<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 December 27, 1998
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 (I.R.S. Employer
of incorporation) Identification No.)
805 Middlesex Turnpike 01821-3986
Billerica, MA (Zip Code)
(Address of principal executive
offices)
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 February 2, 1999:
Class Number of Shares Outstanding
----- ----------------------------
Common Stock, $.01 par value 20,067,418
<PAGE>
PRI AUTOMATION, INC.
INDEX
Page No.
--------
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
December 27, 1998 and September 30, 1998 3
Condensed Consolidated Statements of Operations for
the Three Months Ended December 27, 1998 and
December 28, 1997 4
Condensed Consolidated Statements of Cash Flows for
the Three Months Ended December 27, 1998 and
December 28, 1997 5-6
Notes to Condensed Consolidated Financial Statements 7-12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13-19
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 20-21
SIGNATURE 22
Exhibit Index 23
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
PRI AUTOMATION, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
<TABLE>
<CAPTION>
December 27, September 30,
1998 1998
---- ----
(Unaudited)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .......................... $ 40,507 $ 48,208
Trade accounts receivable, net ..................... 26,642 24,887
Contracts in progress .............................. 9,873 9,017
Inventories ........................................ 22,621 27,494
Deferred income taxes .............................. 7,832 7,832
Other current assets ............................... 7,104 6,892
-------- --------
Total current assets ............................ 114,579 124,330
Property and equipment, net ........................ 16,356 17,122
Deferred income taxes .............................. 559 559
Other assets ....................................... 2,662 2,566
-------- --------
Total assets .................................... $134,156 $144,577
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................... $ 6,515 $ 11,955
Accrued expenses and other liabilities ............. 14,272 13,205
Line of credit ..................................... 59 11
Current portion of obligations under capital
lease ............................................ 102 110
Billings in excess of revenues and customer
advances ......................................... 7,886 9,214
-------- --------
Total current liabilities ....................... 28,834 34,495
Obligations under capital lease ...................... 51 75
Minority interests ................................... 93 --
Stockholders' equity:
Common stock, $.01 par value: 50,000,000 shares
authorized; 19,948,694 and 19,843,620 shares
issued and outstanding at December 27, 1998 and
September 30, 1998, respectively ................. 199 198
Additional paid-in capital ......................... 96,874 96,096
Retained earnings .................................. 8,105 13,713
-------- --------
Total stockholders' equity ...................... 105,178 110,007
-------- --------
Total liabilities and stockholders' equity ...... $134,156 $144,577
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
<PAGE>
PRI AUTOMATION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
------------------
December 27, December 28,
1998 1997
---- ----
<S> <C> <C>
Net revenue ........................................ $ 25,316 $ 65,133
Cost of revenue .................................... 19,363 36,076
-------- --------
Gross profit ....................................... 5,953 29,057
Operating expenses:
Research and development ......................... 8,248 8,375
Selling, general and administrative .............. 6,398 10,243
Acquired in-process research and development ..... -- 8,417
Special charges .................................. 650 --
--------
Operating (loss) profit ............................ (9,343) 2,022
Other income, net .................................. 716 149
-------- --------
(Loss) income before income tax provision .......... (8,627) 2,171
(Benefit from) provision for income taxes .......... (3,019) 2,578
-------- --------
Net loss ........................................... $ (5,608) $ (407)
-------- --------
-------- --------
Net loss per common share:
Basic ............................................ $ (0.28) $ (0.02)
Diluted .......................................... $ (0.28) $ (0.02)
Weighted average shares outstanding:
Basic ............................................ 19,885 19,457
Diluted .......................................... 19,885 19,457
</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>
Three Months Ended
------------------
December 27, December 28,
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net loss ........................................... $ (5,608) $ (407)
Adjustments to reconcile net loss to net cash
(used in) provided by operating activities:
Depreciation and amortization expense ........... 1,843 1,519
Provision for write-downs of inventories ........ 200 654
Provision for bad debts ......................... -- 700
Net loss on disposal of assets .................. 54 --
Amortization of premiums or discounts on
marketable securities ........................ -- 6
Translation gains, net .......................... (359) --
Acquired in-process research and development .... -- 8,417
Changes in operating assets and liabilities:
Trade accounts receivable .................... (1,566) 13,316
Contracts in progress ........................ (856) (4,140)
Inventories .................................. 4,673 1,603
Other assets ................................. (495) (1,285)
Accounts payable ............................. (5,445) (1,326)
Accrued expenses and other liabilities ....... 1,047 (3,112)
Billings in excess of revenues and
customer advances ......................... (1,328) 116
-------- --------
Net cash (used in) provided by operating activities ... (7,840) 16,061
-------- --------
Cash flows from investing activities:
Proceeds from maturities of marketable securities .. -- 685
Purchases of marketable securities ................. -- (1,113)
Proceeds from sale of property and equipment ....... 6 --
Purchases of property and equipment ................ (937) (2,180)
-------- --------
Net cash used in investing activities ................. (931) (2,608)
-------- --------
Cash flows from financing activities:
Proceeds (repayments) of borrowings ................ 48 (1,769)
Repayment of capital lease obligations ............. (32) (71)
Distributions to shareholders of Equipe ............ -- (2,304)
Investment from minority interest shareholders ..... 93 --
Proceeds from exercise of stock options and
Employee Stock Purchase Plan .................... 779 214
-------- --------
Net cash provided by (used in) financing activities ... 888 (3,930)
-------- --------
Effect of exchange rate changes on cash ............... 182 --
-------- --------
Net (decrease) increase in cash and cash equivalents .. (7,701) 9,523
Cash and cash equivalents at beginning of period ...... 48,208 29,384
-------- --------
Cash and cash equivalents at end of period ............ $ 40,507 $ 38,907
-------- --------
-------- --------
</TABLE>
5
<PAGE>
PRI AUTOMATION, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS-Continued
(In thousands)
(Unaudited)
Three Months Ended
------------------
December 27, December 28,
1998 1997
---- ----
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest....................................... $ 8 $ 11
Taxes ......................................... 608 5,112
Significant non-cash transactions:
Acquisition of Interval Logic Corporation (Note F)
The accompanying notes are an integral part of the condensed consolidated
financial statements.
6
<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., its wholly-owned domestic subsidiaries and its wholly-owned
and majority-owned foreign subsidiaries (collectively, the "Company"). All
significant inter-company transactions and balances have been eliminated.
The condensed consolidated financial statements are unaudited. However, in
the opinion of management, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of such information have been
made. 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 connection with the audited consolidated financial statements
of PRI Automation, Inc. for the year ended September 30, 1998 included in the
Company's 1998 Annual Report on Form 10-K, filed with the Securities and
Exchange Commission.
In January 1998, the Company acquired Equipe Technologies, Inc., E-Machine,
Inc., and Equipe Japan Ltd. (collectively, "Equipe" or the "Equipe Combined
Companies"). The acquisition of Equipe was accounted for using the
pooling-of-interests method of accounting. All prior period condensed
consolidated financial statements presented herein have been restated to include
the financial position, results of operations, and cash flows of Equipe (see
Note G).
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
Inventories consist of the following (in thousands):
<TABLE>
<CAPTION>
December 27, September 30,
1998 1998
---- ----
<S> <C> <C>
Raw materials............................. $14,622 $19,072
Work-in-process........................... 4,827 5,242
Finished goods............................ 3,172 3,180
------- -------
$22,621 $27,494
------- -------
------- -------
</TABLE>
C. Accrued Expenses and Other Liabilities
The significant components of accrued expenses and other liabilities consist
of the following (in thousands):
<TABLE>
<CAPTION>
December 27, September 30,
1998 1998
---- ----
<S> <C> <C>
Accrued expenses.......................... $ 6,150 $ 5,334
Accrued compensation...................... 3,060 2,833
Warranty reserves......................... 5,062 5,038
------- -------
$14,272 $13,205
------- -------
------- -------
</TABLE>
7
<PAGE>
D. Net Loss per Share
The Company has adopted Statement of Financial Accounting Standard ("SFAS")
No. 128, "Earnings Per Share," which specifies the computation, presentation and
disclosure requirements for net income (loss) per common 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. Under SFAS No. 128, the computation of diluted net income
(loss) per share does not assume the issuance of common shares that have an
anti-dilutive effect. A reconciliation between basic and diluted net loss per
share is as follows (in thousands, except per share data):
<TABLE>
<CAPTION>
Three Months Ended
------------------
December 27, 1998 December 28, 1997
----------------- -----------------
<S> <C> <C>
Net loss ............................................. $ (5,608) $ (407)
Shares used in computation:
Weighted average common shares outstanding
used in computation of basic net loss per
common share .................................... 19,885 19,457
Dilutive effect of stock options and warrants ..... -- --
Shares used in computation of diluted net loss
per common share ................................ 19,885 19,457
======== ========
Basic net loss per share .......................... $ (0.28) $ (0.02)
Diluted net loss per share ........................ $ (0.28) $ (0.02)
</TABLE>
Options to purchase 754,854 and 991,492 shares of common stock were
outstanding for the three months ended December 27, 1998 and December 28, 1997,
respectively, but were not included in the computation of diluted net loss per
common share because the Company was in a loss position and the inclusion of
such shares would be anti-dilutive. Additionally, options to purchase 164,214
and 11,500 shares of common stock were outstanding for the three months ended
December 27, 1998 and December 28, 1997, respectively, but were not included in
the computation of diluted net loss per common share because the options'
exercise prices were greater than the average market price of the common shares,
and therefore, would be anti-dilutive under the treasury stock method.
8
<PAGE>
E. Comprehensive Income
The Company has adopted SFAS No. 130, "Reporting Comprehensive Income,"
which requires, among other things, that any unrealized gains or losses on
investments be included in other comprehensive income or loss. The
Company's comprehensive loss for the periods presented in these financial
statements was as follows.
Three Months Ended
------------------
December 27, 1998 December 28, 1997
----------------- -----------------
(in thousands)
Net loss ................................. $(5,608) $ (407)
Other comprehensive loss before tax:
Change in unrealized gain or loss on
available-for-sale securities ...... -- (1)
------- -------
Other comprehensive loss, net of tax ..... -- (1)
------- -------
Comprehensive loss ....................... $(5,608) $ (408)
======= =======
F. Acquisition of Interval Logic Corporation
On October 29, 1997 the Company acquired Interval Logic Corporation
("ILC"), a California corporation, for aggregate consideration of 111,258
shares of the Company's common stock. In addition, the Company assumed
options to purchase an aggregate of 199,170 shares of the Company's common
stock. ILC was formed in 1995 to develop advanced, high-performance planning
and scheduling software solutions for the semiconductor industry. The value
of the transaction was $8,523,000, including approximately $600,000 of
expenses related to the acquisition. The transaction was accounted for as a
purchase.
At the time of the acquisition, the purchase price was allocated to the
tangible and intangible assets of ILC. Management is aware that it is
responsible for estimating the fair value of purchased in-process research
and development. The value assigned to the intangible assets, primarily the
acquired technology, was based on the fair market value using a risk-adjusted
discounted cash flow approach. ILC's sole product at the time of the
acquisition was the Leverage product, which was under development. ILC had no
product revenues during its existence and was a development stage enterprise.
Specifically, the purchased technology was evaluated through extensive
interviews and analysis of data concerning the state of the technology and
needed developments. This evaluation of underlying technology acquired
considered the inherent difficulties and uncertainties in completing the
development, and thereby achieving technological feasibility, and the risks
related to the viability of and potential changes in future target markets.
The significant assumptions that affected the valuation of ILC concerned
potential revenue and cost of completion, as well as the timing of the
product release. In addition, the selection of an appropriate discount rate
was a major factor in the valuation analysis.
The revenue assumptions for this product were a key variable in the
Company's valuation analysis. The Company developed revenue projections
based on management's expected release date of March 1999 for the beta
version of the Leverage product. Given that ILC had no historical revenue to
rely on as a guide, the Company based its projections on revenues from a
population of comparable companies. The revenue growth rates projected for
the Leverage product were comparable to the 3-year cumulative average growth
rate for the comparable companies. The costs of completion assumptions for
the Leverage product were a second key variable in the Company's valuation
analysis. These assumptions were based on detailed cost analysis provided by
the head of research and development for ILC, and included assumptions
regarding completion dates for development milestones. To date, the actual
costs of completion incurred have not been materially different from the cost
estimates used in the valuation model.
The Company expects to make significant further investments in development
in order to meet expected customer requirements, and anticipates that it will
complete development in the third quarter of fiscal 1999. The Company must
create a non-static model of a fab and provide links to real-time data that
will enable the product to react to multiple real-time events that might
impact the current fab scheduling. The Company estimates that the remaining
effort will take approximately 175 engineering man-months at a cost of
approximately $2,175,000.
There have been no events subsequent to the acquisition which indicate
that the completion of the Leverage product will be any less successful than
the Company anticipated at the time of its initial valuation. However, the
expected timing of the product release directly affects the Company's revenue
projections. Any delay in the product release date could affect the revenue
projections.
The acquired technology had not reached technological feasibility at the
time of the acquisition. The Company defines technological feasibility as
the point at which a working model is functioning to designed specifications
and has been placed at a beta test site. The Company expects the Leverage
product to be released to a beta test site in March 1999. In addition, the
technology had no alternative future use to the Company in other research and
development projects or otherwise. Accordingly, the acquired technology was
expensed as in-process research and development. Based on the methodology
described above, the Company assigned a fair value of $8,417,000 to the
technology.
9
<PAGE>
G. Acquisition of Equipe
On January 22, 1998, the Company acquired Equipe Technologies, Inc.,
E-Machine, Inc. and Equipe Japan Ltd., (collectively, "Equipe" or the "Equipe
Combined Companies"). Equipe is a leading worldwide developer, manufacturer, and
supplier of wafer and substrate handling robots, pre-aligners and controllers to
semiconductor process tool manufacturers. The Company issued 4,088,016 shares of
common stock in exchange for all of the outstanding stock of Equipe
Technologies, Inc. using an exchange ratio of 0.760372 of one share of the
Company's common stock for each share of Equipe Technologies, Inc. The Company
issued 36,000 and 240,000 shares of the Company's common stock to E-Machine,
Inc. and Equipe Japan Ltd., respectively. In addition, all outstanding Equipe
stock options were converted, at the common stock exchange ratio, into options
to purchase the Company's common stock. The business combination was accounted
for as a pooling of interests. The consolidated financial statements of the
Company for periods prior to the acquisition have been restated to include the
financial position, results of operations and cash flows of Equipe. Significant
intercompany transactions among the Equipe Combined Companies prior to the
period in which the business combination occurred have been eliminated from the
accompanying financial statements.
The following information presents certain statement of operations data of
the Company and Equipe for the period prior to the acquisition:
<TABLE>
<CAPTION>
Combined
PRI Automation Equipe Companies
-------------- ------ ---------
(in thousands)
<S> <C> <C> <C>
Net revenue for:
Three months ended December 28, 1997.................. $46,830 $18,303 $65,133
Net (loss) income for:
Three months ended December 28, 1997 (1).............. $(3,449) $ 3,042 $ (407)
</TABLE>
(1) For PRI Automation and Combined Companies, includes $8.4 million in
charges for in-process research and development related to acquisition
of ILC
Equipe Technologies, Inc. and E-Machine, Inc. were S-corporations for
income tax purposes prior to the acquisition. The following pro forma net
loss and net loss per common share gives effect to adjustments that provide
for income taxes as if Equipe Technologies, Inc. and E-Machine, Inc. were
treated as C-corporations for the period presented. The pro forma information
is shown for comparative purposes only.
Unaudited Pro Forma Net Loss per Common Share
(In thousands, except per share data)
Three Months
Ended
December 28, 1997
-----------------
Historical net loss ....................................... $ (407)
Adjustment to Equipe income tax expense ................... (1,156)
-------
Unaudited pro forma net loss .............................. $(1,563)
-------
-------
Unaudited pro forma diluted net loss per common share ..... $ (0.08)
-------
-------
10
<PAGE>
H. Special Charges
During the quarter ended December 27, 1998, the Company recorded special
charges of $650,000. These charges represent provisions for severance
compensation relating to the termination of 62 personnel, approximately 6% of
the workforce, completed in the first fiscal quarter. These personnel
reductions were approximately 65% in manufacturing and customer support, 15%
in engineering, and 20% in selling, general and administrative functions. The
organizational restructuring occurred in response to the continued downturn
in the semiconductor equipment industry. At December 27, 1998, $372,000 of
these special charges remained in accrued expenses. The Company expects these
costs to be paid by the end of the third fiscal quarter of 1999.
During the second, third and fourth quarters of fiscal 1998, the Company
had previously restructured its operations by consolidating its business unit
structure into a more centralized functional organization as a result of
market conditions and the Equipe acquisition. In connection with the
restructuring, the Company recorded special charges of $5,601,000. The major
components of the special charges included: provisions for severance
compensation of $1,910,000 resulting from terminations of 244 personnel in
manufacturing, engineering, and selling, general and administrative
functions; costs of $2,943,000 relating to reductions in leased facilities;
and a non-cash write-down of specialized demonstration equipment for a
particular customer of $528,000 associated with the closure of the customer
training site that is not usable elsewhere. At December 27, 1998, $396,000 of
the fiscal 1998 severance and lease reduction restructuring charges totaling
$4,853,000 remained in accrued expenses. The Company expects these remaining
costs to be paid by the end of fiscal 1999.
I. Income taxes
The income tax benefit for the three months ended December 27, 1998 was
$3,019,000, compared to a provision of $2,578,000 for the corresponding period
in fiscal 1998. The effective tax rate reflects a 35.0% benefit in the first
quarter of fiscal 1999 compared to a 118.7% provision for the corresponding
period in fiscal 1998. The change in effective tax rates from the first quarter
of fiscal 1998 is primarily due to the charges for acquired in-process research
and development which were not fully deductible for tax purposes and to the fact
that Equipe Technologies, Inc. and E-Machine, Inc. prior to January 1, 1998 were
not subject to federal income tax due to S-corporation status. The tax rate,
exclusive of the acquired in-process research and development charge and
adjusted on a pro forma basis to provide for income taxes as if Equipe
Technologies, Inc. and E-Machine, Inc. were C-corporations, for the three months
ended December 28, 1997 would have been 35.2%. The Company has recognized a net
deferred tax asset of $8,391,000 at December 27, 1998, and the Company believes
it is more likely than not that this will be realized.
J. Joint Venture
Effective June 1, 1998, the Company entered into a joint venture with
Chung Song Systems Co., Ltd. ("CSSC") and Shinsung Engineering Co. Ltd.
("SEC") to distribute the Company's products and services in Korea. CSSC and
SEC are in the business of development and marketing of products and services
for the semiconductor industry. Under the terms of the agreement, the Company
owns 80% of the joint venture and CSSC and SEC each own 10% of the joint
venture. The Company, CSSC, and SEC have committed to invest 2.6 billion
Korean won, or approximately $2.2 million, as capital in the joint venture
over a two-year period through June
11
<PAGE>
2000. As of December 27, 1998, the Company had outstanding commitments under
this agreement of 1.6 billion Korean won, or approximately $1.3 million.
K. Pending Acquisition of Promis
On November 24, 1998, the Company agreed to acquire Promis Systems
Corporation Ltd. ("Promis"), a Toronto-based Canadian corporation traded on
the Toronto Stock Exchange. On January 26, 1999, the shareholders of Promis
voted in favor of its acquisition by the Company. Promis is a leading
developer of manufacturing execution systems software for semiconductor and
precision electronics manufacturers. Pursuant to the agreement, Promis will
undergo a recapitalization and, as a result, the Company will acquire,
through a wholly owned subsidiary, the sole outstanding common share of
Promis. Promis will issue approximately 1.7 million exchangeable shares to
the holders of outstanding Promis common shares. In general, each holder of
an exchangeable share will be able to exchange or redeem the share for one
share of the Company's common stock. The acquisition is intended to be
accounted for as a pooling of interests and is expected to be completed
during the second fiscal quarter of 1999.
L. Recent Accounting Pronouncements
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This statement supersedes SFAS No. 14,
"Financial Reporting for Segments of a Business Enterprise." This statement
includes requirements to report selected segment information including
entity-wide disclosures about products and services, major customers, and the
material countries in which the entity holds assets and reports revenues. The
Company will comply with the disclosure requirements of this statement in its
Annual Report on Form 10-K to Shareholders for fiscal 1999. The Company has
not yet determined the impact of the statement.
In April 1998, the Accounting Standards Executive Committee of the AICPA
issued Statement of Position 98-5, "Accounting for the Costs of Start-Up
Activities" ("SOP 98-5"). SOP 98-5 requires all costs of start-up activities (as
defined by SOP 98-5) to be expensed as incurred. The Company does not expect the
statement to have a material impact on its financial condition and results of
operations.
12
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
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 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 shipment level
and profitability and the sufficiency of capital to meet working capital and
capital expenditure requirements may be forward-looking statements. The words
"expect," "anticipate," "internal," "plan," "believe," "seek," "estimate" and
similar expressions are intended to identify such forward-looking statements.
This Report also contains other 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 such 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 below.
The Company's future results are subject to substantial risks and
uncertainties. The Company's business and results of operations depend in
significant part upon capital expenditures of manufacturers of
semiconductors, which in turn depend upon the current and anticipated market
demand for semiconductors and products incorporating semiconductors.
Historically, the semiconductor industry has been highly cyclical with
recurring periods of over-supply. This recurring over-supply often has had a
severe effect on the semiconductor industry's demand for capital
expenditures, including systems manufactured and marketed by the Company. The
present continuing downturn in the semiconductor industry has and could
continue to materially adversely affect the Company's business. The Company
believes that the markets for newer generations of semiconductors will be
subject to similar fluctuations. Also, the recent high rate of technical
innovation and resulting improvements in the performance and price of
semiconductor devices, which have driven much of the demand for the Company's
products, could slow, or encounter limits, in the future. In addition, any
other factor adversely affecting the semiconductor industry or particular
segments within the semiconductor industry may adversely effect the Company's
business, financial condition and operating results.
In addition to the risks and uncertainties posed generally by the material
cyclicality of the semiconductor industry and the effects of the continued
downturn throughout the industry, the Company faces the following risks and
uncertainties: continuation of the semiconductor industry downturn could
jeopardize the Company's plans; the Company's restructuring plan has
adversely affected its financial position; the Company's lengthy sales cycle
makes it difficult to anticipate sales; the Company's operating results
fluctuate significantly and are affected by the small number of systems it
sells, its gross margins, its significant fixed costs and lack of backlog;
the Company depends on a limited number of customers; the Company's future
revenue sources are uncertain; the downturn in Asia could continue to
adversely affect the Company's business; the Company's planned investments in
Asia may not be successful; the Company has invested heavily in 300mm wafer
technology, which is being adopted more slowly than the Company expected; the
Company needs employees who are difficult to hire and retain; the Company may
have difficulty managing growth in light of fluctuating demand; the Company's
recent acquisitions may disrupt its operations; acquisitions may dilute the
equity interests of the Company's stockholders and reduce the Company's
liquidity; the Company's international operations create special risks; the
Company faces significant competition from other automation companies; the
Company must continually improve its technology to remain competitive; the
Company may continue to experience delays in product development and
technical difficulties; the Company depends on one or a few suppliers for
some matters; 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 Company uses toxic and
hazardous substances that could expose it to liability; the Company depends
on Mordechai Weisler, its chairman, and Mitchell G. Tyson, its President and
Chief Executive Officer; Year 2000 problems may disrupt the Company's
operations; the market price of the Company's common stock is volatile;
future sales by existing stockholders
13
<PAGE>
could depress the market price of the Company's common stock; and certain
provisions of the Company's charter and by-laws and Massachusetts law make a
takeover of the Company more difficult. As a result of the foregoing and
other factors, the Company may experience material fluctuations in its future
operating results on a quarterly or annual basis which could materially
adversely affect its business, financial condition, operating results and
stock price.
Results of Operations
Net revenue: Net revenue for the three months ended December 27, 1998 was
$25.3 million compared to $65.1 million for the corresponding period in
fiscal 1998, a decrease of 61.1%. Net export sales to European and Asian
customers for the three months ended December 27, 1998 were $3.7 million
compared to $19.2 million for the corresponding period in fiscal 1998, and
accounted for 14.6% and 29.4% of net revenue, respectively. The decrease in
net revenue is due to the continued downturn in the capital equipment sector
of the semiconductor industry resulting from decrease in demand for
semiconductor products and excess manufacturing capacity within the
semiconductor industry. The decline in export revenue as a percentage of net
revenue is attributable to this cyclical industry downturn as well as the
adverse economic conditions in the Pacific Rim. Most sales to foreign
customers are denominated in U.S. dollars with the exception of sales of some
Equipe products which are denominated in local currencies. Non-U.S.
dollar-denominated sales amounted to approximately $0.4 million, 1.8% of net
revenue, for the three months ended December 27, 1998.
Gross profit: The Company continues to experience the effects of the
protracted downturn in the semiconductor industry. The gross profit margin
for the three months ended December 27, 1998 decreased to 23.5% compared to
44.6% for the corresponding period in fiscal 1998. The decline in the gross
profit margin is due to the combined impact of a reduction of higher margin
equipment sales and unfavorable manufacturing capacity variances related to
fixed costs and lower production volumes.
Research and development: Research and development expenses for the three
months ended December 27, 1998 were $8.2 million as compared to $8.4 million
for the corresponding period in fiscal 1998, representing 32.6% and 12.9% of
net revenue, respectively. The Company lowered research and development
expenses by reducing the number of employees in engineering positions and
through a three day company-wide shutdown in the first quarter of fiscal
1999. The decreases were offset partially by the additional costs related to
product development and enhancements. The Company continues to maintain its
investment in the development of next-generation products and its planning
and scheduling software, including development of the ILC Leverage software
product. Research and development costs increased as a percentage of net
revenue for the three months ended December 27, 1998, compared with the
corresponding period in fiscal 1998, due to the decline in revenues relative
to costs.
Selling, general and administrative: Selling, general and administrative
expenses for the three months ended December 27, 1998 were $6.4 million,
compared to $10.2 million for the corresponding period in fiscal 1998,
representing 25.3% and 15.7% of net revenue, respectively. The decrease in
the dollar amount of selling, general, and administrative expenses for the
first quarter of fiscal 1999 is primarily attributable to reduced headcount
in sales and administrative departments, approximating $1.2 million of
expenses, decrease in provision for bad debts of $0.7 million, lower bonuses
of $0.6 million and lower commissions expense of $0.5 million. Selling,
general, and administrative expenses increased as a percentage of net
revenue, however, due to the significant decline in net revenue.
Acquired in-process research and development: On October 29, 1997 the
Company acquired Interval Logic Corporation ("ILC"), a California
corporation, for aggregate consideration of 111,258 shares of the Company's
common stock. In addition, the Company assumed
14
<PAGE>
options to purchase an aggregate of 199,170 shares of the Company's common
stock. ILC was formed in 1995 to develop advanced, high-performance planning and
scheduling software solutions for the semiconductor industry. The value of the
transaction was $8,523,000, including approximately $600,000 of expenses related
to the acquisition. The transaction was accounted for as a purchase.
At the time of the acquisition, the purchase price was allocated to the
tangible and intangible assets of ILC. The value assigned to the intangible
assets, primarily the acquired technology, was based on the fair market value
using a risk-adjusted discounted cash flow approach. ILC's sole product at
the time of the acquisition was the Leverage product, which was under
development. ILC had no product revenues during its existence and was a
development stage enterprise. The acquired technology had not reached
technological feasibility at the time of the acquisition and was expensed as
in-process research and development. The Company defined technological
feasibility as the point at which a working model is functioning to designed
specifications and has been placed at a beta test site. The purchased
technology was evaluated through extensive interviews and analysis of data
concerning the state of the technology and needed developments. This
evaluation of underlying technology acquired considered the inherent
difficulties and uncertainties in completing the development, and thereby
achieving technological feasibility, and the risks related to the viability
of and potential changes in future target markets. At the time of the
acquisition, the fair value of $8,417,000 was assigned to the technology.
There have been no subsequent events to the acquisition which indicate
that the completion or exploitation of the Leverage project will be any less
successful than was anticipated in the initial valuation. The product's beta
release date is unchanged at March 1999, the development costs still
approximate those earlier estimates, and the revene and cost projections
remain unchanged. No key assumptions to date have been invalidated with the
passage of time. See Note F of Notes to Condensed Consolidated Financial
Statement, entitled "Acquisition of Interval Logic Corporation," for
additional information relating to the Company's acquisition of ILC.
Special charges: During the quarter ended December 27, 1998, the Company
recorded special charges of $650,000. These charges represent provisions for
severance compensation relating to the termination of 62 personnel,
approximately 6% of the workforce, completed in the first fiscal quarter.
These personnel reductions were approximately 65% in manufacturing and
customer support, 15% in engineering, and 20% in selling, general and
administrative functions. The organizational restructuring occurred in
response to the continued downturn in the semiconductor equipment industry.
At December 27, 1998, $372,000 of these special charges remained in accrued
expenses. The Company expects these costs to be paid by the end of the third
fiscal quarter of 1999. These special charges, as well as the special charges
recorded as a result of the restructurings in fiscal 1998, are expected to
reduce operating expenses by about $4.0 million per quarter for the
foreseeable future. These savings, while significant, are not comparable in
any respects with the revenue decreases, but rather bring the cost structure
more in line with business requirements while not sacrificing future growth
prospects.
Operating (loss) profit: As a result of the decline in revenue and the
other foregoing factors, the loss from operations for the three months ended
December 27, 1998 was $9.3 million, compared to income from operations of
$2.0 million for the corresponding period in fiscal 1998. Excluding the
special charges of $650,000, the operating loss for the three months ended
December 27, 1998 would have been $8.7 million, or 34.3% of net revenue. This
compares with operating income for the three months ended December 28, 1997
of $10.4 million, or 16.0% of net revenue, excluding the non-recurring charge
of $8.4 million related to acquired
15
<PAGE>
in-process research and development recorded in the connection with the
acquisition of Interval Logic Corporation in fiscal 1998.
Other income, net: Other income, net for the three months ended
December 27, 1998 was $716,000, compared to $149,000 for the corresponding
period in fiscal year 1998. Interest income for the three months ended
December 27, 1998 was $423,000, compared to $325,000 for the corresponding
period in fiscal year 1998. Interest expense for the three months ended
December 27, 1998 and December 28, 1997 was $8,000 and $0, respectively. In
addition to the increase in net interest income recorded in the first quarter
of fiscal 1999, other income, net increased due to the net foreign currency
translation gains of $359,000 for the three months ended December 27, 1998.
(Benefit from) provision for income taxes: The income tax benefit for the
three months ended December 27, 1998 was $3,019,000, compared to a provision
of $2,578,000 for the corresponding period in fiscal 1998. The effective tax
rate reflects a 35.0% benefit in the first quarter of fiscal 1999 compared to
a 118.7% provision for the corresponding period in fiscal 1998. The change in
effective tax rates from the first quarter of fiscal 1998 is primarily due to
the charges for acquired in-process research and development which were not
fully deductible for tax purposes and to the fact that Equipe Technologies,
Inc. and E-Machine, Inc. prior to January 1, 1998, were not subject to
federal income tax due to S-corporation status. The tax rate, exclusive of
the acquired in-process research and development charge and adjusted on a pro
forma basis to provide for income taxes as if Equipe Technologies, Inc. and
E-Machine, Inc. were C-corporations, for the three months ended December 28,
1997 would have been 35.2%. The Company has recognized a net deferred tax
asset of $8,391,000 at December 27, 1998, and the Company believes it is more
likely than not that this will be realized. However, the realization of the
net deferred tax assets is dependent on generating sufficient taxable income
in future periods. The amount of the net deferred tax assets considered
realizable could be significantly or completely reduced if taxable income is
not generated for the forseeable future.
Net loss: The net loss for the three months ended December 27, 1998 was
$5.6 million, compared to the net loss of $0.4 million for the corresponding
period in fiscal 1998. Excluding the special charges, net of their tax
effect, the net loss for the three months ended December 27, 1998 would have
been $5.2 million, or 20.5% of net revenue.
Liquidity and Capital Resources
The Company has funded its operations primarily through bank lines of credit,
public stock offerings in October 1994 and July 1995 and cash generated from
operations.
As of December 27, 1998 the Company had working capital of $85.7 million,
including cash and cash equivalents of $40.5 million as compared to working
capital of $89.8 million and cash and cash equivalents of $48.2 million as of
September 30, 1998.
Net cash used in operating activities for the three months ended December 27,
1998 was $7.8 million, compared to net cash provided by operating activities of
$16.1 million for the corresponding period in fiscal 1998. Net cash used in
operating activities for the three months ended December 27, 1998 was primarily
attributable to the net loss, which after adjusting for non-cash items, used
$3.9 million, a decrease in accounts payable of $5.4 million, a decrease in
billings in excess of revenues and customer advances of $1.3 million, and an
increase in accounts receivable of $1.6 million. This was partially offset by
cash provided by a decrease in inventories of $4.7 million and an increase in
accrued expenses and other liabilities of $1.0 million. Net cash provided by
operating activities for the three months ended December 28, 1997 was primarily
attributable to a decrease in accounts receivable of $13.3 million and to the
net loss, which after adjusting for non-cash items, provided $10.9 million.
16
<PAGE>
Net cash used in investing activities for the three months ended December 27,
1998 was $0.9 million as compared to $2.6 million for the corresponding period
in fiscal 1998. Net cash used in investing activities for the three months
ended December 27, 1998 was primarily attributable to purchases of property and
equipment.
Net cash provided by financing activities for the three months ended December
27, 1998 was $0.9 million as compared to net cash used in financing activities
of $3.9 million for the corresponding period in fiscal 1998. The increase in
cash proceeds from financing in the first quarter of fiscal 1999, compared
with the corresponding period in fiscal 1998, is primarily attributable to
the fact that distributions of $2.3 million were paid to shareholders of
Equipe, in the first quarter of fiscal 1998, prior to the Company's
acquisition of Equipe, and that $1.8 million was used to repay borrowings on
bank overdrafts in the three months ended December 28, 1997. In addition,
proceeds from the exercise of stock options and issuance of common stock
pursuant to the Company's Employee Stock Purchase Plan amounted to $0.8
million and $0.2 million for the first quarter of fiscal 1999 and 1998,
respectively.
At December 27, 1998, the Company had a revolving credit facility
agreement with Chase Manhattan Bank (the "Bank"). The revolving credit
facility enables the Company to borrow up to $20,000,000 on an unsecured
basis. Outstanding revolving credit loans bear interest, at the Company's
option, at the 30, 60 or 90 day LIBOR rate plus a credit spread or at the
effective prime rate. At December 27, 1998, the LIBOR borrowing rate would
have been 6.62%. The ability of the Company to effect borrowings under the
revolving credit facility is conditioned upon meeting certain financial
criteria. The revolving credit agreement expires on June 16, 2000. The
Company had outstanding letters of credit with the Bank of $428,000 at
December 27, 1998, and therefore, the available balance under this credit
agreement was $19,572,000 at December 27, 1998. At December 27, 1998, the
Company was not in compliance with certain of the required covenants but
subsequently obtained a waiver from the Bank. The Company was in default of
the minimum consolidated net worth requirement, the minimum fixed charge
coverage ratio, and the minimum consolidated net income requirements of the
revolving credit agreement for the three months ended December 27, 1998. The
Company expects to seek future waivers as necessary from the Bank beginning
on the next measurement date of March 28, 1999. However, there can be no
assurance that such waivers will be obtained.
The Company believes its existing cash balances and access to financing
will be sufficient for the next twelve months. The Company also believes its
existing cash balances and access to financing will be sufficient for the
foreseeable future beyond the next twelve months. However, there can be no
assurance that adequate financing will be available or at terms acceptable to
the Company.
Recent Accounting Pronouncements
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of
an Enterprise and Related Information." This statement supersedes SFAS No.
14, "Financial Reporting for Segments of a Business Enterprise." This
statement includes requirements to report selected segment information
including entity-wide disclosures about products and services, major
customers, and the material countries in which the entity holds assets and
reports revenues. The Company will comply with the disclosure requirements of
this statement in its Annual Report to Shareholders for fiscal 1999. The
Company has not yet determined the impact of the statement.
In April 1998, the Accounting Standards Executive Committee of the AICPA
issued Statement of Position 98-5, "Accounting for the Costs of Start-Up
Activities" ("SOP 98-5"). SOP 98-5 requires all costs of start-up activities (as
defined by SOP 98-5) to be expensed as incurred. The Company does not expect the
statement to have a material impact on its financial condition and results of
operations.
17
<PAGE>
Year 2000
General
Many computer systems and software products are expected to experience
problems handling dates beyond the year 1999 because the systems are coded to
accept only two-digit entries in the date code fields. Inability of the
Company's products, or of products and systems on which the Company relies, to
process these dates could have a material adverse effect on the Company's
business. The Company has implemented a company-wide Year 2000 Project (the
"Project") with the objective of minimizing the impact of Year 2000 issues on
its products, services, infrastructure, and internal business support
applications. The Project's goals are to ensure Year 2000 readiness and
compliance for: (i) all of the Company's products; (ii) all business systems
that are used by the Company; and (iii) all critical business services or
products provided to the Company by its vendors.
Project
The Company has created and is currently implementing a plan intended to
ensure that all of the Company's processes and systems have been assessed,
tested and made Year 2000 compliant. The Company engaged the services of an
information technology consulting firm to assist in the program management of
the Project, and has created a Project Team which includes representatives from
each of the Company's divisions. The Year 2000 Project has been in operation
since 1997 and is proceeding on schedule.
The Project is addressing the impact of Year 2000 on Company products,
internal IT systems, internal non-IT systems, and systems and products of the
Company's suppliers and other third parties. The steps in completing the project
are: (1) identify software systems and products that pose potential Year 2000
issues; (2) assess the Year 2000 readiness of each item identified; (3) develop
and implement programs that will achieve Year 2000 readiness; (4) test to verify
compliance; and (5) develop contingency plans as required.
At December 27, 1998, the Project is in various stages of progress as
discussed below:
o PRI Products: The Company has completed the testing, evaluation and
verification portion of the project for all of its current products. Year
2000 testing for new products is in process and will continue throughout
1999 prior to their being ready for sale to customers.
o Internal IT Systems: The Company has assessed its internal information
technology, or IT, systems, including business information systems,
systems utilized in its manufacturing and service operations, and systems
providing electronic interfaces between the Company and its customers, to
determine whether the Company's operations will be interrupted by Year
2000 issues. The Company has completed approximately 60% of testing and
verifying Year 2000 compliance of its internal IT systems. This segment of
the Project is on schedule and is expected to be completed by June 30,
1999.
o Internal Non-IT Systems: Internal non-IT systems include
telecommunications systems, security systems, HVAC systems and utilities.
Testing and verification of these systems is approximately 50% complete
and is expected to be completed by March 31, 1999.
18
<PAGE>
o Supply Chain: The Company has been working with suppliers and other third
parties upon which it is dependent to determine the extent of their Year
2000 compliance. The Company's inquiry and assessment of their Year 2000
readiness is approximately 80% complete and is expected to be completed by
March 31, 1999.
Costs
Based on its investigation to date, the Company does not expect the total
cost of its Year 2000 Project to have a material adverse effect on the Company's
business or financial results. The estimated total cost of the Year 2000 Project
is approximately $300,000. The total amount charged to expense through December
27, 1998 was approximately $160,000. The remaining amounts are expected to be
spent during 1999.
Risk
The Project is intended to reduce the Company's risk of experiencing
significant Year 2000 problems. Based on the progress that the Company has
made to date in addressing its Year 2000 issues, and its plan and timetable
to complete the Project, the Company does not anticipate significant
interruption in either its products or its normal operations. The risk posed
by Year 2000 issues depends substantially on the number and type of any
instances of non-compliance that have not yet been discovered by the Company.
To the extent that the Company's internal systems, or products and services
obtained from third parties, are found not to be Year 2000 compliant, the
Company could face disruptions in its business which could, in turn, cause
delays in meeting production and shipping goals and could divert significant
management resources.
To minimize potential disruptions, the Company intends to adopt a contingency
plan to address any issues raised during the completion of the assessment and
testing phases of the Project. The Company expects to establish an initial
contingency plan for each Project phase by the end of March 31, 1999. This plan
will be modified as necessary during the final stages of the Project.
If the Company identifies any significant Year 2000 problems late in the
testing schedule, then the Company may not have sufficient time, resources or
ability to remedy the problem. Any unexpected Year 2000 problem could require
the Company to spend significant amounts of money to try to correct the
problem. If any of the Company's products have Year 2000 problems that the
Company cannot quickly correct, then the Company could lose customer goodwill
and could face customer lawsuits.
19
<PAGE>
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits
Exhibit
Number Description
------ -----------
*****2.1 Combination Agreement dated as of November 24, 1998 between PRI
Automation, Inc., 1325949 Ontario Inc. and Promis Systems Corporation
Ltd.
*3.4 Amended and Restated By-Laws of the Company
*3.5 Restated Articles of Organization of the Company
**3.6 Articles of Amendment to the Restated Articles of Organization of the
Company, as approved by stockholders of the Company on April 22, 1997
***3.7 Articles of Amendment to the Restated Articles of Organization of the
Company, as approved by stockholders of the Company on January 16,
1998
****4.1 Rights Agreement dated as of December 9, 1998, between PRI Automation,
Inc. and State Street Bank and Trust Company, as Rights Agent
****4.2 Form of Certificate of Designation of Series A Participating
Cumulative Preferred Stock of PRI Automation, Inc.
****4.3 Form of Rights Certificate
27.1 Financial Data Schedule
27.2 Financial Data Schedule
*****99.1 Form of Plan of Arrangement under Section 192 of the Canada
Business Corporations Act of Promis Systems Corporation Ltd.
*****99.2 Form of Voting and Exchange Trust Agreement among the Company,
1325949 Ontario Inc., Promis Systems Corporation Ltd. and Montreal
Trust Company of Canada, as trustee.
*****99.3 Form of Support Agreement among the Company, 1325949 Ontario Inc.
and Promis Systems Corporation Ltd.
- ---------------
* Incorporated by reference to the similarly numbered Exhibit to the
Company's Registration Statement on Form S-1, File No. 33-81836.
** Incorporated by reference to the similarly numbered Exhibit to the
Company's Quarterly Report Form 10-Q, for the period ended March 30, 1997.
*** Incorporated by reference to the similarly numbered Exhibit to the
Company's Quarterly Report Form 10-Q, for the period ended June 28, 1998.
**** Incorporated by reference to the similarly numbered Exhibit to the
Company's Form 8-K filed on November 25, 1998.
***** Incorporated by reference to the similarly numbered Exhibit to the
Company's Registration Statement on Form S-3, File No 333-69721, as
filed on December 24, 1998.
20
<PAGE>
b) Reports on Form 8-K
The Company filed a Current Report on Form 8-K (the "Form 8-K") with the
Securities and Exchange Commission on November 25, 1998. The Form 8-K reported
that the Company had announced in a November 19, 1998 press release its
financial operating results for the fiscal quarter ended September 30, 1998 and
for the fiscal year then ended. The same Form 8-K reported that the Company had
announced in a November 24, 1998 press release that it had reached a definitive
agreement to acquire Promis Systems Corporation Ltd., a Canadian corporation.
The Company also filed a Current Report on Form 8-K with the Securities and
Exchange Commission on December 10, 1998. This Form 8-K reported that the
Company's Board of Directors, on December 7, 1998, declared a dividend of one
Right for each outstanding share of Common Stock of the Company ("Common
Shares"), to be issued to the holders of record of Common Shares outstanding on
December 9, 1998, and with respect to Common Shares issued thereafter until the
defined Distribution Date and, in certain circumstances, with respect to Common
Shares issued after the Distribution Date. The description and terms of the
Rights are set forth in a Rights Agreement dated as of December 9, 1998 between
the Company and State Street Bank and Trust Company, as Rights Agent.
21
<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.
/s/ STEPHEN D. ALLISON
Date: February 10, 1999 By: _______________________________
Stephen D. Allison
Chief Financial Officer
(Duly Authorized Officer and
Principal Financial and Accounting Officer)
22
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description Page
------ ----------- ----
*****2.1 Combination Agreement dated as of November 24, 1998 between PRI
Automation, Inc., 1325949 Ontario Inc. and Promis Systems Corporation
Ltd.
*3.4 Amended and Restated By-Laws of the Company
*3.5 Restated Articles of Organization of the Company
**3.6 Articles of Amendment to the Restated Articles of Organization of the
Company, as approved by stockholders of the Company on April 22, 1997
***3.7 Articles of Amendment to the Restated Articles of Organization of the
Company, as approved by stockholders of the Company on January 16,
1998
****4.1 Rights Agreement dated as of December 9, 1998, between PRI Automation,
Inc. and State Street Bank and Trust Company, as Rights Agent
****4.2 Form of Certificate of Designation of Series A Participating
Cumulative Preferred Stock of PRI Automation, Inc.
****4.3 Form of Rights Certificate
27.1 Financial Data Schedule
27.2 Financial Data Schedule
*****99.1 Form of Plan of Arrangement under Section 192 of the Canada
Business Corporations Act of Promis Systems Corporation Ltd.
*****99.2 Form of Voting and Exchange Trust Agreement among the Company,
1325949 Ontario Inc., Promis Systems Corporation Ltd. and Montreal
Trust Company of Canada, as trustee.
*****99.3 Form of Support Agreement among the Company, 1325949 Ontario Inc.
and Promis Systems Corporation Ltd.
- ---------------
* Incorporated by reference to the similarly numbered Exhibit to the
Company's Registration Statement on Form S-1, File No. 33-81836.
** Incorporated by reference to the similarly numbered Exhibit to the
Company's Quarterly Report Form 10-Q, for the period ended March 30, 1997.
*** Incorporated by reference to the similarly numbered Exhibit to the
Company's Quarterly Report Form 10-Q, for the period ended June 28, 1998.
**** Incorporated by reference to the similarly numbered Exhibit to the
Company's Form 8-K filed on November 25, 1998.
***** Incorporated by reference to the similarly numbered Exhibit to the
Company's Registration Statement on Form S-3, File No 333-69721, as
filed on December 24, 1998.
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<ARTICLE> 5
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<NAME> PRI AUTOMATION, INC.
<RESTATED>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> DEC-28-1997
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<SALES> 65,133
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<OTHER-EXPENSES> 27,035<F1>
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