<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended: March 31, 1997
OR
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the transition period from ____ to ____ Commission File Number 0-25434
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BROOKS AUTOMATION, INC.
(Exact name of registrant as specified in its charter)
Delaware 04-3040660
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15 Elizabeth Drive
Chelmsford, Massachusetts
(Address of principal executive offices)
01824
(Zip Code)
Registrant's telephone number, including area code: (508) 262-2566
_____________________________________________
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
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As of April 30, 1997, there were outstanding 7,638,190 shares of the
Company's Common Stock, $.01 par value.
This report, including all exhibits and attachments, contains 14 pages.
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BROOKS AUTOMATION, INC.
<TABLE>
<CAPTION>
INDEX
Page
PART 1 FINANCIAL INFORMATION Number
- ------ --------------------- ------
<S> <C> <C>
Item 1 Consolidated Financial Statements:
Consolidated Balance Sheet............................ 3
Consolidated Statement of Income...................... 4
Consolidated Statement of Cash Flows.................. 5
Notes to Consolidated Financial Statements............ 6-7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations................... 8-12
PART II OTHER INFORMATION
- ------- -----------------
Item 6 Exhibits and Reports on Form 8-K...................... 13
Signatures ...................................................... 14
</TABLE>
<PAGE>
BROOKS AUTOMATION, INC.
CONSOLIDATED BALANCE SHEET
(in thousands, except share-related data)
<TABLE>
<CAPTION>
March 31 September 30,
1997 1996
(unaudited)
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 795 $ 2,102
Accounts receivable, net of allowance for doubtful accounts
of $100 and $100, respectively 22,425 24,381
Inventories 18,345 17,803
Prepaid expenses and other current assets 3,790 1,679
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Total current assets 45,355 45,965
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Fixed assets, net 18,595 16,698
Other assets 3,121 2,098
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Total assets $67,071 $64,761
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LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Current portion of long-term liabilities $ 6,309 $ 1,431
Accounts payable 6,984 8,103
Accrued compensation and benefits 2,244 2,719
Accrued expenses and other current liabilities 1,133 1,130
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Total current liabilities 16,670 13,383
Long-term liabilities 687 687
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Total liabilities 17,357 14,070
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Commitments and contingency - -
Stockholders' equity:
Preferred stock, $.01 par value; 1,000,000 shares authorized; none issued
and outstanding - -
Common stock, $.01 par value; 21,500,000 shares authorized;
7,591,459 shares and 7,569,109 shares issued and outstanding 76 76
Additional paid-in capital 34,653 34,335
Cumulative translation adjustment 24 (174)
Deferred compensation (99) (110)
Retained earnings 15,060 16,564
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Total stockholders' equity 49,714 50,691
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Total liabilities and stockholders' equity $67,071 $64,761
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</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
BROOKS AUTOMATION, INC.
CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share data)
(unaudited)
<TABLE>
<CAPTION>
Six months ended Three months ended
March 31, March 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Revenues $32,544 $41,166 $16,433 $22,602
Cost of revenues 22,666 23,665 12,035 12,988
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Gross profit 9,878 17,501 4,398 9,614
------- ------- ------- -------
Operating expenses:
Research and development 6,108 5,735 3,298 3,204
Selling, general and administrative 5,537 5,773 2,983 3,178
------- ------- ------- -------
Total operating expenses 11,645 11,508 6,281 6,382
------- ------- ------- -------
Income (loss) from operations (1,767) 5,993 (1,883) 3,232
------- ------- ------- -------
Interest expense 257 195 186 97
Interest income 16 272 - 112
------- ------- ------- -------
Income (loss) before income taxes (2,008) 6,070 (2,069) 3,247
------- ------- ------- -------
Income tax provision (benefit) (504) 2,113 (525) 1,134
------- ------- ------- -------
Net income (loss) $(1,504) $ 3,957 $(1,544) $ 2,113
======= ======= ======= =======
Net income (loss) per common share $ (.20) $ .48 $ (.20) $ .26
======= ======= ======= =======
Weighted average number of common 7,600 8,254 7,625 8,244
======= ======= ======= =======
and common equivalent shares
</TABLE>
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
BROOKS AUTOMATION, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Six months ended
March 31,
1997 1996
---- ----
<S> <C> <C>
Increase (Decrease) in Cash and Cash Equivalents
Cash flows from operating activities
Net income (loss) $ (1,504) $ 3,957
Adjustments to reconcile net income (loss) to net cash
used in operating activities:
Depreciation and amortization 1,995 1,335
Changes in operating assets and liabilities:
Accounts receivable 1,788 (8,202)
Inventories (648) (6,653)
Prepaid expenses and other current assets (2,125) (279)
Accounts payable (876) 2,253
Accrued compensation and benefits (498) 481
Accrued expenses and other current liabilities 295 (513)
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Net cash used in operating activities (1,573) (7,621)
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Cash flows from investing activities
Purchases of fixed assets (3,489) (3,997)
Increase in other assets (1,260) (80)
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Net cash used in investing activities (4,749) (4,077)
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Cash flows from financing activities
Net borrowings under credit lines 4,956 322
Principal payments on long-term liabilities (216) (234)
Proceeds from issuance of common stock 318 39
Dividends paid - (91)
Purchase and retire treasury stock - (97)
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Net cash provided (used) by financing activities 5,058 (61)
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Effects of exchange rate changes on cash and cash equivalents (43) (12)
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Net decrease in cash and cash equivalents (1,307) (11,771)
Cash and cash equivalents, beginning of period 2,102 15,594
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Cash and cash equivalents, end of period $ 795 $ 3,823
======= =======
</TABLE>
Supplemental Cash Flow Information
During the six months ended March 31, 1996, the Company acquired $583,000 of
fixed assets under capital leases.
The accompanying notes are an integral part of these consolidated financial
statements.
<PAGE>
BROOKS AUTOMATION, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited consolidated financial statements of Brooks
Automation, Inc. and its subsidiaries (the "Company") have been prepared in
accordance with generally accepted accounting principles and with the
instructions to Article 10 of Securities and Exchange Commission Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments, consisting of
normal recurring adjustments, considered necessary for a fair presentation
have been included. The accompanying unaudited consolidated financial
statements should be read in conjunction with the audited consolidated
financial statements of the Company which are included in the Company's
Annual Report on Form 10-K/A for the year ended September 30, 1996.
The results of operations for the six months and three months ended March
31, 1997 are not necessarily indicative of the results that may be expected
for the fiscal year ending September 30, 1997.
2. Inventories
<TABLE>
<CAPTION>
Inventories consist of the following: March 31, September 30,
(in thousands) 1997 1996
---- ----
<S> <C> <C>
Raw materials and
purchased parts $12,654 $12,547
Work-in-process 3,933 2,899
Finished goods 1,758 2,357
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$18,345 $17,803
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</TABLE>
3. Net Income (Loss) Per Common Share
Net income (loss) per common share is determined based on the weighted
average number of common shares and common equivalent shares, if dilutive,
assumed outstanding during the applicable period. Primary and fully-diluted
net income (loss) per share are essentially the same for the periods
presented.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings per Share" (SFAS128),
which establishes standards for computing and presenting earnings per
share. The new standard replaces the presentation of primary earnings per
share prescribed by Accounting Principles Board Opinion No. 15, "Earnings
per Share" (APB15) with a presentation of basic earnings per share and also
requires dual presentation of basic and diluted earnings per share on the
face of the statement of operations for all entities with complex capital
structures. Basic earnings per share excludes dilution and is computed by
dividing income available to common stockholders by the weighted-average
number of common shares outstanding for the period. Diluted earnings per
share is computed similarly to fully diluted earnings per share pursuant to
APB15. The Company will be required to implement SFAS128 in the first
quarter of fiscal 1998 and to restate all prior periods. If the Company had
been required to implement the guidance in SFAS128 during the three months
ended March 31, 1997, the following earnings per share amounts would have
been reported.
<TABLE>
<CAPTION>
Six months ended Three months ended
March 31, March 31,
1997 1996 1997 1996
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income (loss) per common share:
Basic $ (.20) $ .53 $ (.20) $ .28
====== ====== ====== ======
Diluted $ (.20) $ .48 $ (.20) $ .26
====== ====== ====== ======
Weighted average number of common
shares 7,600 7,498 7,625 7,510
===== ===== ===== =====
Weighted average number of common and
dilutive potential common shares 7,600 8,254 7,625 8,244
===== ===== ===== =====
</TABLE>
<PAGE>
BROOKS AUTOMATION, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
4. Related Party and Significant Customer Information
During the six months ended March 31, 1997 and 1996, the Company had
revenues from a related party representing 19% and 17% of revenues,
respectively. During the three months ended March 31, 1997 and 1996, the
Company had revenues from a related party representing 17% and 21% of
revenues, respectively. At March 31, 1997 and 1996, related party accounts
receivable accounted for 14% and 23%, respectively, of accounts receivable.
An executive of this customer is a member of the Company's Board of
Directors.
During the six months ended March 31, 1997, the Company had revenues from
two customers (not related parties) representing 12% and 10% of revenues,
respectively. During the three months ended March 31, 1997, the Company had
revenues from two customers (not related parties) representing 10% and 13%
of revenues, respectively. At March 31, 1997 accounts receivable from one
customer (not a related party) accounted for 16% of accounts receivable.
The Company had no such concentration of accounts receivable at March 31,
1996.
5. Stock Plan
On February 20, 1997, the stockholders of the Company approved an increase
in the number of shares of common stock available for issuance under the
Company's 1993 Non-Employee Director Stock Option Plan from 90,000 shares
to 190,000 shares.
6. Commitments and Contingency
There has been substantial litigation regarding patent and other
intellectual property rights in the semiconductor and related industries.
The Company has received notice from a third-party alleging infringements
of such party's patent rights by certain of the Company's products. The
Company believes the patents claimed may be invalid. In the event of
litigation with respect to this notice, the Company is prepared to
vigorously defend its position. However, because patent litigation can be
extremely expensive and time consuming, the Company may seek to obtain a
license to one or more of the disputed patents. Based upon information
currently available to it, the Company would only do so if license fees
would not be material to the Company's consolidated financial statements.
Currently, the Company does not believe that it is probable that future
events related to this threatened matter will have an adverse effect on the
Company's business; however, there can be no assurance that this will be
the case. The Company is currently unable to reasonably estimate any
possible loss related to this matter.
<PAGE>
BROOKS AUTOMATION, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Brooks Automation, Inc. is a leading, worldwide independent supplier of
substrate handling robots, modules, software controls and cluster tool platforms
to semiconductor and flat panel display manufacturers.
From time to time, information provided by the Company or statements made by its
employees may contain "forward-looking" information which involves risks and
uncertainties. In particular, statements contained in this report which are not
historical facts (including, but not limited to, statements concerning
anticipated revenues, geographical growth rates, anticipated operating expense
levels and the availability of funds to meet cash requirements) are based on the
assumptions and expectations of the Company's management at the time such
statements are made and may be "forward-looking" statements. The Company's
actual future results may differ significantly from those stated in any
"forward-looking" statements. Factors that may cause such differences include,
but are not limited to, the factors discussed below under the caption "Factors
That May Affect Future Results" and the accuracy of the Company's internal
estimates of revenues and operating expense levels.
RESULTS OF OPERATIONS
THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 1997 COMPARED WITH THREE MONTHS AND
SIX MONTHS ENDED MARCH 31, 1996
Revenues
Revenues for the three months ended March 31, 1997 decreased 27.4% or $6.2
million to $16.4 million compared with revenues of $22.6 million in the
comparable prior fiscal period. Revenues for the six months ended March 31, 1997
decreased 20.9% or $8.6 million to $32.5 million compared with revenues of
$41.1 million in the comparable prior fiscal period. Revenues from 200 mm vacuum
central wafer handling systems and components decreased 51.8% or $8.7 million
and 42.1% or $12.3 million, respectively, for the three months and six months
ended March 31, 1997. The decrease in 200 mm product revenues for the three
months ended March 31, 1997 was offset to a lesser extent by increased control
software and service revenues and shipments of 300 mm vacuum central wafer
handling systems and flat panel display ("FPD") substrate handling systems. The
decrease in 200 mm product revenues for the six months ended March 31, 1997 was
offset to a lesser extent by shipments of 300 mm and FPD products. The Company
attributes the lower revenue levels in the first half of fiscal 1997 to a broad
decline in capital spending by the semiconductor manufacturing equipment
industry. As a result, the Company expects that revenues for fiscal 1997 will be
lower than fiscal 1996 revenues.
Foreign revenues for the three months ended March 31, 1997 increased 24.2% to
$4.1 million (25.1% of revenues), including $3.1 million of direct sales to
Asian customers, compared with foreign revenues of $3.3 million (14.6% of
revenues), including $1.9 million of direct sales to Asian customers in the
comparable prior fiscal period. Foreign revenues for the six months ended
March 31, 1997 increased 32.1% to $10.7 million (32.9% of revenues), including
$8.6 million of direct sales to Asian customers, compared with foreign revenues
of $8.1 million (19.7% of revenues), including $5.7 million of direct sales to
Asian customers in the comparable prior fiscal period. The increase in foreign
revenues is attributable to shipments of 200 mm and 300 mm vacuum central wafer
handling systems and FPD systems to customers primarily in Japan and Korea. The
Company expects that foreign revenues will continue to grow throughout fiscal
1997 and to account for a significant portion of total revenues. However, there
can be no assurance that geographical growth rates, if any, in the last half of
fiscal 1997 will be comparable to those achieved in the six months ended
March 31, 1997.
<PAGE>
Gross Profit
Gross profit as a percentage of revenues decreased to 26.8% and 30.4%,
respectively, for the three months and six months ended March 31, 1997 compared
with 42.5% for each of the comparable prior fiscal periods. The decrease in the
gross profit percentage is mainly attributable to underutilization of
manufacturing capacity, higher concentration of shipments of lower gross margin
platforms and systems, increased global support costs and to a lesser extent,
pricing pressure and higher new product introduction costs. Global support
costs, which are included in cost of goods sold, increased 115% to $1.6 million
(9.8% of revenues) for the three months ended March 31, 1997 from $744,000 (3.3%
of revenues) in the comparable prior fiscal period. Global support costs
increased 107% to $2.9 million (8.9% of revenues) for the six months ended March
31, 1997 from $1.4 million (3.4% of revenues) in the comparable prior fiscal
period. The increase in global support costs are indicative of the expansion of
the Company's global support organization in support of the international growth
of its customer base. In future periods, gross profit may be adversely affected
by changes in the mix of products sold, continued pricing pressure or increases
in the cost of goods.
Research and Development
Research and development expenses increased 2.9% to $3.3 million (20.1% of
revenues) for the three months ended March 31, 1997 from $3.2 million (14.2% of
revenues) in the comparable prior fiscal period. Research and development
expenses increased 7.0% to $6.1 million (18.8% of revenues) for the six months
ended March 31, 1997 from $5.7 million (13.9% of revenues) in the comparable
prior fiscal period. During fiscal 1997, the Company has continued to make
investments in research and development to enhance existing and develop new
semiconductor and flat panel display products. As a percentage of revenues, the
increase in research and development expenses reflects the effect on the
Company's cost structure of the lower revenue level in the first half of fiscal
1997. The Company believes that research and development expenditures are
essential to maintaining its competitive position in the semiconductor and flat
panel display fabrication equipment market and expects these expenditure levels
to continue at or above current levels throughout fiscal 1997.
Selling, General and Administrative
Selling, general and administrative expenses decreased 6.3% to $3.0 million
(18.3% of revenues) for the three months ended March 31, 1997 from $3.2 million
(14.2% of revenues) in the comparable prior fiscal period. Selling, general and
administrative expenses decreased 5.2% to $5.5 million (16.9% of revenues) for
the six months ended March 31, 1997 from $5.8 million (14.1% of revenues) in the
comparable prior fiscal period. Selling, general and administrative expenses for
the three months and six months ended March 31, 1996 included merger-related
expenses of $230,000 in connection with the acquisition of Techware Systems
Corporation. There were no such merger-related expenses incurred by the Company
during the first half of fiscal 1997. As a percentage of revenues, the increase
in selling, general and administrative expenses reflects the effect on the
Company's cost structure of the lower revenue level in the first half of fiscal
1997. The Company expects to continue the growth of its worldwide sales and
administrative organizations in fiscal 1997, reflecting the Company's commitment
to further penetrate key international markets.
Interest Expense
Interest expense increased 91.8% or $89,000 to $186,000 (1.1% of revenues) for
the three months ended March 31, 1997 from $97,000 (0.4% of revenues) in the
comparable prior fiscal period. Interest expense increased 31.8% or $62,000 to
$257,000 (0.8% of revenues) for the six months ended March 31, 1997 from
$195,000 (0.5% of revenues) in the comparable prior fiscal period. The increase
in interest expense is primarily due to higher borrowings during the second
quarter of fiscal 1997 compared with the same period of fiscal 1996.
Interest Income
Interest income decreased 94.1% or $256,000 to $16,000 for the six months ended
March 31, 1997 from $272,000 (0.7% of revenues) in the comparable prior fiscal
period. The Company had no interest income for the three months ended March 31,
1997. The decrease in interest income is due to lower cash and investment
balances during the first half of fiscal 1997 compared with the same period of
fiscal 1996.
<PAGE>
BROOKS AUTOMATION, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOREIGN CURRENCY FLUCTUATIONS
The Company's foreign revenues are generally denominated in U.S. dollars.
Accordingly, foreign currency fluctuations have not had a significant impact on
the comparison of the results of operations for the periods presented. The
costs and expenses of the Company's international subsidiaries are generally
denominated in currencies other than the U.S. dollar. However, since the
functional currency of the Company's international subsidiaries is the local
currency, foreign currency translation adjustments are reflected as a component
of stockholders' equity and therefore, foreign currency fluctuations have not
had any impact on the comparison of the results of operations for the periods
presented.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1997, the Company had working capital of $28.7 million compared
with working capital of $32.6 million as of September 30, 1996. During the six
months ended March 31, 1997, the Company used cash in operating activities of
$1.6 million, net of noncash depreciation and amortization, primarily for the
reduction of current liabilities. Decreased levels of accounts receivable
generated cash of $1.8 million during the first half of fiscal 1997. Investing
activities for the six months ended March 31, 1997 consisted of capital
expenditures for CAD/CAM/CAE (computer-aided design, manufacturing and
engineering), test and demonstration equipment, the expansion of the Company's
regional sales and technology center in Canada and lease deposits for new
facilities in Korea. For the remainder of fiscal 1997, the Company expects to
continue to make capital expenditures to support its business; however, the
level of spending will be dependent on various factors, including the growth of
the business and general economic conditions. Financing activities during the
six months ended March 31, 1997 consisted primarily of $5.0 million of net
borrowings under credit lines to fund working capital requirements.
The Company has a $15.0 million unsecured revolving credit facility and a $3.0
million unsecured foreign currency line of credit, both of which expire December
31, 1998. Under the revolving credit facility, advances bear interest, at the
option of the Company, at the prime rate (8.5% at March 31, 1997) or the LIBOR
rate plus 2%. At March 31, 1997, the Company had outstanding $5.3 million
bearing interest at an average rate of 8.0% under the revolving credit facility
and $655,000 denominated in Japanese yen under the foreign currency line of
credit. Foreign currency advances bear interest at the LIBOR rate plus 2% (2.5%
for Japanese yen at March 31, 1997). The terms of the Loan Agreement require
the Company to comply with various covenants, including the maintenance of
specified financial ratios and a minimum tangible capital base, as defined, and
limit the Company's annual level of capital expenditures. At March 31, 1997,
the Company was in compliance with the terms of the agreement or had obtained
the appropriate waiver.
The Company believes that anticipated cash flows from operations, available
funds and borrowings available under the Company's bank lines of credit, will be
adequate to meet the Company's currently planned working capital and capital
expenditure requirements through at least fiscal 1997.
There has been substantial litigation regarding patent and other intellectual
property rights in the semiconductor and related industries. The Company has
received notice from a third-party alleging infringements of such party's patent
rights by certain of the Company's products. The Company believes the patents
claimed may be invalid. In the event of litigation with respect to this claim,
the Company is prepared to vigorously defend its position. However, because
patent litigation can be extremely expensive and time consuming, the Company may
seek to obtain a license to one or more of the disputed patents. Based upon
information currently available to it, the Company would only do so if license
fees would not be material to the Company's consolidated financial statements.
There can be no assurance that the Company would prevail in any litigation
seeking damages or expenses from the Company or to enjoin the Company from
selling its products on the basis of the alleged patent infringement, or that a
license for any of the alleged infringed patents will be available to the
Company on reasonable terms, if at all. Currently, the Company does not believe
that it is probable that future events related to this threatened matter will
have an adverse effect on the Company's business; however, there can be no
assurance that this will be the case. The Company is currently unable to
reasonably estimate any possible loss related to this matter.
<PAGE>
BROOKS AUTOMATION, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FACTORS THAT MAY AFFECT FUTURE RESULTS
Customer Concentration
Relatively few customers account for a substantial portion of the Company's
revenues. Sales to the Company's ten largest customers in the six months ended
March 31, 1997, fiscal 1996 and fiscal 1995 accounted for 68%, 70% and 75% of
revenues, respectively. In the six months ended March 31, 1997 and in fiscal
1996 and fiscal 1995, sales to Lam Research Corporation (a related party), the
Company's largest customer in these periods accounted for 19%, 21% and 21% of
the revenues, respectively. The Company expects that sales to Lam will continue
to represent a significant portion of the Company's revenues for the foreseeable
future. The Company's customers generally do not enter into long-term agreements
obligating them to purchase the Company's products. A reduction or delay in
orders from Lam or other significant customers, including reductions or delays
due to market, economic or competitive conditions in the semiconductor or flat
panel display industries, could have a material adverse effect on the Company's
future financial condition, revenues and operating results.
Dependence on Cyclical Industries
The Company's business is significantly dependent on capital expenditures by
manufacturers of semiconductors. The semiconductor industry is highly cyclical
and historically has experienced periods of oversupply, resulting in
significantly reduced demands for capital equipment, including the products
manufactured and marketed by the Company. The Company believes a broad decline
in capital spending by the semiconductor manufacturing equipment industry
resulted in lower revenues for the first half of fiscal 1997 than in the
comparable period of fiscal 1996. The Company's future financial condition,
revenues and operating results have been and may in the future be materially
adversely affected by semiconductor industry downturns or slowdowns. There can
be no assurance as to when, if ever, capital spending in the semiconductor
manufacturing equipment industry will recover.
Reliance on OEM Customers; Lengthy Sales Cycle
The Company's products are principally sold to OEMs which incorporate the
Company's products into their equipment. Due to the significant capital
commitments usually incurred by semiconductor and flat panel display
manufacturers in their purchase of the OEM's equipment, these manufacturers
demand highly reliable products which require as long as several years for OEMs
to develop. The Company's revenues are therefore primarily dependent upon the
timing and effectiveness of the efforts of its OEM customers in developing and
marketing equipment incorporating the Company's products. There can be no
assurance that any equipment incorporating the Company's products will be
marketed successfully by the Company's customers.
Japanese Market
The Japanese semiconductor and flat panel display process equipment markets are
large and difficult for foreign companies to penetrate. The Company believes
that increasing its penetration of the Japanese market is important to its
business, and that it is currently at a competitive disadvantage to Japanese
suppliers, many of which have long-standing collaborative relationships with
Japanese semiconductor and flat panel display process equipment manufacturers.
Moreover, the Company's ability to compete effectively in the Japanese market
may be limited by the Company's size and its geographic location. Although the
Company intends to expand its direct presence in Japan, there can be no
assurance that the Company will be able to achieve significant sales to, or
compete successfully in, Japan.
Foreign Revenues
The Company does business worldwide, both directly and via sales to United
States-based OEMs who sell such products internationally. In the six months
ended March 31, 1997 and in fiscal 1996 and fiscal 1995, foreign revenues
accounted for 33%, 20% and 12%, respectively, of the Company's revenues. The
Company anticipates that foreign revenues will continue to account for a
significant percentage of revenues, which will result in a significant portion
of the Company's revenues and operating results being subject to risks
associated with foreign revenues, including United States and foreign
regulatory and policy changes, political and economic instability, difficulties
in accounts receivable collection, difficulties in managing representatives, and
foreign currency fluctuations.
<PAGE>
BROOKS AUTOMATION, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Highly Competitive Industry
The markets for the Company's products are highly competitive and subject to
rapid technological change. Many of the Company's current and potential
competitors have substantially greater resources than the Company. The Company
believes that its primary competition is from integrated OEMs that satisfy their
semiconductor and flat panel display handling needs in-house rather than by
purchasing systems or modules from an independent supplier such as the Company.
There can be no assurance that the Company will be successful in selling its
products to OEMs that currently satisfy their substrate handling needs in-house,
regardless of the performance or the price of the Company's products. Moreover,
there can be no assurance that these OEMs will not begin to commercialize their
vacuum handling capabilities. Competitors may develop superior products or
products of similar quality at the same or lower prices. Other technical
innovations may impair the Company's ability to market its products. There can
be no assurance that the Company will be able to compete successfully.
New Products and Technological Change
The semiconductor and flat panel display manufacturing industries have been
characterized by rapid technological change and evolving industry requirements
and standards. The Company believes that these trends will continue into the
foreseeable future. The Company's success will depend upon its ability to
enhance its existing products and to develop new products to meet customer
requirements and to achieve market acceptance. There can be no assurance that
the Company will be successful in introducing products or product enhancements
once developed. Further, there can be no assurance that the Company's products
will not be rendered obsolete by new industry standards or changing technology.
Quarterly Fluctuations in Operating Results and Market Price of Securities
The Company's quarterly operating results may vary significantly from quarter-
to-quarter depending on factors such as economic conditions in the semiconductor
and flat panel display industries, the timing of significant orders and
shipments of its products, changes and delays in product development, new
product introductions by the Company and its competitors, the mix of products
sold by the Company and competitive pricing pressures. Additionally, the
Company's vacuum central handling systems have high selling prices. As a
result, quarterly variations in systems sales will significantly affect the
Company's operating results. Moreover, customers may cancel or reschedule
shipments and production difficulties could delay shipments. These factors
could have a material adverse effect on the Company's future financial
condition, revenues and operating results.
The market price of the Company's securities could also be subject to wide
fluctuations in response to quarter-to-quarter variations in operating results,
changes in earnings estimates by analysts, and market conditions in the
semiconductor industry, as well as general economic conditions and other factors
external to the Company.
<PAGE>
BROOKS AUTOMATION, INC.
PART II: OTHER INFORMATION
Item 4 Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Stockholders on February 20,
1997. At the meeting the stockholders elected the members of the
Board of Directors of the Company. There were no abstentions or
broker nonvotes for such matter. The votes for such matter were as
follows:
<TABLE>
<CAPTION>
Nominee For Withheld
------- --- --------
<S> <C> <C>
Robert J. Therrien 6,242,061 12,730
Norman B. Brooks 6,241,311 13,480
Roger D. Emerick 6,239,916 14,875
Amin J. Khoury 6,240,191 14,600
</TABLE>
In addition, the stockholders approved an amendment to the Company's
1993 Non-Employee Director Stock Option Plan (the "Plan") which
increased the number of shares of Common Stock available for issuance
under the Plan from 90,000 shares to 190,000 shares. There were
5,288,107 votes cast in favor of this amendment, 689,198 votes cast
against it and 39,742 votes abstained. There were 237,744 broker
nonvotes on this matter.
Item 6 (a) Exhibits
(10.22) Loan Agreement First Amendment dated April 30, 1997
(10.23) Revolving Loan Note First Amendment dated April 30, 1997
(10.24) Participation Agreement dated April 30, 1997
(11.01) Computation of per share earnings (incorporated herein by
reference to Note 3 of Notes to Unaudited Consolidated
Financial Statements).
(27.1) Financial Data Schedule
Item 6 (b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
March 31, 1997.
<PAGE>
SIGNATURES
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.
BROOKS AUTOMATION, INC.
May 15, 1997 /s/ Robert J. Therrien
- ------------ ----------------------------------
[Date] Robert J. Therrien
Chief Executive Officer,
President and Treasurer
May 15, 1997 /s/ Stanley D. Piekos
- ------------ ----------------------------------
[Date] Stanley D. Piekos
Vice President - Finance and
Chief Financial Officer
<PAGE>
Exhibit 10.22
LOAN AGREEMENT
--------------
FIRST AMENDMENT
---------------
This First Amendment is made as of April 30, 1997 by and among BROOKS
AUTOMATION, INC., a Delaware corporation, BROOKS AUTOMATION CANADA CORP., a
corporation organized under the laws of British Columbia, Canada, BROOKS
AUTOMATION K.K., a stock corporation organized under the laws of Japan, BROOKS
AUTOMATION LTD., a private company limited by shares organized under the laws of
England, and BROOKS AUTOMATION MASSACHUSETTS SECURITIES CORP., a Massachusetts
corporation (each a "Borrower" and collectively the "Borrowers") and USTRUST, a
Massachusetts Trust Company (the "Bank").
WHEREAS, the Borrowers entered into a Loan Agreement with the Bank dated
June 25, 1996 (the "Loan Agreement") in connection with a $15,000,000 unsecured
revolving line of credit; and
WHEREAS, the Borrowers have requested and the Bank has consented to an
extension of the Termination Date.
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein and of those contained in the
Loan Agreement and of the faithful performance of said covenants and agreements,
the Borrowers and the Bank covenant, agree, represent and warrant as follows:
1. Terms. Terms defined in the Loan Agreement are used herein as so defined
-----
unless otherwise specifically stated herein.
2. Representations and Warranties. In order to induce the Bank to enter
------------------------------
into this First Amendment and to continue the credits provided in the
Loan Agreement as amended hereby, the Borrowers hereby affirm and
restate as of the date thereof and hereof all of the representations and
warranties of the Borrowers contained in the Loan Agreement.
3. Amendment. The definition of "Termination Date" in Section 1 on Page 6
---------
of the Loan Agreement is amended and shall hereafter read as follows:
"Termination Date. December 31, 1998."
----------------
4. Except as specifically amended hereby, all other terms and provisions of
the Loan Agreement shall remain in full force and effect.
<PAGE>
5. This First Amendment shall be binding upon and inure to the benefits of
the parties hereto, their successors and assigns.
EXECUTED as an instrument under seal after the date first above written.
USTRUST BROOKS AUTOMATION, INC.
By: \s\Robert L. Whitmore By: \s\Signature appears here
---------------------------------- ------------------------------
Robert L. Whitmore, Vice President
BROOKS AUTOMATION CANADA
CORP.
By:\s\Signature appears here
---------------------------
BROOKS AUTOMATION K.K.
By:\s\Signature appears here
---------------------------
BROOKS AUTOMATION
MASSACHUSETTS
SECURITIES CORP.
By:\s\Signature appears here
---------------------------
BROOKS AUTOMATION LTD.
By:\s\Signature appears here
---------------------------
<PAGE>
Exhibit 10.23
REVOLVING LOAN NOTE
-------------------
FIRST AMENDMENT
---------------
This First Amendment is made as of April 30, 1997 by and among BROOKS
AUTOMATION, INC., BROOKS AUTOMATION CANADA CORP., BROOKS AUTOMATION K.K., BROOKS
AUTOMATION LTD. and BROOKS AUTOMATION MASSACHUSETTS SECURITIES CORP.
(collectively, the "Borrower") and USTRUST, (the "Lender").
WHEREAS, the Borrower executed and delivered its $15,000,000 Revolving Loan
Note dated June 25, 1996 and payable to the Lender (the "Note") in connection
with that certain Loan Agreement by and between the Borrower and the Lender
dated June 25, 1996 (the "Loan Agreement"); and
WHEREAS, the Borrower and the Lender have herewith executed a First
Amendment to the Loan Agreement which provides for an extension of the Revolving
Loan.
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein and of those contained in the
Note and the Loan Agreement and of the faithful performance of said covenants
and agreements, the Borrower and the Lender covenant, agree, represent and
warrant as follows:
1. Terms. Terms defined in the Note are used herein as so defined unless
-----
otherwise specifically stated herein.
2. Representations and Warranties. In order to induce the Lender to enter
------------------------------
into this First Amendment and to consent to the amendment of the Note,
the Borrower hereby affirms and restates as of the date thereof and
hereof each of the representations, warranties and covenants of the
Borrower contained in the Note and the Loan Agreement.
3. Amendment. The first sentence in the fifth paragraph on page 1 of the
---------
Note is amended and shall hereafter read as follows:
"This Note is issued under and pursuant to the terms of a Loan Agreement
dated as of June 25, 1996, as amended by a First Amendment dated April
30, 1997 (as amended, the "Loan Agreement") between the Borrower and the
Lender to which Loan Agreement reference is hereby made for a statement
of such terms and the respective rights of the Borrower and the holder
of this Note; which Loan Agreement by reference thereto is made a part
hereof to the same and full extent as if set out and incorporated
herein."
<PAGE>
4. Except as specifically amended hereby, all of the terms and provisions
of the Note shall remain in full force and effect.
5. This First Amendment shall be binding upon and inure to the benefit to
the parties hereto, their successors and assigns.
EXECUTED as an instrument under seal after the date first above written.
USTRUST BROOKS AUTOMATION, INC.
By:/s/ Robert L. Whitmore By:/s/ Stanley D. Piekos
---------------------------------- -----------------------------
Robert L. Whitmore, Vice President
BROOKS AUTOMATION CANADA
CORP.
By:/s/ Stanley D. Piekos
-----------------------------
BROOKS AUTOMATION K.K.
By:/s/ Stanley D. Piekos
-----------------------------
BROOKS AUTOMATION
MASSACHUSETTS
SECURITIES CORP.
By:/s/ Stanley D. Piekos
-----------------------------
BROOKS AUTOMATION LTD.
By:/s/ Stanley D. Piekos
-----------------------------
<PAGE>
Exhibit 10.24
PARTICIPATION AGREEMENT
-----------------------
FIRST AMENDMENT
---------------
This First Amendment is made as of April 30, 1997 by and between USTRUST, a
Massachusetts Trust Company ("UST") and CORESTATES BANK, N.A., a national
banking association (the "Participant").
WHEREAS, UST and the Participant entered into a Participation Agreement
dated June 25, 1996 in connection with a $15,000,000 loan facility pursuant to
the terms of a Loan Agreement dated June 25, 1996 (the "Loan Agreement") by and
among UST and Brooks Automation Inc., Brooks Automation Canada Corp., Brooks
Automation K.K., Brooks Automation Ltd. and Brooks Automation Massachusetts
Securities Corp. (collectively, the "Borrower"); and
WHEREAS, the Borrower and UST have herewith executed a First Amendment to
the Loan Agreement which provides for an extension of the Loan.
NOW THEREFORE, in consideration of the mutual covenants, agreements,
representations and warranties contained herein and of those contained in the
Participation Agreement and of the faithful performance of said covenants and
agreements, UST and the Participant covenant, agree, represent and warrant as
follows:
1. Terms. Terms defined in the Participation Agreement are used herein as
-----
so defined unless otherwise specifically stated herein.
2. Representations and Warranties. UST and the Participant each hereby
------------------------------
affirm and restate as of the date thereof and hereof each of their
respective representations, warranties and covenants contained in the
Participation Agreement.
3. Amendment. The next to the last sentence in Section 1 on page 2 of the
---------
Participation Agreement is amended and shall hereafter read as follows:
"The Loan is to continue until the earlier to occur of (a) a Default as
defined in the Loan Agreement or (b) the Termination Date under the Loan
Agreement which is December 31, 1998."
4. Except as specifically amended hereby, all of the terms and provisions
of the Participation Agreement shall remain in full force and effect.
<PAGE>
5. This First Amendment shall be binding upon and inure to the benefit of
the parties hereto, their successors and assigns.
EXECUTED as an instrument under seal as of the date first above written.
USTRUST CORESTATES BANK, N.A.
By:/s/ Robert L. Whitmore By:/s/ R. Thomas Esser
---------------------------------- --------------------------------
Robert L. Whitmore, Vice President R. Thomas Esser, Vice President
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 6-MOS 6-MOS
<FISCAL-YEAR-END> MAR-31-1997 MAR-31-1996
<PERIOD-START> OCT-01-1996 OCT-01-1995
<PERIOD-END> SEP-30-1997 SEP-30-1996
<CASH> 795 3,823
<SECURITIES> 0 0
<RECEIVABLES> 22,425 20,952
<ALLOWANCES> (100) (80)
<INVENTORY> 18,345 19,366
<CURRENT-ASSETS> 45,355 46,092
<PP&E> 25,534 16,603
<DEPRECIATION> 6,939 3,963
<TOTAL-ASSETS> 67,071 59,610
<CURRENT-LIABILITIES> 16,670 12,624
<BONDS> 0 0
0 0
0 0
<COMMON> 76 75
<OTHER-SE> 49,638 46,011
<TOTAL-LIABILITY-AND-EQUITY> 67,071 59,610
<SALES> 32,544 41,166
<TOTAL-REVENUES> 32,544 41,166
<CGS> 22,666 23,665
<TOTAL-COSTS> 22,666 23,665
<OTHER-EXPENSES> 11,645 11,508
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 257 195
<INCOME-PRETAX> (2,008) 6,070
<INCOME-TAX> (504) 2,113
<INCOME-CONTINUING> (1,504) 3,957
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (1,504) 3,957
<EPS-PRIMARY> (0.20) 0.48
<EPS-DILUTED> (0.20) 0.48
</TABLE>
