BROOKS AUTOMATION INC - 10-K Annual Report

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K

(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

FOR FISCAL YEAR ENDED SEPTEMBER 30, 2001

OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)

FOR THE TRANSITION PERIOD FROM TO .

COMMISSION FILE NUMBER: 0-25434
BROOKS AUTOMATION, INC.
(Exact Name of Registrant as Specified in Its Charter)

DELAWARE 04-3040660
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
15 ELIZABETH DRIVE, CHELMSFORD, MASSACHUSETTS 01824
(Address of Principal Executive Offices) (Zip Code)

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

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
COMMON STOCK, $0.01 PAR VALUE
RIGHTS TO PURCHASE COMMON STOCK

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 [ ]

Indicate by check mark if disclosure of delinquent filers pursuant to Rule
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to the
Form 10-K. [ ]

The aggregate market value of the registrant's Common Stock, $0.01 par
value, held by nonaffiliates of the registrant as of November 30, 2001, was
$576,558,732.75 based on the closing price per share of $36.75 on that date on
the Nasdaq Stock Market. As of November 30, 2001, 19,913,483 shares of the
registrant's Common Stock, $0.01 par value, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's Proxy Statement involving the election of
directors, which is expected to be filed within 120 days after the end of the
registrant's fiscal year, are incorporated by reference in Part III of this
Report.
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PART I

ITEM 1. BUSINESS

Brooks Automation, Inc. ("Brooks" or the "Company") is a leading supplier
of integrated tool and factory automation solutions for the global semiconductor
and related industries such as the data storage and flat panel display
manufacturing industries. Brooks has distinguished itself as a technology and
market leader, particularly in the demanding cluster-tool vacuum-processing
environment and in integrated factory automation software applications. The
Company's offerings have grown from individual robots used to transfer
semiconductor wafers in advanced production equipment to fully integrated
automation solutions that control the flow of resources in the factory from
process tools to factory scheduling and dispatching. In 1998, the Company began
an aggressive program of investment and acquisition. By the close of fiscal year
2000, Brooks had emerged as one of the leading suppliers of factory and tool
automation solutions for semiconductor and original equipment manufacturers.
During fiscal 2001, the Company continued its program of strategic investment
and acquisitions designed to broaden the depth and breadth of its offerings and
market position.

INDUSTRY BACKGROUND

Fabrication of semiconductors and flat panel displays requires a large
number of complex process steps in which electrically insulating or conductive
materials are deposited and etched into patterns on the surface of a substrate
or wafer. A simplified production sequence consists of deposition,
photolithography and etch processes. In deposition, one or more layers of a film
of material are deposited on a substrate or wafer. Then, with photolithography,
the desired circuit pattern is imaged on the deposited material. Finally, in the
etch process, the material not covered with the pattern is selectively removed.
Each deposition, photolithography or etch process requires the use of one or
more process tools. This basic sequence is repeated up to 25 times for complex
semiconductor devices. To become fully processed a bare silicon wafer will pass
through as many as 400 or more process steps.

State-of-the-art semiconductor manufacturing creates on-chip features 1,000
times narrower than a human hair, and it must control the dimensions of those
features to within 10%. A fabrication facility, or "fab", contains hundreds of
manufacturing tools. Wafer fabs process wafers in lots of 25. A flat panel
display substrate may contain as few as two laptop computer displays, while a
wafer may contain more than 500 semiconductor chips.

One manufacturing facility could at any moment be processing wafers that
will result in hundreds of different end products. The slightest drift or
malfunction in any of the tools at any of the process steps can cause a process
deviation. A manufacturing problem or deviation in a wafer fabrication plant can
ruin an entire lot of 25 wafers, or multiple lots. One lot of 300mm (i.e. about
12 inches in diameter) wafers can be worth up to $7 million.

As a result, semiconductor manufacturing has become and continues to be
increasingly automated. Today, almost every aspect of processing includes
automation, from material handling to tracking work-in-process to process
control and scheduling. Factory and tool automation directly impacts factory
performance. Factory performance, in turn, drives semiconductor manufacturers'
ability to:

- get to market first when product profitability is greatest; and

- drive manufacturing costs down to remain competitive in the face of
constant downward price pressure.

TOOL AUTOMATION SYSTEMS

Semiconductor and flat panel display substrates must be processed in
ultra-clean environments. This means that manufacturing is either in a clean
room at atmospheric pressure levels, a nitrogen purged atmospheric environment,
or in a vacuum environment. Semiconductor and flat panel display process tools
generally use vacuum environments for deposition and etch processes, and
atmospheric environments for photolithography and other processes. Vacuum
equipment is typically designed as cluster tools and atmospheric equipment is
typically designed as in-line handling systems.

Cluster tool handling systems typically link together multiple processes
such as deposition, etch and heating/cooling of the substrate around a transfer
robot located in a central vacuum chamber. In a cluster tool, a standard
cassette of up to 25 wafers enters the vacuum environment through a vacuum
cassette elevator load lock. The load lock is sealed and pumped to vacuum and
then opened to the central wafer handling system. A central transfer robot then
carries the wafers between the cassette and the different process and
conditioning modules through the central vacuum chamber. After all the wafers
have been processed within the cluster tool and returned to the cassette in the
load lock, the load lock is sealed from the vacuum central chamber and vented to
atmospheric pressure. The cassette of wafers is then removed from the cluster
tool through the load lock. Vacuum cluster tools often employ two load locks,
with the wafers from one load lock being actively transferred, conditioned and
processed while wafers in the other load lock are being brought to or removed
from vacuum conditions.

In-line handling systems often link together multiple processes such as
photo resist processing, using a transfer robot located on an atmospheric
horizontal traverser. In these systems, the process modules are lined up rather
than clustered around an automation handling system. Robotic traversers in these
systems move substrates back and forth across the line of process modules. The
in-line architecture is now emerging in the stripping, etch, cleaning and
chemical mechanical polishing process markets. Some in-line architectures have
their Process Modules loaded directly by an atmospheric robot (chemical
mechanical polishing ("CMP"), track). Others utilize a transport mechanism in a
vacuum load lock to load the process module (etch, rapid thermal processing
("RTP"), ashing).

FACTORY INTERFACE SOLUTIONS

Semiconductor manufacturers with 300mm, as well as advanced 200mm, projects
utilize mini-environment technology for their factories. Mini-environment
technology permits a factory to cost-effectively maintain the wafers in an
environment that is 1,000 times cleaner than one that is typically found in a
surgical operating room. The interface between a mini-environment that surrounds
a tool and the outside factory is a critical element of a factory's total
automation solution. Material handling automation includes sorters (moving
wafers within and between carriers), interbay (moving wafer carriers between
manufacturing areas), intrabay (moving wafer carriers from tool to tool within a
manufacturing area) and tool-level automation. Tool-level automation uses robot
arms or tracks to handle wafers or cassettes of wafers between lot box and
processing chamber, or between consecutive processing chambers.

FACTORY AUTOMATION SOLUTIONS

Driven by increased global competition, shorter product lifecycles, and
downward price pressures, semiconductor manufacturers are turning their
attention to reducing manufacturing costs by improving the operational
efficiencies of their manufacturing processes. This is evidenced by the
continued investment, even in a down market, in 300mm manufacturing facilities
on the basis of cost reduction. It is also supported by the strong push for more
and better-advanced process control, equipment performance tracking and other
optimization and manufacturing control applications.

Semiconductor manufacturers require factory automation systems that
document, control and report on the movement of material through the automated
factory. To achieve this requires a high degree of integration of the many
automation components. For example, the factory systems must simultaneously
setup and run processing equipment automatically, route work-in-process
dynamically based on the current state of the factory, collect process data,
modify process variables, monitor semiconductor processing equipment performance
and control the dispatching of work-in-process, to keep the factory at
acceptable performance levels.

As automation requirements have grown, semiconductor manufacturers'
automation solutions have changed from add-on systems that have evolved over
time, to full solutions that are specified, in detail, at the beginning of the
factory planning process. The increasing requirement for automation makes it
critical to semiconductor manufacturers that the automation systems they select
work together in an integrated fashion at the time of deployment.

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Semiconductor and flat panel display manufacturers use a wide variety of
hardware and software systems to automate and control their operations. To
improve factory performance, they use factory automation systems. Almost all
fabs apply statistical process control to their processes and equipment.
Manufacturing execution system ("MES") applications coordinate and track the
activities of manufacturing resources, including equipment, material, operators,
engineers and software applications. Many fabs use sensors and software
applications to monitor equipment performance, modify process parameters
automatically, provide automated notification of out-of-control conditions and
supply on-line help for troubleshooting. In addition, many fabs use automated
tracking systems to collect large amounts of data about process and product
conditions, equipment maintenance and operation history, lot production history
and yield results. Engineers use applied statistical tools to analyze large
volumes of data from multiple sources in order to identify and correct problems
that negatively impact yields, equipment utilization and throughput. Finally,
capacity planning and scheduling solutions are used to manage all the
constraints in the factory, from limited resources during shift changes to
factors effecting machine efficiency. These solutions help increase throughput,
improve utilization of resources and reduce in-process inventory.

PRODUCTS

TOOL AUTOMATION SYSTEMS

Brooks provides vacuum and atmospheric tool automation systems for the
semiconductor, MEMS (Micro-electronic Machines Systems), opto-electronic, flat
panel display and data storage markets. Brooks has developed comprehensive
product lines that encompass automation modules, handling systems and integrated
software and controls. Brooks uses a common architectural foundation in the
design and production of systems, robots and modules. Shared technologies and
common software controls enable Brooks to respond to changing industry demands,
such as processing larger diameter 300mm semiconductor wafers and the larger,
fourth generation flat panel display substrates.

Brooks provides components to customers who build their own systems and
integrated systems to those customers who do not.

FACTORY INTERFACE SOLUTIONS

Brooks provides mini-environment and factory interface solutions that
support 200mm Standard Mechanical Interface Facilities ("SMIF"), as well as
solutions for 300mm factories, which utilize Brooks' Front Opening Unified Pod
("FOUP") technology. Brooks' Equipment Front-End Modules ("EFEMs") are compact
interface solutions that provide the equipment supplier with an integrated
system that consists of a mini-environment, load port(s), atmospheric robot(s),
tool control and software interface modules.

Brooks offers multi-cassette sorting systems. These sorters are often used
for the random sampling of wafers for statistical process control routines,
which, when coupled with metrology inspection, help assure the quality of the
process tool and the materials used in the fabrication process. Brooks also
provides advanced lot tracking that enables semiconductor manufacturers to
monitor the exact location of every wafer in the factory. Brooks believes that
its factory interface solutions enhance return on investment in new fabs,
retrofit projects, as well as in process tools, by providing integrated
automation solutions to manage the complex logistics of advanced semiconductor
factories.

FACTORY AUTOMATION SOLUTIONS

Electronics manufacturing often requires software systems for decision
support (reporting, planning, scheduling, dispatching, simulation, process
development), tracking/management (work in process ("WIP"), durables (i.e.
reticles and carriers), equipment, operators, recipes, maintenance, inventory),
equipment or cell control (process equipment, measurement equipment, material
handling systems, storage systems) and analysis (statistical process control,
advanced process control, engineering data analysis, yield management, equipment
performance tracking). As a result of the complexity of their processes and
intolerance of even minor deviations from those processes, semiconductor fabs
lead the way in driving the requirements for

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manufacturing automation software systems, often referred to as computer
integrated manufacturing ("CIM") system. The heart of this system is the MES.

Brooks offers a CIM solution that provides a unifying framework for factory
automation. Brooks' MES software provides decision support and WIP tracking and
management either stand-alone or as part of the CIM solution. Brooks' equipment
integration products connect the manufacturing equipment to the advanced process
control, factory automation, and other control applications. Brooks' solutions
provide integrated applications for material control and durables management,
WIP tracking and process optimization, maintenance management and equipment
performance tracking, advanced process control and process optimization, factory
scheduling and real-time dispatching, recipe management and engineering data
collection, and engineering data analysis and statistical process control. These
applications integrate, coordinate and track the activities of manufacturing
resources, including equipment, material, operators, engineers and software
applications.

Brooks' solutions may be both process-specific and facility-wide. Brooks
may deliver these solutions as a stand-alone product or as part of an
integrated, CIM solution including systems integration services. Brooks'
offerings address the automation software requirements for hi-tech manufacturing
markets including semiconductor fab assembly and test areas, liquid crystal
display, or LCD, MEMS, opto-electronics and data storage markets.

The following table lists the Company's primary product offerings within
each of the markets it serves:

CUSTOMERS

Brooks' customers for tool automation systems are primarily original
equipment manufacturers ("OEMs") and semiconductor manufacturers who are
constructing new and/or retrofitting existing vacuum and atmospheric automation
process equipment or developing advanced process equipment for internal use.
Brooks' customers for factory automation software and factory interface
solutions are primarily semiconductor manufacturers. The Company's customers are
primarily located in the United States, Japan, South Korea, Europe, Taiwan and
Southeast Asia. Brooks markets its developing family of atmospheric central
wafer handling equipment to its existing customers in the vacuum and flat panel
display markets and to potential new customers.

Relatively few customers account for a substantial portion of Brooks'
revenues. In fiscal 2000 and fiscal 1999, Lam Research Corporation ("Lam") was
the Company's largest customer. In fiscal 2001, Novellus Systems, Inc.
("Novellus") was the Company's largest customer. Sales to the Company's ten
largest customers, Novellus and Lam, as a percentage of total sales, are as
follows:

A reduction or delay in orders from Novellus, Lam or other significant
customers could have a material adverse effect on Brooks' results of operations.
See Note 11, "Segment and Geographic Information," of the consolidated financial
statements for further discussion of the Company's sales by geographic region
and revenues, income and assets by financial reporting segment.

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Brooks derives a significant amount of its total revenues from direct
foreign sales. Revenues outside the United States were approximately 50%, 48%
and 43% of total revenues for the years ended September 30, 2001, 2000 and 1999,
respectively.

The Company expects foreign revenues to continue to represent a significant
percentage of total revenues in the foreseeable future. Brooks cannot guarantee
that geographical revenue rates in the foreseeable future will be comparable to
those achieved in recent years. See "Factors That May Affect Future
Results -- Brooks' international business operations expose it to a number of
difficulties in coordinating its activities abroad and in dealing with multiple
regulatory environments" for a discussion of additional factors which could
adversely affect foreign revenues."

MARKETING, SALES AND CUSTOMER SUPPORT

Brooks markets and sells its tool and factory automation hardware and
software solutions for factory performance optimization in the United States,
Europe, Japan, South Korea, Southeast Asia and Taiwan through its direct sales
and marketing organization. The selling process for Brooks' products is often
multilevel, involving a team comprised of individuals from sales, marketing,
engineering, operations and senior management. Each significant customer is
assigned a team that engages the customer at different organization levels to
provide planning and product customization and to assure open communication and
support. Brooks also utilizes a network of value-added integration partners to
provide implementation and integration services for its factory automation
software products.

The Company's marketing activities also include participation in trade
shows, publication of articles in trade journals, seminars, participation in
industry forums and distribution of sales literature. To enhance this
communication and support, particularly with its international customers, Brooks
maintains technology and implementation centers in the United States, British
Columbia, Japan, South Korea, Taiwan, Singapore, Malaysia, the United Kingdom
and Germany. These facilities, together with Brooks' headquarters, maintain
demonstration equipment for customers to evaluate. Customers are also encouraged
to discuss the features and applications of Brooks' demonstration equipment with
Brooks' engineers located at these facilities. The Company maintains a number of
regional sales and service centers throughout the world.

In 1998, Brooks developed a new sales and marketing tool, a process tool
throughput simulator, to enable the evaluation of various wafer handling system
configurations to identify the preferred tool configuration for a specific
application. This tool simulates the movement of wafers with execution times,
scheduling algorithms, and flow sequences similar to those of actual process
tools and outputs this information visually. This tool is capable of comparing
multiple tool configurations simultaneously for preferred fit comparisons.

Brooks provides support to its customers with:

- Telephone technical support access 24 hours a day, 365 days a year;

- Direct training programs; and

- Operating manuals and other technical support information for Brooks'
products.

The Company maintains spare parts inventories in most of its locations to
enable its personnel to serve Brooks' customers and repair their products more
efficiently.

COMPETITION

The semiconductor and flat panel display process equipment manufacturing
industries are highly competitive and characterized by continual change and
improvements in technology. Although other independent companies sell vacuum and
atmospheric wafer and flat panel display substrate handling automation systems
and vacuum transfer robots to original equipment manufacturers, Brooks believes
that its primary competition is from the larger, integrated semiconductor and
flat panel display original equipment manufacturers that satisfy their substrate
handling needs in-house rather than by purchasing handling systems or modules
from an independent source, such as Brooks. Such original equipment
manufacturers comprise the majority of Brooks' current and potential customers
in this segment. Many of the companies in these
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industries have significantly greater research and development, clean room
manufacturing, marketing and financial resources than Brooks. Applied Materials,
Inc., the leading process equipment original equipment manufacturer, develops
and manufactures its own central wafer handling systems and modules.

Brooks believes its customers will only purchase Brooks' products if Brooks
can demonstrate improved product performance, as measured by throughput,
reliability, contamination control and accuracy, at an acceptable price. Brooks
believes that it competes favorably with original equipment manufacturers and
other independent suppliers with respect to all of these factors. However,
Brooks cannot guarantee that it will be successful in selling its products to
original equipment manufacturers that currently satisfy their wafer and flat
panel handling needs in-house or from other independent suppliers, regardless of
the performance or the price of Brooks' products.

Brooks' sale of its products for the flat panel display process equipment
market is heavily dependent upon its penetration of the Japanese market. Brooks
continues to expand its presence in the Japanese semiconductor process equipment
market. In addressing the Japanese markets, Brooks may be at a competitive
disadvantage to Japanese suppliers.

Brooks believes that the competitive factors in the factory interface
solutions market are technical and technological capabilities, reliability,
price/performance, ease of integration and global sales and support capability.
Brooks believes that its solutions compete favorably with respect to all these
factors. In this market, Brooks encounters direct competition from Asyst, Rorze,
Fortrend, Newport, TDK, Yasakawa and Hirata. Some of these competitors have
extensive engineering, manufacturing and marketing capabilities.

Brooks believes that the primary competitive factors in the end-user market
for factory automation software and process control solutions software are
product functionality, degree of integration, price/performance, ease of
implementation and installation, hardware and software platform compatibility,
costs to support and maintain, vendor reputation and financial stability. Brooks
believes its products currently compete favorably with other systems on the
primary factors listed above. Brooks also believes that the relative importance
of these competitive factors may change over time. Brooks experiences direct
competition in the semiconductor factory automation market industry from various
competitors, including Applied Materials-Consilium, IBM, Si-view, Compaq, TRW,
Camstar and numerous small independent software companies.

RESEARCH AND DEVELOPMENT

Brooks' research and development efforts are focused on developing new
products for the semiconductor, data storage and flat panel display process
equipment industries and further enhancing the functionality, degree of
integration, reliability and performance of existing products. Brooks'
engineering, marketing, operations and management personnel have developed close
collaborative relationships with many of their counterparts in customer
organizations and have used these relationships to identify market demands and
target Brooks' research and development to meet those demands. Brooks' current
research and development efforts include the continued development and
enhancement of Brooks' semiconductor and flat panel display products, including
Gemini Express vacuum central wafer handling systems and modules, fourth
generation flat panel display substrate handling systems and modules, 300mm
loadport modules, integrated equipment front-end modules, atmospheric handling
systems and modules, manufacturing execution system, station control software,
advanced tool control solutions, advanced process control solutions, factory
scheduling and dispatching solutions and material handling control software.
Furthermore, the Company is investing in a common information systems framework
to provide ease of integration across these applications. The Company also
maintains relationships with integrated circuit manufacturers and equipment
suppliers to define hardware and software solutions for equipment front-end
automation, contamination control, logistic management, material tracking and
equipment integration.

MANUFACTURING

Brooks' manufacturing operations consist primarily of product assembly,
integration, and testing. Brooks has adopted stringent quality assurance
procedures that include standard design practices, component selection
procedures, vendor control procedures and comprehensive reliability testing and
analysis to assure
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the performance of its products. The Company's facilities in Chelmsford,
Massachusetts; Jena, Germany; Kiheung, Korea and Livingston, Scotland are ISO
9001 certified.

Brooks employs a just-in-time manufacturing strategy for a large portion of
its manufacturing process. Brooks believes that this strategy, coupled with the
outsourcing of non-critical subassemblies, reduces fixed operating costs,
improves working capital efficiency, reduces manufacturing cycle times and
improves flexibility to rapidly adjust its production capacities. While Brooks
often uses single source suppliers for certain key components and common
assemblies to achieve quality control and the benefits of economies of scale,
Brooks believes that these parts and materials are readily available from other
supply sources. Brooks also believes that its software development and
manufacturing facilities are more than adequate to service foreseeable needs.

PATENTS AND PROPRIETARY RIGHTS

Brooks relies upon trade secret laws, confidentiality procedures, patents,
copyrights, trademarks and licensing agreements to protect its technology. Due
to the rapid technological change that characterizes the semiconductor and flat
panel display process equipment industries, Brooks believes that the improvement
of existing technology, reliance upon trade secrets and unpatented proprietary
know-how and the development of new products may be more important than patent
protection in establishing and maintaining a competitive advantage. To protect
trade secrets and know-how, it is Brooks' policy to require all technical and
management personnel to enter into nondisclosure agreements. Brooks cannot
guarantee that these efforts will meaningfully protect its trade secrets.

Brooks has obtained patents and will continue to make efforts to obtain
patents, when available, in connection with its product development program.
Brooks cannot guarantee that any patent obtained will provide protection or be
of commercial benefit to Brooks. Despite these efforts, others may independently
develop substantially equivalent proprietary information and techniques. As of
September 30, 2001, Brooks had obtained 116 United States patents and had 34
United States patent applications pending on its behalf. In addition, Brooks had
obtained 152 foreign patents and had 199 foreign patent applications pending on
its behalf. Brooks' United States patents expire at various times from May 2004
to July 2019. Brooks cannot guarantee that its pending patent applications or
any future applications will be approved, or that any patents will not be
challenged by third parties. Others may have filed and in the future may file
patent applications that are similar or identical to those of Brooks. These
patent applications may have priority over patent applications filed by Brooks.

There has been substantial litigation regarding patent and other
intellectual property rights in the semiconductor related industries. Brooks has
in the past been, and may in the future be, notified that it may be infringing
intellectual property rights possessed by other third parties. Any patent
litigation would be costly and could divert the efforts and attention of Brooks'
management and technical personnel, which could have a material adverse effect
on Brooks' business, financial condition and results of operations. Brooks
cannot guarantee that infringement claims by third parties or other claims for
indemnification by customers or end users of Brooks' products resulting from
infringement claims will not be asserted in the future or that such assertions,
if proven to be true, will not materially and adversely affect Brooks' business,
financial condition and results of operations. If any such claims are asserted
against Brooks' intellectual property rights, the Company may seek to enter into
a royalty or licensing arrangement. Brooks cannot guarantee, however, that a
license will be available on reasonable terms or at all. Brooks could decide in
the alternative to resort to litigation to challenge such claims or to design
around the patented technology. Such actions could be costly and could divert
the efforts and attention of Brooks' management and technical personnel, which
could materially and adversely affect Brooks' business, financial condition and
results of operations.

Brooks had received notice from General Signal Corporation alleging
infringement of patents then owned by General Signal, relating to cluster tool
architecture, by certain of Brooks' products. The notification advised Brooks
that General Signal was attempting to enforce its rights to those patents in
litigation against Applied Materials. According to a press release issued by
Applied Materials in November 1997, Applied Materials settled its litigation
with General Signal by acquiring ownership of five General Signal patents.
Although not

8

verified, these five patents would appear to be the patents referred to by
General Signal in its prior notice to Brooks. Applied Materials has not
contacted Brooks regarding these patents.

On October 10, 2001, the United States Court of Appeals for the Federal
Circuit ("CAFC") issued an order in Asyst Technologies, Inc. v. Empak, Inc., and
Emtrak, Inc., Jenoptik AG, Jenoptik Infab, Inc., Jenoptik GMBH and Infab U.S.
Operations, Inc,. and Meissner & Wurst (the "Asyst litigation"), that may
ultimately affect certain products sold by Brooks. The product that may be
affected is a transport system known as IridNet, which was acquired by Brooks as
part of the purchase of the assets of the Infab division of Jenoptik AG on
September 30, 1999. Asyst had filed suit against Jenoptik AG and other parties
(collectively the "defendants") in the Northern District of California charging
the defendants with infringing Asyst's U.S. Patent Nos. 4,974,166 and 5,097,421.
The District Court granted certain motions for summary judgment in favor of the
defendants and Asyst appealed. The order from the CAFC reversed the grant of
summary judgment and remanded the case to the District Court for further
proceedings regarding claim construction, infringement and invalidity of the
Asyst patents. Brooks has received notice that Asyst may amend its complaint to
name Brooks as an additional defendant. Based on Brooks' investigation of
Asyst's allegations, Brooks does not believe it is infringing any claims of
Asyst's patents. Brooks intends to continue to support Jenoptik to argue
vigorously, among other things, the position that the IridNet system does not
infringe the Asyst patents. If Asyst prevails in its case, Asyst may seek to
prohibit Brooks from developing, marketing and using the IridNet product without
a license. Brooks cannot guarantee that a license will be available to it on
reasonable terms, if at all. If a license from Asyst is not available Brooks
could be forced to incur substantial costs to reengineer the IridNet product,
which could diminish its value. In any case, Brooks may face litigation with
Asyst. Jenoptik has indemnified Brooks for losses Brooks may incur in this
action.

BACKLOG

Backlog for Brooks' products as of September 30, 2001, totaled $102.7
million. Backlog consists of purchase orders for which a customer has scheduled
delivery within the next 12 months. Backlog for the Company's tool automation
systems segment, factory interface solutions segment and factory automation
solutions segment was $37.4 million, $24.5 million and $40.8 million,
respectively, at September 30, 2001. Orders included in the backlog may be
cancelled or rescheduled by customers without significant penalty. Backlog as of
any particular date should not be relied upon as indicative of Brooks' revenues
for any future period. A substantial percentage of current business generates no
backlog because the Company delivers its products and services in the same
period in which the order is received.

EMPLOYEES

At September 30, 2001, Brooks had approximately 1,900 employees. Brooks
believes its future success will depend in large part on its ability to attract
and retain highly skilled employees. Approximately 140 employees in the
Company's Jena, Germany facility are covered by a collective bargaining
agreement. Brooks considers its relationships with its employees to be good.

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ITEM 2. PROPERTIES

Brooks corporate headquarters and primary manufacturing facility is located
in two buildings, comprising the Brooks campus, in Chelmsford, Massachusetts,
which the Company purchased in January 2001. This purchase included a third
building located at the same campus. The Company currently leases the third
building to an unrelated party. The term of that lease concludes in November
2002. Prior to its purchase, the Company had leased its facilities in
Chelmsford. Brooks maintains additional manufacturing facilities which are
described in the table below:

The Company's tool automation systems and factory interface solutions
segments utilize the manufacturing facilities in Massachusetts, Arizona,
California, Colorado, Germany, Korea and Canada. The Company's factory
automation solutions segment utilizes the manufacturing facilities in Arizona,
Utah, and Chelmsford.

Brooks maintains additional sales and support service offices in Florida,
Indiana, Massachusetts, Michigan, New Mexico, New York, Oregon, Pennsylvania,
Texas, France, Germany, Malaysia, Singapore, Japan, South Korea, Taiwan, China,
and the United Kingdom. Training is also provided at the majority of these
sites. The sales, service and training locations serve all of the Company's
segments.

The Company is in the process of renegotiating its lease in San Jose. The
operations in the Burbank facility are expected to relocate to Sylmar. The Tempe
facility operations are transferring to Valencia, California, the facility
occupied by General Precision Inc., which the Company acquired on October 5,
2001, upon the expiration of the Tempe lease.

ITEM 3. LEGAL PROCEEDINGS

Brooks is not a party to any material pending legal proceedings. See
"Patents and Proprietary Rights," in Part I, Item 1, "Business," for a
description of certain potential patent disputes.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

During the quarter ended September 30, 2001, no matters were submitted to a
vote of security holders through the solicitation of proxies or otherwise.

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PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

The Company's common stock is traded on the Nasdaq National Market under
the symbol "BRKS". The following table sets forth, for the periods indicated,
the high and low close prices per share of the Company's common stock, as
reported by the Nasdaq National Market:

NUMBER OF HOLDERS

As of November 28, 2001, there were 364 holders on record of the Company's
Common Stock.

DIVIDEND POLICY

Other than dividends paid by one of our subsidiaries prior to its
acquisition by Brooks, Brooks has never paid or declared any cash dividends on
its capital stock and does not plan to pay any cash dividends in the foreseeable
future. Brooks' current policy is to retain all of its earnings to finance
future growth.

ISSUANCE OF UNREGISTERED COMMON STOCK

On February 16, 2001, the Company acquired SEMY Engineering, Inc. in
exchange for cash and 73,243 shares of Brooks common stock. The common stock
issued in this transaction was sold in reliance upon the exemption from
registration set forth in Section 4(2) of the Securities Act relating to sales
by an issuer not involving any public offering. The shares issued in this
transaction have been registered pursuant to an effective registration statement
on Form S-3.

On May 15, 2001, the Company acquired SimCon N.V. in exchange for cash and
13,741 shares of Brooks common stock. Under the acquisition agreement, Brooks is
also obligated to make a future payment of Brooks common stock worth $750,000 on
May 15, 2002. The common stock issued and to be issued in the future in this
transaction was sold in reliance upon the exemptions from registration set forth
in Section 4(2) of the Securities Act relating to sales by an issuer not
involving any public offering and Regulation S promulgated thereunder. The
shares issued in this transaction have been registered pursuant to an effective
registration statement on Form S-3.

On June 25, 2001, the Company completed the acquisition of CCS Technology,
Inc. in exchange for cash and 78,475 shares of Brooks common stock. The common
stock issued in this transaction was sold in reliance upon the exemptions from
registration set forth in Section 4(2) of the Securities Act relating to sales
by an issuer not involving any public offering. The shares issued in this
transaction have been registered pursuant to an effective registration statement
on Form S-3.

On June 26, 2001, the Company completed the acquisition of KLA-Tencor,
Inc.'s e-Diagnostics product business in exchange for a note payable and 331,153
shares of Brooks common stock. At the option of Brooks, the note payable may be
paid in cash or in an equivalent amount of Brooks common stock. There is also
the

11

potential for additional purchase consideration of up to $8.0 million in the
aggregate, contingent upon meeting certain performance objectives. At the option
of Brooks, any additional purchase price consideration may be paid in an
equivalent amount of Brooks common stock. The common stock issued and that may
be issued in the future in this transaction was sold in reliance upon the
exemption from registration set forth in Section 4(2) of the Securities Act
relating to sales by an issuer not involving any public offering. The shares
issued in this transaction have been registered pursuant to an effective
registration statement on Form S-3.

On July 12, 2001, the Company completed the acquisition of Progressive
Technologies, Inc. in exchange for 715,004 shares of Brooks common stock. The
common stock issued in this transaction was sold in reliance upon the exemptions
from registration set forth in Section 4(2) of the Securities Act relating to
sales by an issuer not involving any public offering. The shares issued in this
transaction have been registered pursuant to a registration statement on Form
S-3 which has not been declared effective as of the date of this report.

12

ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data set forth below should be read in
conjunction with our consolidated financial statements and notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations," appearing elsewhere in this report.

- ---------------

(1) Amounts have been restated to reflect the acquisition of Progressive
Technologies, Inc. in a pooling of interests transaction effective July 12,
2001.

(2) Amounts include results of operations of the Infab Division of Jenoptik AG
(acquired September 30, 1999); Auto-Soft Corporation and AutoSimulations,
Inc. (acquired January 6, 2000) and MiTeX Solutions (acquired June 23, 2000)
for the periods subsequent to their respective acquisitions.

(3) Amounts include results of operations of Domain Manufacturing Corporation
(acquired June 30, 1999) and Hanyon Technology, Inc. (acquired April 21,
1999) for the periods subsequent to their respective acquisitions.

(4) Amounts include results of operations of SEMY Engineering, Inc. (acquired
February 16, 2001), the KLA e-Diagnostics product business (acquired June
26, 2001), CCS Technology, Inc. (acquired June 25, 2001) and SimCon N.V.
(acquired May 15, 2001) for the periods subsequent to their respective
acquisitions.

14

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

Certain statements in this Annual Report on Form 10-K constitute
"forward-looking statements" which involve known risks, uncertainties, and other
factors which may cause the actual results, performance, or achievements of
Brooks to be materially different from any future results, performance, or
achievements expressed or implied by such forward-looking statements. Such
factors include the factors that may affect future results set forth in
Management's Discussion and Analysis of Financial Condition and Results of
Operations, which is included in this report. Precautionary statements made
herein should be read as being applicable to all related forward-looking
statements whenever they appear in this report.

OVERVIEW

Brooks Automation, Inc. ("Brooks" or the "Company") is a leading supplier
of integrated tool and factory automation solutions for the global semiconductor
and related industries, such as the data storage and flat panel display
manufacturing industries. Brooks has distinguished itself as a technology and
market leader, particularly in the demanding cluster-tool vacuum-processing
environment and in integrated factory automation software applications. The
Company's offerings have grown from individual robots used to transfer
semiconductor wafers in advanced production equipment to fully integrated
automation solutions that control the flow of resources in the factory from
process tools to factory scheduling and dispatching. In 1998, the Company began
an aggressive program of investment and acquisition. By the close of fiscal year
2000, Brooks had emerged as one of the leading suppliers of factory and tool
automation solutions for semiconductor and original equipment manufacturers.
During the fiscal year 2001, the Company continued its program of strategic
investment and acquisitions designed to broaden the depth and breadth of its
offerings and market position.

The Company's revenues are generally distributed equally between the United
States and foreign countries. The Company's foreign sales have occurred
primarily in Europe, Japan, Korea, Taiwan and Singapore.

BASIS OF PRESENTATION

On July 12, 2001, the Company acquired Progressive Technologies, Inc.
("PTI") in a transaction accounted for as a pooling of interests initiated prior
to June 30, 2001. Accordingly, the Company's consolidated financial statements
and notes thereto have been restated to include the financial position and
results of operations of PTI for all periods prior to the acquisition. PTI is
engaged in the development, production and distribution of air-flow regulation
systems for clean room and process equipment in the semiconductor industry.
Prior to its acquisition by the Company, PTI's fiscal year-end was December 31.
Accordingly, the Company's consolidated balance sheet as of September 30, 2000,
includes PTI's balance sheet as of December 31, 2000, and the Company's
consolidated statements of operations for the years ended September 30, 2000 and
1999 include PTI's results of operations for the years ended December 31, 2000
and 1999, respectively. As a result of conforming dissimilar year-ends, PTI's
results of operations for the three months ended December 31, 2000, are included
in both of the Company's fiscal years 2001 and 2000. An amount equal to PTI's
net income attributable to common stockholders for the three months ended
December 31, 2000 was eliminated from consolidated accumulated deficit for the
year ended September 30, 2001. PTI's revenues, net income and net income
attributable to common stockholders for that quarter were $3.8 million, $536,000
and $506,000, respectively.

On June 26, 2001, the Company completed the purchase of KLA-Tencor, Inc.'s
e-Diagnostics product business ("e-Diagnostics"). The e-Diagnostics programs
enable service and support teams to remotely access their tools in customer fabs
in real-time to diagnose and resolve problems quickly and cost-effectively. On
June 25, 2001, the Company acquired CCS Technology, Inc. ("CCST"), a supplier of
300mm automation test and certification software located in Williston, Vermont.
On May 15, 2001, the Company acquired SimCon N.V. ("SimCon"), a value-added
reseller for the Company's simulation, scheduling, production analysis and
dispatching software headquartered in Belgium. On February 16, 2001, the Company
acquired SEMY Engineering, Inc. ("SEMY"), a provider of advanced process and
equipment control systems for the

15

semiconductor industry located in Phoenix, Arizona. On December 13, 2000, the
Company acquired substantially all of the assets of a scheduling and simulation
software and service distributor in Japan. These transactions were recorded
using the purchase method of accounting in accordance with Accounting Principles
Board Opinion No. 16, "Business Combinations" ("APB 16"). Accordingly, the
Company's Consolidated Statements of Operations and of Cash Flows for the year
ended September 30, 2001, include the results of these acquired entities for the
periods subsequent to their respective acquisitions.

On May 5, 2000, the Company completed the acquisition of Irvine Optical
Company LLC ("Irvine Optical") in a transaction accounted for as a pooling of
interests. Accordingly, the results of operations and financial position of
Irvine Optical are included in the Company's consolidated results for all
periods presented. Prior to its acquisition by the Company, Irvine Optical's
fiscal year-end was December 31. As a result of conforming dissimilar year-ends,
Irvine Optical's results of operations for the three months ended December 31,
1999, are included in both of the Company's fiscal years 2000 and 1999. An
amount equal to Irvine Optical's net income for the three months ended December
31, 1999, was eliminated from consolidated accumulated deficit for the year
ended September 30, 2000. Irvine Optical's revenues and net income for that
quarter were $4.1 million and $0.1 million, respectively.

The Company completed two acquisitions during fiscal year 2000 which were
accounted for using the purchase method of accounting in accordance with APB 16:
MiTeX Solutions ("MiTeX") on June 23, 2000 and Auto-Soft Corporation ("ASC") and
AutoSimulations, Inc. ("ASI") on January 6, 2000. The Company's Consolidated
Statements of Operations and of Cash Flows include the results of these entities
for the periods subsequent to their respective acquisitions.

On August 31, 1999, the Company completed the acquisition of Smart Machines
Inc. ("Smart Machines"). The acquisition was accounted for as a pooling of
interests. Accordingly, the results of operations and financial position of
Smart Machines are included in the Company's consolidated results for all
periods presented.

The Company completed several acquisitions during the year ended September
30, 1999, which were accounted for using the purchase method of accounting in
accordance with APB 16: the Infab Division ("Infab") of Jenoptik AG on September
30, 1999; Domain Manufacturing Corporation ("Domain") on June 30, 1999 and
Hanyon Technology, Inc. ("Hanyon") on April 21, 1999. Accordingly, the Company's
Consolidated Statements of Operations and of Cash Flows include the results of
these acquired entities for all periods subsequent to their respective
acquisitions.

In June 1999, the Company formed a joint venture in Korea. This joint
venture is 70% owned by the Company and 30% owned by third parties unaffiliated
with the Company. The Company consolidates fully the financial position and
results of operations of the joint venture and accounts for the minority
interest in the consolidated financial statements.

RECENT DEVELOPMENTS

On December 13, 2001, the Company acquired the Automation Systems Group of
Zygo Corporation in exchange for approximately $11 million of cash, net of
closing adjustments aggregating approximately $2 million. The Automation Systems
Group, located in Florida, is a manufacturer of reticle automation systems,
including reticle sorters, reticle macro inspection systems and reticle handling
solutions for the semiconductor industry. The transaction will be accounted for
as a purchase of assets.

On October 23, 2001, the Company entered into an Agreement and Plan of
Merger (the "Merger Agreement") to acquire PRI Automation, Inc. ("PRI").
Pursuant to the Merger Agreement and subject to the terms and conditions
contained therein, holders of each share of PRI common stock will receive 0.52
shares of the Company's common stock.

The Merger, which is expected to close in the first calendar quarter of
2002, is contingent upon the fulfillment of certain conditions as provided in
the Merger Agreement including, but not limited to, all required regulatory
approvals, the approval of the Merger by the stockholders of PRI and the
approval of the issuance of the Company's common stock in the Merger by the
stockholders of the Company.
16

PRI supplies advanced factory automation systems, software, and services
that optimize the productivity of semiconductor and precision electronics
manufacturers, as well as OEM process tool manufacturers.

On October 9, 2001, the Company acquired 90% of the capital stock of
Tec-Sem A.G., a Swiss company ("Tec-Sem") in exchange for $12.9 million in cash
and 131,750 shares of Brooks common stock, which had a value of approximately $4
million at the time of issuance, subject to post-closing adjustments. At the
same time, the Company obtained an option to acquire, and one of the selling
stockholders was given a put to sell, the remaining 10% of the stock of Tec-Sem
for $1.1 million in cash and 23,250 shares of Brooks common stock. The Company
also made stock grants to certain key non-owner employees of Tec-Sem. Tec-Sem is
a manufacturer of bare reticle stockers, tool buffers and batch transfer systems
for the semiconductor industry. The transaction will be accounted for as a
purchase of assets.

On October 5, 2001, the Company acquired substantially all of the assets of
General Precision, Inc. ("GPI"), in exchange for 850,000 shares of Brooks common
stock, with a market value of approximately $25 million at the time of issuance,
subject to post-closing adjustments. GPI, located in Valencia, California, is a
supplier of high-end mini-environment solutions for the semiconductor industry.

RESULTS OF OPERATIONS

The Company's business is significantly dependent on capital expenditures
by semiconductor manufacturers and OEMs, which are, in turn, dependent on the
current and anticipated market demand for semiconductors. The Company's revenues
grew substantially in fiscal 2000 compared to fiscal 1999 due in large part to
high levels of capital expenditures of semiconductor manufacturers. Demand for
semiconductors is cyclical and has historically experienced periodic downturns.
The semiconductor industry is currently experiencing such a downturn, which
began to significantly affect the Company in the second half of fiscal 2001 when
the demand for the Company's products and services decreased significantly as
semiconductor manufacturers sharply reduced capital expenditures. This downturn
impacted all of the Company's business segments in the second half of fiscal
2001, affecting revenues and gross margins due to pricing pressure and
underabsorbed costs. As a result of this downturn, the Company anticipates lower
shipments of its products in the next year, which may result in lower revenues
compared to the year ended September 30, 2001. During fiscal 2001, the Company
has taken selective cost reduction actions in many areas of its business in
response to this ongoing downturn. These cost management initiatives include
reductions to headcount, salary and wage reductions and reduced spending.
Although the Company will continue to take a proactive approach to cost
management in response to this downturn, it will continue to invest in those
areas which it believes are important to the long-term growth of the Company,
such as its infrastructure, customer support and new products.

YEAR ENDED SEPTEMBER 30, 2001, COMPARED TO YEAR ENDED SEPTEMBER 30, 2000

The Company reported a net loss of $29.7 million for the year ended
September 30, 2001, compared to net income of $15.1 million in the previous
year. The results for the year ended September 30, 2001, include $30.2 million
of amortization of acquired intangible assets, $9.3 million of restructuring and
acquisition-related charges and $17.2 million of other charges. These other
charges, recorded in the fourth quarter, include $13.7 million recorded to cost
of product sales, comprised of $13.1 million for valuation adjustments to
inventories and $0.6 million for additional warranty reserves; $1.0 million of
accelerated amortization of research and development expense; and $2.5 million
of sales, general and administrative expense for additional accounts receivable
allowances. The results for the previous year include $18.5 million of
amortization of acquired intangible assets and $0.6 million of
acquisition-related charges. After accretion and dividends on preferred stock of
$0.1 million in each year, the Company reported a net loss attributable to
common stockholders of $29.8 million in the year ended September 30, 2001 and
net income attributable to common stockholders of $15.0 million in the year
ended September 30, 2000.

17

REVENUES

The Company has adopted the recommendations of Staff Accounting Bulletin
101, "Revenue Recognition in Financial Statements" ("SAB 101"), effective
October 1, 2000. The adoption of SAB 101 did not have any impact on the
Company's results of operations or financial position.

The Company reported revenues of $381.7 million in the year ended September
30, 2001, compared to $337.2 million in the previous year, a 13.2% increase. The
increase in revenues is principally attributable to incremental revenue from
acquisitions and the strength in the first half of fiscal 2001 in both the
original equipment manufacturer ("OEM") and end user markets, partially offset
by lower revenues in the second half of the fiscal year.

The Company's tool automation systems segment reported revenues of $171.3
million in the year ended September 30, 2001, an increase of 2.1% from the prior
year. This increase is primarily attributable to growth in the vacuum business
area earlier in fiscal 2001, partially offset by lower revenues in the last two
quarters of fiscal 2001. The Company's factory interface solutions segment
reported an increase of 11.1%, to $97.8 million in the year ended September 30,
2001, compared to the prior year, reflecting in part the strong growth in the
Company's Standard Mechanical Interface Facilities ("SMIF") and Front Opening
Uniform Pod ("FOUP") product lines. The Company's factory automation solutions
segment reported revenues of $112.6 million in the year ended September 30,
2001, an increase of 38.3% from the prior year, principally due to internal
growth, the acquisition of ASC and ASI on January 6, 2000 and the acquisition of
SEMY on February 16, 2001.

Product revenues increased $7.4 million, to $291.7 million, in the year
ended September 30, 2001, from $284.4 million in the previous fiscal year. This
growth is primarily attributable to the overall strength in the OEM and end user
markets in the first half of fiscal 2001 and the Company's recent acquisitions.
Service revenues increased $37.2 million, or 70.4%, to $90.0 million. This
increase is primarily attributable to internal growth and the Company's
acquisitions.

Revenues outside the United States were $191.6 million, or 50.2% of
revenues, and $161.5 million, or 47.9% of revenues, in the years ended September
30, 2001 and 2000, respectively. The absolute increase in revenues outside the
United States is primarily the result of the Company's expanded global presence
from its recent acquisitions, while the increase as a percentage of the
Company's revenues reflects lower sales in the United States, in particular OEM
sales in the second half of fiscal 2001, relative to the rest of the world. The
Company expects that foreign revenues will continue to account for a significant
portion of total revenues. However, the Company cannot guarantee that foreign
revenues, particularly from Asia, will remain a strong component of the
Company's total revenues.

GROSS MARGIN

Gross margin decreased to 39.9% for the year ended September 30, 2001,
compared to 47.7% for the previous year. Excluding other charges of $13.7
million referred to above, the Company's gross margin was 43.5% for the year
ended September 30, 2001. The Company's tool automation systems segment gross
margin decreased to 31.4% in the year ended September 30, 2001, from 42.1% in
the prior year. Excluding other charges of $4.9 million, gross margin for the
tool automation systems segment in the year ended September 30, 2001 was 34.3%.
The decrease is primarily the result of product mix, coupled with the effects of
the current downturn in the semiconductor industry. Gross margin for the
Company's factory interface solutions segment was 26.4% for the year ended
September 30, 2001, a decrease from 39.0% in the prior year. Excluding other
charges of $8.1 million, gross margin for this segment was 34.6%. The decrease
is primarily the result of product and services mix, combined with the current
downturn in the semiconductor industry. The Company's factory automation
solutions gross margin for the year ended September 30, 2001 decreased for the
factory automation solutions segment to 64.6%, compared to 68.6% in the prior
year. Excluding other charges of $0.7 million, gross margin for the year ended
September 30, 2001 was 65.3%. The decrease is primarily attributable to product
and services mix; specifically, a decrease in license revenues partially offset
by an increase in service revenues.

18

Gross margin on product revenues was 42.9% for the year ended September 30,
2001, compared to 50.4% for the prior year. Excluding other charges aggregating
$13.7 million, gross margin on product revenues was 47.6% for the year ended
September 30, 2001. The decrease is primarily attributable to product mix,
coupled with the effects of the current downturn in the semiconductor industry,
which impact both pricing and cost absorption.

Gross margin on service revenues decreased to 30.2% for the year ended
September 30, 2001, from 33.0% in the previous year. The decrease is primarily a
result of business mix, combined with the effects of the current downturn in the
semiconductor industry.

In future years, gross margin may be adversely affected by changes in
product mix and/or price competition.

RESEARCH AND DEVELOPMENT

Research and development expenses for the year ended September 30, 2001,
were $60.9 million, an increase of $16.8 million, compared to $44.1 million in
the previous year. Research and development expenses also increased as a
percentage of revenues, to 16.0%, from 13.1% in the prior year. Excluding other
charges of $1.0 million, research and development expenses were 15.7% of
revenues in the current year. The increase in absolute spending is the result of
the research and development related to the Company's recent acquisitions as
well as incremental spending associated with the launch of new products. The
increase in these expenditures as a percentage of revenues is attributable in
part to the downturn currently affecting the semiconductor industry, which began
to impact the Company during the quarterly period ended March 31, 2001. To a
lesser extent, this increase is attributable to higher spending levels
associated with the Company's recent acquisitions. The Company plans to continue
to invest in research and development to enhance existing and develop new tool
and factory hardware and software automation solutions for the semiconductor,
data storage and flat panel display manufacturing industries.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses were $95.9 million for the
year ended September 30, 2001, an increase of $18.5 million, compared to $77.4
million in the previous year. Selling, general and administrative expenses
increased as a percentage of revenues, to 25.1% in the year ended September 30,
2001, from 23.0% in the previous year. Excluding other charges of $2.5 million,
selling, general and administrative expenses were 24.5% of revenues in the year
ended September 30, 2001. The increase in absolute spending is the result of
expanded sales and marketing activities as well as general and administration
support costs associated with the Company's recently completed acquisitions and
infrastructure improvements, while the increase as a percentage of revenues is
attributable primarily to the downturn currently affecting the semiconductor
industry. The Company expects that future expenditure levels will continue at or
above current levels to support its worldwide sales and administrative
organizations.

AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS

Amortization expense for acquired intangible assets totaled $30.2 million
for the year ended September 30, 2001, and relates to acquired intangible assets
from the acquisitions of the e-Diagnostics product business, CCST, SimCon and
SEMY in the current year, the acquisitions of MiTeX, ASC and ASI in fiscal 2000,
the Infab, Domain and Hanyon acquisitions in the second half of fiscal 1999 and
Irvine Optical's acquisition of a corporation in March 1997. For the year ended
September 30, 2000, amortization expense for acquired intangible assets was
$18.5 million, and relates to the fiscal 2000 and fiscal 1999 acquisitions and
the Irvine Optical acquisition discussed above.

ACQUISITION-RELATED AND RESTRUCTURING COSTS

The Company recorded $9.3 million of acquisition-related and restructuring
charges during the year ended September 30, 2001, comprised of $3.9 million of
acquisition-related costs and $5.4 million of restructuring charges. The
acquisition-related costs primarily relate to transaction costs incurred during
the
19

Company's recent acquisition of PTI. On September 5, 2001, the Company's Board
of Directors approved a formal plan of restructure in response to the current
downturn in the semiconductor industry. To that effect, the Company recorded
restructuring charges of $5.4 million in the fourth quarter of the fiscal year.
Of this amount, $2.0 million is related to workforce reductions of approximately
140 employees which is expected to be paid in 2002 and $3.4 million for the
consolidation and strategic focus realignment of several facilities, of which
$0.1 million was paid in 2001, $1.7 million is expected to be paid in 2002 and
$1.6 million in the subsequent years. These measures were largely intended to
align the Company's capacity and infrastructure to anticipated customer demand.
Workforce charges, consisting principally of severance costs, were recorded
based on specific identification of employees to be terminated, along with their
job classifications or functions and their locations. The charges for the
Company's excess facilities were recorded to recognize the lower of the amount
of the remaining lease obligations, net of any sublease rentals, or the expected
lease settlement costs. These costs have been estimated from the time when the
space is expected to be vacated and there are no plans to utilize the facility
in the future. Costs incurred prior to vacating the facilities will be charged
to operations. Acquisition-related charges of $0.6 million in the year ended
September 30, 2000, relate primarily to transaction costs in connection with the
acquisition of Irvine Optical.

The activity related to the Company's acquisition-related and restructuring
accruals is below (in thousands):

INTEREST INCOME AND EXPENSE

Interest income increased by $2.8 million, to $12.5 million, in the year
ended September 30, 2001, compared to an increase of $6.6 million to $9.7
million the previous year. This increase is due primarily to higher cash and
investment asset balances which resulted from investing the proceeds from the
Company's private placement of $175.0 million aggregate Convertible Subordinated
Notes in May 2001 and the public offering of shares of its common stock in March
2000. Interest expense of $4.1 million for the year ended September 30, 2001,
relates primarily to the 4.75% Convertible Subordinated Notes, imputed interest
on notes payable related to the e-Diagnostics and SimCon acquisitions and the
Company's note payable to Daifuku America in connection with the acquisition of
ASC and ASI, which was discharged on January 5, 2001. Interest expense in the
prior year primarily relates to Irvine Optical's debt, which was paid by Brooks
subsequent to the Company's acquisition of Irvine Optical, and the note payable
to Daifuku America.

INCOME TAX PROVISION (BENEFIT)

The Company recorded a net income tax benefit of $6.4 million in the year
ended September 30, 2001 and net income tax expense of $13.6 million in the year
ended September 30, 2000. The tax benefit recorded in fiscal 2001 is primarily
due to anticipated future tax benefit of domestic net operating losses and
research and development credits, partially offset by provisions for taxes on
overseas earnings. The fiscal 2000 tax provision is attributable to federal,
state, foreign and withholding taxes. Federal and state taxes have been reduced
for net operating losses, research and development tax credits and a foreign
sales corporation benefit.

The Company has recorded a deferred tax asset of $38.9 million. Realization
is dependent on generating sufficient taxable income prior to expiration of loss
carryforwards, which will expire at various dates through 2021. Although
realization is not assured, management believes it is more likely than not that
all of the

20

deferred tax assets will be realized. The amount of the deferred tax asset
considered realizable, however, could be reduced in the near term if estimates
of future taxable income during the carryforward period are reduced.

YEAR ENDED SEPTEMBER 30, 2000, COMPARED TO YEAR ENDED SEPTEMBER 30, 1999

The Company reported net income of $15.1 million for the year ended
September 30, 2000, compared to a net loss of $9.5 million in the previous year.
Net income attributable to common shareholders for the year ended September 30,
2000 include $18.5 million of amortization of acquired intangible assets, $0.6
million of acquisition-related charges and $0.1 million of accretion and
dividends on preferred stock. The Company's net loss attributable to common
stockholders in the previous year includes $0.6 million of amortization of
acquired intangible assets, $5.3 million of acquisition-related and
restructuring charges and other costs and $0.8 million of accretion and
dividends on preferred stock.

REVENUES

The Company reported revenues of $337.2 million in the year ended September
30, 2000, compared to $123.0 million in the previous year, a 174.2% increase.
The overall increase is principally attributable to the strength in both the
original equipment manufacturer ("OEM") and end user markets and incremental
revenue from acquisitions. The Company experienced growth in all of the
geographic regions in which it operates. Revenues for each of the Company's
segments increased from the prior year. Revenues for the tool automation systems
segment more than doubled, to $167.8 million, from $79.1 million in the prior
year. The Company's factory interface solutions segment had revenues of $88.1
million in the year ended September 30, 2000, more than four times the $19.6
million reported in the prior year. Revenues for the factory automation
solutions segment were $81.4 million, more than triple the $24.2 million
reported in the prior year.

Product revenues increased $182.9 million, or 180.2%, to $284.4 million in
the year ended September 30, 2000, from $101.5 million in the previous fiscal
year. This growth is primarily attributable to the overall strength in the OEM
and End User markets and acquisitions.

Service revenues increased $31.3 million, or 146.0%, to $52.8 million. This
increase is primarily attributable to internal growth and the Company's
acquisitions.

Revenues outside the United States were $161.5 million, or 47.9% of
revenues, and $53.1 million, or 43.2% of revenues, in the years ended September
30, 2000 and 1999, respectively. The increase is primarily the result of the
Company's expanded global presence from its recent acquisitions.

GROSS MARGIN

Gross margin increased to 47.7% for the year ended September 30, 2000,
compared to 44.9% for the previous year. The Company's tool automation systems
segment gross margin increased to 42.1% in the year ended September 30, 2000,
from 33.8% in the prior year, and is primarily the result of operational
efficiencies and change in product mix. This increase was partially offset by
decreases in gross margins for the Company's other segments. Gross margin for
the Company's factory interface solutions segment decreased to 39.0%, from 49.4%
in the prior year, while the factory automation solutions gross margin decreased
to 68.6%, from 77.4% in the prior year. The decline in the factory interface
solutions segment is primarily the result of change in product mix, while the
factory automation solutions segment is primarily attributable to the acquired
service business of ASC, which has a historically lower margin structure than
that of the segment.

Gross margin on product revenues was 50.4% for the year ended September 30,
2000. Gross margin on product revenues for the year ended September 30, 1999,
which included charges aggregating $1.6 million, comprised of $1.0 million to
provide additional reserves for slow-moving and obsolete inventories and $0.6
million of additional depreciation expense, was 46.6%. Excluding these charges,
gross margin for the year ended September 30, 1999, was 49.7%. The increase is
primarily attributable to improvements in manufacturing capacity utilization and
the acquisition of higher margin software product businesses, partially offset
by the Infab operations' historically lower margin structure.

21

Gross margin on service revenues decreased to 33.0% for the year ended
September 30, 2000, from 36.8% in the previous year. The decrease is primarily a
result of business mix, combined with ASC's historically lower margin structure.
Included in the cost of service revenues are global customer support costs,
consisting primarily of personnel costs and travel expenses.

RESEARCH AND DEVELOPMENT

Research and development expenses for the year ended September 30, 2000,
were $44.1 million, an increase of $19.6 million, compared to $24.5 million in
the previous year. However, research and development expenses decreased as a
percentage of revenues, to 13.1%, from 19.9% in fiscal 1999. The increase in
absolute spending is the result of the research and development efforts related
to the Company's acquisitions as well as incremental spending associated with
the launch of new atmospheric products and the transition to the next generation
vacuum wafer handling products, partially offset by the elimination of redundant
research and development programs.

SELLING, GENERAL AND ADMINISTRATIVE

Selling, general and administrative expenses were $77.4 million for the
year ended September 30, 2000, an increase of $38.6 million, compared to $38.8
million in the previous year. However, selling, general and administrative
expenses decreased as a percentage of revenues, to 23.0% in the year ended
September 30, 2000, from 31.5% in the previous year. The increase in absolute
spending is the result of expanded sales and marketing activities as well as
general and administration support costs associated with the Company's
acquisitions and infrastructure improvements, while the improvement of these
costs as a percentage of revenues reflects the Company's efforts at expanding
its product offerings and customer base.

AMORTIZATION OF ACQUIRED INTANGIBLE ASSETS

Amortization expense for acquired intangible assets totaled $18.5 million
for the year ended September 30, 2000, and relates to acquired intangible assets
from the June 23, 2000 MiTeX acquisition, the January 6, 2000 ASC and ASI
acquisition, the Infab, Domain and Hanyon acquisitions, all of which occurred
during the second half of fiscal 1999 and Irvine Optical's acquisition of a
corporation in March 1997. Amortization expense for acquired intangible assets
was $0.6 million in the year ended September 30, 1999, and relates to the Domain
and Hanyon acquisitions and Irvine Optical's acquisition.

ACQUISITION-RELATED AND RESTRUCTURING COSTS

Acquisition-related charges of $0.6 million in the year ended September 30,
2000, relate primarily to transaction costs in connection with the acquisition
of Irvine Optical. In fiscal 1999, the Company incurred acquisition-related and
restructuring costs of $3.1 million, comprised of $1.2 million for transaction
costs related to the Smart Machines acquisition, $0.3 million for severance
costs and $1.6 million for the write-off of certain fixed assets.

INTEREST INCOME AND EXPENSE

Interest income increased by $6.6 million, to $9.7 million, in the year
ended September 30, 2000, compared to the previous year. This increase is due
primarily to higher cash and investment asset balances that resulted from the
Company's public offering of shares of common stock in March 2000. Interest
expense of $1.3 million and $1.6 million for the years ended September 30, 2000
and 1999, respectively, relates primarily to Irvine Optical's debt, which was
discharged on May 6, 2000. Fiscal 2000 interest expense also includes interest
on the Company's note payable to Daifuku America issued as part of the
consideration for the Company's acquisition of ASC and ASI.

INCOME TAX PROVISION (BENEFIT)

The Company recorded net income tax expense of $13.6 million for the year
ended September 30, 2000, and net income tax benefits of $0.9 million for the
year ended September 30, 1999. The fiscal 2000 tax
22

provision is attributable to federal, state, foreign and withholding taxes.
Federal and state taxes have been reduced for net operating losses, research and
development tax credits and a foreign sales corporation benefit. The tax benefit
recorded in fiscal 1999 is primarily due to anticipated future tax benefit of
domestic net operating losses and research and development credits, partially
offset by a $1.6 million increase in the deferred tax asset valuation allowance.

LIQUIDITY AND CAPITAL RESOURCES

At September 30, 2001, the Company had cash, cash equivalents and
marketable securities aggregating $329.7 million. This amount was comprised of
$160.2 million of cash and cash equivalents, $43.6 million of investments in
short-term marketable securities and $125.9 million of investments in long-term
marketable securities.

Cash and cash equivalents were $160.2 million at September 30, 2001, an
increase of $26.6 million from September 30, 2000. This increase in cash and
cash equivalents is primarily the result of proceeds of $169.5 million, net of
costs, from the Company's private placement of 4.75% Convertible Subordinated
Notes completed on May 23, 2001, partially offset by payment of net cash
consideration of $34.5 million for SEMY on February 16, 2001, payment of the
Company's $16.0 million note payable to Daifuku America on January 5, 2001 in
connection with its January 2000 acquisition of ASC and ASI, the purchase of the
Company's headquarters complex on January 29, 2001 for $28.9 million in cash and
net purchases of marketable securities of $66.4 million.

Cash provided by operations was $20.7 million for the year ended September
30, 2001, and is primarily attributable to a decrease in accounts receivable of
$8.4 million and an increase in gross inventories of $2.6 million, offset by
additional inventory valuation adjustments of $13.1 million. The Company's net
loss of $29.7 million included depreciation and amortization of $45.0 million,
and an increase to the Company's net deferred tax asset of $14.1 million. The
decrease in accounts receivable is primarily the result of lower sales in the
second half of the fiscal year due to the economic downturn currently affecting
the semiconductor industry.

Cash used in investing activities was $153.7 million for the year ended
September 30, 2001, and was principally comprised of $181.4 million invested in
marketable securities, $34.5 million for the purchase of SEMY on February 16,
2001, net of cash acquired, $4.7 million of cash payments for other
acquisitions, net of cash acquired and $53.7 million used for capital additions,
including $28.9 million for the purchase on January 29, 2001 of the Company's
headquarters complex located in Chelmsford, Massachusetts. These expenditures
were partially offset by the sale of $115.0 million of the Company's investments
in marketable securities and $6.0 million in cash payments to the Company for
settlements related to previous acquisitions the Company had made.

Cash provided by financing activities was $161.8 million for the year ended
September 30, 2001, and is primarily comprised of $169.5 million, net of costs,
received from the private placement of 4.75% Convertible Subordinated Notes on
May 23, 2001 and $9.1 million from the issuance of stock under the Company's
employee stock purchase plan and the exercise of options to purchase the
Company's common stock. These amounts were partially offset by $16.0 million
paid on January 5, 2001 to retire the Company's note payable to Daifuku America
in connection with the acquisition of ASC and ASI, $0.4 million for the
repayment of PTI's revolving credit facility and $0.5 million for the payment of
long-term debt.

In connection with the acquisition of the e-Diagnostics product business,
the Company issued a $17.0 million one-year note payable to the selling
stockholders. The note is payable in cash or common stock, or any combination
thereof, at the Company's discretion. The Company currently intends to settle
this note in common stock; however, if the Company elects to settle all or a
portion of the note in cash, up to $17.0 million would be required for payment
in June of 2002. Additional cash payments aggregating a maximum of $8.0 million
over the next three years could be required for payment of consideration
contingent upon meeting certain performance objectives, if the Company elected
to settle any or all potential contingent payments in cash.

23

In connection with its acquisition of SimCon, the Company issued a note
payable to the selling stockholders for $750,000, payable in one year. This note
will be settled with shares of the Company's common stock. No cash payment will
be required.

On May 23, 2001, the Company completed the private placement of $175.0
million aggregate principal amount of 4.75% Convertible Subordinated Notes due
in 2008. The amount sold includes $25.0 million principal amount of notes
purchased by the initial purchaser upon exercise in full of their 30-day option
to purchase additional notes. The Company received net proceeds of $169.5
million from the sale.

Interest on the notes will be paid on June 1 and December 1 of each year,
with the first interest payment due on December 1, 2001. The notes will mature
on June 1, 2008. The Company may redeem the notes at stated premiums on or after
June 6, 2004, or earlier if the price of the Company's common stock reaches
certain prices. Holders may require the Company to repurchase the notes upon a
change in control of the Company in certain circumstances. The notes are
convertible at any time prior to maturity, at the option of the holders, into
shares of the Company's common stock, at a conversion price of $70.23 per share,
subject to certain adjustments. The notes are subordinated to the Company's
senior indebtedness and structurally subordinated to all indebtedness and other
liabilities of the Company's subsidiaries.

While the Company has no significant capital commitments, as it expands its
product offerings, the Company anticipates that it will continue to make capital
expenditures to support its business and improve its computer systems
infrastructure. The Company may also use its resources to acquire companies,
technologies or products that complement the business of the Company.

The Company terminated its $30.0 million unsecured revolving credit
facility and replaced it with a $10.0 million uncommitted demand promissory note
facility with ABN AMRO Bank N.V. ("ABN AMRO") on May 2, 2000. The Company
transferred all outstanding letters of credit, totaling approximately $1.1
million, to the new facility. ABN AMRO is not obligated to extend loans or issue
letters of credit under this new facility. At September 30, 2001, approximately
$1.2 million of the facility was in use, all of it for letters of credit.

The Company believes that its existing resources will be adequate to fund
the Company's currently planned working capital and capital expenditure
requirements for at least the next twelve months. The cyclical nature of the
semiconductor industry makes it very difficult for the Company to predict future
liquidity requirements with certainty. In addition, the Company may experience
unforeseen capital needs in connection with both its recently completed
acquisitions and its planned acquisition of PRI. The sufficiency of the
Company's resources to fund its needs for capital is subject to known and
unknown risks, uncertainties and other factors which may have a material adverse
effect on the Company's business, including, without limitation, the factors
discussed under "Factors That May Affect Future Results."

RECENT ACCOUNTING PRONOUNCEMENTS

In October 2001, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 144 ("FAS 144"), "Accounting for the
Impairment or Disposal of Long-Lived Assets." FAS 144 supersedes FASB Statement
No. 121 ("FAS 121") "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of." FAS 144 applies to all long-lived assets
and consequently amends Accounting Principles Board Opinion No. 30 ("APB 30"),
"Reporting Results of Operations -- Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions." FAS 144 is effective for financial statements issued
for fiscal years beginning after December 15, 2001. Management is currently
evaluating the effect, if any, FAS 144 will have on its financial position and
results of operations.

In July 2001, the Financial Accounting Standards Board issued Statements of
Financial Accounting Standards No. 141 ("FAS 141"), "Business Combinations" and
No. 142 ("FAS 142"), "Goodwill and Other Intangible Assets" effective for fiscal
years beginning after December 15, 2001. FAS 141 requires business combinations
initiated after June 30, 2001 to be accounted for using the purchase method of
accounting, and broadens the criteria for recording intangible assets separate
from goodwill. FAS 142 requires that goodwill

24

and identifiable intangible assets determined to have an indefinite life no
longer be amortized, but instead be tested for impairment at least annually.

The Company is required to adopt FAS 142 in the fiscal year beginning
October 1, 2002, at which time amortization of goodwill will cease. The Company
has evaluated the impact of adoption of FAS 142 in respect of acquisitions
accounted for as purchase transactions and completed prior to June 30, 2001. The
application of the separate recognition criteria for intangible assets and the
cessation of amortization of goodwill will result in goodwill of approximately
$67 million at September 30, 2001 being subject to an annual impairment test,
unless interim indicators indicate a need for an interim test, and a resulting
expected reduction of goodwill amortization expense of approximately $32
million, $22 million and $11 million in fiscal 2002, 2003 and 2004,
respectively.

FACTORS THAT MAY AFFECT FUTURE RESULTS

From time to time, information provided by Brooks or statements made by its
employees may contain forward-looking information that involves substantial
known and unknown risks and uncertainties such as those described below that
could cause actual results to differ materially from targets or projected
results.

You should carefully consider the risks described below and the other
information in this report before deciding to invest in shares of our common
stock. While these are the risks and uncertainties we believe are most important
for you to consider, you should know that they are not the only risks or
uncertainties facing us or which may adversely affect our business. If any of
the following risks or uncertainties actually occur, our business, financial
condition and operating results would likely suffer. In that event, the market
price of our common stock could decline and you could lose all or part of the
money you paid to buy our common stock.

RISK FACTORS RELATING TO BROOKS' INDUSTRY

THE CYCLICAL DEMAND OF SEMICONDUCTOR MANUFACTURERS AFFECTS BROOKS' OPERATING
RESULTS AND THE ONGOING DOWNTURN IN THE INDUSTRY COULD SERIOUSLY HARM BROOKS'
OPERATING RESULTS.

Brooks' business is significantly dependent on capital expenditures by
semiconductor manufacturers. The level of semiconductor manufacturers' capital
expenditures is dependent on the current and anticipated market demand for
semiconductors. The semiconductor industry is highly cyclical and is currently
experiencing a downturn. Brooks anticipates the downturn will continue during
the next few quarters. Despite these industry conditions, Brooks plans to
continue to invest in those areas which Brooks believes are important to its
long-term growth, such as its infrastructure and information technology system,
customer support, supply chain management and new products. As a result,
consistent with its experience in downturns in the past, Brooks believes the
current industry downturn will lead to reduced revenues for it and may cause it
to incur losses.

INDUSTRY CONSOLIDATION AND OUTSOURCING OF THE MANUFACTURE OF SEMICONDUCTORS TO
FOUNDRIES COULD REDUCE THE NUMBER OF AVAILABLE CUSTOMERS.

The substantial expense of building or expanding a semiconductor
fabrication facility is leading increasing numbers of semiconductor companies to
contract with foundries, which manufacture semiconductors designed by others. As
manufacturing is shifted to foundries, the number of Brooks' potential customers
could decrease, which would increase its dependence on its remaining customers.
Recently, consolidation within the semiconductor manufacturing industry has
increased. If semiconductor manufacturing is consolidated into a small number of
foundries and other large companies, Brooks' failure to win any significant bid
to supply equipment to those customers could seriously harm its reputation and
materially and adversely affect its revenue and operating results.

25

RISK FACTORS RELATING TO BROOKS' OPERATIONS

BROOKS' SALES VOLUME SUBSTANTIALLY DEPENDS ON THE SALES VOLUME OF BROOKS'
ORIGINAL EQUIPMENT MANUFACTURER CUSTOMERS AND ON INVESTMENT IN MAJOR CAPITAL
EXPANSION PROGRAMS, RETROFITS AND UPGRADES BY END-USER SEMICONDUCTOR
MANUFACTURING COMPANIES.

Brooks sells a majority of its tool automation products to original
equipment manufacturers that incorporate Brooks' products into their equipment.
Therefore, Brooks' revenues depend on the ability of these customers to develop,
market and sell their equipment in a timely, cost-effective manner.

Brooks also generates significant revenues from large orders from
semiconductor manufacturing companies that build new plants or invest in major
automation retrofits and upgrades. Brooks' revenues depend, in part, on
continued capital investment by semiconductor manufacturing companies.

BROOKS RELIES ON A RELATIVELY LIMITED NUMBER OF CUSTOMERS FOR A LARGE PORTION OF
ITS REVENUES AND BUSINESS.

Brooks receives a significant portion of its revenues in each fiscal period
from a relatively limited number of customers. The loss of one or more of these
major customers, or a decrease in orders by one or more customers, could
adversely affect Brooks' revenue, business and reputation. Sales to Brooks' ten
largest customers accounted for approximately 37% of total revenues in fiscal
2001 and 43% of total revenues in fiscal 2000.

DELAYS IN OR CANCELLATION OF SHIPMENTS OF A FEW OF BROOKS' LARGE ORDERS COULD
SUBSTANTIALLY DECREASE ITS REVENUES OR REDUCE ITS STOCK PRICE.

Historically, a substantial portion of Brooks' quarterly and annual
revenues has come from sales of a small number of large orders. Some of Brooks'
products have high selling prices compared to Brooks' other products. As a
result, the timing of when Brooks recognizes revenue from one of these large
orders can have a significant impact on its total revenues and operating results
for a particular period and reduce its stock price because its sales in that
fiscal period could fall significantly below the expectations of financial
analysts and investors. This could cause the value of its common stock to fall.
Brooks' operating results could be harmed if a small number of large orders are
canceled or rescheduled by customers or cannot be filled due to delays in
manufacturing, testing, shipping or product acceptance.

DEMAND FOR BROOKS' PRODUCTS FLUCTUATES RAPIDLY AND UNPREDICTABLY, WHICH MAKES IT
DIFFICULT TO MANAGE ITS BUSINESS EFFICIENTLY AND CAN REDUCE ITS GROSS MARGINS
AND PROFITABILITY.

Brooks' expense levels are based in part on its expectations for future
demand. Many expenses, particularly those relating to capital equipment and
manufacturing overhead, are relatively fixed. The rapid and unpredictable shifts
in demand for Brooks' products make it difficult to plan manufacturing capacity
and business operations efficiently. If demand is significantly below
expectations, Brooks may be unable to rapidly reduce these fixed costs, which
can diminish gross margins and cause losses. A sudden downturn may also leave
Brooks with excess inventory, which may be rendered obsolete as products evolve
during the downturn and demand shifts to newer products. Brooks' ability to
reduce expenses is further constrained because it must continue to invest in
research and development to maintain its competitive position and to maintain
service and support for its existing global customer base. Conversely, in sudden
upturns, Brooks sometimes incurs significant expenses to rapidly expedite
delivery of components, procure scarce components and outsource additional
manufacturing processes. These expenses could reduce its gross margins and
overall profitability. Any of these results could seriously harm Brooks'
business.

BROOKS' LENGTHY SALES CYCLE REQUIRES IT TO INCUR SIGNIFICANT EXPENSES WITH NO
ASSURANCE THAT BROOKS WILL GENERATE REVENUE.

Brooks' tool automation products are generally incorporated into original
equipment manufacturer equipment at the design stage. To obtain new business
from its original equipment manufacturer customers, Brooks must develop products
for selection by a potential customer at the design stage. This often requires

26

Brooks to make significant expenditures without any assurance of success. The
original equipment manufacturer's design decisions often precede the generation
of volume sales, if any, by a year or more. Brooks cannot guarantee that the
equipment manufactured by its original equipment manufacturing customers will be
commercially successful. If Brooks or its original equipment manufacturing
customers fails to develop and introduce new products successfully and in a
timely manner, Brooks' business and financial results will suffer.

Brooks also must complete successfully a costly evaluation and proposal
process before Brooks can achieve volume sales of Brooks factory automation
software to customers. These undertakings are major decisions for most
prospective customers and typically involve significant capital commitments and
lengthy evaluation and approval processes. Brooks cannot guarantee that it will
continue to satisfy evaluations by its end-user customers.

BROOKS' OPERATING RESULTS WOULD BE HARMED IF ONE OF ITS KEY SUPPLIERS FAILS TO
DELIVER COMPONENTS FOR BROOKS' PRODUCTS.

Brooks currently obtains many of its components on an as needed, purchase
order basis. Generally, Brooks does not have any long-term supply contracts with
its vendors and believes many of its vendors have been taking cost containment
measures in response to the industry downturn. When demand for semiconductor
manufacturing equipment increases, Brooks' suppliers face significant challenges
in delivering components on a timely basis. Brooks' inability to obtain
components in required quantities or of acceptable quality could result in
significant delays or reductions in product shipments. This could create
customer dissatisfaction, cause lost revenue and otherwise materially and
adversely affect Brooks' operating results. Delays on Brooks' part could also
cause it to incur contractual penalties for late delivery.

BROOKS MAY EXPERIENCE DELAYS AND TECHNICAL DIFFICULTIES IN NEW PRODUCT
INTRODUCTIONS AND MANUFACTURING, WHICH CAN ADVERSELY AFFECT ITS REVENUES, GROSS
MARGINS AND NET INCOME.

Because Brooks' systems are complex, there can be a significant lag between
the time Brooks introduces a system and the time it begins to produce that
system in volume. As technology in the semiconductor industry becomes more
sophisticated, Brooks is finding it increasingly difficult to design and
integrate complex technologies into its systems, to procure adequate supplies of
specialized components, to train its technical and manufacturing personnel and
to make timely transitions to high-volume manufacturing. Many customers also
require customized systems, which compound these difficulties. Brooks sometimes
incurs substantial unanticipated costs to ensure that its new products function
properly and reliably early in their life cycle. These costs could include
greater than expected installation and support costs or increased materials
costs as a result of expedited changes. Brooks may not be able to pass these
costs on to its customers. In addition, Brooks has experienced, and may continue
to experience, difficulties in both low and high volume manufacturing. Any of
these results could seriously harm Brooks' business.

Moreover, on occasion Brooks has failed to meet its customers' delivery or
performance criteria, and as a result Brooks incurred late delivery penalties
and had higher warranty and service costs. These failures could continue and
could also cause Brooks to lose business from those customers and suffer
long-term damage to its reputation.

BROOKS MAY BE UNABLE TO RECRUIT AND RETAIN NECESSARY PERSONNEL BECAUSE OF
INTENSE COMPETITION FOR HIGHLY SKILLED PERSONNEL.

Brooks needs to retain a substantial number of employees with technical
backgrounds for both its hardware and software engineering, manufacturing, sales
and support staffs. The market for these employees is intensively competitive,
and Brooks has occasionally experienced delays in hiring qualified personnel.
Due to the cyclical nature of the demand for its products and the current
downturn in the semiconductor market, Brooks recently reduced its workforce as a
cost reduction measure. If the semiconductor market experiences an upturn,
Brooks may need to rebuild its workforce. Due to the competitive nature of the
labor markets in which Brooks operates, this type of employment cycle increases
Brooks' risk of being unable to retain and recruit key personnel. Brooks'
inability to recruit, retain and train adequate numbers of qualified personnel
on

27

a timely basis could adversely affect its ability to develop, manufacture,
install and support its products and may result in lost revenue and market share
if customers seek alternative solutions.

BROOKS' INTERNATIONAL BUSINESS OPERATIONS EXPOSE IT TO A NUMBER OF DIFFICULTIES
IN COORDINATING ITS ACTIVITIES ABROAD AND IN DEALING WITH MULTIPLE REGULATORY
ENVIRONMENTS.

Sales to customers outside North America accounted for approximately 50% of
Brooks' total revenues in fiscal 2001, 48% in fiscal 2000 and 43% in fiscal
1999. Brooks anticipates that international sales will continue to account for a
significant portion of its revenues. Many of Brooks' vendors are located in
foreign countries. As a result of its international business operations, Brooks
is subject to various risks, including:

- difficulties in staffing and managing operations in multiple locations in
many countries;

- difficulties in managing distributors, representatives and third party
systems integrators;

- challenges presented by collecting trade accounts receivable in foreign
jurisdictions;

- longer sales-cycles;

- possible adverse tax consequences;

- fewer legal protections for intellectual property;

- governmental currency controls and restrictions on repatriation of
earnings;

- changes in various regulatory requirements;

- political and economic changes and disruptions; and

- export/import controls and tariff regulations.

To support its international customers, Brooks maintains locations in
several countries, including Belgium, Canada, China, Germany, Japan, Malaysia,
Singapore, South Korea, Switzerland, Taiwan and the United Kingdom. Brooks
cannot guarantee that it will be able to manage these operations effectively.
Brooks cannot assure you that its investment in these international operations
will enable it to compete successfully in international markets or to meet the
service and support needs of its customers, some of whom are located in
countries where Brooks has no infrastructure.

Although Brooks' international sales are primarily denominated in U.S.
dollars, changes in currency exchange rates can make it more difficult for
Brooks to compete with foreign manufacturers on price. If Brooks' international
sales increase relative to its total revenues, these factors could have a more
pronounced effect on Brooks' operating results.

BROOKS MUST CONTINUALLY IMPROVE ITS TECHNOLOGY TO REMAIN COMPETITIVE.

Technology changes rapidly in the semiconductor, data storage and flat
panel display manufacturing industries. Brooks believes its success depends in
part upon its ability to enhance its existing products and to develop and market
new products to meet customer needs, even in industry downturns. For example, as
the semiconductor industry transitions from 200mm manufacturing technology to
300mm technology, Brooks believes it is important to its future success to
develop and sell new products that are compatible with 300mm technology. If
competitors introduce new technologies or new products, Brooks' sales could
decline and its existing products could lose market acceptance. Brooks cannot
guarantee that it will identify and adjust to changing market conditions or
succeed in introducing commercially rewarding products or product enhancements.
The success of Brooks' product development and introduction depends on a number
of factors, including:

- accurately identifying and defining new market opportunities and
products;

- completing and introducing new product designs in a timely manner;

- market acceptance of Brooks' products and its customers' products;

28

- timely and efficient software development, testing and process;

- timely and efficient implementation of manufacturing and assembly
processes;

- product performance in the field;

- development of a comprehensive, integrated product strategy; and

- efficient implementation and installation and technical support services.