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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                            ------------------------

                                   FORM 10-K

<TABLE>
<C>                    <S>
         /X/           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934
</TABLE>

<TABLE>
<S>                        <C>
For the Fiscal Year Ended  Commission file number
   September 30, 2000             0-24934
</TABLE>

<TABLE>
<C>                    <S>
         / /           TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                       SECURITIES EXCHANGE ACT OF 1934
</TABLE>

                              PRI AUTOMATION, INC.

             (Exact name of registrant as specified in its charter)

<TABLE>
<S>                            <C>
        MASSACHUSETTS                04-2495703
(State of other jurisdiction      (I.R.S. Employer
      of incorporation)         Identification No.)

   805 MIDDLESEX TURNPIKE            01821-3986
        BILLERICA, MA                (Zip Code)
    (Address of principal
     executive offices)
</TABLE>

                 Registrant's telephone number: (978) 670-4270
                            ------------------------

          Securities registered pursuant to Section 12(b) of the Act:
                                      NONE
          Securities registered pursuant to Section 12(g) of the Act:
     RIGHTS TO PURCHASE SERIES A PARTICIPATING CUMULATIVE PREFFERRED STOCK
                          COMMON STOCK, PAR VALUE $.01
                            ------------------------

    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 Item
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 this
Form 10-K. / /

    The aggregate market value of the Registrant's common stock, $0.01 par value
per share ("Common Stock") held by non-affiliates of the Registrant, based on
the closing price of the Common Stock on December 6, 2000 as reported by the
Nasdaq National Market, was approximately $536,025,000. Shares of Common Stock
held by officers and directors and by persons who own of record 5% or more of
the outstanding Common Stock have been excluded from this computation in that
such persons may be deemed to be affiliates. This determination of affiliate
status is not necessarily a conclusive determination for other purposes.

    As of December 6, 2000 the Registrant had outstanding 25,142,525 shares of
Common Stock.

                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant's Definitive Proxy Statement for its 2001 Annual
Meeting of Stockholders, expected to be filed with the Securities and Exchange
Commission on or before January 26, 2001 are incorporated by reference into
Items 10, 11, 12 and 13 of this Annual Report on Form 10-K.

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<PAGE>
                                     PART I

ITEM 1. BUSINESS

THE COMPANY

    PRI Automation, Inc. ("PRI" or the "Company"), founded in 1982, is a leading
global supplier of advanced automation systems and software to the semiconductor
industry. The Company offers complete and flexible solutions that address a wide
range of automation requirements for semiconductor manufacturers and OEM
semiconductor equipment suppliers. PRI's factory automation systems and software
help semiconductor manufacturers optimize the flow of material and data
throughout the semiconductor fabrication facility ("fab" or "fabs"), improving
productivity and increasing the manufacturer's return on investment. The
Company's tool automation systems and software, offer high-performance and
reliability to OEM process tool manufacturers, allowing them to focus on
developing next generation process technology. PRI also provides automation
services, including equipment layout and design, fab simulation, project
management, installation and on-site support. The Company sells and supports its
products through its global direct sales and support organizations, operating
out of offices in North America, Europe, and Asia. PRI's customers include many
of the world's leading semiconductor manufacturers and semiconductor capital
equipment suppliers.

THE PRI AUTOMATION SOLUTION

    PRI offers complete factory automation solutions designed to enhance
productivity throughout the fab and overall factory effectiveness, increasing
semiconductor manufacturers' return on investment. PRI combines its advanced
automation systems and factory management software with a broad range of
implementation services that draw on its extensive domain expertise in the
semiconductor fabrication process to provide integrated automation solutions. By
optimizing data management throughout the fab, the Company's products enable
customers to more effectively plan, schedule and carry out their production
activity. PRI's products support industry standards, providing customers with
the option of purchasing the company's integrated factory automation solutions
or incorporating elements of the system into their existing fab automation
infrastructure.

    PRI's comprehensive product line, sophisticated software offerings and broad
range of implementation services enable customers to address the challenges of
an increasingly complex semiconductor manufacturing process and enhance the
return on their fab investments by:

    - providing the manufacturing flexibility to respond to customers' shorter
      product cycles and changing requirements;

    - enabling fabs to achieve productivity gains through more efficient
      materials planning and work-in-process (WIP) scheduling, as well as
      through more efficient materials handling and storage;

    - enabling manufacturers to increase utilization of costly facilities and
      process tools;

    - providing an integrated factory automation solution that eliminates the
      inefficiency and risk involved in coordinating the efforts of multiple
      suppliers and systems; and

    - supplying a range of automation systems designed to meet the requirements
      of 200mm and 300mm production.

PRODUCTS AND SERVICES

    PRI provides its customers with a fully integrated line of factory
automation systems, software and services designed to automate the semiconductor
fabrication process and optimize the flow of products, data, materials and
resources throughout the fab. The Company has organized its product development,

                                       1
<PAGE>
marketing and sales functions to address a wide range of automation requirements
to improve manufacturing efficiency and increase productivity. The Company's key
product areas are:

    - FACTORY AUTOMATION SYSTEMS that store, transport and manage the movement
      of work-in-process wafers throughout the fab.

    - TOOL AUTOMATION SYSTEMS that automate the movement of wafers into and out
      of the process chamber and provide an integration point between the
      factory automation systems and the process tool.

    - FACTORY MANAGEMENT SOFTWARE that manages and directs manufacturing
      operations and optimizes material flow, process equipment and other
      production resources.

    - ADVANCED PLANNING AND SCHEDULING SOFTWARE that enables customers to
      develop capacity plans and work-flow schedules to optimize fab-wide
      operations and quickly react to changing business requirements.

    - TOOL CONNECTIVITY SOFTWARE that allows customers to connect valuable
      production data from the process tools with MES and fab-wide scheduling
      software in order to make more informed decisions regarding throughput.

    - AUTOMATION SERVICES AND SUPPORT that help customers throughout the total
      automation project lifecycle from initial conceptualization and design to
      installing and servicing the equipment in the customer fab.

FACTORY AUTOMATION SYSTEMS

    Factory automation systems products and service offerings include the
following:

1.  INTERBAY AUTOMATION:  Interbay automation systems transport wafers
    throughout the fab and store them in the bay where the next process step
    will occur. The Company's interbay automation products consist of automated
    storage and retrieval systems linked by an overhead monorail transport
    system, together with associated controllers, software and communications
    capabilities to provide a tightly integrated wafer flow solution. PRI's
    interbay automation systems include:

    - AEROTRAK OVERHEAD MONORAIL SYSTEMS--PRI's AeroTrak overhead monorail
      transport systems provide fast delivery of material from process bay to
      process bay.

    - TURBOSTOCKER AUTOMATED STORAGE AND RETRIEVAL SYSTEMS--PRI's TurboStocker
      automated storage and retrieval systems, or stockers, are enclosed,
      environmentally controlled structures that store work-in-process wafers in
      various locations throughout the fab.

    - INTERFLOOR AND INTERBUILDING TRANSPORT SYSTEMS--Interfloor and
      interbuilding transport systems move wafers between different floors or
      buildings of a fab.

    - TRANSNET MATERIAL CONTROL SOFTWARE--PRI's TransNet material control
      software directs the movement of wafers throughout the fab and is
      integrated with their interbay and intrabay automation systems.

2.  INTRABAY AUTOMATION:  Intrabay automation systems move wafers from storage
    systems to individual process tools. PRI's intrabay automation systems
    include:

    - MACHINE LOADING ROBOT VEHICLE--Machine loading robot vehicles are guided
      vehicles that utilize a track system embedded in the floor of the process
      bay to transport wafers to and from the process tool.

    - AEROLOADER OVERHEAD HOIST TRANSPORT SYSTEMS--PRI's AeroLoader overhead
      hoist transport systems use a monorail to retrieve wafer pods from a
      stocker and deliver them directly to the loadport at the process tool.

                                       2
<PAGE>
    - PEOPLE GUIDED VEHICLES--People guided vehicles are manually operated
      vehicles used to safely move materials across the fab and assist the
      operator in transferring the wafer pod from the vehicle to the process
      tool loadport. These vehicles can be used as a backup to automated
      systems.

3.  LITHOGRAPHY AUTOMATION SYSTEMS:  Lithography automation systems automate the
    storage, retrieval, tracking and delivery of reticles and wafers within the
    lithography bay. Reticles are glass plates containing the integrated circuit
    images that are projected onto wafers during the lithography process. As
    semiconductor manufacturing technology advances, the cost of lithography
    tools, or steppers, is increasing. Also, as integrated circuit design
    complexity increases, the number of reticles used in the manufacturing
    process increases, increasing the need for automation to improve utilization
    and productivity. Since the lithography bay typically paces overall fab
    output, productivity improvements in the lithography bay directly improve
    overall fab throughput and productivity. PRI's lithography automation
    systems include:

    - BARE RETICLE STOCKERS--Bare reticle stockers provide a high-density
      storage and retrieval solution for reticles that are stored without being
      placed in a pod or box container. This gives customers the ability to
      store large numbers of reticles in a very small footprint within the
      lithography bay. This year, PRI introduced its second-generation bare
      reticle stocker called the Guardian(tm) BRS.

    - RETICLE POD OR BOX STOCKERS--Reticle pod or box stockers provide clean and
      safe storage for reticles that are stored in industry-standard pods or
      boxes. The reticle pod and box stocker interfaces with our interbay
      transport system, allowing the pod or box stocker to be placed anywhere in
      the fab.

    - COMBINATION RETICLE STOCKERS--Combination reticle stockers combine the
      speed and convenience of a pod stocker with the high-density storage of a
      bare reticle stocker for greater levels of reticle inventory management
      and productivity in the lithography bay.

    - RETICLE MANAGEMENT SOFTWARE--Reticle management software manages the use,
      kitting and unkitting, delivery and maintenance of reticles for improved
      reticle inventory management.

    - 300MM RETICLE AUTOMATION--PRI is developing systems that will totally
      automate reticle storage and delivery in 300mm lithography bays. These
      systems combine PRI reticle stockers, overhead transport, and software
      control systems to manage reticle usage within the bay.

TOOL AUTOMATION SYSTEMS

    PRI provides robotic systems that automate the transfer of wafers into and
out of process tools. The primary customers for these solutions are
manufacturers of process tool equipment. These manufacturers typically integrate
PRI's tool automation systems into their product before shipment to the end user
(fab customer). PRI's tool automation systems include:

    - ATMOSPHERIC WAFER-HANDLING SYSTEMS--PRI is a leading supplier of
      atmospheric wafer-handling systems. These systems remove wafers from pods
      or cassettes and align them prior to placing them into the process tool
      chamber or metrology station.

    - VACUUM WAFER-HANDLING SYSTEMS--Vacuum wafer-handling systems automate
      wafer-handling within a vacuum chamber. PRI's vacuum products range from
      individual vacuum robotic components to fully integrated vacuum cluster
      platforms.

    - SFO INTEGRATED FRONT END SYSTEMS--PRI's Smart FOUP Opener (SFO) integrated
      front end systems store work-in-process wafer cassettes, standard
      mechanical interface pods, or 300mm front opening unified pods, or FOUPs,
      directly at the process tool front-end. These systems also unload wafers
      from the FOUP, align them and place them in the process tool. PRI's
      integrated front-end systems products include all SEMI-compliant
      interfaces to the factory automation systems.

                                       3
<PAGE>
    - 300MM LOADPORTS--PRI's 300mm loadports provide a simple and economical
      method for opening and removing wafers from FOUPs.

    - SPECIALTY WAFER-HANDLING SYSTEMS--PRI provides specially designed robots
      used in a variety of wafer-handling applications, including chemical
      mechanical planarization and copper interconnect processing.

FACTORY MANAGEMENT SOFTWARE

    As more of the semiconductor manufacturing process becomes automated, PRI
believes that software will play an increasingly important role in the
manufacturer's ability to improve the productivity of its overall fab
operations. PRI's software products address the most important aspects of wafer
flow logistics to deliver a complete software management solution that addresses
fab-wide operations. PRI's factory management software offerings include:

    - MANUFACTURING EXECUTION SYSTEM, OR MES, SOFTWARE--PRI's MES software
      manages and directs complex manufacturing operations by automating process
      specifications and control. PRI's PROMIS software is designed to integrate
      business production planning systems and material processing in the fab to
      optimize the flow of material and improve process equipment utilization.
      PRI expects to introduce its next-generation MES software offering,
      Encore!, in fiscal year 2001.

ADVANCED PLANNING AND SCHEDULING SOFTWARE

    PRI's planning and scheduling software offerings enable semiconductor
manufacturers to increase their return on investment by maximizing production
efficiency, prioritizing the production of high-margin or high-demand customer
orders and minimizing the disruption caused by limited process tool
availability. The Company's advanced planning and scheduling software offerings
include:

    - LEVERAGE FOR PLANNING SOFTWARE--PRI's Leverage for Planning software
      product enables customers to develop capacity plans to optimize wafer
      starts and quickly react to changing business requirements.

    - LEVERAGE FOR SCHEDULING SOFTWARE--PRI's Leverage for Scheduling software
      product enables customers to develop and modify work-flow schedules that
      optimize fab-wide operations based on many factors, including process tool
      availability, demand for specific semiconductor batches or types and
      changing business and technical requirements.

TOOL CONNECTIVITY SOFTWARE

    PRI's tool connectivity software solutions allow semiconductor manufacturers
to connect valuable production data generated by the process tool with the
manufacturing execution system (MES) software and the fab-wide scheduling
software. By connecting this production data with other fab-wide software
systems, manufacturers can more readily access their key production data and
make more informed decisions that impact the throughput and productivity of
valuable production resources. Key products include:

    - EQUIPESOFT SYSTEM CONTROL SOFTWARE--PRI's EquipeSoft system control
      software integrates, tracks and controls the wafer-handling robots within
      the manufacturer's process tool.

    - FABUILDER MANUFACTURING INTEGRATION SOFTWARE--FAbuilder, PRI's
      manufacturing integration software, reduces the time required to deploy
      process tool automation and provides a flexible solution for distributing
      and maintaining equipment automation throughout the fab.

    - EQONNECTOR PROCESS TOOL AND EQUIPMENT CONNECTIVITY SOFTWARE--PRI's
      eQonnector equipment connectivity software allows equipment and process
      engineers to easily connect any process tool or other critical
      manufacturing equipment to the fab's host MES system.

                                       4
<PAGE>
AUTOMATION SERVICES AND SUPPORT

    PRI provides a variety of automation services and support that are essential
to the success of large-scale factory automation projects. These include:

    - AUTOMATION PLANNING AND DESIGN SERVICES--PRI works with customers in
      assessing their automation needs during the design phase of a project to
      build or upgrade a fab. The Company develops a complete automation plan
      identifying the type and configuration of the automation systems and
      simulates a design, using computer-modeling techniques to verify that the
      design layout meets customer requirements.

    - PROJECT MANAGEMENT SERVICES--PRI provides customers with project
      management support during the building and manufacturing of the automation
      systems.

    - INSTALLATION SERVICES--PRI develops an installation plan and timetable
      coordinated with the customer's manufacturing schedule and installs the
      equipment in the customer's fab.

    - POST-INSTALLATION SERVICE AND SUPPORT--PRI provides a variety of
      post-installation services to assist customers in operating and
      maintaining their factory automation systems.

MARKETING, SALES AND CUSTOMER SUPPORT

    PRI markets its products worldwide to semiconductor manufacturers and OEM
semiconductor equipment suppliers. In North America, the Company sells and
supports its products through a direct sales and support organization operating
out of its headquarters in Billerica, Massachusetts and regional offices located
in California and Texas. Offshore, PRI products are sold and supported by a
direct sales and support organization with offices in France, Germany, Ireland,
Israel, Switzerland, the United Kingdom, Japan, Singapore, South Korea and
Taiwan.

    PRI offers a variety of service programs to meet a broad range of customer
requirements. These services can range from telephone hot-line support to
full-time, on-site customer service provided by its personnel based at the
customer's facility. The Company maintains a fully staffed and equipped training
center at its Billerica, Massachusetts headquarters to support the training
requirements of PRI customers.

COMPETITION

    Rapid technological change and intense competition characterize the
semiconductor capital equipment market. PRI's Factory Systems division competes
with Daifuku, Murata Machinery, Shinko Electric and a number of other smaller
foreign and domestic manufacturers of automated machinery used in semiconductor
fabrication facilities. The Company's OEM Systems division competes with Genmark
Automation, Asyst Technologies, Brooks Automation and a number of other foreign
and domestic wafer-handling robotics companies, including in-house organizations
of process tool manufacturers that develop their own automation technology, as
well as other smaller robotics companies. PRI's software products compete with
products provided by Consilium, a subsidiary of Applied Materials, Brooks
Automation and other vendors. PRI believes that competition in its industry is
likely to intensify.

    PRI believes that semiconductor manufacturers are striving to increase
productivity and reduce costs. The Company competes on the basis of product
performance, quality, reliability, customer service and support, delivery
capability and price. The Company believes that it has the following competitive
advantages in the factory automation market:

    - a broad range of integrated and flexible factory automation systems and
      factory management software products;

    - technological leadership;

    - experience in managing large factory automation projects;

                                       5
<PAGE>
    - domain expertise in automation applications;

    - specialized manufacturing skills; and

    - a worldwide sales and customer support infrastructure.

    However, existing or future competitors, particularly those with greater
resources than PRI's, or who are able to bring technologically superior products
to market, could overcome these competitive advantages.

    PRI believes that once a semiconductor manufacturer selects a vendor's
equipment for a particular fab, the manufacturer may continue to rely upon that
equipment for a specific application in other fabs. Accordingly, the Company may
have difficulty selling to potential customers that have selected a competitor's
equipment, and the Company expects that difficulty to last for a significant
period of time. Also, at least one of PRI's significant customers has adopted a
policy of maintaining multiple vendors for the products it purchases. This kind
of policy could limit additional sales to existing customers. In addition, the
opportunities presented by the transition to 300mm technology may cause new
competitors to enter PRI's markets and may diminish the competitive advantage
with customers for whom PRI is the incumbent supplier of automation equipment.
In the face of increased competition, PRI may need to lower its prices, which
could seriously harm PRI's business.

RESEARCH AND DEVELOPMENT

    PRI continuously invests in the development of new products to improve
performance and reliability and to introduce new functionality in order to
maintain its leading position in providing factory automation systems, tool
automation systems, and software. The ongoing development of technologies and
products, particularly relating to 300mm technology, is vital to PRI's success.
The Company's research and development expenses were $54.6 million,
$45.5 million and $44.5 million in fiscal years 2000, 1999 and 1998,
representing 18%, 33% and 22% of its total net revenue for such periods,
respectively.

CUSTOMERS

    PRI's customers include many of the leading global manufacturers of
semiconductors, as well as OEM semiconductor equipment suppliers in the United
States, Europe and the Asia-Pacific region. Historically, a significant portion
of the Company's total net revenue for any particular period has been
attributable to sales to a limited number of customers. Sales to PRI's top ten
customers accounted for 54% of total net revenue in both fiscal years 2000 and
1999, and 60% in fiscal year 1998.

    PRI's largest customers change from year to year, as large projects are
completed and new projects are initiated. Sales to Intel accounted for 14%, 21%
and 19% of total net revenue for fiscal years 2000, 1999 and 1998 respectively
and sales to KLA-Tencor accounted for 12% of total net revenue for fiscal year
2000.

BACKLOG

    PRI's backlog at September 30, 2000 was $207.4 million, compared to
$86.4 million at September 30, 1999. The Company includes in backlog only those
customer orders for products and services for which it has accepted signed
purchase orders with assigned delivery dates within twelve months. Tool
automation products and software products typically have shorter lead times than
do factory automation products. Therefore, backlog is not a relevant indicator
of business levels for these products.

MANUFACTURING

    PRI's manufacturing operations take place in Billerica, Massachusetts and in
Mountain View, California. Manufactured products consist of standard components
that can be customized to meet unique

                                       6
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customer requirements. The manufacturing operations consist primarily of
assembly and test functions, with fabrication of most components and
subassemblies outsourced to key suppliers. Completed subassemblies are tested
for functionality prior to their assembly into completed systems. Completed
systems are subjected to functional testing prior to shipment. PRI expects to
expand outsource manufacturing operations with the objective of reducing costs
and increasing its flexibility to respond to changes in semiconductor demand.
The Company has a strategic alliance with Shinsung Engineering Co., Ltd., a
Korean based electronics and semiconductor equipment components manufacturer, to
perform PRI's final assembly and test operations specifically for Asian customer
orders. Recently the Company invested approximately $12,000,000 in Shinsung
Engineering Co., Ltd.

    PRI has quality control and quality assurance processes. Quality control is
maintained through inspections of components and in-process inspection and
testing of subassemblies. After all manufacturing operations are completed, the
quality assurance personnel perform final test and acceptance of each system to
ensure that it meets product specifications and quality standards prior to
shipment to the customer.

INTELLECTUAL PROPERTY RIGHTS

    While PRI believes that success will depend more upon its technological
expertise and the capabilities of its employees than upon legal protection of
the Company's intellectual property rights. PRI's success also depends to a
significant degree upon its patent for certain key elements of its monorail
system, its other patents, its software and its other proprietary technology. At
September 30, 2000, PRI held eight issued U.S. patents relating to certain key
elements of its wafer-handling systems. PRI also had over 20 U.S. patent
applications pending, and the Company intends to file additional patent
applications as appropriate. The Company's patents expire at various times from
2007 to 2019. PRI cannot predict whether any patents will issue from its patent
applications, or whether any of its issued patents or subsequently issued
patents will provide any meaningful protection. PRI also seeks to protect its
trade secrets and other proprietary technology through confidentiality
agreements with employees, consultants and other parties. The steps PRI has
taken to protect its technology may be inadequate. If so, PRI might not be able
to prevent others from using what it regards as its technology to compete with
us. For example, PRI's patents could be challenged, invalidated or circumvented,
and the rights PRI have under its patents could provide no competitive
advantages. Existing trade secrets, copyright, and trademark laws offer only
limited protection. In addition, the laws of some foreign countries do not
protect PRI's proprietary technology to the same extent as the laws of the
United States. Other companies could independently develop similar or superior
technology without violating PRI's proprietary rights. Any misappropriation of
PRI's technology or the development of competitive technology could seriously
harm its business.

EMPLOYEES

    At September 30, 2000, the company had approximately 1,540 full-time
employees. In addition, PRI utilizes the services of temporary or contract
personnel within some functional areas to assist on project-related activities.
The number of temporary or contract personnel varies depending on specific
project activity. At September 30, 2000, the company employed approximately 210
temporary or contract personnel. PRI believes that its future success will
depend in large part on its ability to attract and retain highly skilled
employees. None of its employees is covered by a collective bargaining
agreement. PRI considers its relationship with its employees to be good.

                                       7
<PAGE>
ITEM 2. PROPERTIES

FACILITIES

    PRI's corporate headquarters are located in a 122,342-square foot leased
building in Billerica, Massachusetts. The lease on this facility expires in
2011. PRI also leases five additional facilities, with lease expiration dates
ranging from September 2001 to October 2010, in Billerica, Massachusetts, with a
total of 195,700 square feet. PRI's Billerica, Massachusetts facilities are
primarily used by its factory systems division for engineering and
manufacturing. PRI also leases facilities in Austin, Texas, Mountain View,
California, Mesa, Arizona, and Toronto, Ontario, as well as France, Germany,
Japan, Singapore, South Korea, Switzerland, Taiwan and the United Kingdom, under
leases with expiration dates ranging from March 2001 to November 2006. The
Company believes that its existing facilities will be adequate to meet its
currently anticipated requirements and that suitable additional or substitute
facilities will be available as required.

ITEM 3. LEGAL PROCEEDINGS

    On November 20, 2000, and November 22, 2000, the Company and three of its
directors were named as defendants in virtually identical lawsuits filed in the
United States District Court for the District of Massachusetts: (i) Kai Chan On
Behalf of Himself and All Others Similarly Situated vs. PRI Automation, Inc.,
Amram Rasiel, Mitchell G. Tyson and Mordechai Wiesler, Civil Action
No. 00-123958-REK; and (ii) Jacob J. Siegal On Behalf of Himself and All Others
Similarly Situated vs. PRI Automation, Inc., Amram Rasiel, Mitchell G. Tyson and
Mordechai Wiesler, Civil Action No. 00-12414-REK. The named plaintiff in each
action purports to bring the complaint on behalf of a class consisting of all
purchasers of the Company's stock during the period January 27, 2000 through
September 11, 2000. The plaintiffs claim that the defendants violated
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and SEC
Rule 10b-5, by virtue of statements and omissions that the plaintiffs claim were
materially false or misleading. The plaintiffs each seek certification as a
class, damages, pre-judgment and post-judgment interest, costs, and attorneys'
fees. The Company strongly believes that the lawsuits lack merit and it intends
to defend against the claims vigorously. The Company cannot predict the outcome
of the lawsuits at this time, and there can be no assurance that the litigation
will not have a material adverse impact on its financial condition or results of
operations.

    From time to time the Company has been, and expects to continue to be,
subject to legal proceedings and claims in the ordinary course of its business.
Such claims, even if not meritorious, could result in the expenditure of
significant financial and managerial resources.

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

    No matters were submitted to a vote of the Company's security holders during
the fourth quarter of fiscal year 2000.

                                       8
<PAGE>
                                    PART II

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

    The Company's common stock is traded on the National Market System of the
Nasdaq Stock Market under the trading symbol PRIA. There were 311 holders of
record of the Company's common stock as of December 6, 2000. The Company
believes that there are a substantial number of additional beneficial owners
that hold stock in nominee or "street name" through brokerage firms. The
following table sets forth the high and low sales prices for the Company's
common stock as reported on the Nasdaq Stock Market for each quarter during the
two-year period ended September 30, 2000.

<TABLE>
<CAPTION>
                                         1ST QUARTER    2ND QUARTER    3RD QUARTER    4TH QUARTER
                                         ------------   ------------   ------------   ------------
<S>                                      <C>            <C>            <C>            <C>
Fiscal 2000............................  $34.00-67.13   $59.06-87.63   $45.06-79.88   $18.25-71.44
Fiscal 1999............................  $ 9.57-27.75   $24.06-44.31   $20.75-39.00   $24.75-39.75
</TABLE>

    The Company has never paid cash dividends on its common stock. The current
policy of the Board of Directors is to retain all earnings to finance the
continued growth of the Company.

ITEM 6. SELECTED FINANCIAL DATA

    The following table summarizes certain selected consolidated financial data,
which should be read in conjunction with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and the Company's consolidated
financial statements and related notes included elsewhere herein.

<TABLE>
<CAPTION>
                                                          YEAR ENDED SEPTEMBER 30,
                                            ----------------------------------------------------
                                              2000       1999       1998       1997       1996
                                            --------   --------   --------   --------   --------
<S>                                         <C>        <C>        <C>        <C>        <C>
                                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
STATEMENTS OF OPERATIONS DATA:
  Total net revenue (1)...................  $299,772   $136,296   $203,545   $236,100   $166,256
  Gross profit (1)(2).....................    95,173     52,542     78,790    115,128     89,970
  Operating (loss) profit
    (1)(2)(3)(4)(5).......................    (9,280)   (37,955)   (31,014)    35,316     31,973
  Net (loss) income (1)(2)(3)(4)(5)(6)....    (7,953)   (36,085)   (22,623)    27,497     27,279
  Net (loss) income per common
    share:(1)(2)(3)(4)(5)(6)(7)
    Basic.................................     (0.34)     (1.67)     (1.08)      1.35       1.40
    Diluted...............................     (0.34)     (1.67)     (1.08)      1.27       1.33
BALANCE SHEET DATA:
  Total assets............................  $276,924   $146,552   $167,478   $195,315   $147,797
  Long-term capital lease obligations.....       125        411        734        823        735
</TABLE>

------------------------
(1) For the year ended September 30, 2000, reflects charges of $3,663,000 for
    customer penalties.

(2) For the years ended September 30, 2000 and 1998, reflects specific items
    charged to cost of revenue of $21,105,000 related to inventory provisions
    and write-downs, warranty provisions and contract losses, and $13,987,000
    for inventory and warranty provisions, respectively.

(3) For the year ended September 30, 1999, reflects charges of $3,950,000 for
    merger costs related to the acquisition of Promis and for other special
    charges of $2,425,000 for workforce reductions, lease abandonments, and
    other charges related to the integration of Promis with the Company. See
    Note S of Notes to Consolidated Financial Statements.

(4) For the year ended September 30, 1998, reflects charges of $8,417,000 for
    the purchase of incomplete technology from the acquisition of Interval Logic
    Corporation, merger costs of $4,490,000 related to the acquisition of Equipe
    and other special charges of $5,601,000 related to workforce reductions,
    lease abandonments and other charges incurred in consolidating the Company's
    business unit structure. See Notes Q and S of Notes to Consolidated
    Financial Statements.

(5) For the year ended September 30, 2000, reflects charges of $569,000 related
    to severance.

(6) For the year ended September 30, 1999 reflects a charge to establish a full
    valuation allowance against the Company's net deferred tax assets. See
    Note J of Notes to Consolidated Financial Statements.

(7) Reflects a two-for-one stock split effective May 2, 1997.

                                       9
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
  OF OPERATIONS

    The following discussion provides an analysis of the Company's financial
condition and results of operations and includes Promis Systems Inc. ("Promis"),
acquired in fiscal year 1999, and the Equipe Combined Companies ("Equipe"),
acquired in fiscal year 1998, each accounted for as a pooling of interests.

RESULTS OF OPERATIONS

    The following table sets forth, for the fiscal years indicated, certain
income and expense items as a percentage of net revenue:

<TABLE>
<CAPTION>
                                                                2000        1999        1998
                                                              --------    --------    --------
<S>                                                           <C>         <C>         <C>
Net revenue:
  Product and equipment.....................................    86.3%       73.4%       84.4%
  Services and maintenance..................................    13.7        26.6        15.6
                                                               -----       -----       -----
    Total net revenue.......................................   100.0       100.0       100.0
Cost of revenue:
  Product and equipment.....................................    58.6        46.9        51.8
  Services and maintenance..................................     9.7        14.6         9.5
                                                               -----       -----       -----
    Total cost of revenue...................................    68.3        61.5        61.3
                                                               -----       -----       -----
Gross profit................................................    31.7        38.5        38.7
Operating expenses:
  Research and development..................................    18.2        33.3        21.9
  Selling, general and administrative.......................    16.6        28.3        23.0
  Acquired in-process research and development..............      --          --         4.1
  Merger costs and special charges..........................      --         4.7         4.9
                                                               -----       -----       -----
Operating loss..............................................    (3.1)      (27.8)      (15.2)
Other income, net...........................................     0.9         2.1         0.3
                                                               -----       -----       -----
Loss before income taxes....................................    (2.2)      (25.7)      (14.9)
Provision for (benefit from) income taxes...................     0.4         0.8        (3.8)
                                                               -----       -----       -----
Net loss....................................................    (2.6)%     (26.5)%     (11.1)%
                                                               =====       =====       =====
</TABLE>

FISCAL 2000 VS. FISCAL 1999

    TOTAL NET REVENUE:  Total net revenue for fiscal year 2000 increased 119.9%
to $299,772,000, compared to $136,296,000 for fiscal year 1999. This overall
increase in the Company's total net revenue is attributable to an increase in
the Company's market share and the upturn in the worldwide semiconductor
industry, which resulted in an increase in the construction and expansion of
semiconductor fabs. Total net revenue increased in the three operating segments,
Factory Systems, OEM Systems, and Software Systems, 105.9%, 184.9% and 50.9%,
respectively, in fiscal year 2000. Total product and equipment revenue increased
158.6% in fiscal year 2000. In addition, service and maintenance revenue
increased 13.2%, for a net change in total revenue of 119.9%. Net export sales
to customers outside of North America were $107,638,000 or 35.9% of revenue for
fiscal year 2000, compared to $44,155,000 or 32.4% of total net revenue for the
prior fiscal year. During the fourth quarter of fiscal year 2000, the Company
incurred late delivery penalties that adversely impacted revenue by $3,663,000.
On September 11, 2000, the Company announced that its Factory Systems segment
had encountered manufacturing and supply chain problems relating to its new
TurboStocker product, which had been scheduled to transition into high volume
production during the fourth quarter of fiscal year 2000. As a result of these
problems, the Company announced that its revenue for the fourth quarter of
fiscal year 2000 would be lower than expected, including the effect of
$3,663,000

                                       10
<PAGE>
of late delivery penalties. The Company has initiated efforts to correct the
manufacturing and supply chain problems in its Factory Systems segment. These
problems will continue to affect the Company's revenue and profitability in the
first half of fiscal 2001, and if the Company is unable to correct these
problems in a timely manner, the adverse impact could be more prolonged. See
"Certain Factors That May Affect Future Results."

    GROSS PROFIT:  The Company's gross profit margin was 31.7% for fiscal year
2000, compared to 38.5% for the prior fiscal year. The decrease in gross profit
margin occurred principally in the Factory Systems segment, as a result of lower
than expected revenues and increased costs related to the Company's TurboStocker
manufacturing problems. These problems and the corresponding corrective actions
resulted in specific charges being incurred in the fourth quarter relating
mainly to inventory provisions and write-downs of $14,657,000, provisions for
contract losses of $5,215,000, and provisions for warranty expense and other
items of $1,233,000. The decrease was offset partially by gross profit margin
improvements in the Company's OEM Systems segment due to greater manufacturing
efficiencies associated with increased production volumes and by a favorable
change in product mix toward the Company's higher-margin OEM Systems products.
Service and Maintenance gross profit margin was 29.4% for fiscal year 2000,
compared to 45.0% for the prior fiscal year. The decrease in service and
maintenance gross profit margin relates primarily to increases in personnel and
related costs to support anticipated future growth of the Company's installed
base of products.

    RESEARCH AND DEVELOPMENT:  Research and development expenses increased to
$54,568,000 or approximately 18.2% of total net revenue for fiscal year 2000,
compared to $45,480,000 or 33.3% of total net revenue for the prior fiscal year.
The increase in fiscal year 2000 spending is the result of the Company's
continued investments in next-generation automation system products, including
interfloor transport systems, automated storage and retrieval systems, bare
reticle stockers, robotic wafer handling systems, MES systems, and advanced
planning and scheduling systems. The decrease in spending as a percent of total
net revenue, in fiscal year 2000, is due to the increase in total net revenue
during the fiscal year.

    SELLING, GENERAL AND ADMINISTRATIVE:  Selling, general and administrative
expenses increased to $49,885,000 or 16.6% of total net revenue for fiscal year
2000, compared to $38,642,000 or 28.3% of total net revenue for the prior fiscal
year. In fiscal year 2000, the Company increased marketing efforts, sales
activities and other administrative expenses incurred in support of the growth
in customer orders and revenues. The decrease in spending as a percent of total
net revenue is due to the increase in total net revenue in fiscal year 2000, as
well as to the consolidation of duplicate functions and activities of acquired
companies.

    MERGER COSTS AND SPECIAL CHARGES:  The company did not recognize any merger
costs or special charges during fiscal year 2000. In the first quarter of fiscal
year 1999, the Company recorded special charges of $650,000 representing
provisions for severance compensation relating to the termination of 62
personnel. The personnel reductions included 40 in manufacturing and customer
support, 8 in engineering and 14 in sales, general and administrative functions.
In the second quarter of fiscal year 1999 the Company acquired Promis, in a
pooling-of-interests transaction, and recorded merger costs of $3,950,000,
consisting primarily of investment banking, legal and accounting fees. In
addition, the Company recorded special charges of $1,850,000 during the second
quarter, of fiscal year 1999, consisting of $1,406,000 for compensation-related
costs for five management personnel in sales, general and administrative
functions to satisfy existing contractual obligations related to acquired
companies; $196,000 of costs associated with the reduction of leased facilities;
and $248,000 for other legal costs. In the fourth quarter of fiscal year 1999,
the Company recognized a credit of $75,000, to adjust the estimated costs to
reflect actual costs. At September 30, 2000, approximately $72,000 of these
charges remain in accrued expenses, and are expected to be paid during fiscal
year 2001.

    OTHER INCOME, NET:  Other income, net, in fiscal year 2000 was $2,554,000 or
0.9% of total net revenue, compared to $2,935,000 or 2.1% of total net revenue
for the prior fiscal year. Interest income was

                                       11
<PAGE>
$3,376,000 and $2,233,000 and interest expense was $92,000 and $123,000, for
fiscal years 2000 and 1999, respectively. The increase in interest income was
due to the higher average cash balance on hand during fiscal year 2000. Net
translation and foreign exchange loss of $721,000 was recorded in fiscal year
2000 compared to net translation and foreign exchange gain of $854,000 in fiscal
year 1999.

    PROVISION FOR INCOME TAXES:  The income tax provision for fiscal year 2000
was $1,227,000, compared to $1,065,000 for the previous fiscal year. The
effective tax rate in fiscal year 2000 was 18.2% as compared to 3.0% for the
previous fiscal year. In fiscal year 2000, the effective tax rate was
unfavorably affected by the provision for foreign and local taxes.

FISCAL 1999 VS. FISCAL 1998

    TOTAL NET REVENUE:  Total net revenue for fiscal year 1999 decreased 33.0%
to $136,296,000, compared to $203,545,000 for fiscal year 1998. This overall
decrease in the Company's total net revenue was attributable to the downturn in
the worldwide semiconductor industry, which resulted in a significant slowdown
in the construction or expansion of semiconductor fabs. The total net revenue
decline occurred primarily in the Factory Systems and OEM Systems segments,
which declined by 34.7% and 41.1% in fiscal year 1999, respectively. While
product and equipment revenue decreased, the Company gained market share in
fiscal year 1999 and experienced a 14.1% increase in its service and maintenance
revenue. Net export sales to customers outside of North America were $44,155,000
or 32.4% of revenue for fiscal year 1999, compared to $72,238,000 or 35.5% of
total net revenue for the prior fiscal year.

    GROSS PROFIT:  The Company's gross profit margin was 38.5% for fiscal year
1999, compared to 38.7% for the prior fiscal year. In fiscal year 1998, there
were $13,987,000 in charges to cost of sales related to inventory and warranty
provisions. Excluding these charges, fiscal year 1998 gross profit margins would
have been 45.6%. The decline in gross profit margin in fiscal year 1999 occurred
principally in the Factory Systems segment, which decreased, to 20.4% from
23.7%. The deterioration in margin was the result of fixed capacity and related
manufacturing costs, which could not be reduced proportionally with the
reduction in production volume, and a decline in product pricing during the
industry downturn. This decline was partially offset by favorable changes in
product mix. Gross margin for service and maintenance increased in fiscal year
1999 to 45.0% from 38.9% in fiscal year 1998 and was primarily related to
increased growth in software maintenance contracts.

    RESEARCH AND DEVELOPMENT:  Research and development expenses increased
slightly to $45,480,000 or approximately 33.3% of total net revenue for fiscal
year 1999, compared to $44,509,000 or 21.9% of total net revenue for the prior
fiscal year. The increase in the dollar amount of research and development
spending reflects the Company's continued investment in new product development
and enhancements of existing product lines. The Company continued to invest in
the development of 200mm and 300mm products throughout its factory automation
and tool automation product lines as well as the manufacturing execution, and
advanced planning and scheduling software product lines.

    SELLING, GENERAL AND ADMINISTRATIVE:  Selling, general and administrative
expenses decreased to $38,642,000 or 28.3% of total net revenue for fiscal year
1999, compared to $46,787,000 or 23.0% of total net revenue for the prior fiscal
year. The Company reduced its expenses in the current fiscal year in response to
the industry downturn and through the consolidation of common activities and
functions of acquired companies. In fiscal year 1999, the Company reduced its
work force by 62 personnel, including 14 in sales, general and administrative
functions, in addition to a reduction in force of 244 personnel, including 56 in
sales, general and administrative functions, in fiscal year 1998. See "Merger
costs and special charges" for discussion of severance and reductions of leased
facilities.

    ACQUIRED IN PROCESS RESEARCH AND DEVELOPMENT:  In fiscal year 1998, the
Company recorded a charge of $8,417,000 in relation to the purchase of
incomplete technology acquired in the ILC acquisition.

                                       12
<PAGE>
    MERGER COSTS AND SPECIAL CHARGES:  During fiscal year 1999 the Company
incurred certain special charges. In the first quarter of fiscal year 1999, the
Company recorded special charges of $650,000 representing provisions for
severance compensation relating to the termination of 62 personnel. The
personnel reductions included 40 in manufacturing and customer support, 8 in
engineering and 14 in sales, general and administrative functions. In the second
fiscal quarter the Company acquired Promis, in a pooling-of-interest
transaction, and recorded merger costs of $3,950,000 consisting primarily of
investment banking, legal and accounting fees. In addition, during the second
quarter, the Company recorded special charges of $1,850,000. The special charges
consisted of $1,406,000 for compensation-related costs for five management
personnel in sales, general and administrative functions to satisfy existing
contractual obligations related to acquired companies; $196,000 of costs
associated with the reduction of leased facilities; and $248,000 for other legal
costs. In the fourth fiscal quarter, the Company recognized a credit of $75,000,
to adjust the estimated costs to reflect actual costs. At September 30, 1999,
$424,000 of these charges remained in accrued expenses.

    During fiscal year 1998 the Company incurred certain special charges. In the
second quarter of fiscal year 1998, the Company acquired Equipe in a transaction
accounted for as a pooling of interests. Direct acquisition costs, primarily
related to legal, investment banking, and accounting fees, amounted to
$4,490,000 and were charged against the results of operations in the quarter.
Additionally, during the second, third and fourth quarters of fiscal year 1998,
the Company recorded restructuring and other special charges of $5,601,000 in
response to market conditions and to integrate the Equipe operations. The
special charges included provisions for severance compensation of $1,910,000
resulting from terminations of approximately 244 personnel completed in fiscal
year 1998. The personnel reductions consisted of 123 in manufacturing and
customer support, 65 in engineering and 56 in sales, general and administrative
functions. In addition, the special charges included costs of $2,943,000
relating to reductions of leased facilities space and a non-cash write-down of
specialized demonstration equipment for a particular customer of $748,000 and
other assets that are not usable elsewhere. Of the total $4,853,000 severance
and lease reduction charges recorded in fiscal year 1998, all of these special
charges had been paid as of September 30, 1999.

    OTHER INCOME, NET:  Other income, net, in fiscal year 1999 was $2,935,000 or
2.1% of total net revenue, compared to $625,000 or 0.3% of total net revenue for
the prior fiscal year. Interest income was $2,233,000 and $1,991,000 and
interest expense was $123,000 and $137,000, for fiscal years 1999 and 1998,
respectively. Net translation and foreign exchange gains of $854,000 were
recorded in fiscal year 1999 and net translation and foreign exchange losses of
$1,086,000 were incurred in fiscal year 1998.

    PROVISION FOR (BENEFIT FROM) INCOME TAXES:  The income tax provision for
fiscal year 1999 was $1,065,000, compared to a benefit of $7,766,000 for the
previous fiscal year. The effective tax rate in fiscal year 1999 was 3.0% as
compared to 25.6% for the previous fiscal year. In fiscal year 1999, the
effective tax rate was unfavorably affected by the provision for foreign taxes
and the increase in the valuation allowance as a result of management's
conclusion that a full valuation allowance against its net deferred tax asset
was required, under applicable accounting criteria. The effect of the provision
for foreign taxes and the increase in the valuation allowance was partially
offset by the Company's ability to carryback tax losses generated in fiscal year
1999 to a prior profitable period. The fiscal year 1998 effective tax rate
reflects the charges for acquired in-process research and development and merger
and other special charges which are not fully deductible for income tax
purposes. This unfavorable impact was partially offset by the effect of the
acquisition of Equipe Technologies, Inc. and E-Machine, Inc., which were both
subchapter S corporations for federal income tax purposes for the three months
ended December 28, 1997.

LIQUIDITY AND CAPITAL RESOURCES

    The Company has funded its operations primarily through private equity
financing, bank lines of credit, public stock offerings in October 1994 and
July 1995 and cash generated from operations. In

                                       13
<PAGE>
addition, during fiscal year 2000 the Company completed a common stock offering
which provided the Company with $89.9 million of cash, net of offering expenses.

    At September 30, 2000 the Company had working capital of $177,630,000,
including cash and cash equivalents of $92,484,000, compared to working capital
of $78,936,000, including cash and cash equivalents of $51,865,000 as of
September 30, 1999.

    Net cash used in operations was $55,510,000 in fiscal year 2000, compared to
net cash used in operations of $10,462,000 in fiscal year 1999. The net cash
used by operating activities in fiscal year 2000 was primarily attributable to
the net loss, increases in accounts receivable and contracts in progress in
aggregate of $60,003,000 and increases in inventory of $38,512,000. These cash
outflows were partially offset by the non-cash expenses of $19,161,000,
consisting primarily of depreciation and amortization and provisions for
write-downs of inventories as well as increases in accounts payable and accrued
expenses of $27,864,000. Net cash used in operations in fiscal year 1999 was
primarily attributable to the net loss, partially offset by non-cash items of
$19,460,000 consisting of depreciation, amortization and deferred taxes.
Additionally, increases in accounts payable and accrued expenses of $6,676,000,
decreases in accounts receivable of $3,726,000 and decreases in contracts in
progress of $2,999,000 provided cash from operations. The net cash used in
operations and the investment in working capital is in support of the growth in
customer orders, revenues and overall business operations.

    Net cash used in investing activities was $13,844,000 in fiscal year 2000,
compared to $6,823,000 in fiscal year 1999. The increase is principally
attributable to investments in capital assets, primarily leasehold improvements
and computers and telecommunications equipment. The Company anticipates that it
will continue to invest in capital equipment to support its infrastructure needs
accompanying its business growth. Subsequent to September 30, 2000, the Company
made a $12 million minority investment in Shinsung Engineering Co. Ltd., as part
of a strategic alliance. See Note V of Notes to Consolidated Financial
Statements.

    Net cash provided by financing activities was $110,682,000 in fiscal year
2000, compared to cash provided in financing activities of $12,124,000 in fiscal
year 1999. The increase is principally attributable to the Company's common
stock offering, completed during the third quarter, which provided $89,905,000,
net of offering expenses. The increase in fiscal year 2000 is also attributable
to $21,303,000 of proceeds from the exercise of stock options and from the
Company's Employee Stock Purchase Plan.

    At September 30, 2000, the Company had a revolving credit facility agreement
with Chase Manhattan Bank (the "Bank"). The revolving credit facility enables
the Company to borrow up to $20,000,000 on an unsecured basis. Outstanding
revolving credit loans bear interest, at the Company's option, at the 30, 60 or
90 day LIBOR rate plus a credit spread, or at the effective prime rate. At
September 30, 2000, the LIBOR borrowing rate would have been 6.62%. The ability
of the Company to borrow under the revolving credit facility is conditioned upon
the meeting of certain financial criteria. The revolving credit agreement
expires on December 31, 2000. On December 14, 2000, the Company amended its
existing revolving credit facility agreement with the Bank extending the
expiration date to March 31, 2001. At September 30, 2000, the Company had
outstanding letters of credit with the Bank of $1,420,000 and therefore, the
available balance under this credit agreement was $18,580,000. At September 30,
2000, the Company was not in compliance with the minimum consolidated net worth
requirement, the minimum fixed charge coverage ratio, and the maximum total
funded debt to EBITDA (earnings before interest, taxes, depreciation, and
amortization) ratio of the revolving credit agreement, but has subsequently
received a waiver from the Bank through September 30, 2000. The Company expects
to seek future waivers as necessary from the Bank. However, there can be no
assurance that such waivers will be obtained.

    The Company believes that existing cash and investment balances and funds
available under its existing revolving credit facility will be sufficient to
meet the Company's cash requirements to fund operations and expected capital
expenditures during the next twelve months.

                                       14
<PAGE>
CERTAIN FACTORS THAT MAY AFFECT FUTURE RESULTS

    From time to time, information provided by the Company, statements made by
its employees or information included in its filings with the Securities and
Exchange Commission may contain statements which are not historical facts but
which are "forward-looking statements" involving risks and uncertainties. In
particular, statements in "Management's Discussion and Analysis of Financial
Condition and Results of Operations" relating to the Company's expectations
concerning its future results of operations and the sufficiency of capital to
meet working capital and capital expenditure requirements may be forward-
looking statements. The words "expect," "anticipate," "internal," "plan,"
"believe," "seek," "estimate" and similar expressions are intended to identify
such forward-looking statements. Such statements are not guarantees of future
performance and involve certain risks, uncertainties and assumptions that could
cause the Company's future results to differ materially from those expressed in
any forward-looking statements made by or on behalf of the Company. Many of
these factors are beyond the Company's ability to control or predict. Readers
are accordingly cautioned not to place undue reliance on forward-looking
statements. The Company disclaims any intent or obligation to update publicly
any forward-looking statements, whether in response to new information or future
events or otherwise. Important factors that may cause the Company's actual
results to differ from such forward-looking statements include, but are not
limited to the factors discussed below.

    The Company's future results face the following risks and uncertainties: the
Company has experienced and may continue to experience capacity constraints
during high growth periods which may limit the Company's ability to take
advantage of business opportunities during such periods, such as the
manufacturing problems related to its new TurboStocker product that adversely
affected the Company's results of operations in fiscal year 2000; during periods
of high growth, the Company is required to increase its cost structure to
support anticipated customer services and such cost increases may occur before
related revenue increases; the Company maintains inventory to support production
which, due to the evolution of products and the cyclical nature of demand, may
be rendered obsolete; and in order to continually improve its technology to
remain competitive, the Company must expend substantial resources on research
and development, even in periods during industry downturns.

    In addition to the foregoing, the following additional factors could cause
material fluctuations in the Company's future operating results on a quarterly
or annual basis, which could materially adversely affect its business, financial
condition, operating results and stock price:

OVERSUPPLY IN THE SEMICONDUCTOR MARKET MAY IN THE FUTURE REDUCE DEMAND FOR
CAPITAL EQUIPMENT, INCLUDING FOR THE COMPANY'S SYSTEMS.

    The Company's business depends heavily upon capital expenditures by
semiconductor manufacturers, particularly manufacturers that are opening or
expanding semiconductor fabrication facilities. These manufacturers frequently
postpone or abandon their plans to make capital expenditures when demand for
their products and products containing semiconductors is low. The semiconductor
industry has been highly cyclical, and periods of oversupply in the market for
semiconductors have caused significantly reduced demand for capital equipment,
including the Company's systems. The Company believes that this cyclicality will
continue and that the markets for newer generations of semiconductors will be
subject to similar fluctuations. Also, the recent high rate of technical
innovation and resulting improvements in the performance and price of
semiconductor devices, which have driven much of the demand for the Company's
products, could slow, or encounter limits, in the future. In addition, any other
factor adversely affecting the semiconductor industry or particular segments
within the semiconductor industry may adversely effect the Company's business,
financial condition and operating results.

                                       15
<PAGE>
THE SEMICONDUCTOR INDUSTRY RECENTLY EXPERIENCED A DOWNTURN THAT ADVERSELY
AFFECTED THE COMPANY'S OPERATING RESULTS, AND REDUCED DEMAND FOR SEMICONDUCTORS
IN THE FUTURE COULD JEOPARDIZE THE COMPANY'S PLANS.

    In recent years, the semiconductor industry experienced a significant
downturn, which seriously harmed the Company's ability to sell its systems. The
recent downturn in the Asia-Pacific market also affected demand for
semiconductor manufacturing equipment, including the Company's systems. These
and other factors significantly reduced the Company's revenue and profitability
in fiscal 1999. The Company's total net revenue for fiscal 1999 was
$136.3 million, compared with total net revenue of $203.5 million in fiscal
1998. This decline occurred primarily in the Company's Factory Systems and OEM
Systems businesses. In fiscal 1999, the Company incurred a net loss of
$36.1 million, compared with a net loss of $22.6 million in fiscal 1998. These
losses included special charges, including charges for restructuring and
personnel reductions related to cost-cutting measures the Company took in
response to the industry downturn. If the Company takes cost-cutting measures in
response to another downturn in the semiconductor industry, the Company may be
unable to continue to invest in marketing, research, development and engineering
at the levels the Company thinks is necessary to maintain its competitive
position. The Company's failure to make these investments could seriously
curtail its long-term business prospects.

THE COMPANY MAY HAVE DIFFICULTY MANAGING ITS OPERATIONS IN RESPONSE TO
FLUCTUATING DEMAND.

    The Company's systems, procedures, controls and staffing may not be adequate
to support rapid growth in its operations. For example, in fiscal year 2000, the
Company encountered manufacturing and supply chain problems relating to the
Company's TurboStocker product, which the Company had planned to begin
manufacturing in high volume in the fourth quarter of fiscal year 2000 in
response to increased customer demand. These problems caused the Company's
revenues for the fourth quarter and fiscal year 2000 to be lower than expected
and contributed to the Company's net loss for these periods. These problems will
continue to affect the Company's revenues and profitability in the first half of
fiscal 2001, and if the Company is unable to correct these problems in a timely
manner, the adverse impact could be more prolonged.

    The Company's failure to respond effectively to fluctuating demand for its
products and to manage its manufacturing and other operations and its future
growth, if any, could seriously harm its business. If the Company fails to meet
a customer's delivery or performance criteria, as has recently occurred in
certain instances involving its new TurboStocker product, the Company could
incur contract losses and late delivery penalties, lose business from that
customer, suffer long-term damage to its reputation and have higher warranty and
service costs. Any of these results could seriously harm the Company's business.
Further, if the Company is unable to expand its existing manufacturing capacity
to meet demand, a customer's placement of a large order for the development and
delivery of factory automation systems during a particular period might deter
other customers from placing similar orders with the company for the same
period. It could be difficult for the Company to rapidly recruit and train the
substantial number of qualified engineering and technical personnel who would be
necessary to fulfill one or more large, unanticipated orders.

THE COMPANY'S LENGTHY SALES CYCLE MAKES IT DIFFICULT TO ANTICIPATE SALES.

    The Company's systems often have a lengthy sales cycle. As a result, the
Company has difficulty anticipating the timing and amount of specific sales. The
Company may also spend significant amounts of money and effort with no assurance
that it will make a sale. Before buying one of the Company's systems, a
prospective customer must generally decide to upgrade or expand existing
facilities or to construct new facilities. These undertakings are major
decisions for most prospective customers and typically involve significant
capital commitments and lengthy evaluation and approval processes. In addition,
downturns in

                                       16
<PAGE>
the semiconductor industry may cause prospective customers to postpone decisions
regarding major capital expenditures, including purchases of the Company's
systems.

THE COMPANY'S OPERATING RESULTS FLUCTUATE SIGNIFICANTLY, AND ITS STOCK PRICE
COULD FALL IF ITS OPERATING RESULTS ARE BELOW THE EXPECTATIONS OF ANALYSTS OR
INVESTORS.

    Many factors may cause the Company's operating results to fluctuate
significantly. Some of these factors are:

    - the timing of significant orders;

    - the gain or loss of any significant customer;

    - new product announcements and releases by the Company or its competitors;

    - the Company's ability to manufacture and ship its products consistent with
      its customers' expectations during periods of fluctuating demand caused by
      the cyclicality of the semiconductor manufacturing equipment industry;

    - order cancellations and shipment reschedulings or delays;

    - patterns of capital spending by the Company's customers;

    - market acceptance of new and enhanced versions of the Company's products;

    - changes in the pricing and the mix of products the Company sells;

    - cyclicality in the semiconductor industry and the markets served by the
      Company's customers;

    - the timing of any acquisitions and related costs; and

    - changes in personnel and related costs.

    In addition, because the Company's services and maintenance revenue is
largely correlated with its product and equipment revenue, a decline in product
and equipment revenue could reduce services and maintenance revenue in the same
quarter or in subsequent quarters.

    If the Company's operating results fall below the expectations of financial
analysts or investors, its stock price could fall. As a result of these factors
and the other factors described in this section, the Company believes that
period-to-period comparisons of its revenue and operating results are not
necessarily meaningful. You should not rely on these comparisons to predict the
Company's future performance.

DELAY IN THE COMPANY'S SHIPMENT OF A SINGLE SYSTEM COULD SUBSTANTIALLY DECREASE
ITS SALES FOR A PERIOD.

    The Company derives a substantial portion of its revenue from the sale of a
relatively small number of its systems. The purchase price of the Company's
systems generally ranges from $3.0 million to $15.0 million, and the Company
usually takes more than one or two fiscal quarters to deliver its systems. As a
result, any delay in the recognition of revenue for a single system could harm
the Company's results for a given accounting period. If the Company delays a
shipment near the end of a fiscal period because, for example, the customer
reschedules or cancels its order or the Company encounters unexpected
manufacturing difficulties, its sales in that fiscal period could fall
significantly below the expectations of financial analysts and investors. This
could cause the Company's stock price to fall.

                                       17
<PAGE>
NEW ACCOUNTING GUIDANCE COULD RESULT IN DELAYED RECOGNITION OF THE COMPANY'S
REVENUES.

    In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, entitled "Revenue Recognition in Financial
Statements." The bulletin sets forth the SEC's guidance in applying generally
accepted accounting principles to selected revenue recognition issues. The
Company will be required to apply the guidance in the bulletin in its financial
statements beginning in the Company's fourth quarter of fiscal 2001. The effects
of applying this guidance with respect to the Company's historical reported
revenue will be reflected as a cumulative effect adjustment in its statement of
operations for the fourth quarter of fiscal 2001. The Company has not completed
its evaluation of the guidance in the bulletin as it relates to its business,
and therefore cannot yet assess the likely impact of application of the guidance
on its future results of operations, or the magnitude of the cumulative effect
adjustment, if any, that may be required. In certain situations, application of
the guidance discussed in the bulletin could delay the recognition of revenue
that might otherwise have been recognized in earlier periods. As a result, the
Company's reported revenue could fluctuate more widely among fiscal periods in
the future, and reported revenue for a particular fiscal period might not meet
expectations. A significant cumulative effect adjustment or delay in recognition
of revenue resulting from application of the guidance in the bulletin, while not
affecting the Company's cash flow, could adversely affect its results of
operations in one or more future periods, which could cause its stock price to
fall.

THE COMPANY TYPICALLY CHARGES A FIXED PRICE FOR A SYSTEM, WHICH LEAVES IT
VULNERABLE TO COST OVERRUNS.

    The Company's operating results also fluctuate because its gross margins
vary. The Company's gross margins vary for a number of reasons, including:

    - the mix of products the Company sells;

    - the average selling prices of products the Company sells;

    - the costs to manufacture, market, service and support the Company's new
      products and enhancements;

    - the costs to customize the Company's systems; and

    - the Company's efforts to enter new markets.

    The Company typically charges a fixed price for its systems. As a result, if
the costs the Company incurs in performing a contract exceed its expectations,
the Company generally cannot pass those costs on to its customer.

THE COMPANY HAS SIGNIFICANT FIXED COSTS, WHICH ARE NOT EASILY REDUCED DURING A
DOWNTURN.

    The Company continues to invest in research and development, capital
equipment and extensive ongoing customer service and support capability
worldwide. These investments create significant fixed costs that the Company may
be unable to reduce rapidly if the Company does not meet its sales goals.
Moreover, if the Company lacks a significant backlog of orders for an extended
period of time, the Company may have difficulty planning its future production
and inventory levels, which could also cause fluctuations in its operating
results.

THE COMPANY HAS A LIMITED NUMBER OF CUSTOMERS, AND THE LOSS, CANCELLATION OR
DELAY OF ANY ORDER BY THESE CUSTOMERS COULD HARM ITS BUSINESS.

    Historically, the Company has derived a significant portion of its revenue
from a limited number of customers. The Company expects this trend to continue
for the foreseeable future. The loss, cancellation

                                       18
<PAGE>
or delay of any order by these customers could significantly reduce the
Company's revenue and harm its reputation in the industry. Sales to the
Company's top ten customers accounted for 54% of its total net revenue in fiscal
years 2000 and 1999, and 60% in fiscal year 1998. One customer, Intel, accounted
for 14%, 21% and 19% in fiscal years 2000, 1999 and 1998, respectively. The
Company's largest customers can change from year to year, as some customers
complete large semiconductor fabrication facilities and others initiate new
projects. Moreover, at least one of the Company's significant customers has
adopted a policy of maintaining multiple vendors for the products it purchases.
This kind of policy could limit the Company's ability to sell its products to
its customers.

THE COMPANY DOES NOT HAVE LONG-TERM PURCHASE AGREEMENTS WITH ITS CUSTOMERS, AND
AS A RESULT ITS CUSTOMERS COULD STOP PURCHASING ITS PRODUCTS AND SERVICES AT ANY
TIME.

    None of the Company's customers have any long-term obligation to continue to
purchase its products or services, and any customer could reduce or cease
ordering its products or services. The Company's failure to obtain large orders
from new or existing customers could seriously harm its business. The Company
believes that sales to some of its customers will decrease in the near future as
they complete their current purchases for new or expanded semiconductor
fabrication facilities. In the past, the Company's customers have sometimes
failed to place orders the Company expected or have delayed or canceled delivery
schedules as a result of changes in their requirements. Because of the long
sales cycle for its products, the Company may have difficulty in quickly
replacing orders that its customers cancel or reduce. When a customer cancels an
order, the Company's sales contract generally allows it to recover only its
costs and a portion of its anticipated profits from the sale. Any order
deferrals or cancellations could seriously harm the Company's business.

DEMAND FOR LESS EXPENSIVE SEMICONDUCTORS IS INCREASING PRESSURE TO REDUCE PRICES
IN THE COMPANY'S INDUSTRY.

    Semiconductors are increasingly being incorporated into less expensive
products, which limits the price that semiconductor manufacturers can charge for
semiconductors. As a result, semiconductor manufacturers face increasing
pressure to reduce their costs, which in turn creates pressure on semiconductor
equipment manufacturers, such as the Company, to reduce the prices of their
products. The Company believes that over time this trend will lead to lower
prices, which would reduce its revenue and adversely affect its operating
results.

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 the Company's 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, the Company's 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.

THE COMPANY'S ONGOING INVESTMENTS IN THE ASIA-PACIFIC MARKET MAY NOT BE
SUCCESSFUL.

    The Company believes that its continued presence in the Asia-Pacific market
will be important to its long-term future financial performance. Accordingly,
the Company expects to continue to invest significant

                                       19
<PAGE>
resources to increase its presence in the Asia-Pacific market. Many of the
Company's Japanese competitors have longstanding collaborative relationships
with Japanese and other semiconductor manufacturers in the Asia-Pacific region.
Accordingly, the Company may be unable to increase sales in the Asia-Pacific
semiconductor market. This market, which includes South Korea, Taiwan,
Singapore, China and, most significantly, Japan, represents a substantial
percentage of worldwide semiconductor manufacturing capacity.

THE COMPANY HAS INVESTED HEAVILY IN 300MM WAFER TECHNOLOGY, WHICH IS BEING
ADOPTED MORE SLOWLY THAN EXPECTED, AND COMPETITION FOR EARLY 300MM ORDERS MAY BE
INTENSE.

    The Company has invested, and is continuing to invest, substantial resources
to develop new systems and technologies to automate the processing of 300mm
wafers. However, the industry transition from the current, widely used 200mm
manufacturing technology to 300mm manufacturing technology is occurring more
slowly than expected, partly as a result of the recent period of reduced demand
for semiconductors. Although a small number of pilot projects are currently in
operation, no 300mm semiconductor fabrication facility is producing wafers in
commercial quantities. Any significant delay in the adoption of 300mm
manufacturing technology or the failure of the industry to adopt 300mm
manufacturing technology, could significantly reduce the Company's opportunities
for future growth. Moreover, continued delay in the transition to 300mm
technology could permit the Company's competitors to introduce competing or
superior 300mm products, and the Company's competitive position in the market
for 300mm products could be adversely affected by its recent manufacturing
problems relating to its new 200mm TurboStocker product.

    Manufacturers implementing factory automation in 300mm pilot projects may
initially seek to purchase systems from multiple vendors. Competition, including
price competition, for such early 300mm orders could be vigorous. A vendor whose
system is selected for an early 300mm pilot project may have, or be perceived to
have, an advantage in competing for future orders, and thus the award to a
competitor of one or more early 300mm orders could cause the Company's stock
price to fall.

IT IS DIFFICULT TO HIRE AND RETAIN THE MANAGERIAL AND TECHNICAL EMPLOYEES THAT
THE COMPANY NEEDS

    The Company needs to hire additional management-level employees and
substantial numbers of employees with technical backgrounds for both its
hardware and software engineering and technical support staffs. The market for
these employees is becoming increasingly competitive, and the Company has
occasionally experienced delays in hiring these personnel. The Company's failure
or inability to recruit, retain and train adequate numbers of qualified
personnel on a timely basis would adversely affect its ability to develop,
manufacture, install and support its systems.

THE COMPANY'S INTERNATIONAL OPERATIONS CREATE SPECIAL RISKS.

    The Company's net export sales to customers outside North America accounted
for 35.9%, 32.4% and 35.5% of its total net revenue in fiscal years 2000, 1999
and 1998, respectively. The Company anticipates that international sales will
continue to account for a significant portion of its total net revenue for the
foreseeable future. The Company's plan to expand internationally may distract
its attention from its domestic operations and may absorb financial resources
needed elsewhere. The Company's international operations are subject to
additional risks, including:

    - unexpected changes in trading policies, regulatory requirements, exchange
      rates, tariffs and other barriers;

    - unstable political and economic environments;

                                       20
<PAGE>
    - greater difficulties in collecting accounts receivable;

    - difficulties in managing distributors or representatives;

    - restrictions on exporting and importing technology;

    - fewer protections for the Company's intellectual property;

    - longer sales cycles than with domestic customers;

    - difficulties in staffing and managing foreign operations;

    - restrictions on the repatriation of earnings; and

    - potentially adverse tax consequences.

    Although the Company's international sales are primarily denominated in U.S.
dollars, changes in currency exchange rates could make it more difficult for it
to compete with foreign manufacturers on price. If the Company's international
sales increase relative to its total revenue, these factors could have a more
pronounced effect on its operating results. In any event, any of these factors
could cause serious harm to the Company's business.

THE COMPANY FACES SIGNIFICANT COMPETITION FROM OTHER AUTOMATION COMPANIES, WHICH
MAY LIMIT THE PRICES THE COMPANY CAN CHARGE FOR ITS SYSTEMS AND MAY CAUSE IT TO
LOSE SALES.

    The Company's Factory Systems division competes with Daifuku, Murata
Machinery, Shinko Electric and a number of other smaller foreign and domestic
manufacturers of automated machinery used in semiconductor fabrication
facilities. The Company's OEM Systems division competes with Genmark Automation,
Asyst Technologies, Brooks Automation and a number of other foreign and domestic
wafer-handling robotics companies, including in-house organizations of process
tool manufacturers that develop their own automation technology, as well as
other smaller robotics companies. The Company's software products compete with
products provided by Consilium, a subsidiary of Applied Materials, Brooks
Automation and other vendors. The Company believes that competition in its
industry is likely to intensify.

    The Company believes that, once a semiconductor manufacturer selects a
vendor's equipment for a particular fab, the manufacturer may continue to rely
upon that equipment for a specific application in other fabs. Accordingly, the
Company may have difficulty selling to potential customers that have selected a
competitor's equipment, and the Company expects that difficulty to last for a
significant period of time. However, at least one of the Company's significant
customers has adopted a policy of maintaining multiple vendors for the products
it purchases. This kind of policy could limit additional sales to existing
customers. In addition, the expected transition to 300mm technology may cause
new competitors to enter the Company's markets, which could diminish its
competitive advantage with customers for whom the Company are the incumbent
supplier of automation equipment. In the face of increased competition, the
Company may need to lower its prices, which could seriously harm its business.

THE COMPANY MUST CONTINUALLY IMPROVE ITS TECHNOLOGY TO REMAIN COMPETITIVE.

    Technology changes rapidly in the semiconductor manufacturing industry. The
Company's ability to compete will depend, in part, on its ability to develop and
introduce more advanced systems at competitive prices and on a cost-effective
basis so as to enable its customers to integrate them into their operations
either before or as they begin volume product manufacturing. For example, as the
semiconductor industry transitions from 200mm manufacturing technology to 300mm
technology, the Company believes it is important to its future success to
develop and sell new products that are compatible with 300mm manufacturing
technology. If the Company's competitors introduce new technologies, its sales
could

                                       21
<PAGE>
decline and its existing products could lose market acceptance. The Company's
success in developing, introducing, selling and supporting more advanced systems
depends upon many factors, including:

    - component selection;

    - timely and efficient completion of product design and development;

    - timely and efficient implementation of manufacturing and assembly
      processes;

    - software development;

    - product performance in the field; and

    - effective sales, marketing, service and project management.

    Because the Company must commit resources to product development well in
advance of sales, its product development decisions must anticipate
technological advances by leading semiconductor manufacturers. The Company may
not be successful in that effort. The Company's inability to select, develop,
manufacture and market new systems or enhance its existing systems could cause
it to lose its competitive position and could seriously harm its business.

THE COMPANY MAY EXPERIENCE DELAYS IN PRODUCT DEVELOPMENT AND TECHNICAL
DIFFICULTIES THAT COULD DELAY NEW PRODUCT INTRODUCTIONS.

    Because the Company's systems are complex and have a large number of
components, there can be a significant lag between the time the Company
introduces a system and the time the Company begins to produce that system in
volume. The Company has experienced delays in introducing some of its systems
and enhancements, such as its new TurboStocker product, as well as certain
technical and manufacturing difficulties with those systems and enhancements. As
the level of sophistication of technology in the semiconductor industry
increases, the Company has found it increasingly difficult to coordinate complex
manufacturing equipment and software in its systems, to procure adequate
supplies of specialized components, to train its technical and manufacturing
personnel and to make the transition from low-volume to high-volume
manufacturing of new products in a timely manner. The Company could experience
similar delays and difficulties in the future. In addition, the Company must
customize some of its systems to meet a customer's site or operating
requirements. The Company's inability to complete the development or meet the
technical specifications of any of its new systems or enhancements or to
manufacture and ship these systems or enhancements in volume in a timely manner
could incur contract losses and late delivery penalties, impair its
relationships with its customers, and seriously harm its business. In addition,
the Company may incur substantial unanticipated costs to ensure that its new
products function properly and reliably early in their life cycle, as in the
case of its new TurboStocker. These costs could include greater than expected
installation and support costs or increased materials costs as a result of
expedited changes. The Company may not be able to pass these costs on to its
customers. Any of these events could seriously harm the Company's business.

FUTURE ACQUISITIONS MAY DISRUPT THE COMPANY'S OPERATIONS.

    The Company acquired Promis Systems in March 1999, the Company acquired
Equipe and its European distributor, Chiptronix Handling Systems, in the first
half of 1998 and the Company acquired Interval Logic Corporation in 1997. The
Company actively pursues potential acquisitions, and any acquisition the Company
makes could disrupt its operations and seriously harm its business. The Company
may encounter difficulties in integrating the operations of acquired companies
with its own operations. The Company may also be unable to successfully develop,
market and sell their products. Any future acquisitions also pose additional
risks, including:

    - diversion of the Company's management's attention;

                                       22
<PAGE>
    - loss of key employees of the acquired company;

    - interruptions in the sales efforts of the acquired company;

    - failure to integrate financial and accounting systems successfully;

    - significant acquisition and integration expenses; and

    - assumption of legal and other liabilities and risks.

    Any of these factors could seriously harm the Company's business. Moreover,
these and future acquisitions may not produce the revenue, earnings or business
synergies that the Company anticipated, and an acquired product, service or
technology might not perform as the Company expected. Any such event could cause
customer dissatisfaction and damage the Company's reputation.

    If the Company issues equity securities to pay for an acquisition, the
ownership percentage of its existing stockholders would be reduced. If the
Company uses cash to pay for an acquisition, the payment could significantly
reduce the cash that would be available to fund its operations or for other
purposes. Acquisition financing may not be available on favorable terms, or at
all. In addition, the Company may be required to amortize significant amounts of
goodwill or other intangible assets in connection with future acquisitions,
which could seriously harm its operating results.

THE COMPANY DEPENDS ON SUBCONTRACTORS AND ONE OR A FEW SUPPLIERS FOR SOME
COMPONENTS AND MANUFACTURING PROCESSES.

    For some components or specialized processes that the Company use in its
products, such as painting of system cabinets and enclosures, the Company
depends on subcontractors or has available only one or a few suppliers. The
Company's reliance on subcontractors gives it less control over the
manufacturing process and exposes it to significant risks, especially inadequate
capacity, late delivery, substandard quality and high costs. The Company intends
in the near future to outsource additional aspects of its manufacturing
operations to additional subcontractors and suppliers. The Company could
experience disruption in obtaining components the Company needs for its products
and may not be able to develop alternatives in a timely manner. If the Company
is unable to obtain adequate deliveries of components for its products for an
extended period of time, the Company may have to pay more for inventory, parts
and other supplies, seek alternative sources of supply or delay shipping
products to its customers. The Company could also damage its relationships with
customers. Any such increased costs, delays in shipping or damage to customer
relationships could seriously harm the Company's business.

THE COMPANY DEPENDS ON MORDECHAI WIESLER AND MITCHELL G. TYSON.

    The Company's future success depends significantly on the skills, experience
and efforts of its founder, and Chairman of the Board, Mordechai Wiesler, and
its President and Chief Executive Officer, Mitchell G. Tyson. The Company also
depends on other executive officers and key personnel. Many of these individuals
would be difficult to replace. The loss of Mr. Wiesler, Mr. Tyson or any other
key person could seriously harm the Company's business.

THE COMPANY'S SOFTWARE PRODUCTS MAY CONTAIN ERRORS OR DEFECTS THAT COULD RESULT
IN LOST REVENUE, DELAYED OR LIMITED MARKET ACCEPTANCE OR PRODUCT LIABILITY
CLAIMS WITH SUBSTANTIAL LITIGATION COSTS.

    Complex software products like the Company's can contain errors or defects,
particularly when the Company first introduces new products or when the Company
releases new versions or enhancements. Defects or errors in current or future
products, including FAbuilder, PROMIS, TransNet and Encore! software, could
result in lost revenue or a delay in market acceptance, which would seriously
harm its business and operating results. In the past, the Company has
occasionally discovered software errors in its

                                       23
<PAGE>
new software products and new releases after their introduction, and the Company
expects that this will continue. Despite internal testing and testing by current
and potential customers, the Company's current and future products may contain
serious defects.

    Because many of the Company's customers use its products for
business-critical applications, any errors, defects or other performance
problems could result in financial or other damage to its customers and could
significantly impair their operations. The Company's customers could seek to
recover damages from it for losses related to any of these issues. A product
liability claim brought against the Company, even if not successful, would
likely be time consuming and costly to defend and could adversely affect the
Company's marketing efforts.

THE COMPANY MAY BE UNABLE TO PROTECT ITS PROPRIETARY TECHNOLOGY.

    The Company's success depends to a significant degree upon its patent for
certain key elements of its AeroTrak monorail system, its other patents, its
source code and its other proprietary technology. The steps the Company has
taken to protect its technology may be inadequate. If so, the Company might not
be able to prevent others from using what the Company regards as its technology
to compete with it. For example, its patents could be challenged, invalidated or
circumvented, and the rights the Company has under its patents could provide no
competitive advantages. Existing trade secret, copyright and trademark laws
offer only limited protection. In addition, the laws of some foreign countries
do not protect its proprietary technology to the same extent as the laws of the
United States. Other companies could independently develop similar or superior
technology without violating its proprietary rights. Any misappropriation of its
technology or the development of competitive technology could seriously harm the
Company's business.

    If the Company has to resort to legal proceedings to enforce its
intellectual property rights, the proceedings could be burdensome and expensive
and could involve a high degree of risk.

CLAIMS BY OTHERS THAT THE COMPANY INFRINGES THEIR PROPRIETARY TECHNOLOGY COULD
HARM THE COMPANY'S BUSINESS.

    Third parties could claim that the Company's products or technology infringe
their patents or other proprietary rights. Although the Company conducts patent
searches to determine whether the technology used in its products infringes
patents held by third parties, these searches are not comprehensive and may not
reveal potential third party claimants. Any claim of infringement by a third
party could cause the Company to incur substantial costs defending against the
claim, even if the claim is invalid, and could distract the Company's management
from its business. Furthermore, a party making such a claim could secure a
judgment that requires the Company to pay substantial damages. A judgment could
also include an injunction or other court order that could prevent the Company
from selling its products. Any of these events could seriously harm the
Company's business.

    If anyone asserts a claim against the Company relating to proprietary
technology or information, the Company might seek to license their intellectual
property or to develop non-infringing technology. The Company might not be able
to obtain a license on commercially reasonable terms or on any terms.
Alternatively, the Company's efforts to develop non-infringing technology could
be unsuccessful. The Company's failure to obtain the necessary licenses or other
rights or to develop non-infringing technology could prevent it from selling its
products and could therefore seriously harm its business.

THE MARKET PRICE OF THE COMPANY'S COMMON STOCK IS VOLATILE, WHICH COULD RESULT
IN SUBSTANTIAL LOSSES FOR INVESTORS PURCHASING SHARES.

    The market price of the Company's common stock has fluctuated widely and may
continue to do so. For example, during fiscal year 2000 the closing price of its
stock ranged from a high of $87.63 per share to

                                       24
<PAGE>
a low of $18.25 per share. Many factors could cause the market price of the
Company's common stock to rise and fall. These factors include:

    - variations in the Company's quarterly operating results;

    - announcements of technological innovations;

    - introduction of new products or new pricing policies by the Company or the
      Company's competitors;

    - announcements by the Company or the Company's competitors of significant
      customer orders;

    - acquisitions or strategic alliances by the Company or others in the
      Company's industry;

    - the hiring or departure of key personnel;

    - changes in the semiconductor industry cycle;

    - changes in market valuations of companies within the semiconductor
      industry; and

    - changes in estimates of the Company's performance or recommendations by
      financial analysts.

    When the market price of a stock has been volatile, holders of that stock
have often instituted securities class action litigation against the company
that issued the stock. On November 20, 2000, and November 22, 2000, the Company
and three of its directors were named as defendants in two virtually identical
lawsuits claiming, among other things, that the defendants violated securities
laws and regulations by virtue of statements and omissions that the plaintiffs
claim were materially false or misleading. The plaintiffs each seek
certification as a class, damages, pre-judgment and post-judgment interest,
costs, and attorneys' fees. The Company strongly believes that the lawsuits lack
merit and it intends to defend against the claims vigorously. However, the
Company could incur substantial costs defending the lawsuits. The lawsuits could
also divert the time and attention of the Company's management. The Company
cannot predict the outcome of the lawsuits at this time, and can give no
assurance that they will not materially adversely affect the Company's financial
condition or results of operations.

THE COMPANY MAY NEED ADDITIONAL FINANCING, WHICH COULD BE DIFFICULT TO OBTAIN.

    The Company expects its existing cash and investment balances, funds
available under its revolving credit facility agreement and cash generated from
operations will be sufficient to meet its cash requirements to fund operations
and expected capital expenditures during at least the next twelve months. After
that, the Company may need to raise additional funds and the Company cannot be
certain that the Company will be able to obtain additional financing on
favorable terms, if at all. Further, if the Company issues additional equity
securities, stockholders may experience additional dilution or the new equity
securities may have rights, preferences or privileges senior to those of
existing holders of common stock. If the Company cannot raise funds on
acceptable terms, if and when needed, the Company may not be able to develop or
enhance its products and services, take advantage of future opportunities, grow
its business or respond to competitive pressures or unanticipated requirements,
which could seriously harm its business.

PROVISIONS OF THE COMPANY'S CHARTER AND BY-LAWS AND MASSACHUSETTS LAW MAKE A
TAKEOVER OF THE COMPANY MORE DIFFICULT.

    The Company's basic corporate documents, its stockholder rights plan and
Massachusetts law contain provisions that could discourage, delay or prevent a
change in the control of the company, even if a change of control would be
beneficial to its stockholders.

                                       25
<PAGE>
NEW ACCOUNTING PRONOUNCEMENTS

    In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. The statement requires companies to
recognize all derivatives as either assets or liabilities, with the instruments
measured at fair value. The accounting for changes in fair value, gains or
losses, depends on the intended use of the derivative and its resulting
designation. The statement is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000. In June 2000, the FASB issued SFAS No. 138,
"Accounting for Certain Derivative Instruments and Certain Hedging Activities,
an amendment of SFAS No. 133." This accounting standard amended the accounting
and reporting standards of SFAS No. 133 for certain derivative instruments and
hedging activities. Management of the Company anticipates that the adoption of
SFAS No. 133, as amended, will not have a material impact on the Company's
consolidated results of operations or financial position.

    In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB 101"). SAB 101 summarizes the staff's view in applying generally accepted
accounting principles to selected revenue recognition issues. The application of
the guidance in SAB 101 is required to be adopted no later than the Company's
fourth quarter of fiscal year 2001. The effects of applying this guidance, if
any, will be reported as a cumulative effect adjustment resulting from a change
in accounting principle. The Company is still evaluating SAB 101 and its impact.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

FOREIGN CURRENCY AND EXCHANGE RATE RISK

    The Company conducts a portion of its business outside the United States
through its foreign subsidiaries. The Company has foreign currency exposure
related to its operations in international markets, where it transacts some
business in foreign currencies, and accordingly the company is exposed to
adverse movements in foreign currency exchange rates. The Company's foreign
subsidiaries maintain their accounting records in local currencies.
Consequently, changes in currency exchange rates may affect the translation of
foreign statements of operations into U.S. dollars, which may in turn affect the
company's consolidated statement of operations. The functional currency is the
U.S. dollar for all of the Company's subsidiaries, and therefore, translation
gains and losses are included as a component of net income or loss.
Substantially all of the Company's revenue is invoiced and collected in U.S.
dollars.

    At September 30, 2000 the Company had no outstanding forward currency
contracts.

    Market risks relating to the Company's operations result primarily from
changes in interest rates and foreign exchange rates. The Company currently does
not use financial instruments for trading or hedging purposes, due to its
limited exposure in these areas.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    Consolidated Financial Statements and Financial Statement Schedule as of
September 30, 2000 and 1999 and for each of the three years in the period ended
September 30, 2000 are included in Items 14(a)(1) and (2).

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
  FINANCIAL DISCLOSURE

    None.

                                       26
<PAGE>
                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

    The information required by this item with respect to directors and
executive officers of the Company is incorporated herein by reference to the
information set forth under the caption "Directors and Executive Officers"
contained in the Company's Definitive Proxy Statement for its Annual Meeting of
Stockholders expected to be filed with the Securities and Exchange Commission on
or before January 26, 2001 (the "Proxy Statement").

ITEM 11. EXECUTIVE COMPENSATION

    The information required by this item with respect to executive compensation
is incorporated herein by reference to the information set forth under the
caption "Remuneration of Executive Officers and Directors" contained in the
Proxy Statement.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

    The information required by this item with respect to security ownership of
management and certain beneficial owners of the Company is incorporated herein
by reference to the information set forth under the caption "Security Ownership
of Certain Beneficial Owners and Management" contained in the Proxy Statement.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

    The information required by this item with respect to certain relationships
and related transactions is incorporated herein by reference to the information
set forth under the caption "Security Ownership of Certain Beneficial Owners and
Management" contained in the Proxy Statement.

                                       27
<PAGE>
                                    PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K

(a) The following documents are filed as part of this Report:

    (1) Financial Statements

Report of Independent Accountants

Consolidated Balance Sheets as of September 30, 2000 and 1999

Consolidated Statements of Operations for the years ended September 30, 2000,
1999 and 1998

Consolidated Statements of Stockholders' Equity for the years ended
September 30, 2000, 1999 and 1998

Consolidated Statements of Cash Flows for the years ended September 30, 2000,
1999 and 1998

Notes to Consolidated Financial Statements

    (2) Financial Statement Schedule

Schedule II--Valuation and Qualifying Accounts

    Schedules not included herein are omitted because they are not applicable or
the required information appears in the consolidated financial statements or
notes thereto.

    (3) Exhibits

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                          DESCRIPTION
-------                                         -----------
<C>                     <S>
        2.1             Agreement and Plan of Reorganization, dated as of October
                        25, 1997, among PRI Automation, Inc., E-Acquisition Corp.,
                        Equipe Technologies, Inc. and certain Stockholders of Equipe
                        Technologies, Inc. (filed as Exhibit 10.19 to the Company's
                        Current report on form 8-K on November 10, 1997, and
                        incorporated herein by reference).

        2.2             Stock Purchase Agreement, dated as of October 25, 1997 among
                        PRI Automation, Inc. and the Shareholders of E-Machine, Inc.
                        (filed as Exhibit 10.20 to the Company's Current Report on
                        Form 8-K filed on November 10, 1997, and incorporated herein
                        by reference).

        2.3             Stock Purchase Agreement, dated as of October 25, 1997,
                        among PRI Automation, Inc. and the Shareholders of Equipe
                        Japan Corporation (filed as Exhibit 10.21 to the Company's
                        Current Report on Form 8-K filed on November 10, 1997, and
                        incorporated herein by reference).

        2.4             Stock Purchase Agreement dated as of May 19, 1998 by and
                        between the Company and the Shareholders of Chiptronix
                        Handling Systems GmbH and of Chiptronix GmbH (filed as
                        Exhibit 10.27 to the Company's Quarterly Report on Form 10-Q
                        for the quarter ended June 28, 1998 and incorporated herein
                        by reference).

        2.5             Combination Agreement dated as of November 24, 1998 between
                        PRI Automation, Inc., 1325949 Ontario Inc. and Promis
                        Systems Corporation Ltd. (filed as Exhibit 2.1 to the
                        Company's Registration Statement S-3 filed on December 24,
                        1998 and incorporated herein by reference).

        3.1             Restated Articles of Organization and amendments thereto.**

        3.2             Amended and Restated By-Laws of the Company (filed as
                        Exhibit 3.4 to the Company's Registration Statement on Form
                        S-1, File No. 33-81836 and incorporated herein by
                        reference).

        4.1             Specimen certificate for the Common Stock of the Company
                        (filed as Exhibit 4.1 to the Company's Registration
                        Statement on Form S-1, File No. 33-81836 and incorporated
                        herein by reference).
</TABLE>

                                       28
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                          DESCRIPTION
-------                                         -----------
<C>                     <S>
        4.2             Rights Agreement dated as of December 9, 1998, between PRI
                        Automation, Inc. and State Street Bank and Trust Company, as
                        Rights Agent (filed as Exhibit 4.1 to the Company's Form 8-K
                        filed on November 25, 1998 and incorporated herein by
                        reference).

        4.3             Form of Rights Certificate (filed as Exhibit 4.3 to the
                        Company's Form 8-K filed on November 25, 1998 and
                        incorporated herein by reference).

        4.4             Plan of Arrangement under Section 192 of the Canada Business
                        Corporations Act of Promis Systems Corporation Ltd. dated
                        March 2, 1999 (filed as Exhibit 99.1 to the Company's
                        Registration Statement on Form S-3, File No. 333-69721 and
                        incorporated herein by reference).

        4.5             Voting and Exchange Trust Agreement among the Company,
                        1325949 Ontario Inc., Promis Systems Corporation Ltd. And
                        Montreal Trust Company of Canada, as trustee dated March 2,
                        1999 (filed as Exhibit 99.2 to the Company's Registration
                        Statement on Form S-3, File No. 333-69721 and incorporated
                        herein by reference).

        4.6             Support Agreement among the Company, 1325949 Ontario Inc.
                        and Promis Systems Corporation Ltd. dated March 2, 1999
                        (filed as Exhibit 99.3 to the Company's Registration
                        Statement on Form S-3, File No. 333-69721 and incorporated
                        herein by reference).

       10.1*            1994 Incentive and Non-Qualified Stock Option Plan of the
                        Company (filed as Exhibit 10.5 to the Company's Registration
                        Statement on Form S-1, File No. 33-81836 and incorporated
                        herein by reference).

       10.2*            PRI Automation, Inc. 1997 Non-Incentive Stock Option Plan of
                        the Company, as amended.**

       10.3*            Promis Systems Corporation Ltd. Amended and Restated Stock
                        Option Plan dated September 30, 1998 (filed as Exhibit 4.4
                        to the Company's Form S-8 filed on March 9, 1999 and
                        incorporated herein by reference).

       10.4             Management Agreement dated as of November 30, 2000 by and
                        between the Company and Wan Keun Lee as the majority
                        shareholder of Shinsung Eng Co. Ltd.**

       10.5             Bond Subscription Agreement dated as of November 30, 2000 by
                        and between the Company and Shinsung Eng. Co. Ltd.**

       10.6             Share Subscription Agreement dated as of November 30, 2000
                        by and between the Company and Shinsung Eng. Co. Ltd.**

       10.7*            PRI Automation, Inc. 2000 Employee Stock Purchase Plan
                        (filed as Exhibit 10.2 to the Company's Registration
                        Statement on Form S-8, File No. 333-33894 and incorporated
                        herein by reference).

       10.8*            PRI Automation, Inc. 2000 Stock Option Plan, as amended.**

       10.9*            Form of Retention Agreement dated October 23, 2000 between
                        the Company and each of its executive officers and certain
                        other officers.**

       10.10            Lease Agreement dated as of May 5, 1994, by and between the
                        Company and The Prudential Insurance Company of America
                        (filed as Exhibit 10.14 to the Company's Registration
                        Statement on Form S-1, File No. 33-81836 and incorporated
                        herein by reference).

       10.11            Lease Agreement dated as of May 28, 1996 by and between 170
                        University (Toronto) Partnership and Promis Systems
                        Corporation Ltd. (filed as Exhibit 10.24 to the Company's
                        Annual Report on Form 10-K for the year ended September 30,
                        1999 and incorporated herein by reference).

       10.12            Lease agreement dated as of March 9, 1998 by and between the
                        Company and Lincoln-Whitehall Realty, L.L.C. (filed as
                        Exhibit 10.24 to the Company's Quarterly Report on Form 10-Q
                        for the quarter ended March 29, 1998 and incorporated herein
                        by reference).
</TABLE>

                                       29
<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                          DESCRIPTION
-------                                         -----------
<C>                     <S>
       10.13            Sublease agreement dated as of March 18, 1998 by and between
                        the Company and BAAN USA (filed as Exhibit 10.25 to the
                        Company's Quarterly Report on Form 10-Q for the quarter
                        ended June 28, 1998 and incorporated herein by reference).

       10.14            Lease Agreement dated as of October 22, 1999 by and between
                        the Company and Spieker Properties, L.P. (filed as Exhibit
                        10.25 to the Company's Quarterly Report on Form 10-Q for the
                        quarter ended January 2, 2000 and incorporated herein by
                        reference).

       10.15            Revolving Credit Agreement dated as of June 16, 1998 by and
                        between the Company and The Chase Manhattan Bank (filed as
                        Exhibit 10.28 to the Company's Quarterly Report on Form 10-Q
                        for the quarter ended June 28, 1998 and incorporated herein
                        by reference).

       10.16            First Amendment to Credit Agreement between the Company and
                        Chase Manhattan Bank, dated as of March 31, 2000 (filed as
                        Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q
                        for the quarter ended April 2, 2000 and incorporated herein
                        by reference).

       10.17            Second Amendment to Credit Agreement between the Company and
                        Chase Manhattan Bank, dated as of December 31, 2000**

       10.18            Joint Venture Agreement by and between the Company and Chung
                        Song Systems, Co., Ltd. and Shinsung Engineering Co., Ltd.
                        (filed as Exhibit 10.26 to the Company's Quarterly Report on
                        Form 10-Q for the quarter ended June 28, 1998 and
                        incorporated herein by reference).

       21.1             List of Subsidiaries of the Company**

       23.1             Consent of PricewaterhouseCoopers LLP**

       27.1             Financial Data Schedule**
</TABLE>

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

*   management contracts and compensatory arrangements

**  filed herewith

(B) REPORTS ON FORM 8-K

    None

                                       30
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Shareholders of
PRI Automation, Inc.:

    In our opinion, the consolidated financial statements listed in the index
appearing under Item 14(a)(1) present fairly, in all material respects, the
financial position of PRI Automation, Inc. and its subsidiaries at
September 30, 2000 and 1999, and the results of their operations and their cash
flows for each of the three years in the period ended September 30, 2000 in
conformity with accounting principles generally accepted in the United States of
America. In addition, in our opinion, the financial statement schedule listed in
the index appearing under Item 14(a)(2) presents fairly, in all material
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements. These financial statements and
financial statement schedule are the responsibility of the Company's management;
our responsibility is to express an opinion on these financial statements and
financial schedule based on our audits. We conducted our audits of these
statements in accordance with auditing standards generally accepted in the
United States of America, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Boston, Massachusetts

November 21, 2000, except as to the information

presented in Note V, which is as of December 14, 2000

                                      F-1
<PAGE>
                              PRI AUTOMATION, INC.

                          CONSOLIDATED BALANCE SHEETS

                       (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                 SEPTEMBER 30,
                                                              -------------------
                                                                2000       1999
                                                              --------   --------
<S>                                                           <C>        <C>
                                     ASSETS

Current assets:
  Cash and cash equivalents.................................  $ 92,484   $ 51,865
  Trade accounts receivable, less allowance for doubtful
    accounts of $2,881 at 2000 and $2,646 at 1999...........    73,019     31,436
  Contracts in progress.....................................    23,668      6,018
  Inventories...............................................    59,104     28,351
  Other current assets......................................     2,686      7,063
                                                              --------   --------
    Total current assets....................................   250,961    124,733
Property and equipment, net.................................    24,065     19,128
Other assets, net...........................................     1,898      2,691
                                                              --------   --------
    Total assets............................................  $276,924   $146,552
                                                              ========   ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable..........................................  $ 28,536   $ 16,900
  Accrued expenses and other liabilities....................    32,479     16,396
  Current portion of obligation under capital lease.........       330        570
  Billings in excess of revenues and customer advances......    11,986     11,931
                                                              --------   --------
    Total current liabilities...............................    73,331     45,797
Obligation under capital lease..............................       125        411
Other non-current liabilities...............................       671        788

Commitments and contingencies (Notes F, I and T)

Minority interest...........................................       150         56

Stockholders' equity:
  Preferred stock, 400,000 shares authorized; none
    outstanding.............................................        --         --
  Common stock, $.01 par value; 75,000,000 shares
    authorized; 25,011,938 and 22,265,676 issued and
    outstanding at September 30, 2000 and 1999,
    respectively............................................       250        223
  Additional paid-in capital................................   252,542    141,469
  Accumulated deficit.......................................   (50,145)   (42,192)
                                                              --------   --------
    Total stockholders' equity..............................   202,647     99,500
                                                              --------   --------
    Total liabilities and stockholders' equity..............  $276,924   $146,552
                                                              ========   ========
</TABLE>

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

                                      F-2
<PAGE>
                              PRI AUTOMATION, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                     (In thousands, except per share data)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED SEPTEMBER 30,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Net revenue:
  Product and equipment.....................................  $258,755   $100,074   $171,791
  Services and maintenance..................................    41,017     36,222     31,754
                                                              --------   --------   --------
    Total net revenue.......................................   299,772    136,296    203,545
Cost of revenue:
  Product and equipment.....................................   175,645     63,850    105,342
  Services and maintenance..................................    28,954     19,904     19,413
                                                              --------   --------   --------
    Total cost of revenue:..................................   204,599     83,754    124,755
                                                              --------   --------   --------
Gross profit................................................    95,173     52,542     78,790
Operating expenses:
  Research and development..................................    54,568     45,480     44,509
  Selling, general and administrative.......................    49,885     38,642     46,787
  Acquired in-process research and development..............        --         --      8,417
  Merger costs and special charges..........................        --      6,375     10,091
                                                              --------   --------   --------
Operating loss..............................................    (9,280)   (37,955)   (31,014)
Other income, net...........................................     2,554      2,935        625
                                                              --------   --------   --------
Loss before income taxes....................................    (6,726)   (35,020)   (30,389)
Provision for (benefit from) income taxes...................     1,227      1,065     (7,766)
                                                              --------   --------   --------
Net loss....................................................  $ (7,953)  $(36,085)  $(22,623)
                                                              ========   ========   ========

Net loss per common share, basic and diluted................  $  (0.34)  $  (1.67)  $  (1.08)
Weighted average number of shares outstanding basic and
  diluted...................................................    23,645     21,628     20,988

Unaudited pro forma net loss per common share:
Historical net loss.........................................                        $(22,623)
Adjustment to Equipe income tax expense to convert from
  S-corporation to C-corporation status.....................                          (1,156)
                                                                                    --------
Unaudited pro forma net loss................................                        $(23,779)
                                                                                    ========
Unaudited pro forma net loss per common share, basic and
  diluted...................................................                        $  (1.13)
</TABLE>

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

                                      F-3
<PAGE>
                              PRI AUTOMATION, INC.

                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

                                 (In thousands)

<TABLE>
<CAPTION>
                                                                             RETAINED      ACCUMULATED
                                           COMMON STOCK       ADDITIONAL     EARNINGS         OTHER           TOTAL
                                        -------------------    PAID-IN     (ACCUMULATED   COMPREHENSIVE   STOCKHOLDERS'
                                         SHARES     AMOUNT     CAPITAL       DEFICIT)     INCOME (LOSS)      EQUITY
                                        --------   --------   ----------   ------------   -------------   -------------
<S>                                     <C>        <C>        <C>          <C>            <C>             <C>
Balance, September 30, 1997...........   20,730      $207      $111,925      $ 28,893          $ 2           $141,027
Exercise of stock options.............      178         2         1,050                                         1,052
Tax benefit on exercise of stock
  options.............................                              439                                           439
Issuance of common stock in connection
  with the Employee Stock Purchase
  Plan................................      115         1         1,574                                         1,575
Distributions to shareholders of
  Equipe..............................                                         (4,507)                         (4,507)
Adjustment of retained earnings for
  S-corporation earnings of Equipe....                            5,911        (5,911)
Issuance of common stock in connection
  with the acquisition of ILC.........      111         1         5,915                                         5,916
Stock options assumed in connection
  with the acquisition of ILC.........                            2,015                                         2,015
Reduction in paid-in-capital for
  contingent consideration............                           (1,364)                                       (1,364)
Issuance of common stock in connection
  with the pooling of interests with
  Chiptronix..........................      105         1            12                                            13
Acquired accumulated deficit from
  Chiptronix..........................                                         (1,556)                         (1,556)
Tax benefit from Chiptronix
  acquisition.........................                            1,591                                         1,591
Adjustment to conform fiscal year of
  Promis..............................       (3)                    (33)         (403)                           (436)
Comprehensive loss:
  Net loss............................                                        (22,623)                        (22,623)
  Other comprehensive loss:
    Change in unrealized gain on
      securities......................                                                          (2)                (2)
                                                                                                             --------
Total comprehensive loss..............                                                                        (22,625)
                                         ------      ----      --------      --------          ---           --------
Balance, September 30, 1998...........   21,236       212       129,035        (6,107)          --            123,140
Exercise of stock options.............      859         9        10,091                                        10,100
Issuance of common stock in connection
  with the Employee Stock Purchase
  Plan................................      171         2         2,385                                         2,387
Stock-based compensation..............                              236                                           236
Reduction in paid-in-capital for
  contingent consideration............                             (278)                                         (278)
Comprehensive loss:
  Net loss............................                                        (36,085)                        (36,085)
                                         ------      ----      --------      --------          ---           --------
Balance, September 30, 1999...........   22,266       223       141,469       (42,192)          --             99,500
Exercise of stock options.............    1,091        11        18,030                                        18,041
Issuance of common stock in connection
  with the Employee Stock Purchase
  Plan................................      164         1         3,261                                         3,262
Issuance of common stock in connection
  with offering (net of expenses of
  $5.5 million).......................    1,491        15        89,890                                        89,905
Reduction in paid-in-capital for
  contingent consideration............                             (108)                                         (108)
Comprehensive loss:
  Net loss............................                                         (7,953)                         (7,953)
                                         ------      ----      --------      --------          ---           --------
Balance, September 30, 2000...........   25,012      $250      $252,542      $(50,145)          --           $202,647
                                         ======      ====      ========      ========          ===           ========
</TABLE>

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

                                      F-4
<PAGE>
                              PRI AUTOMATION, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (In thousands)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED SEPTEMBER 30,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Cash flows (used in) provided by operating activities:
  Net loss..................................................  $ (7,953)  $(36,085)  $(22,623)
  Adjustments to reconcile net loss to net cash (used in)
    provided by operating activities:
    Depreciation and amortization expense...................     9,870      8,679      8,307
    Provision for write-down of inventories.................     7,759        785     12,389
    Provision for bad debts.................................       683       (523)     1,724
    Deferred income taxes...................................        --      8,391     (5,329)
    Tax benefit related to stock options....................        --         --        439
    Net loss on disposal of assets..........................        34         54      2,042
    Stock-based compensation................................        --        236         --
    Amortization of premiums or discounts on marketable
     securities.............................................        --         --         42
    Translation (gains) losses, net.........................       721       (854)     1,086
    Minority interests in income (losses) of subsidiaries...        94       (143)        --
    Write-off of acquired in-process research and
     development............................................        --         --      8,417
    Changes in operating assets and liabilities:
      Trade accounts receivable.............................   (42,353)     3,726     46,386
      Contracts in progress.................................   (17,650)     2,999      6,446
      Inventories...........................................   (38,512)    (1,642)    (5,739)
      Other assets..........................................     3,874         34     (5,984)
      Accounts payable......................................    12,042      4,760    (12,050)
      Accrued expenses and other liabilities................    15,822      1,916     (4,605)
      Billings in excess of revenues and customer
       advances.............................................        59     (2,795)     6,889
                                                              --------   --------   --------
Net cash (used in) provided by operating activities.........   (55,510)   (10,462)    37,837
Cash flows (used in) provided by investing activities:
  Proceeds from the sale of marketable securities...........        --         --      6,867
  Proceeds from maturities of marketable securities.........        --         --      2,035
  Purchases of marketable securities........................        --         --     (5,798)
  Purchases of intangible assets............................        --       (305)      (112)
  Proceeds from sale of property and equipment..............        --          9         24
  Purchases of property and equipment.......................   (13,736)    (6,249)   (13,665)
  Cash paid for contingent consideration....................      (108)      (278)    (1,364)
  Net effect on cash balances from Chiptronix acquisition...        --         --        246
  Net effect on cash balances from MASE acquisition.........        --         --     (1,533)
                                                              --------   --------   --------
Net cash used in investing activities.......................   (13,844)    (6,823)   (13,300)
Cash flows (used in) provided by financing activities:
  Proceeds from common stock offering, net..................    89,905         --         --
  Repayments of borrowings..................................        --         --     (1,913)
  Proceeds from borrowings under capital lease
    obligations.............................................        --         --      1,001
  Repayment of capital lease obligations....................      (526)      (551)      (758)
  Proceeds from minority shareholders.......................        --        199         --
  Distributions to shareholders of Equipe...................        --         --     (4,507)
  Repayments under line of credit...........................        --        (11)        --
  Proceeds from exercise of stock options and Employee Stock
    Purchase Plan...........................................    21,303     12,487      2,627
                                                              --------   --------   --------
Net cash (used in) provided by financing activities.........   110,682     12,124     (3,550)
Adjustment to conform fiscal years of Promis and Equipe.....        --         --        (50)
Effect of changes in exchange rates on cash.................      (709)       (21)      (642)
                                                              --------   --------   --------
Net (decrease) increase in cash and cash equivalents........    40,619     (5,182)    20,295
Cash and cash equivalents at beginning of year..............    51,865     57,047     36,752
                                                              --------   --------   --------
Cash and cash equivalents at end of year....................  $ 92,484   $ 51,865   $ 57,047
                                                              ========   ========   ========
Supplemental disclosures of cash flow information:
  Cash paid (received) during the year for:
    Interest expense........................................  $     92   $    125   $    155
    Income taxes (net)......................................  $ (4,846)  $    908   $  8,730
  Non-cash transactions:
    Property and equipment acquired under capital leases....  $     56         --         --
</TABLE>

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

                                      F-5
<PAGE>
                              PRI AUTOMATION, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A. DESCRIPTION OF BUSINESS:

    PRI Automation, Inc. ("PRI" or the "Company") is a leading global supplier
of advanced automation systems and software to the semiconductor industry. The
Company offers complete and flexible solutions that address a wide range of
automation requirements for semiconductor manufacturers and OEM semiconductor
equipment suppliers. PRI's factory automation systems and software help
semiconductor manufacturers optimize the flow of material and data throughout
the semiconductor fabrication facility ("fab" or "fabs"), improving productivity
and increasing the manufacturer's return on investment. The Company's tool
automation systems and software, offer high-performance and reliability for OEM
process tool manufacturers, allowing them to focus on developing next generation
process technology. PRI also provides automation services, including equipment
layout and design, fab simulation, project management, installation and on-site
support. The Company is subject to risks and uncertainties common to companies
in the semiconductor industry including, but not limited to: the highly cyclical
nature of the semiconductor industry leading to recurring periods of
over-supply; rapid technological change and the development by the Company or
its competitors of new technological innovations; dependence on key personnel;
the protection of proprietary technology; management of inventory and
manufacturing capacity; fluctuations in operating results; doing business in
Asian and European markets and related currency risks; competitive pressure on
selling prices; the timing and cancellation of customer orders; and the
Company's ability to absorb and manage acquisitions.

B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

PRINCIPLES OF CONSOLIDATION

    The consolidated financial statements include the accounts of PRI
Automation, Inc., its wholly owned domestic subsidiaries and its wholly owned
and majority-owned foreign subsidiaries (collectively, the "Company"). All
significant intercompany transactions and balances have been eliminated. Certain
reclassifications have been made to prior years' financial statements to conform
to the current presentation.

    In March 1999, the Company acquired Promis Systems Corporation Ltd.
("Promis"). In January 1998, the Company acquired Equipe Technologies, Inc.,
E-Machine, Inc., and Equipe Japan Ltd. (collectively, "Equipe"). In May 1998,
the Company acquired Chiptronix Handling Systems GmbH ("Chiptronix"), the
European distributor of Equipe products. The acquisitions of Promis, Equipe and
Chiptronix were accounted for using the pooling-of-interests method of
accounting. All prior period historical consolidated financial statements
presented herein have been restated to include the financial position, results
of operations, and cash flows of Promis and Equipe. The Company has not restated
its financial statements for the acquisition of Chiptronix because the effect of
restatement is immaterial.

USE OF ESTIMATES

    The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make certain estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates and would
impact future results of operations and cash flows. Significant estimates are
inherent in determining revenue recognition and associated profits under the
percentage-of-completion method.

                                      F-6
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
CASH AND CASH EQUIVALENTS

    Cash equivalents consist of commercial paper, money market mutual funds, and
other short term investments with maturities of three months or less.

MARKETABLE SECURITIES

    Current marketable securities include all investments with remaining
maturities of twelve months or less. The Company classifies all securities as
available-for-sale. These securities are reported at fair value as of the
balance sheet date with net unrealized holding gains and losses included in
stockholders' equity. Gains and losses on sales of securities are calculated
using the specific identification method. The Company did not hold any
marketable securities as of September 30, 2000 and 1999. Gross realized gains
and losses from marketable securities for the year ended September 30, 1998 were
$1,000. Interest income included in other income, net was $3,376,000, $2,233,000
and $1,991,000 for the years ended September 30, 2000, 1999 and 1998,
respectively.

FINANCIAL INSTRUMENTS

    Financial instruments that potentially subject the Company to significant
concentrations of financial or credit risk consist principally of cash and cash
equivalents, current and non-current marketable securities, trade accounts
receivable, accounts payable and debt. The Company generally invests its cash
and investments in investment-grade securities. The carrying value of financial
instruments approximates their related fair values.

    The Company's customers are primarily concentrated in one industry, the
semiconductor manufacturing and related capital goods industry. Historically,
significant portions of the Company's sales have been to a limited number of
customers within this industry. The Company performs ongoing credit evaluations
of its customers' financial condition, and may require deposits on large orders
but does not require collateral or other security to support customer
receivables.

OFF-BALANCE SHEET RISK

    The Company, in prior years, entered into forward contracts in Canadian
dollars to hedge the expected operating expenses of its Canadian subsidiary that
were denominated in Canadian dollars. These contracts were used to mitigate the
Company's risk associated with exchange rate movements, as gains and losses on
these contracts were intended to offset exchange losses and gains on underlying
cost exposures. These contracts did not qualify for hedge accounting. The
contract periods, which did not exceed sixteen months, expired monthly through
December 1999. Both realized and unrealized gains and losses on the contracts
were classified as components of other income, net, in the consolidated
statement of operations. At September 30, 1999 the notional amount of
outstanding forward currency contracts was $1,914,000, which was marked to
market and recognized in the consolidated statements of operations. There were
no outstanding contracts at September 30, 2000. Net realized gains/losses were
immaterial for all periods presented.

RETAINAGES

    Accounts receivable include certain amounts which are not due until final
customer acceptance or until contract provisions allow for billing. Such
retainages were approximately $9,406,000 and $9,605,000 at

                                      F-7
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
September 30, 2000 and 1999, respectively. The retainages are expected to be
collected within the next twelve months.

CONTRACTS IN PROGRESS

    Contracts in progress include costs and estimated profits under incomplete
contracts accounted for using the percentage-of-completion method, net of
amounts billed. These amounts are expected to be collected within the next
twelve months as units are delivered. Amounts billed at September 30, 2000 and
1999 were $49,525,000 and $7,701,000, respectively.

CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS

    Financial instruments that potentially expose the Company to concentrations
of credit risk consist principally of trade accounts receivable. Concentrations
of credit risk with respect to trade accounts receivable are limited due to the
large number of customers comprising the Company's customer base and their
dispersion across many different geographies. The Company performs ongoing
credit evaluations of its customers and generally does not require collateral
from its customers. As of September 30, 2000, two customers have amounts owing
the Company amounting to 10% or greater of the total accounts receivable
balance. These two customers accounted for 18% and 12% of gross accounts
receivable for fiscal year 2000. During fiscal year 2000, revenue from two
customers each accounted for 14% and 12% of the Company's revenue. In fiscal
year 1999 and 1998, revenue for one customer accounted for 21% and 19% of total
revenue, respectively.

INCOME TAXES

    The Company recognizes deferred tax assets and liabilities based on
temporary differences between the financial statement and tax bases of assets
and liabilities using the expected tax rates in the year in which the
differences are expected to reverse. The Company provides a valuation allowance
against net deferred tax assets if, based on the available evidence, it is more
likely than not that some or all of the deferred tax assets will not be
realized. Equipe Technologies, Inc. and one of the related companies,
E-Machine, Inc., elected to be treated as an S-corporation under the provisions
of the Internal Revenue Code, prior to their acquisition by the Company, and as
such, the shareholders of Equipe Technologies, Inc. and E-Machine, Inc. were
liable for individual federal and certain state income taxes on their allocated
portions of the respective company's taxable income. Accordingly, U.S. income
tax expense related to Equipe Technologies, Inc. and E-Machine, Inc. was not
recorded by the Company for all periods through January 22, 1998, the date of
consummation of the merger with the Company (see Note O).

INVENTORIES

    Inventories, consisting of raw materials, work-in-process and finished
goods, are stated at the lower of cost (determined principally on a first-in,
first-out basis) or market.

PROPERTY AND EQUIPMENT

    Property and equipment are stated at cost. Betterments and major renewals
are capitalized and included in property and equipment, while repairs and
maintenance are charged to expense as incurred. Depreciation and amortization of
property and equipment are primarily provided using the straight-line method
over the estimated useful lives of the assets. The amortization of assets
recorded under capital

                                      F-8
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
leases is included in depreciation and amortization expense. Upon retirement or
sale, the cost of the assets disposed and the related accumulated depreciation
are removed from the accounts and any resulting gain or loss is credited or
charged to operations. The Company periodically assesses its property and
equipment for impairment. The company determines such impairment by measuring
undiscounted future cash flows. If an impairment is present, the assets are
reported at the lower of carrying value or fair value.

OTHER ASSETS

    Goodwill, included in other assets, represents the excess of the purchase
price over the fair value of net assets acquired and is amortized on a straight
line basis over ten years. Goodwill was fully amortized as of September 30,
1999. Additionally, other intangible assets are amortized on a straight line
basis over the estimated useful lives of the assets ranging from two to five
years. Management reviews intangible assets for impairment whenever events or
changes in circumstances indicate the carrying amount of such assets is less
than the undiscounted expected future cash flows from such assets.
Recoverability of these assets is assessed using a number of factors including
operating results, business plans, budgets, and economic projections and
undiscounted cash flows. Management believes that no significant impairment has
occurred.

BILLINGS IN EXCESS OF REVENUES

    Billings in excess of revenues include amounts billed on incomplete
contracts, accounted for using the percentage-of-completion method net of costs
and estimated profits recognized, and customer service contracts paid in
advance.

REVENUE RECOGNITION

    For certain contracts eligible under American Institute of Certified Public
Accountants ("AICPA") Statement of Position No. 81-1, revenue on product sales
is recognized using the percentage-of-completion accounting method based upon an
efforts-expended method. In all cases, changes to total estimated costs and
anticipated losses, if any, are recognized in the period in which determined.
Revenue recognized under the percentage-of-completion accounting method was
approximately $72,927,000, $23,383,000 and $54,999,000 during fiscal years 2000,
1999, and 1998, respectively. Revenue from product sales not recognized under
the percentage-of-completion method is generally recorded upon shipment to the
customer, provided that no significant vendor obligations remain outstanding and
that collection of the related receivable is deemed probable by management.
Software license revenue is recognized upon delivery of the software and
completion of a written agreement with the customer, provided fees are fixed or
determinable, and collectibility of the related receivable is deemed probable by
management. Revenues from training and consulting are recognized as services are
performed. Service revenue is recognized ratably over applicable contract
periods or as the services are performed. Additionally, the Company accrues for
warranty costs upon shipment. Product and equipment net revenue includes revenue
from all equipment sales, installation, project management and software
licenses. Service and maintenance net revenue consists of service contracts,
spare part sales, repairs and upgrades, software maintenance contracts and
consulting and training services.

                                      F-9
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
RESEARCH AND DEVELOPMENT COSTS

    The Company expenses all engineering, research and development costs as
incurred. Expenses subject to capitalization in accordance with SFAS No. 86,
"Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise
Marketed," were insignificant.

FOREIGN CURRENCY TRANSLATION

    The Company's functional currency is the U.S. dollar. Assets and liabilities
of foreign subsidiaries which are denominated in foreign currencies are
remeasured into U.S. dollars at rates of exchange in effect at the end of the
fiscal year, except for nonmonetary assets and liabilities, which are remeasured
using historical exchange rates. Revenue and expense amounts are remeasured
using an average of exchange rates in effect during the period, except those
amounts related to nonmonetary assets and liabilities, which are remeasured at
historical exchange rates. Net realized and unrealized gains and losses
resulting from foreign currency remeasurement are included in the consolidated
statements of operations as other income or expense.

ACCOUNTING FOR STOCK-BASED COMPENSATION

    The Company continues to apply the accounting provisions of Accounting
Principles Board ("APB") Opinion 25 and has elected the disclosure-only
alternative permitted under Statement of Financial Accounting Standards ("SFAS")
No. 123, "Accounting for Stock-Based Compensation." The Company has disclosed
pro forma net loss and pro forma net loss per share in the footnotes using the
fair value based method.

NET LOSS PER COMMON SHARE

    Basic net loss per common share is computed using the weighted average
number of common shares outstanding. Diluted earnings per share is based upon
the weighted average number of common and common equivalent shares outstanding.
For all years presented basic and dilutive earnings per share are equivalent
since potential common shares from the exercise of stock options are
anti-dilutive.

COMPREHENSIVE LOSS

    The Company previously adopted SFAS No. 130, "Reporting Comprehensive
Income," which established standards for reporting and displaying comprehensive
income and its components in a financial statement that is displayed with the
same prominence as other financial statements. Comprehensive loss is equal to
net loss for fiscal years 2000 and 1999. For fiscal year 1998 comprehensive loss
included an unrealized loss in marketable securities of $2,000.

NEW ACCOUNTING PRONOUNCEMENTS

    In June 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts (collectively referred to as
derivatives), and for hedging activities. The statement requires companies to
recognize all derivatives as either assets or liabilities, with the instruments
measured at fair value. The accounting for changes in fair value, gains or
losses, depends on the intended use of the derivative and its resulting
designation. The statement

                                      F-10
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
is effective for all fiscal quarters of fiscal years beginning after June 15,
2000. In June 2000, the FASB issued SFAS No. 138, "Accounting for Certain
Derivative Instruments and Certain Hedging Activities, an amendment of SFAS
No. 133." This accounting standard amended the accounting and reporting
standards of SFAS No. 133 for certain derivative instruments and hedging
activities. Management of the Company anticipates that the adoption of SFAS
No. 133, as amended, will not have a material impact on the Company's
consolidated results of operations or financial position.

    In December 1999, the Securities and Exchange Commission ("SEC") issued
Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements"
("SAB 101"). SAB 101 summarizes the staff's view in applying generally accepted
accounting principles to selected revenue recognition issues. The application of
the guidance in SAB 101 is required to be adopted no later than the Company's
fourth quarter of fiscal year 2001. The effects of applying this guidance, if
any, will be reported as a cumulative effect adjustment resulting from a change
in accounting principle. The Company is still evaluating SAB 101 and its impact.

C. CASH AND CASH EQUIVALENTS:

    Cash and cash equivalents consisted of the following at September 30:

<TABLE>
<CAPTION>
                                                              2000       1999
                                                            --------   --------
                                                              (IN THOUSANDS)
<S>                                                         <C>        <C>
Cash on hand and deposited with banks.....................  $ 7,450    $15,638
Money market funds........................................   38,431     36,179
Short term investments....................................   46,603         --
Time deposits.............................................       --         48
                                                            -------    -------
                                                            $92,484    $51,865
                                                            =======    =======
</TABLE>

D. INVENTORIES:

    Inventories consisted of the following at September 30:

<TABLE>
<CAPTION>
                                                              2000       1999
                                                            --------   --------
                                                              (IN THOUSANDS)
<S>                                                         <C>        <C>
Raw materials.............................................  $43,981    $16,492
Work-in-process...........................................    6,248      5,804
Finished goods............................................    8,875      6,055
                                                            -------    -------
                                                            $59,104    $28,351
                                                            =======    =======
</TABLE>

                                      F-11
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

E. PROPERTY AND EQUIPMENT:

    Property and equipment consisted of the following at September 30:

<TABLE>
<CAPTION>
                                              DEPRECIABLE LIFE              2000       1999
                                     -----------------------------------  --------   --------
                                                                            (IN THOUSANDS)
<S>                                  <C>                                  <C>        <C>
Machinery and equipment............  2-7 years                            $ 41,232   $ 31,259
Furniture and fixtures.............  5-7 years                               7,415      6,479
Leasehold improvements.............  Shorter of life of lease or useful
                                     life                                    8,583      5,883
                                                                          --------   --------
                                                                            57,230     43,621
Accumulated depreciation and
  amortization.....................                                        (33,165)   (24,493)
                                                                          --------   --------
                                                                          $ 24,065   $ 19,128
                                                                          ========   ========
</TABLE>

    Depreciation expense was $8,245,000, $7,364,000, and $6,691,000 for the
years ended September 30, 2000, 1999, and 1998, respectively. Machinery and
equipment under capital leases totaled $2,550,000, and $3,415,000 as of
September 30, 2000, and 1999, respectively. Accumulated amortization of these
assets was $1,664,000 and $1,822,000 as of September 30, 2000 and 1999,
respectively.

F. LEASE COMMITMENTS:

    The Company leases manufacturing and office facilities and equipment under
noncancelable operating and capital leases expiring through the year 2011 (see
Notes E and K). Rent expense under operating leases was $5,651,000, $4,418,000,
and $4,343,000 for fiscal years 2000, 1999, and 1998, respectively.

    At September 30, 2000, future minimum payments, required under all
noncancelable operating and capital leases were as follows:

<TABLE>
<CAPTION>
                                                             OPERATING   CAPITAL
FISCAL YEAR                                                   LEASES      LEASES
-----------                                                  ---------   --------
                                                                (IN THOUSANDS)
<S>                                                          <C>         <C>
2001.......................................................   $ 6,173      $420
2002.......................................................     7,361       101
2003.......................................................     6,460        14
2004.......................................................     4,921        14
2005.......................................................     4,041        --
2006 and thereafter........................................    16,670        --
                                                              -------      ----
Total minimum lease payments...............................   $45,626      $549
                                                              =======
Less: amount representing interest.........................                  94
                                                                           ----
Present value of minimum lease payments....................                $455
                                                                           ====
</TABLE>

                                      F-12
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

G. ACCRUED EXPENSES AND OTHER LIABILITIES:

    The significant components of accrued expenses and other liabilities
consisted of the following at September 30:

<TABLE>
<CAPTION>
                                                              2000       1999
                                                            --------   --------
                                                              (IN THOUSANDS)
<S>                                                         <C>        <C>
Accrued expenses..........................................  $ 9,385    $ 7,295
Accrued compensation......................................    9,910      4,718
Warranty and contract loss reserves.......................   13,184      4,383
                                                            -------    -------
                                                            $32,479    $16,396
                                                            =======    =======
</TABLE>

H. STOCKHOLDERS' EQUITY:

STOCK OPTIONS

    During 1984, the Board of Directors voted to adopt the 1984 Incentive Stock
Option Plan (the "1984 Option Plan") and subsequently reserved 1,050,000 shares
of its authorized common stock for issuance under this plan. On March 17, 1994,
the Board of Directors approved the 1994 Incentive and Nonqualified Stock Option
Plan (the "1994 Option Plan") and reserved 810,000 shares of common stock for
issuance under this plan. At the Company's annual stockholder meeting held on
January 26, 1996, the shareholders voted to increase the number of shares
authorized for issuance under the 1994 Option Plan to 1,810,000 shares. In 1997
the Board of Directors voted to adopt the 1997 Non-Incentive Stock Option Plan
(the "1997 Option Plan") which authorizes the issuance of non-qualified options
to purchase up to an aggregate of 1,400,000 shares of common stock. The Board of
Directors has also granted non-qualified options to directors of the Company.
Additionally, the Company assumed Promis's obligations under its Amended and
Restated Stock Options Plan dated September 30, 1998. The Promis plan reserved
290,895 options, as converted, for available grants by the Company's Board of
Directors.

    On July 1, 1998 the Compensation Committee of the Board of Directors, in an
effort to restore the long-term incentive feature of employee stock options that
were significantly out of the money, voted to provide employees with the
opportunity to exchange options dated April 1, 1997 and thereafter for new
options with an exercise price of $14.75, the then fair market value of the
Company's common stock. Options to purchase 1,637,300 shares of common stock
with an average exercise price of $27.98 were canceled and replaced with an
equal number of stock options effective July 17, 1998. The vesting period
started over again on repriced options.

    On November 30, 1999 the Board of Directors voted to adopt the 2000 Stock
Option Plan (the "2000 Option Plan") and subsequently reserved 400,000 shares of
its authorized common stock for issuance under this plan. In addition, the 2000
Option Plan provides that up to a maximum of 600,000 shares not required to be
reserved for issuance upon exercise of options granted under the 1994 Option
Plan will be added to the shares reserved under the 2000 Options Plan. The plan
was subsequently approved by stockholders on March 10, 2000.

    Incentive stock options generally vest over five years and expire six years
after issuance. Non-qualified stock options generally vest between zero and five
years and expire between five and ten years after issuance.

                                      F-13
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

H. STOCKHOLDERS' EQUITY: (CONTINUED)

    Information with respect to option activity for the fiscal years 1998, 1999
and 2000 is as follows:

<TABLE>
<CAPTION>
                                                    NUMBER OF    WEIGHTED AVERAGE
                                                      SHARES      EXERCISE PRICE
                                                    ----------   ----------------
<S>                                                 <C>          <C>
Outstanding at September 30, 1997.................   1,854,288        $13.62
  Granted.........................................   3,759,160         20.24
  Canceled........................................  (1,894,464)        27.26
  Exercised.......................................    (173,314)         5.80
                                                    ----------
Outstanding at September 30, 1998.................   3,545,670         13.78
  Granted.........................................   1,532,805         32.37
  Canceled........................................    (460,354)        17.24
  Exercised.......................................    (858,734)        11.76
                                                    ----------
Outstanding at September 30, 1999.................   3,759,387         19.17
  Granted.........................................   1,949,850         49.95
  Canceled........................................    (730,919)        28.39
  Exercised.......................................  (1,091,392)        16.53
                                                    ----------
Outstanding at September 30, 2000.................   3,886,926        $33.53
                                                    ==========
</TABLE>

    Summarized information about stock options outstanding at September 30, 2000
is as follows:

<TABLE>
<CAPTION>
                                                         OPTIONS OUTSTANDING            OPTIONS EXERCISABLE
                                                    -----------------------------   ----------------------------
                                                      WEIGHTED
                                                      AVERAGE         WEIGHTED                       WEIGHTED
                                                     REMAINING        AVERAGE                        AVERAGE
         RANGE OF                       NUMBER      CONTRACTUAL    EXERCISE PRICE     NUMBER      EXERCISE PRICE
     EXERCISE PRICES                  OUTSTANDING   LIFE (YEARS)        ($)         EXERCISABLE        ($)
     ---------------                  -----------   ------------   --------------   -----------   --------------
<C>      <C>        <C>      <S>      <C>           <C>            <C>              <C>           <C>
$ 7.25      --      $14.75   .......   1,026,409        3.67           $14.05         376,056         $13.43
 15.13      --       28.44   .......   1,020,583        4.16            24.65         467,567          23.60
 28.50      --       47.38   .......   1,444,159        5.43            44.58         128,446          45.00
 48.07      --       85.68   .......     395,775        5.52            66.66          27,148          68.69
                                       ---------                                      -------
$ 7.25      --      $85.68   .......   3,886,926        4.64           $33.53         999,217         $23.74
</TABLE>

    At September 30, 1999 and 1998 options exercisable were 1,025,154 and
822,914, respectively.

    On October 29, 1997, the Company granted Interval Logic Corporation common
stock options ("ILC options") in accordance with the Board of Directors'
adoption of the 1997 Interval Logic Corporation Incentive and Non-Qualified
Stock Option Plan, and reserved 5,000,000 shares of ILC authorized common stock.
ILC is a subsidiary of the Company engaged in the development of the Leverage
advanced planning and scheduling software product for semiconductor fabs. These
options give ILC employees the option to purchase ILC common shares at exercise
prices of $0.10 through $1.00. The options vest over four years and expire after
ten years.

                                      F-14
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

H. STOCKHOLDERS' EQUITY: (CONTINUED)
    Information with respect to the ILC options activity for fiscal years 1998,
1999 and 2000 is as follows:

<TABLE>
<CAPTION>
                                                     NUMBER OF   WEIGHTED AVERAGE
                                                      SHARES      EXERCISE PRICE
                                                     ---------   ----------------
<S>                                                  <C>         <C>
Outstanding at September 30, 1997..................         --        $  --
  Granted..........................................  2,445,250         0.10
  Canceled.........................................   (430,000)        0.10
  Exercised........................................         --           --
                                                     ---------
Outstanding at September 30, 1998..................  2,015,250         0.10
  Granted..........................................    391,750         0.19
  Canceled.........................................   (154,765)        0.11
  Exercised........................................    (24,018)        0.10
                                                     ---------
Outstanding at September 30, 1999..................  2,228,217         0.11
  Granted..........................................    434,000         1.00
  Canceled.........................................   (244,741)        0.48
  Exercised........................................    (52,159)        0.10
                                                     ---------
Outstanding at September 30, 2000..................  2,365,317        $0.24
                                                     =========
</TABLE>

    Summarized information about ILC stock options outstanding at September 30,
2000 is as follows:

<TABLE>
<CAPTION>
                                                       OPTIONS OUTSTANDING            OPTIONS EXERCISABLE
                                                  -----------------------------   ----------------------------
                                                    WEIGHTED
                                                    AVERAGE         WEIGHTED                       WEIGHTED
                                                   REMAINING        AVERAGE                        AVERAGE
        RANGE OF                      NUMBER      CONTRACTUAL    EXERCISE PRICE     NUMBER      EXERCISE PRICE
    EXERCISE PRICES                 OUTSTANDING   LIFE (YEARS)        ($)         EXERCISABLE        ($)
------------------------            -----------   ------------   --------------   -----------   --------------
<C>     <C>        <C>     <S>      <C>           <C>            <C>              <C>           <C>
         $0.10             .......   1,998,417        7.23            $0.10        1,439,535         $0.10
          1.00             .......     366,900        9.29             1.00            2,500          1.00
                                     ---------                                     ---------
$0.10      --      $1.00   .......   2,365,317        7.55            $0.24        1,442,035         $0.10
</TABLE>

    At September 30, 1999 there were 938,632 ILC stock options exercisable.
There were no ILC stock options exercisable at September 30, 1998.

EMPLOYEE STOCK PURCHASE PLAN

    Since May 1994, the Company has offered an Employee Stock Purchase Plan
("ESPP") under which rights are granted to purchase shares of common stock at
85% of the lesser of the market value of such shares at either the beginning or
the end of each six month offering period. The plan permits employees to
purchase common stock through payroll deductions, which may not exceed 10% of an
employee's compensation as defined in the plan. The Company, in 1994, had
reserved 450,000 shares of common stock for issuance to eligible employees. The
Company reserved 70,000 additional shares of common stock, under its existing
plan during fiscal year 2000, and also adopted a new plan under which it
reserved 350,000 shares. Shares purchased during fiscal years 2000, 1999 and
1998, were 164,120, 171,436, and 114,996 respectively, at average prices ranging
from $9.78 to $28.90 per share. Shares available for future purchase under the
ESPP totaled 239,402 at September 30, 2000.

                                      F-15
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

H. STOCKHOLDERS' EQUITY: (CONTINUED)
STOCK-BASED COMPENSATION PLANS

    All stock option awards are granted at fair market value, accordingly no
compensation expense has been recognized for options granted to employees and
shares purchased under these plans. Had compensation expense for the stock-based
compensation plans been determined based on the fair value at the grant dates
for options granted and shares purchased under the plans consistent with the
method of SFAS No. 123, "Accounting for Stock-Based Compensation," the net loss
and net loss per diluted share for the years ended September 30 would have been
as follows:

<TABLE>
<CAPTION>
                                                   2000       1999       1998
                                                 --------   --------   --------
<S>                                              <C>        <C>        <C>
Net loss:
  As Reported..................................  $ (7,953)  $(36,085)  $(22,623)
  Pro Forma....................................   (27,397)   (50,304)   (28,816)
Net loss per share:
  Basic
    As Reported................................     (0.34)     (1.67)     (1.08)
    Pro Forma..................................     (1.16)     (2.33)     (1.37)
  Diluted
    As Reported................................     (0.34)     (1.67)     (1.08)
    Pro Forma..................................     (1.16)     (2.33)     (1.37)
</TABLE>

    The effects of applying SFAS No. 123 in this pro forma disclosure are not
likely to be representative of the effects on reported net income for future
years, because SFAS 123 does not apply to awards granted prior to fiscal year
1996 and additional awards are anticipated in future years.

    The estimated weighted average fair value of options granted in fiscal year
2000, 1999, and 1998 to purchase the Company's common stock, were $35.42,
$16.86, and $12.78, respectively. The fair value of options at the date of grant
was estimated using the Black-Scholes option pricing model with the following
weighted average assumptions:

<TABLE>
<CAPTION>
                                                       2000                 1999                 1998
                                                ------------------   ------------------   ------------------
<S>                                             <C>                  <C>                  <C>
Expected life (years) stock options...........          5                    5                    5
Expected life (years) ESPP....................         0.5                  0.5                  0.5
Risk-free interest rate.......................     6.09%--6.65%         4.59%--5.86%         5.42%--5.74%
Volatility....................................         85%                  71%                  67%
Dividend yield................................          0                    0                    0
</TABLE>

    The fair value of ILC options at the date of grant was estimated using the
Black-Scholes option pricing model with the following assumptions: expected life
of one to four years, risk-free interest rate of 6.09%-6.65%, volatility of 85%
and dividend yield of 0. The estimated weighted average fair value of options
granted in fiscal year 2000 and 1999 was $0.54 and $0.13, respectively.

                                      F-16
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

H. STOCKHOLDERS' EQUITY: (CONTINUED)
RIGHTS AGREEMENT

    The Board of Directors of the Company adopted a Rights Agreement, dated as
of December 9, 1998, between the Company and State Street Bank and Trust
Company, as Rights Agent. In connection with this agreement, the Board
distributed one common share purchase right for each share of common stock then
or thereafter outstanding. The rights will become exercisable only if a person
or group acquires beneficial ownership of 20% or more of the outstanding common
shares of the Company. Each Right, when it becomes exercisable, will entitle the
holder to purchase from the Company one one-hundredth of a share of Series A
Participating Cumulative Preferred Stock, par value $0.01 per share, of the
Company, at a price of $140. Prior to any party acquiring 20% or more of the
outstanding common shares of the Company or prior to the expiration date, the
Board of Directors of the Company may redeem the Rights in whole, but not in
part, at a price, in cash or common shares or other securities of the Company
deemed by the Board of Directors to be at least equivalent in value, of $.001
per Right. The rights expire on December 9, 2008 unless otherwise redeemed by
the Company prior to that date.

I. CONTINGENT LIABILITY:

    At September 30, 2000, the Company had a contingent liability of
approximately $0.9 million. In 1993, Promis purchased the business assets and
assumed selected liabilities of Palette Systems, Inc., a Canadian company (the
"sellers"). The purchase price of approximately $9.9 million consisted of
$5.5 million in cash and 59,889 exchangeable common shares, as converted at the
common stock exchange ratio, of the Company, valued at $73.91 per common share.
At the time of the acquisition, Promis agreed that on April 7, 1998 it would pay
additional cash consideration to the sellers of an amount equal to the amount by
which approximately $4.0 million exceeded the market value of the common shares
owned by the sellers on April 7, 1998.

    On March 29, 1996, Promis made a formal claim against the sellers pursuant
to the dispute resolution provisions of the original purchase and sale
agreement. The sellers filed certain counterclaims against Promis. In 1997,
Promis and the sellers reached a settlement of the dispute. The settlement
provided that commencing on April 7, 1998 Promis would pay additional cash to
the sellers in an amount equal to the amount by which the market value of 59,889
exchangeable common shares, on each of the agreed-upon payment dates, is less
than $73.91 per common share. As part of the settlement, half the additional
cash consideration was payable on April 7, 1998, with the remaining half due in
20 quarterly installments commencing on July 7, 1998 through April 7, 2003.
Under the terms of the settlement agreement, the sellers are restricted as to
the number of shares of the Company's common stock which can be sold in any
quarter prior to April 7, 2003.

    Since the payment of additional consideration is determined based on the
Company's share price at various future dates, any consideration in addition to
that paid to date will be recorded as a reduction in additional paid-in capital
of the Company as the amounts become determinable. The Company's contingent
liability as of September 30, 2000, calculated based on the market value of the
Company's common stock at September 30, 2000, is approximately $0.9 million.

                                      F-17
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

J. INCOME TAXES:

    The following summarizes the Company's provision for (benefit from) income
taxes for the years ended September 30:

<TABLE>
<CAPTION>
                                                      2000       1999       1998
                                                    --------   --------   --------
                                                            (IN THOUSANDS)
<S>                                                 <C>        <C>        <C>
Current tax (benefit) provision:
  Federal.........................................   $   78    $(7,667)   $(2,806)
  State...........................................      221         21         17
  Foreign.........................................      928        320        267
                                                     ------    -------    -------
Total current (benefit) provision.................    1,227     (7,326)    (2,522)
Deferred provision (benefit):
  Federal.........................................       --      4,570     (3,349)
  State...........................................       --      2,643     (1,895)
  Foreign.........................................       --      1,178         --
                                                     ------    -------    -------
Total deferred provision (benefit)................       --      8,391     (5,244)
                                                     ------    -------    -------
Total provision for (benefit from) income taxes...   $1,227    $ 1,065    $(7,766)
                                                     ======    =======    =======
</TABLE>

    The differences between the effective tax rates and the U.S. federal
statutory tax rates were as follows:

<TABLE>
<CAPTION>
                                                      2000        1999        1998
                                                    --------    --------    --------
<S>                                                 <C>         <C>         <C>
U.S. federal income tax statutory rate............   (34.0)%     (34.0)%     (34.0)%
Change in valuation allowance.....................    60.5        43.4         0.0
State income taxes, net of federal benefit........     2.8        (0.4)       (2.6)
Foreign rate differential.........................    (8.5)       (0.1)        0.6
U.S. and foreign tax credits......................    (5.9)       (9.6)       (2.1)
S-corporation income of Equipe....................     0.0         0.0        (1.4)
Acquisition costs not deductible for tax
  purposes........................................     0.0         3.9        14.3
Other.............................................     3.3        (0.2)       (0.4)
                                                     -----       -----       -----
Effective tax rate................................    18.2%        3.0%      (25.6)%
                                                     =====       =====       =====
</TABLE>

                                      F-18
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

J. INCOME TAXES: (CONTINUED)
    At September 30, the components of net deferred tax assets (liabilities)
were as follows:

<TABLE>
<CAPTION>
                                                            2000       1999
                                                          --------   --------
                                                            (IN THOUSANDS)
<S>                                                       <C>        <C>
Gross deferred tax assets:
  Accruals and reserves.................................  $ 10,819   $  5,047
  Intangible assets.....................................     2,135      2,338
  Tax credits...........................................     8,376      6,890
  Canadian R&D and capital cost allowances..............     8,709      9,884
  Net operating losses..................................    22,777     10,715
  Other.................................................     6,474      1,815
                                                          --------   --------
    Total gross deferred tax assets.....................    59,290     36,689
Gross deferred tax liabilities:
  Long-term contracts...................................    (4,040)      (993)
  Accounts receivable...................................      (349)      (698)
  Depreciation..........................................    (2,147)    (1,650)
                                                          --------   --------
    Total gross deferred tax liabilities................    (6,536)    (3,341)
Valuation allowance.....................................   (52,754)   (33,348)
                                                          --------   --------
Net deferred tax assets.................................  $     --   $     --
                                                          ========   ========
</TABLE>

    The Company experienced net operating losses during fiscal years 1998 and
1999 and, as a result, it believed that sufficient uncertainty existed regarding
the realizability of the net deferred tax assets and accordingly it established
a full valuation allowance in fiscal 1999. Due to the net operating loss in
fiscal year 2000, the Company has continued to maintain a full valuation
allowance against its net deferred tax assets as of the end of fiscal 2000. The
net increase in the valuation allowance during 2000 and 1999 was $19,406,000 and
$19,680,000, respectively.

    At September 30, 2000, the Company had an aggregate U.S. federal net
operating loss (NOL) of $56,096,000 that is available to offset future taxable
income. Approximately $44,826,000 of the NOL is attributable to the exercise of
stock options for which the tax benefit, when realized, will be recorded
directly to stockholders' equity. The U.S. federal net operating loss available
for carryforward begins to expire in fiscal year 2020. The Company also has U.S.
federal credit carryforwards of $2,326,000 that begin to expire in fiscal year
2005. The Company has available state net operating losses of $71,467,000 that
expire in fiscal year 2004 to fiscal year 2021 and state credit carryforwards of
$4,319,000 that expire beginning in fiscal year 2013. The Company also has
non-U.S. losses of $1,433,000 that expire beginning in fiscal year 2005, and
non-U.S. credits of $3,200,000 that begin to expire in fiscal year 2005.

                                      F-19
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

K. FINANCING ARRANGEMENTS:

REVOLVING CREDIT

    On June 16, 1998, the Company entered into a revolving credit facility
agreement with Chase Manhattan Bank (the "Bank"). The revolving credit facility
enables the Company to borrow up to $20,000,000 on an unsecured basis.
Outstanding revolving credit loans bear interest, at the Company's option, at
the 30, 60 or 90 day LIBOR rate plus a credit spread, or at the effective prime
rate. At September 30, 2000, the LIBOR borrowing rate would have been 6.62%. The
ability of the Company to effect borrowings under the revolving credit facility
is conditioned upon the meeting of certain financial criteria. The revolving
credit agreement expires on December 31, 2000. The Company had outstanding
letters of credit with the Bank of $1,420,000 at September 30, 2000, and
therefore, the available balance under this credit agreement was $18,580,000 at
September 30, 2000. At September 30, 2000, the Company was in default of the
minimum consolidated net worth requirement, the minimum fixed charge coverage
ratio, and the maximum total funded debt to EBITDA (earnings before interest,
taxes, depreciation, and amortization) ratio of the revolving credit agreement
for the three months ended September 30, 2000. The Company has subsequently
received a waiver from the Bank on December 13, 2000. The Company expects to
seek future waivers as necessary from the Bank. However, there can be no
assurance that such waivers will be obtained.

CAPITAL LEASE OBLIGATIONS

    The Company holds certain property and equipment under capital leases. The
obligations under capital leases represent the present value of future minimum
lease payments and are collateralized by certain assets of the Company. The
capital lease obligations bear interest at rates of 7.0% to 9.9% per annum and
expire at various dates through July 2005 (see Note F).

L. DEFINED CONTRIBUTION PLANS:

    Eligible employees can participate in the Company's 401(k) Savings and
Retirement Plan by making voluntary contributions to the plan in amounts up to
the statutory limit or 15% of their annual compensation. Currently, the Company
has elected to match a portion of the employee deferral up to certain prescribed
limits, and these contributions vest at a rate of 20% per year. Pursuant to the
acquisition of Promis, certain eligible employees receive Company matching
contributions which vest 100% after one year. The Company's contribution expense
under these plans amounted to $1,321,000, $1,118,000, and $1,101,000 for fiscal
years 2000, 1999, and 1998, respectively. Employees of Equipe were not eligible
under this plan until after the acquisition (see Note O.)

    Canadian employees are eligible to participate in the Registered Retirement
Savings Plan ("RRSP") which allows voluntary contributions up to the statutory
limit. The Company has elected to match a portion of the employee contributions,
up to a maximum of $5,000 per employee per year. These contributions are fully
vested when made. The Company's contribution expenses under the RRSP were
approximately $332,000, $255,000, and $223,000 in fiscal years 2000, 1999, and
1998, respectively.

                                      F-20
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

M. SEGMENT REPORTING AND GEOGRAPHIC INFORMATION:

    The Company operates in three primary segments, all within the semiconductor
manufacturing and OEM equipment supply industry, which serve both domestic and
international markets. These reportable operating segments consist of Factory
Systems, OEM Systems and Software Systems. These businesses are segregated into
their respective reportable segments based on the Company's management reporting
structure and its method of internal resource allocations. Additionally, the
Company's product development processes and customers were evaluated in
determination of the segments.

    The Factory Systems segment provides automation products for interbay,
intrabay and lithography automation as well as integration and support services
to semiconductor manufacturers. The OEM Systems segment provides wafer-handling
systems, software and services for semiconductor equipment suppliers. The
Software Systems segment primarily provides manufacturing execution system
("MES") software and advanced planning and scheduling software to semiconductor
manufacturers. This segment, however, does not include all of the Company's
software products, as material control software ("MCS") and tool connectivity
software are components of the other segments.

    The Company's operating segments have no significant intersegment revenues
and expenses, as all segments' revenues are generated from sales to unaffiliated
customers. External revenues and expenses are allocated between the applicable
segments. The Company's segments are evaluated on an operating profit basis, and
other income and expenses and income tax provisions or benefits are not
calculated for the specific segments. Any results of operations or assets not
specifically allocated to these segments are included in the Corporate and Other
category. The Corporate and Other category assets include all non-identifiable
assets, primarily cash and investments, deferred income taxes, and other current
and non-current assets. Activity related to strategic technology development,
corporate marketing, general corporate administrative expenses, merger costs and
special charges, other income and expenses, and income taxes are included in the
Corporate and Other segment. Depreciation expense and expenditures for
long-lived assets by segment are not presented below as amounts are not used in
measuring segment operating performance by the Company's chief operating
decision maker. The accounting policies of the reportable segments are the same
as those described in Note B, "Summary of Significant Accounting Policies."

                                      F-21
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

M. SEGMENT REPORTING AND GEOGRAPHIC INFORMATION: (CONTINUED)
                          SUMMARY OF BUSINESS SEGMENTS

<TABLE>
<CAPTION>
                                                                YEARS ENDED SEPTEMBER 30,
                                                              ------------------------------
                                                                2000       1999       1998
                                                              --------   --------   --------
                                                                      (IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
TOTAL NET REVENUE TO UNAFFILIATED CUSTOMERS
Factory Systems.............................................  $144,219   $ 70,046   $107,215
OEM Systems.................................................   118,210     41,496     70,459
Software Systems............................................    37,343     24,754     25,871
                                                              --------   --------   --------
Total net revenue...........................................  $299,772   $136,296   $203,545
                                                              ========   ========   ========
SEGMENT OPERATING (LOSS) PROFIT
Factory Systems.............................................  $(35,710)  $(21,454)  $ (3,531)
OEM Systems.................................................    33,063      1,426      9,781
Software Systems............................................    10,401     (3,062)    (6,785)
Other reconciling items:
Corporate and other expenses................................   (17,034)   (14,865)   (30,479)
                                                              --------   --------   --------
  Consolidated operating loss...............................    (9,280)   (37,955)   (31,014)
Other income, net...........................................     2,554      2,935        625
                                                              --------   --------   --------
Consolidated loss before income taxes.......................  $ (6,726)  $(35,020)  $(30,389)
                                                              ========   ========   ========
IDENTIFIABLE SEGMENT ASSETS
Factory Systems.............................................  $121,664   $ 52,094
OEM Systems.................................................    37,703     19,097
Software Systems............................................    15,413      9,253
                                                              --------   --------
  Identifiable segment assets...............................   174,780     80,444
Corporate and other.........................................   102,144     66,108
                                                              --------   --------
Consolidated total assets...................................  $276,924   $146,552
                                                              ========   ========
</TABLE>

    Two customers comprised 10% or more of the Company's total net revenue for
the years ended September 30 as follows:

<TABLE>
<CAPTION>
                                                               2000       1999       1998
                                                             --------   --------   --------
<S>                                                          <C>        <C>        <C>
Customer A (1).............................................     14%        21%        19%
Customer B (2).............................................     12%        --         --
</TABLE>

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

(1) Total net revenue for this customer in fiscal years 2000, 1999, and 1998,
    were recorded by the Factory Systems segment.

(2) Total net revenue for this customer, in fiscal year 2000, were recorded by
    the OEM Systems segment.

                                      F-22
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

M. SEGMENT REPORTING AND GEOGRAPHIC INFORMATION: (CONTINUED)
                       SUMMARY OF GEOGRAPHIC INFORMATION

    Information as to the Company's revenues in different geographical areas for
the years ended September 30 were as follows (3):

<TABLE>
<CAPTION>
                                                  2000       1999       1998
                                                --------   --------   --------
                                                        (IN THOUSANDS)
<S>                                             <C>        <C>        <C>
United States.................................  $191,570   $ 91,632   $130,718
Taiwan........................................    24,477      6,012     13,274
Germany.......................................    15,024     15,990     23,699
Rest of World.................................    68,701     22,662     35,854
                                                --------   --------   --------
Total net revenue.............................  $299,772   $136,296   $203,545
                                                ========   ========   ========
</TABLE>

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

(3) Sales are attributable to geographic areas based on location of customer.

    Long-lived assets, including property and equipment, goodwill, intellectual
property and other intangible assets by geographical areas as of September 30
were as follows:

<TABLE>
<CAPTION>
                                                              2000       1999
                                                            --------   --------
                                                              (IN THOUSANDS)
<S>                                                         <C>        <C>
United States.............................................  $21,575    $17,651
Canada....................................................    2,991      3,041
Rest of world.............................................      453        495
                                                            -------    -------
Total long-lived assets...................................  $25,019    $21,187
                                                            =======    =======
</TABLE>

N. ACQUISITION OF PROMIS:

    On March 2, 1999, the Company acquired Promis, a Canadian corporation, in a
transaction accounted for as a pooling of interests. Promis is a developer of
manufacturing execution systems ("MES") software solutions for semiconductor and
precision electronics manufacturers. In connection with the acquisition, the
Company issued 0.1353 exchangeable shares for each outstanding Promis share, or
an aggregate of 1,389,974 exchangeable shares. Each exchangeable share may be
exchanged at any time for one share of common stock of the Company. The Company
assumed options to purchase 270,336 shares of the Company's common stock and a
warrant to purchase 13,530 shares of common stock, converted at the common stock
exchange ratio, under this acquisition agreement (see Note H). The consolidated
financial statements of the Company for periods prior to the acquisition have
been restated to include the financial position, results of operations and cash
flows of Promis.

    Prior to the acquisition, Promis prepared its financial statements based on
a December 31 fiscal year-end. Accordingly, Promis' results of operations,
statements of stockholders' equity and cash flows for the year ended
December 31, 1997 were combined with the Company's results of operations,
statements of stockholders' equity and cash flows for the year ended
September 30, 1997. The results of operations, statements of stockholders'
equity and cash flows for fiscal 1998 are for the twelve months ended
September 30, 1998 for both the Company and Promis. Promis' results of
operations for the three months ended December 31, 1997, including net revenue
of $6,457,000 and net income of $403,000, are included in the Company's
consolidated statements of operations, statements of stockholders' equity, and
cash flows

                                      F-23
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

N. ACQUISITION OF PROMIS: (CONTINUED)
for both the years ended September 30, 1998 and 1997. To conform fiscal periods,
an amount equal to Promis' net income and $33,000 of Promis' additional paid-in
capital from the exercise of stock options for the three months ended
December 31, 1997 were eliminated from the consolidated statement of
stockholders' equity for the year ended September 30, 1998. Additionally,
Promis' $50,000 increase in cash and cash equivalents for the three months ended
December 31, 1997 has been eliminated in the Company's condensed consolidated
statement of cash flows for the year ended September 30, 1998, because this
increase has been included in the beginning cash and cash equivalents at
October 1, 1997.

    The following information presents certain statements of operations data of
the Company, after restatement from the Equipe acquisition, and Promis for the
period prior to the Promis acquisition:

<TABLE>
<CAPTION>
                                                                PRI        HISTORICAL   COMBINED
                                                             AUTOMATION      PROMIS     COMPANIES
                                                            ------------   ----------   ---------
<S>                                                         <C>            <C>          <C>
Net revenue for:
  Three months ended December 27, 1998....................    $ 25,316       $ 4,319    $ 29,635
  Fiscal 1998.............................................     178,193        25,352     203,545
Net (loss) income for:
  Three months ended December 27, 1998....................    $ (5,608)      $(2,047)   $ (7,655)
  Fiscal 1998.............................................     (23,942)        1,319     (22,623)
</TABLE>

O. ACQUISITION OF EQUIPE:

    On January 22, 1998, the Company acquired Equipe, a worldwide developer,
manufacturer, and supplier of wafer and substrate handling robots, pre-aligners
and controllers for semiconductor process tool manufacturers. The Company issued
4,088,016 shares of its common stock in exchange for all of the outstanding
stock of Equipe Technologies, Inc., using an exchange ratio of 0.760372 of one
share of the Company's common stock for each share of Equipe Technologies, Inc,
and the Company issued 36,000 and 240,000 shares of the Company's common stock
for the common stock of E-Machine, Inc. and Equipe Japan Ltd., respectively. In
addition, all outstanding Equipe stock options were converted, at the common
stock exchange ratio, into options to purchase the Company's common stock. The
business combination was accounted for as a pooling of interests. The
consolidated financial statements of the Company for periods prior to the
acquisition have been restated to include the financial position, results of
operations and cash flows of Equipe. Significant intercompany transactions among
the Equipe Combined Companies prior to the period in which the business
combination occurred have been eliminated from the accompanying financial
statements.

    Prior to the acquisition, Equipe prepared its financial statements based on
a December 31 fiscal year-end. Equipe Technologies, Inc. and E-Machine, Inc.
were S corporations for income tax purposes prior to the acquisition. Pro forma
net (loss) income and net (loss) income per common share, which give effect to
adjustments that provide for income taxes as if Equipe Technologies, Inc. and
E-Machine, Inc. had been treated as C-corporations for the period presented,
have been presented on the consolidated statements of operations. The pro forma
information is shown for comparative purposes only.

                                      F-24
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

O. ACQUISITION OF EQUIPE: (CONTINUED)
    The following information presents certain statements of operations data of
the Company and Equipe for the period prior to the Equipe acquisition. The
statements of operations data for Promis is included below so as to reconcile
with the consolidated statements of operations:

<TABLE>
<CAPTION>
                                             PRI                   COMBINED
                                          AUTOMATION     EQUIPE    COMPANIES    PROMIS    CONSOLIDATED
                                         ------------   --------   ---------   --------   ------------
<S>                                      <C>            <C>        <C>         <C>        <C>
Net revenue for:
  Three months ended December 28, 1997     $46,830      $18,303     $65,133     $6,457       $71,590
Net (loss) income for:
  Three months ended December 28, 1997     $(3,449)     $ 3,042     $  (407)    $  403       $    (4)
</TABLE>

P. ACQUISITION OF CHIPTRONIX:

    On May 19, 1998, the Company acquired Chiptronix, a Switzerland corporation,
for aggregate non-cash consideration of 105,000 shares of the Company's common
stock. Chiptronix was the European distributor of Equipe products. The business
combination was accounted for as a pooling of interests. However, as the
financial position and results of operations of Chiptronix are immaterial to the
financial position and results of operations of the Company on a consolidated
basis, no prior period financial amounts have been restated. In accordance with
this business combination, the Company has acquired the net liabilities of
Chiptronix, in the amount of $1,543,000, including net cash assumed of $246,000.
Additionally, the Company acquired Chiptronix' retained deficit of $1,556,000 as
of March 29, 1998 and this amount is included in the changes to stockholders'
equity for the year ended September 30, 1998. The results of operations of
Chiptronix for the six months ended September 30, 1998 have been included in the
accompanying consolidated financial statements of the Company.

Q. ACQUISITION OF INTERVAL LOGIC CORPORATION:

    On October 29, 1997 the Company acquired ILC, a California corporation, for
aggregate non-cash consideration of 111,258 shares of the Company's common
stock. In addition, the Company assumed options to purchase an aggregate of
199,170 shares of the Company's common stock. ILC was formed in 1995 to develop
advanced, high-performance planning and scheduling software solutions for the
semiconductor industry. The value of the transaction was $8,523,000, including
approximately $600,000 of expenses related to the acquisition. $424,000 of net
liabilities of ILC were acquired under this transaction. The Company accounted
for the transaction as a purchase. Pro forma information for the previous period
has been omitted because the effect of restatement would be immaterial.

    At the time of the acquisition, the purchase price was allocated to the
tangible and intangible assets of ILC. Management is aware that it is
responsible for estimating the fair value of purchased in-process research and
development. The value assigned to the intangible assets, primarily the acquired
technology, was based on the fair market value using a risk-adjusted discounted
cash flow approach. ILC's sole product at the time of the acquisition was the
Leverage product, which was under development. ILC had no product revenues
during its prior existence and was a development stage enterprise. Specifically,
the purchased technology was evaluated through extensive interviews and analysis
of data concerning the state of the technology and needed developments. This
evaluation of underlying technology acquired considered the inherent
difficulties and uncertainties in completing the development, and thereby
achieving technological feasibility, and the risks related to the viability of
and potential changes in future target markets. The significant assumptions that
affected the valuation of ILC concerned potential revenue and cost of

                                      F-25
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Q. ACQUISITION OF INTERVAL LOGIC CORPORATION: (CONTINUED)
completion, as well as the timing of the product release. In addition, the
selection of an appropriate discount rate was a major factor in the valuation
analysis.

    The revenue assumptions for this product were a key variable in the
Company's valuation analysis. The Company developed revenue projections based on
management's expected release date of March 1999 for the beta version of the
Leverage product. Given that ILC had no historical revenue to rely on as a
guide, the Company based its projections on revenues from a population of
comparable companies. The revenue growth rates projected for the Leverage
product were comparable to the 3-year cumulative average growth rate for the
comparable companies. The costs of completion assumptions for the Leverage
product were a second key variable in the Company's valuation analysis. These
assumptions were based on detailed cost analysis provided by the head of
research and development for ILC, and included assumptions regarding completion
dates for development milestones. The total development effort was estimated to
take approximately 225 engineering man-months at a cost of approximately
$2,800,000. This project included completion of the software requirement
definition, data integration and validation, completion of the graphics user
interface, development of alpha and beta versions for customer testing, and
integration and adaptation with customer systems. The significant further
investments in development required to meet expected customer requirements were
substantially completed in the third quarter of fiscal 1999. The actual
development costs have approximated the cost estimates used in the valuation
model.

    The acquired technology had not reached technological feasibility at the
time of the acquisition. The Company defines technological feasibility as the
point at which a working model is functioning to designed specifications and has
been placed at a beta test site. The Leverage product was first released to a
beta test site in March 1999. In addition, the technology had no alternative
future use to the Company in other research and development projects or
otherwise. Accordingly, the acquired technology was expensed as in-process
research and development. Based on the methodology described above, the Company
assigned a fair value of $8,417,000 to the technology.

R. ACQUISITION OF MASE:

    Effective October 2, 1997, prior to the acquisition of Promis by the
Company, Promis purchased the net assets of MASE Systems, Inc. ("MASE") of San
Jose, California for $1,533,000 in cash. The Company acccounted for the
transaction as a purchase. The net assets of MASE acquired included $170,000 of
net non-cash working capital, $26,000 in net property and equipment, and
$1,337,000 in intellectual property. Pro forma information for the previous
period has been omitted because the effect of restatement on the Company's
results of operations would be immaterial.

S. MERGER COSTS AND SPECIAL CHARGES:

    For the year ended September 30, 1999, the Company recorded special charges
of $650,000 in the first quarter. These charges represent provisions for
severance compensation relating to the termination of 62 personnel. The
personnel reductions included 40 in manufacturing and customer support, 8 in
engineering, and 14 in selling, general and administrative functions. The
reduction in force occurred in response to the continued downturn in the
semiconductor equipment industry. As of September 30, 1999, all of the severance
compensation had been paid.

    For the year ended September 30, 1999, the Company, in the second quarter,
recorded merger costs of $3,950,000 related to the acquisition of Promis,
primarily consisting of legal, accounting and investment banking fees. As of
September 30, 1999, all of these merger costs had been paid. Additionally,
during the

                                      F-26
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

S. MERGER COSTS AND SPECIAL CHARGES: (CONTINUED)
second quarter the Company recorded special charges of $1,850,000. The special
charges consisted of $1,406,000 for compensation-related costs for five
management personnel in the selling, general, and administrative functions to
satisfy existing contractual obligations related to the acquired companies;
$196,000 of costs associated with the reductions of leased facilities; and
$248,000 for other legal issues. In the fourth fiscal quarter, the Company
recognized a special credit of $75,000 to adjust the estimated costs to reflect
actual costs. At September 30, 2000, $72,000 of these charges remained in
accrued expenses and are expected to be paid during fiscal year 2001.

    In connection with the acquisition of Equipe, direct acquisition costs of
$4,490,000 for legal, investment banking and accounting fees were recorded in
fiscal 1998. At September 30, 2000 there were no remaining amounts in accrued
expenses related to these direct acquisition costs.

    Additionally, during the second, third and fourth quarters of fiscal 1998,
the Company recorded restructuring and other special charges of $5,601,000 in
response to market conditions and to integrate the Equipe operations. The
special charges included provisions for severance compensation of $1,910,000
resulting from terminations of approximately 244 personnel completed in 1998.
The personnel reductions consisted of 123 in manufacturing and customer support,
65 in engineering and 56 in sales, general and administrative functions. In
addition, the special charges included costs of $2,943,000 relating to
reductions of leased facilities space and a non-cash write-down of specialized
demonstration equipment for a particular customer of $748,000 and other assets
that are not usable elsewhere. Of the total $4,853,000 severance and lease
reduction charges recorded in fiscal 1998, all of these special charges had been
paid as of September 30, 1999.

T. JOINT VENTURE:

    Effective June 1, 1998, the Company entered into a joint venture with
Shinsung Engineering Co. Ltd. ("SEC") and Chung Song Systems Co., Ltd. ("CSSC")
to distribute the Company's products and services in Korea. SEC and CSSC are in
the business of developing and marketing of products and services for the
semiconductor industry. Under the terms of the agreement, the Company owns 80%
of the joint venture and SEC and CSSC each own 10% of the joint venture. The
Company, SEC and CSSC have committed to invest on a pro rata basis 2.6 billion
Korean won, or approximately $2.1 million, based on a September 30, 1999
exchange rate of 1216 Korean won per U.S. dollar, in the joint venture over a
two-year period through June 2000. As of September 30, 1999, the Company had
outstanding commitments under this agreement of 1.0 billion Korean won, or
approximately $0.9 million.

U. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED):

    The following sets forth certain unaudited consolidated quarterly statements
of operations data for each of the Company's last eight quarters. In
management's opinion, this quarterly information reflects all adjustments,
consisting only of normal recurring adjustments, necessary for a fair
presentation for the periods presented. Such quarterly results are not
necessarily indicative of future results of operations and

                                      F-27
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

U. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED): (CONTINUED)
should be read in conjunction with the audited consolidated financial statements
of the Company and the notes thereto included elsewhere herein.
<TABLE>
<CAPTION>
                                                          FISCAL YEAR 1999
                                        ----------------------------------------------------
                                         FIRST      SECOND     THIRD      FOURTH     TOTAL
                                        QUARTER    QUARTER    QUARTER    QUARTER      YEAR
                                        --------   --------   --------   --------   --------
                                          (ALL AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
<S>                                     <C>        <C>        <C>        <C>        <C>
Net revenue...........................   $ 29.6     $ 30.3     $ 34.5     $ 41.9     $136.3
                                         ------     ------     ------     ------     ------
Gross profit..........................      9.5       11.5       14.6       16.9       52.5
                                         ------     ------     ------     ------     ------
Net income (loss).....................   $ (7.7)    $(10.2)    $(13.1)    $ (5.1)    $(36.1)
                                         ======     ======     ======     ======     ======
Net income (loss) per share:
  Basic...............................   $(0.36)    $(0.48)    $(0.60)    $(0.23)    $(1.67)
                                         ======     ======     ======     ======     ======
  Diluted.............................   $(0.36)    $(0.48)    $(0.60)    $(0.23)    $(1.67)
                                         ======     ======     ======     ======     ======

<CAPTION>
                                                          FISCAL YEAR 2000
                                        ----------------------------------------------------
                                         FIRST      SECOND     THIRD      FOURTH     TOTAL
                                        QUARTER    QUARTER    QUARTER    QUARTER      YEAR
                                        --------   --------   --------   --------   --------
                                          (ALL AMOUNTS IN MILLIONS, EXCEPT PER SHARE DATA)
<S>                                     <C>        <C>        <C>        <C>        <C>
Net revenue...........................   $58.7      $76.7      $88.9      $ 75.5     $299.8
                                         -----      -----      -----      ------     ------
Gross profit..........................    21.4       30.0       36.4         7.4       95.2
                                         -----      -----      -----      ------     ------
Net income (loss).....................   $ 0.3      $ 5.8      $ 9.8      $(23.9)    $ (8.0)
                                         =====      =====      =====      ======     ======
Net income (loss) per share:
  Basic...............................   $0.01      $0.25      $0.41      $(0.96)    $(0.34)
                                         =====      =====      =====      ======     ======
  Diluted.............................   $0.01      $0.23      $0.38      $(0.96)    $(0.34)
                                         =====      =====      =====      ======     ======
</TABLE>

The results for the fourth quarter of fiscal year 2000 were affected by specific
charges related to inventory provisions and write-downs of $14,657,000,
provisions for contract losses and customer penalties of $8,878,000 and
provisions for warranty and other items of $1,802,000, due to manufacturing and
supply chain problems encountered during the quarter within the Company's
Factory Systems segment.

V.  SUBSEQUENT EVENTS

    On November 20, 2000, and November 22, 2000, the Company and three of its
directors were named as defendants in virtually identical lawsuits filed in the
United States District Court for the District of Massachusetts: (i) Kai Chan On
Behalf of Himself and All Others Similarly Situated vs. PRI Automation, Inc.,
Amram Rasiel, Mitchell G. Tyson and Mordechai Wiesler, Civil Action
No. 00-123958-REK; and (ii) Jacob J. Siegal On Behalf of Himself and All Others
Similarly Situated vs. PRI Automation, Inc., Amram Rasiel, Mitchell G. Tyson and
Mordechai Wiesler, Civil Action No. 00-12414-REK. The named plaintiff in each
action purports to bring the complaint on behalf of a class consisting of all
purchasers of the Company's stock during the period January 27, 2000 through
September 11, 2000. The plaintiffs claim that the defendants violated
Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, and SEC
Rule 10b-5, by virtue of statements and omissions that the plaintiffs claim were
materially false or misleading. The plaintiffs each seek certification as a
class, damages, pre-judgment and post-judgment interest, costs, and attorneys'
fees. The Company strongly believes that the lawsuits lack merit and it intends
to defend against the claims vigorously. The Company cannot predict the outcome
of the lawsuits at this time, and there can be no assurance that the litigation
will not have a material adverse impact on its financial condition or results of
operations.

    On December 1, 2000, the Company announced that it signed a strategic
alliance agreement with Shinsung Engineering Co. Ltd., a South Korean
manufacturer of semiconductor cleanroom equipment and other industrial systems.
Under the terms of the agreement, Shinsung Engineering will assemble PRI's
automated storage and retrieval systems for customers in Asia. As part of the
strategic alliance, PRI has made a minority investment of $12 million in
Shinsung Engineering, giving PRI ownership of approximately 12% of the
outstanding shares with warrants that could potentially increase that holding to
19.5%.

    On December 14, 2000, the Company amended its existing revolving credit
facility agreement with Chase Manhattan Bank extending the expiration date to
March 31, 2001.

                                      F-28
<PAGE>
                                   SIGNATURES

    Pursuant to the requirements of the Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

<TABLE>
<S>                                                   <C>
                                                                    PRI AUTOMATION, INC.

Date: December 19, 2000                                            /s/ MITCHELL G. TYSON
                                                      ------------------------------------------------
                                                                     Mitchell G. Tyson
                                                           President and Chief Executive Officer

Date: December 19, 2000                                             /s/ COSMO S. TRAPANI
                                                      ------------------------------------------------
                                                                      Cosmo S. Trapani
                                                                  Chief Financial Officer
</TABLE>

    Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.

<TABLE>
<CAPTION>
                      SIGNATURE                                   TITLE                      DATE
                      ---------                                   -----                      ----
<C>                                                    <S>                          <C>
                                                       Chief Executive Officer,
                /s/ MITCHELL G. TYSON                    President and Director
     -------------------------------------------         (principal executive         December 19, 2000
                  Mitchell G. Tyson                      officer)

                /s/ MORDECHAI WIESLER                  Director and Chairman of
     -------------------------------------------         the Board                    December 19, 2000
                  Mordechai Wiesler

                                                       Chief Financial Officer
                /s/ COSMO S. TRAPANI                     (principal financial and
     -------------------------------------------         accounting officer) and      December 19, 2000
                  Cosmo S. Trapani                       Treasurer

             /s/ ALEXANDER V. D'ARBELOFF               Director
     -------------------------------------------                                      December 19, 2000
               Alexander V. d'Arbeloff

                /s/ BORUCH FRUSZTAJER                  Director
     -------------------------------------------                                      December 19, 2000
                  Boruch Frusztajer

                  /s/ AMRAM RASIEL                     Director
     -------------------------------------------                                      December 19, 2000
                    Amram Rasiel

               /s/ KENNETH M. THOMPSON                 Director
     -------------------------------------------                                      December 19, 2000
                 Kenneth M. Thompson
</TABLE>
<PAGE>
                 SCHEDULE II: VALUATION AND QUALIFYING ACCOUNTS
                              PRI AUTOMATION, INC.

               FOR YEARS ENDED SEPTEMBER 30, 2000, 1999, AND 1998
                                 (in thousands)

<TABLE>
<CAPTION>
                                                       BALANCE AT                AMOUNTS     BALANCE
                                                       BEGINNING    CHARGED TO   WRITTEN     AT END
                                                       OF PERIOD     EXPENSE       OFF      OF PERIOD
                                                       ----------   ----------   --------   ---------
<S>                                                    <C>          <C>          <C>        <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
  September 30, 2000.................................    $ 2,646      $   683     $  448     $ 2,881
  September 30, 1999.................................      3,252         (523)        83       2,646
  September 30, 1998.................................    $ 1,600      $ 1,652     $   --     $ 3,252
INVENTORY RESERVES:
  September 30, 2000.................................    $ 6,255      $ 7,759     $4,358     $ 9,656
  September 30, 1999.................................     15,147          785      9,677       6,255
  September 30, 1998.................................    $ 5,125      $12,389     $2,367     $15,147
</TABLE>
<PAGE>
                              PRI AUTOMATION, INC.
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                          DESCRIPTION
-------                                         -----------
<C>                     <S>
        2.1             Agreement and Plan of Reorganization, dated as of October
                        25, 1997, among PRI Automation, Inc., E-Acquisition Corp.,
                        Equipe Technologies, Inc. and certain Stockholders of Equipe
                        Technologies, Inc. (filed as Exhibit 10.19 to the Company's
                        Current report on form 8-K on November 10, 1997, and
                        incorporated herein by reference).

        2.2             Stock Purchase Agreement, dated as of October 25, 1997 among
                        PRI Automation, Inc. and the Shareholders of E-Machine, Inc.
                        (filed as Exhibit 10.20 to the Company's Current Report on
                        Form 8-K filed on November 10, 1997, and incorporated herein
                        by reference).

        2.3             Stock Purchase Agreement, dated as of October 25, 1997,
                        among PRI Automation, Inc. and the Shareholders of Equipe
                        Japan Corporation (filed as Exhibit 10.21 to the Company's
                        Current Report on Form 8-K filed on November 10, 1997, and
                        incorporated herein by reference).

        2.4             Stock Purchase Agreement dated as of May 19, 1998 by and
                        between the Company and the Shareholders of Chiptronix
                        Handling Systems GmbH and of Chiptronix GmbH (filed as
                        Exhibit 10.27 to the Company's Quarterly Report on Form 10-Q
                        for the quarter ended June 28, 1998 and incorporated herein
                        by reference).

        2.5             Combination Agreement dated as of November 24, 1998 between
                        PRI Automation, Inc., 1325949 Ontario Inc. and Promis
                        Systems Corporation Ltd. (filed as Exhibit 2.1 to the
                        Company's Registration Statement S-3 filed on December 24,
                        1998 and incorporated herein by reference).

        3.1             Restated Articles of Organization and amendments thereto.**

        3.2             Amended and Restated By-Laws of the Company (filed as
                        Exhibit 3.4 to the Company's Registration Statement on Form
                        S-1, File No. 33-81836 and incorporated herein by
                        reference).

        4.1             Specimen certificate for the Common Stock of the Company
                        (filed as Exhibit 4.1 to the Company's Registration
                        Statement on Form S-1, File No. 33-81836 and incorporated
                        herein by reference).

        4.2             Rights Agreement dated as of December 9, 1998, between PRI
                        Automation, Inc. and State Street Bank and Trust Company, as
                        Rights Agent (filed as Exhibit 4.1 to the Company's Form 8-K
                        filed on November 25, 1998 and incorporated herein by
                        reference).

        4.3             Form of Rights Certificate (filed as Exhibit 4.3 to the
                        Company's Form 8-K filed on November 25, 1998 and
                        incorporated herein by reference).

        4.4             Plan of Arrangement under Section 192 of the Canada Business
                        Corporations Act of Promis Systems Corporation Ltd. dated
                        March 2, 1999 (filed as Exhibit 99.1 to the Company's
                        Registration Statement on Form S-3, File No. 333-69721 and
                        incorporated herein by reference).

        4.5             Voting and Exchange Trust Agreement among the Company,
                        1325949 Ontario Inc., Promis Systems Corporation Ltd. And
                        Montreal Trust Company of Canada, as trustee dated March 2,
                        1999 (filed as Exhibit 99.2 to the Company's Registration
                        Statement on Form S-3, File No. 333-69721 and incorporated
                        herein by reference).

        4.6             Support Agreement among the Company, 1325949 Ontario Inc.
                        and Promis Systems Corporation Ltd. dated March 2, 1999
                        (filed as Exhibit 99.3 to the Company's Registration
                        Statement on Form S-3, File No. 333-69721 and incorporated
                        herein by reference).

       10.1*            1994 Incentive and Non-Qualified Stock Option Plan of the
                        Company (filed as Exhibit 10.5 to the Company's Registration
                        Statement on Form S-1, File No. 33-81836 and incorporated
                        herein by reference).

       10.2*            PRI Automation, Inc. 1997 Non-Incentive Stock Option Plan of
                        the Company, as amended.**

       10.3*            Promis Systems Corporation Ltd. Amended and Restated Stock
                        Option Plan dated September 30, 1998 (filed as Exhibit 4.4
                        to the Company's Form S-8 filed on March 9, 1999 and
                        incorporated herein by reference).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                          DESCRIPTION
-------                                         -----------
<C>                     <S>
       10.4             Management Agreement dated as of November 30, 2000 by and
                        between the Company and Wan Keun Lee as the majority
                        shareholder of Shinsung Eng Co. Ltd.**

       10.5             Bond Subscription Agreement dated as of November 30, 2000 by
                        and between the Company and Shinsung Eng. Co. Ltd.**

       10.6             Share Subscription Agreement dated as of November 30, 2000
                        by and between the Company and Shinsung Eng. Co. Ltd.**

       10.7*            PRI Automation, Inc. 2000 Employee Stock Purchase Plan
                        (filed as Exhibit 10.2 to the Company's Registration
                        Statement on Form S-8, File No. 333-33894 and incorporated
                        herein by reference).

       10.8*            PRI Automation, Inc. 2000 Stock Option Plan, as amended.**

       10.9*            Form of Retention Agreement dated October 23, 2000 between
                        the Company and each of its executive officers and certain
                        other officers.**

       10.10            Lease Agreement dated as of May 5, 1994, by and between the
                        Company and The Prudential Insurance Company of America
                        (filed as Exhibit 10.14 to the Company's Registration
                        Statement on Form S-1, File No. 33-81836 and incorporated
                        herein by reference).

       10.11            Lease Agreement dated as of May 28, 1996 by and between 170
                        University (Toronto) Partnership and Promis Systems
                        Corporation Ltd. (filed as Exhibit 10.24 to the Company's
                        Annual Report on Form 10-K for the year ended September 30,
                        1999 and incorporated herein by reference).

       10.12            Lease agreement dated as of March 9, 1998 by and between the
                        Company and Lincoln-Whitehall Realty, L.L.C. (filed as
                        Exhibit 10.24 to the Company's Quarterly Report on Form 10-Q
                        for the quarter ended March 29, 1998 and incorporated herein
                        by reference).

       10.13            Sublease agreement dated as of March 18, 1998 by and between
                        the Company and BAAN USA (filed as Exhibit 10.25 to the
                        Company's Quarterly Report on Form 10-Q for the quarter
                        ended June 28, 1998 and incorporated herein by reference).

       10.14            Lease Agreement dated as of October 22, 1999 by and between
                        the Company and Spieker Properties, L.P. (filed as Exhibit
                        10.25 to the Company's Quarterly Report on Form 10-Q for the
                        quarter ended January 2, 2000 and incorporated herein by
                        reference).

       10.15            Revolving Credit Agreement dated as of June 16, 1998 by and
                        between the Company and The Chase Manhattan Bank (filed as
                        Exhibit 10.28 to the Company's Quarterly Report on Form 10-Q
                        for the quarter ended June 28, 1998 and incorporated herein
                        by reference).

       10.16            First Amendment to Credit Agreement between the Company and
                        Chase Manhattan Bank, dated as of March 31, 2000 (filed as
                        Exhibit 10.4 to the Company's Quarterly Report on Form 10-Q
                        for the quarter ended April 2, 2000 and incorporated herein
                        by reference).

       10.17            Second Amendment to Credit Agreement between the Company and
                        Chase Manhattan Bank, dated as of December 31, 2000**

       10.18            Joint Venture Agreement by and between the Company and Chung
                        Song Systems, Co., Ltd. and Shinsung Engineering Co., Ltd.
                        (filed as Exhibit 10.26 to the Company's Quarterly Report on
                        Form 10-Q for the quarter ended June 28, 1998 and
                        incorporated herein by reference).

       21.1             List of Subsidiaries of the Company**

       23.1             Consent of PricewaterhouseCoopers LLP**

       27.1             Financial Data Schedule**
</TABLE>

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

*   management contracts and compensatory arrangements

**  filed herewith