penalty unless a Fixed Rate (as defined in the Letter Agreement) is
applicable to such Principal at the date of any such prepayment. If such a
prepayment is made at any time when a Fixed Rate is applicable to the Principal,
the Borrower shall also pay to the Bank such additional amount, if any, as is
required by (S)1.9 of the Letter Agreement. Under certain circumstances set
forth in the Letter Agreement, prepayments of Principal may be required.
22
<PAGE>
Payments of both Principal and interest shall be made, in immediately
available funds, at the principal office of the Bank (now located at 75 State
Street, Boston, Massachusetts 02109), or at such other address as the Bank may
from time to time designate.
The undersigned Borrower irrevocably authorizes the Bank to make or cause
to be made, on a schedule attached to this note or on the books of the Bank, at
or following the time of making any Revolving Loan (as defined in the Letter
Agreement) and of receiving any payment of Principal, an appropriate notation
reflecting such transaction and the then aggregate unpaid balance of Principal.
Failure of the Bank to make any such notation shall not, however, affect any
obligation of the Borrower hereunder or under the Letter Agreement. The unpaid
Principal amount of this note, as recorded by the Bank from time to time on such
schedule or on such books, shall constitute presumptive evidence of the
aggregate unpaid principal amount of the Revolving Loans.
The Borrower hereby (a) waives notice of and consents to any and all
advances, settlements, compromises, favors and indulgences (including, without
limitation, any extension or postponement of the time for payment), any and all
receipts, substitutions, additions, exchanges and releases of collateral, and
any and all additions, substitutions and releases of any person primarily or
secondarily liable, (b) waives presentment, demand, notice, protest and all
other demands and notices generally in connection with the delivery, acceptance,
performance, default or enforcement of or under this note, and (c) agrees to
pay, to the extent permitted by law, all costs and expenses, including, without
limitation, reasonable attorneys' fees, incurred or paid by the Bank in
enforcing this note and any collateral or security therefor, all whether or not
litigation is commenced.
This note is the Revolving Note referred to in, and is entitled to the
benefits of, the Letter Agreement. This note is subject to prepayment (with
such additional amount, if any, as may then be required by (S)1.9 of the Letter
Agreement) as set forth in the Letter Agreement. The maturity of this note may
be accelerated upon the occurrence of an Event of Default, as provided in the
Letter Agreement.
Executed, as an instrument under seal, as of the day and year first above
written.
CORPORATE SEAL PRI AUTOMATION, INC.
ATTEST:
/s/Robert L. Birnbaum By:/s/Mordechai Wiesler
- ---------------------------- ----------------------------------
Clerk Name: Mordechai Wiesler
Title: Chief Executive Officer
23
<PAGE>
EXHIBIT 11.1
PRI AUTOMATION, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE
<TABLE>
<CAPTION>
Three Months Ended
------------------
June 30, 1996 June 30, 1995
Fully Fully
Type of Security Primary Diluted Primary Diluted
- ---------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Common stock outstanding,
beginning of
the period............... 7,187,962 7,187,962 5,804,583 5,804,583
Weighted average common
stock issued
during the period....... 51,612 67,242 47,136 101,063
Assumed exercise of
common stock warrants... -- -- 112,500 112,500
Assumed exercise of
common share options.... 644,608 644,608 574,064 577,360
Less: Purchase of common
stock under the treasury.
stock method............. (286,727) (281,468) (154,303) (127,364)
---------- ---------- ---------- ----------
Weighted average number
of common and
common equivalent
shares outstanding..... 7,597,455 7,618,344 6,383,980 6,468,142
========== ========== ========== ==========
Net income per common
share................... $ 0.46 $ 0.46 $0.31 $0.30
========== ========== ========== ==========
</TABLE>
Nine Months Ended
-----------------
<TABLE>
<CAPTION>
June 30, 1996 June 30, 1995
------------- -------------
Fully Fully
Type of Security Primary Diluted Primary Diluted
- ---------------- ------- ------- ------- -------
<S> <C> <C> <C> <C>
Common stock outstanding,
beginning of the period.. 6,998,266 6,998,266 3,176,364 3,176,364
Weighted average common
stock issued
during the period....... 145,551 166,985 2,246,462 2,315,678
Assumed exercise of
common stock warrants... 39,169 39,169 112,500 112,500
Assumed exercise of
common share options.... 604,759 605,824 619,311 624,125
Less: Purchase of common
stock under the treasury
stock method............. (214,207) (212,015) (196,935) (175,142)
---------- ---------- ---------- ----------
Weighted average number
of common and
common equivalent
shares outstanding..... 7,573,538 7,598,229 5,957,702 6,053,525
========== ========== ========== ==========
Net income per common
share.................. $ 1.32 $ 1.32 $0.85 $0.83
========== ========== ========== ==========
</TABLE>
24
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> APR-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 35,045
<SECURITIES> 9,970
<RECEIVABLES> 18,985
<ALLOWANCES> 0
<INVENTORY> 17,728
<CURRENT-ASSETS> 102,507
<PP&E> 8,380
<DEPRECIATION> 0
<TOTAL-ASSETS> 116,137
<CURRENT-LIABILITIES> 23,348
<BONDS> 0
0
0
<COMMON> 73
<OTHER-SE> 71,360
<TOTAL-LIABILITY-AND-EQUITY> 116,137
<SALES> 76,677
<TOTAL-REVENUES> 76,677
<CGS> 39,422
<TOTAL-COSTS> 39,422
<OTHER-EXPENSES> 12,236
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 14,700
<INCOME-TAX> 4,686
<INCOME-CONTINUING> 10,014
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,014
<EPS-PRIMARY> 1.32
<EPS-DILUTED> 1.32
</TABLE>
