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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

     
(Mark One)  
[X]   Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
     
    For the quarterly period ended: March 31, 2003

OR

     
[   ]   Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
     
    For the transition period from      to      

Commission File Number 0-25434

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
(Address of principal executive offices)

01824
(Zip Code)

Registrant’s telephone number, including area code: (978) 262-2400

     Brooks-PRI Automation, Inc.
(Former Name, Former Address and Former Fiscal Year if Changed Since Last Report)

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 whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Yes   [X]  No  [   ]

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practical date, April 30, 2003:

     
Common stock, $0.01 par value   36,873,465 shares

 

TABLE OF CONTENTS

CONSOLIDATED BALANCE SHEETS
CONSOLIDATED STATEMENTS OF OPERATIONS
CONSOLIDATED STATEMENTS OF CASH FLOWS
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
Item 4. CONTROLS AND PROCEDURES
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
CERTIFICATIONS
EXHIBIT INDEX
EX-3.01 CERTIFICATE OF INCORPORATION, AS AMENDED
EX-3.02 BYLAWS OF THE COMPANY, AS AMENDED
EX-10.01 EMPLOYMENT AGREEMENT/ROBERT W. WOODBURY
EX-99.01 CERTIFICATION OF THE CEO AND CFO

Table of Contents

BROOKS-PRI AUTOMATION, INC.

INDEX

           
      PAGE NUMBER
     
PART I.   FINANCIAL INFORMATION      
Item 1.   Consolidated Financial Statements      
   
Consolidated Balance Sheets as of March 31, 2003 (unaudited) and September 30, 2002
  3  
   
Consolidated Statements of Operations for the three and six months ended March 31, 2003 and 2002 (unaudited)
  4  
   
Consolidated Statements of Cash Flows for the six months ended March 31, 2003 and 2002 (unaudited)
  5  
   
Notes to Consolidated Financial Statements (unaudited)
  6  
Item 2.  
Management’s Discussion and Analysis of Financial Condition and Results of Operations
  20  
Item 3.  
Quantitative and Qualitative Disclosures about Market Risk
  33  
Item 4.   Controls and Procedures   34  
PART II.   OTHER INFORMATION    
Item 4.  
Submission of Matters to a Vote of Security Holders
  35  
Item 6.   Exhibits and Reports on Form 8-K   36  
Signatures   37  
Certifications   38  

 

Table of Contents

BROOKS AUTOMATION, INC.
CONSOLIDATED BALANCE SHEETS

                         
            March 31,   September 30,
            2003   2002
           
 
            (unaudited)        
            (In thousands, except share and per share data)
Assets
                
 
Current assets
                
   
Cash and cash equivalents
   $ 130,888     $ 125,297  
   
Marketable securities
     13,059       25,353  
   
Accounts receivable, net, including related party receivables of $4 and $68, respectively
     73,167       89,150  
   
Inventories
     67,355       78,193  
   
Prepaid expenses and other current assets
     15,310       15,560  
 
    
     
 
       
Total current assets
     299,779       333,553  
 
Property, plant and equipment
                
   
Buildings and land
     37,707       37,259  
   
Computer equipment and software
     41,585       45,558  
   
Machinery and equipment
     18,947       23,658  
   
Furniture and fixtures
     10,014       14,706  
   
Leasehold improvements
     16,539       25,238  
   
Construction in progress
     3,564       13,768  
 
    
     
 
 
     128,356       160,187  
   
Less: Accumulated depreciation and amortization
     (60,353 )     (75,395 )
 
    
     
 
 
     68,003       84,792  
 
Long-term marketable securities
     68,986       95,087  
 
Goodwill
     108,250       104,156  
 
Intangible assets, net
     12,391       14,648  
 
Other assets
     10,749       25,261  
 
    
     
 
       
Total assets
   $ 568,158     $ 657,497  
 
    
     
 
Liabilities, minority interests and stockholders’ equity
                
 
Current liabilities
                
   
Current portion of long-term debt
   $ 221     $ 8  
   
Accounts payable
     18,551       30,436  
   
Deferred revenue
     34,180       29,032  
   
Accrued warranty and retrofit costs
     15,468       19,011  
   
Accrued compensation and benefits
     17,035       18,171  
   
Accrued retirement benefit
     9,899       9,599  
   
Accrued restructuring costs
     15,772       18,897  
   
Accrued income taxes payable
     14,059       8,488  
   
Accrued expenses and other current liabilities
     20,578       23,573  
 
    
     
 
     
Total current liabilities
     145,763       157,215  
 
Long-term debt
     175,086       175,177  
 
Accrued long-term restructuring
     14,836       14,889  
 
Other long-term liabilities
     1,363       1,488  
 
    
     
 
       
Total liabilities
     337,048       348,769  
 
    
     
 
 
Contingencies (Note 12)
                
 
Minority interests
     686       493  
 
    
     
 
Stockholders’ equity
                
   
Preferred stock, $0.01 par value, 1,000,000 shares authorized, one share issued and outstanding
     —       —  
   
Common stock, $0.01 par value, 100,000,000 shares authorized, 36,851,524 and 36,199,333 shares issued and outstanding at March 31, 2003 and September 30, 2002, respectively
     369       362  
   
Additional paid-in capital
     1,096,720       1,094,726  
   
Deferred compensation
     (6,051 )     (13,421 )
   
Accumulated other comprehensive income (loss)
     4,547       (8,058 )
   
Accumulated deficit
     (865,161 )     (765,374 )
 
    
     
 
       
Total stockholders’ equity
     230,424       308,235  
 
    
     
 
       
Total liabilities, minority interests and stockholders’ equity
   $ 568,158     $ 657,497  
 
    
     
 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

Table of Contents

BROOKS AUTOMATION, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(In thousands, except per share data)

                                     
        Three months ended   Six months ended
        March 31,   March 31,
        2003   2002   2003   2002
       
 
 
 
Revenues
                                
 
Product, including related party revenues of $38 and $82 for the three and six months ended March 31, 2003, respectively, and $469 and $517 for the three and six months ended March 31, 2002, respectively
   $ 65,761     $ 39,252     $ 120,760     $ 78,285  
 
Services
     27,203       17,872       57,059       37,021  
 
    
     
     
     
 
   
Total revenues
     92,964       57,124       177,819       115,306  
 
    
     
     
     
 
Cost of revenues
                                
 
Product
     49,867       25,098       88,548       49,505  
 
Services
     18,445       13,175       40,245       26,109  
 
    
     
     
     
 
   
Total cost of revenues
     68,312       38,273       128,793       75,614  
 
    
     
     
     
 
Gross profit
     24,652       18,851       49,026       39,692  
 
    
     
     
     
 
Operating expenses
                                
 
Research and development
     19,754       15,441       39,428       29,575  
 
Selling, general and administrative
     23,022       19,079       57,128       37,984  
 
Amortization of acquired intangible assets
     941       2,556       2,988       6,189  
 
Restructuring and acquisition-related charges
     4,728       9       25,824       109  
 
    
     
     
     
 
   
Total operating expenses
     48,445       37,085       125,368       73,857  
 
    
     
     
     
 
Loss from operations
     (23,793 )     (18,234 )     (76,342 )     (34,165 )
Interest income
     1,093       2,610       2,846       5,454  
Interest expense
     2,622       2,674       5,195       5,272  
Other (income) expense, net
     3,323       (92 )     16,035       (645 )
 
    
     
     
     
 
Loss before income taxes and minority interests
     (28,645 )     (18,206 )     (94,726 )     (33,338 )
Income tax provision (benefit)
     53       (5,567 )     4,868       (10,757 )
 
    
     
     
     
 
Loss before minority interests
     (28,698 )     (12,639 )     (99,594 )     (22,581 )
Minority interests in income (loss) of consolidated subsidiaries
     103       (63 )     193       (120 )
 
    
     
     
     
 
Net loss attributable to common stockholders
   $ (28,801 )   $ (12,576 )   $ (99,787 )   $ (22,461 )
 
    
     
     
     
 
Loss per share
                                
 
Basic and diluted
   $ (0.79 )   $ (0.63 )   $ (2.73 )   $ (1.12 )
Shares used in computing loss per share
                                
 
Basic and diluted
     36,682       20,116       36,521       20,001  

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

Table of Contents

BROOKS AUTOMATION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

                         
            Six months ended
            March 31,
            2003   2002
           
 
            (unaudited)
            (In thousands)
Cash flows from operating activities
                
 
Net loss
   $ (99,787 )   $ (22,461 )
 
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
                
   
Depreciation and amortization
     21,621       13,111  
   
Compensation expense related to common stock options
     3,473       664  
   
Provision for losses on accounts receivable
     509       439  
   
Reserves for excess and obsolete inventories and other inventory adjustments
     6,091       1,095  
   
Deferred income taxes
     —       (2,822 )
   
Amortization of debt discount and issuance costs
     420       394  
   
Minority interests
     193       (120 )
   
Loss on disposal of long-lived assets
     3,541       103  
   
Impairment of assets
     17,604       —  
   
Changes in operating assets and liabilities, net of acquired assets and liabilities:
                
     
Accounts receivable
     16,310       28,409  
     
Inventories
     7,035       6,905  
     
Prepaid expenses and other current assets
     256       2,556  
     
Accounts payable
     (12,699 )     (4,040 )
     
Deferred revenue
     5,009       606  
     
Accrued warranty and retrofit costs
     (3,543 )     (267 )
     
Accrued compensation and benefits
     (1,476 )     708  
     
Accrued acquisition-related and restructuring costs
     (2,800 )     (1,790 )
     
Accrued expenses and other current liabilities
     2,198       (15,399 )
 
    
     
 
       
Net cash provided by (used in) operating activities
     (36,045 )     8,091  
 
    
     
 
Cash flows from investing activities
                
 
Purchases of fixed assets
     (8,100 )     (11,101 )
 
Acquisition of businesses, net of cash acquired
     147       (34,439 )
 
Purchases of marketable securities
     (19,600 )     (30,213 )
 
Sale/maturity of marketable securities
     57,995       19,936  
 
Proceeds from sale of long-lived assets
     8,212       —  
 
(Increase) decrease in other assets
     272       (11,128 )
 
    
     
 
       
Net cash provided by (used in) investing activities
     38,926       (66,945 )
 
    
     
 
Cash flows from financing activities
                
 
Payments of long-term debt and capital lease obligations
     (26 )     (897 )
 
Issuance of long-term debt
     153       —  
 
Proceeds from issuance of common stock, net of issuance costs
     1,916       3,983  
 
    
     
 
       
Net cash provided by financing activities
     2,043       3,086  
 
    
     
 
Effects of exchange rate changes on cash and cash equivalents
     667       (761 )
 
    
     
 
Net increase (decrease) in cash and cash equivalents
     5,591       (56,529 )
Cash and cash equivalents, beginning of period
     125,297       160,239  
 
    
     
 
Cash and cash equivalents, end of period
   $ 130,888     $ 103,710  
 
    
     
 

The accompanying notes are an integral part of these unaudited consolidated financial statements.

 

Table of Contents

BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1.   BASIS OF PRESENTATION
 
    The unaudited consolidated financial statements of Brooks Automation, Inc. and its subsidiaries (“Brooks” or the “Company”) included herein have been prepared in accordance with generally accepted accounting principles. In the opinion of management, all material adjustments which are of a normal and recurring nature necessary for a fair presentation of the results for the periods presented have been reflected.
 
    The Company has recorded significant losses from operations and has an accumulated deficit of $865.2 million at March 31, 2003. Revenues and operations, excluding the impact of acquisitions, have decreased substantially and net cash outflows from operations have increased significantly as a result of the current downturn within the semiconductor sector and related industries. Consequently, the Company has undertaken several restructuring programs during the year ended September 30, 2002 and the six months ended March 31, 2003 (see Note 10) to align its cost structures and its revenues. The cyclical nature of the industry, the extended period of the current downturn and the current uncertainty as to the timing and speed of recovery mean that estimates of future revenues, results of operations and net cash flows are inherently difficult. At March 31, 2003, the Company had $212.9 million in cash, cash equivalents and marketable securities, primarily a result of the proceeds raised from the May 2001 sale of $175.0 million of convertible notes due in 2008 and the $220.0 million offering of common stock in May of 2000. The Company believes it has adequate existing resources to fund the Company’s currently planned restructuring activities, working capital requirements and capital expenditures, including development of new products and enhancements to existing products, for at le