<PAGE>
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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>

                  FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999

                         COMMISSION FILE NUMBER 0-24934

<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
                BILLERICA, MA                                   01821-3986
            (Address of principal                               (Zip Code)
             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:
                          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. /X/

    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 3, 1999 as reported by the
Nasdaq National Market, was approximately $1,091,299,458. 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 3, 1999 the Registrant had outstanding 22,612,092 shares of
Common Stock.

                      DOCUMENTS INCORPORATED BY REFERENCE

    Portions of the Registrant's Definitive Proxy Statement for its 2000 Annual
Meeting of Stockholders, expected to be filed with the Securities and Exchange
Commission on or before January 28, 2000 are incorporated by reference into
Items 10, 11, 12 and 13 of this Annual Report on Form 10-K.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
<PAGE>
                                     PART I

ITEM 1. BUSINESS

THE COMPANY

    PRI Automation, Inc. ("PRI" or the "Company"), founded in 1982, is a leading
global supplier of factory automation systems for semiconductor manufacturers
and original equipment manufacturers ("OEMs") whose mission is to improve the
productivity of semiconductor manufacturing. The Company offers a broad range of
integrated solutions consisting of factory automation hardware and software that
optimize the flow of materials and data throughout the semiconductor fabrication
facility, or fab. The Company also provides automation services including
equipment layout and design; simulation; project management; installation; and,
on-site support. The Company has thousands of systems installed at over one
hundred locations throughout the world.

    The Company has expanded its product offerings through the acquisition of
several companies during the past two years. The Company acquired Interval Logic
Corporation ("ILC") in October 1997, Equipe Technologies, Inc. and its
affiliates ("Equipe") in January 1998 and Promis Systems Corporation Ltd.
("Promis") in March 1999.

INDUSTRY BACKGROUND

    Semiconductor manufacturing is one of the most complex and logistically
challenging operations in the world. A silicon wafer, upon which integrated
circuits are manufactured, can travel approximately 10 miles and undergo 400-500
individual process steps as it moves throughout the fab during its thirty to
forty-five day manufacturing cycle. State-of-the-art fabs produce from 10,000 to
30,000 or more wafers a month and run 24 hours a day, seven days a week.

    The semiconductor industry has grown significantly during the past fifteen
years, driven by the demand for inexpensive electronic products, personal
computers, wireless communications and, more recently, by the Internet. Each of
these products and technologies requires greater semiconductor content that
drives manufacturers to produce greater quantities of more complex and powerful
integrated circuits as well as less expensive and more application specific
integrated circuits. The current renewed growth of the semiconductor industry is
driving semiconductor manufacturers to find ways to remain competitive by
increasing their manufacturing capacity and lowering the cost of their
production. The Company believes this will lead manufacturers to increase their
capital investment in automation systems and software in order to improve the
efficiency of their manufacturing operations, lower costs and increase capacity.
Additionally, the Company believes that the industry is preparing for the
expected transition to 300mm manufacturing over the next two to five years. The
move to the next-generation wafer size, if it occurs as expected, could require
semiconductor manufacturers to increase, their capital spending for full-factory
automation systems.

INTEGRATED PRODUCT STRATEGY

    The Company provides its end-user and OEM customers 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, marketing and sales functions to address a wide range of
automation requirements to improve manufacturing efficiency and increase
productivity. Key product areas include:

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

    - LITHOGRAPHY AUTOMATION SYSTEMS that store, transport, and manage the use
      of reticles in the critical photolithography process;

                                       2
<PAGE>
    - 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 AUTOMATION SOFTWARE that manages and directs manufacturing
      operations and optimizes material flow, process equipment and other
      production resources; and

    - AUTOMATION SERVICES AND SUPPORT that help customers throughout the total
      project lifecycle from initial conceptualization and design to the
      building of the equipment, the installation of the equipment at the
      customer site, and all post-installation services.

PRODUCTS

    FACTORY AUTOMATION SYSTEMS

      INTERBAY AUTOMATION

    The Company is a leading supplier of interbay automation systems. Interbay
systems transport wafers throughout the factory 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 the associated controllers, software
and communications capabilities that provide a tightly integrated wafer flow
solution. The majority of new fabs constructed since 1990 have adopted some form
of interbay automation system. The Company's interbay automation systems
include:

    - OVERHEAD MONORAIL SYSTEMS--Overhead monorail transport systems provide
      clean and fast delivery of material from process bay to process bay.

    - AUTOMATED STORAGE AND RETRIEVAL SYSTEMS--Automated storage and retrieval
      systems (stockers) are enclosed structures that store work-in-process
      wafer carriers in various locations throughout the fab.

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

      INTRABAY AUTOMATION

    The Company's intrabay products move wafers from storage systems to
individual process tools. Manufacturers anticipate that the shift to 300mm
wafers will require the extensive adoption of intrabay automation systems to
automate the movement of work-in-process wafers from one process tool loadport
to another. The Company's intrabay automation systems include:

    - MACHINE LOADING ROBOT VEHICLES ("MLRVs")--MLRVs are floor-guided vehicles
      that utilize a track system embedded in the floor of the process bay to
      transport wafers to and from the process tool.

    - OVERHEAD HOIST TRANSPORT SYSTEMS ("OHTs")--OHTs are overhead monorail
      transport systems that retrieve wafer pods from a stocker and deliver them
      directly to the loadport at the process tool. The Company believes this
      will be the preferred method of intrabay automation in 300mm fabs.

    - AUTOMATED GUIDED VEHICLES ("AGVs")--AGVs are operator-free, trackless
      vehicles that automate the movement of wafers within a process bay from
      the stocker directly to the loadport of the process tool. AGVs are ideally
      suited for low throughput applications where floor space is less critical.

                                       3
<PAGE>
    - PEOPLE GUIDED VEHICLES ("PGVs")--PGVs are manually operated vehicles used
      to move materials across the fab and assist the operator in transferring
      the wafer pod from the vehicle to the process tool loadport. The PGVs can
      be used as a backup to automated systems.

      FACTORY SYSTEMS SOFTWARE

    The Company designs and develops material control software ("MCS") that
directs the movement of wafers throughout the fab and is integrated with the
Company's interbay and intrabay automation systems.

      LITHOGRAPHY AUTOMATION SYSTEMS

    The Company is a leading supplier of lithography automation systems. The
Company's lithography material handling systems automate the storage, retrieval,
tracking, and delivery of reticles and wafers within the lithography bay.
Reticles are glass plates containing the device images that are projected onto
wafers during the lithography process. As semiconductor manufacturing technology
advances, the cost of lithography tools (steppers) is increasing. Also, as
device complexity increases, the number of reticles used in the manufacturing
process increases, expanding 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. The Company'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. The bare reticle stocker protects the
      reticle in an environmentally controlled system and saves expensive floor
      space inside the lithography bay.

    - 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 the Company's wafer
      transport system, allowing the pod or box stocker to be placed anywhere in
      the fab.

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

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

    TOOL AUTOMATION SYSTEMS

    The Company provides robotic systems that automate the transfer of wafers
into and out of process tools. The primary customers for these solutions are
process tool equipment suppliers, or OEMs. The automation systems are typically
integrated directly into the OEM's product before shipment to the end user. The
Company's tool automation systems include:

    - ATMOSPHERIC WAFER-HANDLING SYSTEMS--The Company 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 the vacuum chamber. The Company's vacuum products
      range from individual vacuum robotic components to fully integrated vacuum
      cluster platforms.

    - SYSTEM CONTROL SOFTWARE--System control software integrates, tracks and
      controls the wafer-handling robots with the OEM's process tool.

                                       4
<PAGE>
    - INTEGRATED FRONT END SYSTEMS ("IFEs")--Integrated front ends provide the
      storage of work-in-process wafer cassettes, standard mechanical interface
      (SMIF) pods, or 300mm front opening unified pods (FOUPs) directly at the
      process tool front-end. IFEs also unload wafers from the FOUPs, align them
      and place them into the process tool. IFE series products include all the
      SEMI-compliant interfaces to the factory automation systems.

    - 300MM LOADPORTS--The Company's 300mm loadports provide a simple and
      economical method for opening and removing wafers from FOUPs.

    - SPECIALTY WAFER-HANDLING SYSTEMS--The Company provides other
      wafer-handling systems. These specially designed robots are used in a
      variety of wafer-handling applications including chemical mechanical
      planarization (CMP), copper interconnect processing and other robotic
      wafer-handling applications.

    MES AND OTHER SYSTEMS

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

    - MANUFACTURING EXECUTION SYSTEM ("MES") SOFTWARE--MES software manages and
      directs complex manufacturing operations by automating process
      specification and control. MES software bridges business planning systems
      and material processing in the factory to optimize the flow of material
      and improve process equipment utilization.

    - MANUFACTURING INTEGRATION SOFTWARE--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.

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

AUTOMATION SERVICES AND SUPPORT

    The Company 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--The Company works with customers
      in assessing their automation needs during the design phase of the
      project. The Company develops a complete automation plan identifying the
      type and configuration of the automation systems and simulates the design
      using computer modeling techniques to verify that the design layout meets
      customer requirements.

    - PROJECT MANAGEMENT SERVICES--The Company provides customers with project
      management support during the building and manufacturing of the automation
      systems. The customer's order is tracked from manufacturing through
      delivery to the customer's site.

    - INSTALLATION SERVICES--The Company develops an installation plan and
      timetable that meets the customer's manufacturing schedule and installs
      the equipment into the customer's fab.

    - POST INSTALLATION SERVICE AND SUPPORT--The Company provides a variety of
      post installation services to ensure the automation systems continue to
      operate at optimum performance levels.

                                       5
<PAGE>
MARKETING, SALES AND CUSTOMER SUPPORT

    The Company markets its products worldwide to semiconductor manufacturers
and OEM equipment suppliers. In North America, the Company sells its products
through a direct sales force operating out of its headquarters in Billerica,
Massachusetts and regional offices located in California and Texas. In Europe,
the Company's products are sold through a direct sales force with offices in the
United Kingdom, France, Germany, Ireland, Israel, and Switzerland. In Asia, the
Company's products are sold through a direct sales force with offices in Taiwan,
South Korea, Singapore and Japan. For additional information regarding revenues
for the Company's business segments, as well as information regarding export
sales, see Note M to the Notes to Consolidated Financial Statements included in
this Report, entitled "Segment Reporting and Geographic Information."

    The Company 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 Company 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 its customers.

COMPETITION

    Rapid technological change and intense competition characterize the
semiconductor capital equipment market. The Company believes that the market for
its products is characterized by manufacturers' need to increase productivity
and reduce manufacturing costs. The Company competes on the basis of product
performance, quality, track record, customer service and support, delivery
capability and price. The Company believes it has a competitive advantage in the
factory automation market for the following reasons:

    - a broad range of flexible products;

    - technological leadership;

    - experience in managing large scale factory automation projects;

    - knowledge of automation applications;

    - specialized manufacturing skills; and

    - worldwide customer support infrastructure.

    However, existing or future competitors, particularly those with greater
resources than the Company, or who are able to bring technologically superior
products to market could overcome these competitive advantages. The Company's
factory automation products face intense competition from a number of foreign
and domestic companies who market and sell their automation systems and software
to semiconductor manufacturers throughout the world. The Company's tool
automation products compete with a number of foreign and domestic wafer-handling
robotics companies, including in-house organizations of process tool
manufacturers that develop their own automation. The Company's software products
compete with a number of suppliers of MES and automated scheduling and planning
software.

RESEARCH AND DEVELOPMENT

    The Company is continuously investing in the development of new products to
improve performance, reliability, and to introduce new functionality in order to
maintain the Company's leading position in providing fully integrated factory
automation systems and software. Research and development of promising
technologies and products is vital to the success of the Company. The Company's
expenses for research and development were $45,480,000, $44,509,000 and
$36,198,000 in fiscal years 1999, 1998 and 1997, representing 33%, 22% and 15%
of its total net revenue for such periods, respectively.

                                       6
<PAGE>
CUSTOMERS

    The Company's customers include most of the leading manufacturers of ASICs,
microprocessors and DRAMs as well as foundries and OEM equipment suppliers in
the U.S., Europe and Asia. Historically, a significant portion of the Company's
total net revenue in any particular period has been attributable to sales to a
limited number of customers. Sales to the Company's top ten customers accounted
for 54%, 60% and 67% of total net revenue for fiscal year 1999, 1998 and 1997,
respectively. The Company continues to expand its global operations and broaden
its growing worldwide customer base.

    The Company's largest customers change from year to year, as large projects
are completed and new projects are initiated. Sales to Intel accounted for 21%,
19% and 32% of the Company's total net revenue for fiscal year 1999, 1998 and
1997, respectively. At September 30, 1999, Intel and Texas Instruments accounted
for 13% and 10% of the Company's backlog, respectively.

ORDER BACKLOG

    The Company's backlog at September 30, 1999 was $86,398,000, compared to
$52,120,000 at September 30, 1998. The Company includes in its backlog only
those customer orders for products, spare parts and services for which it has
accepted signed purchase orders with assigned delivery dates within twelve
months. OEM and software products typically have shorter lead times than do
factory automation products and thus, backlog is not as relevant an indicator of
business levels.

MANUFACTURING

    The Company's manufacturing operations take place in Billerica,
Massachusetts and in Mountain View, California. The Company's manufactured
products consist of standard components that can be customized to meet unique
customer requirements. Primary manufacturing operations include assembly and
test functions with most fabrication 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.

    The Company's manufacturing department is responsible for managing the
transition of new products from engineering to production, and for improving
manufacturing efficiency. The Company operates a "concurrent engineering"
process to provide an effective integration of disciplines from design through
manufacturing, acceptance testing and installation. The Company's objective is
not only to meet customers' tight delivery deadlines, but to ensure that
products are designed so they can be manufactured at the lowest cost while
meeting the reliability, serviceability and support required by customers.

    The Company has implemented quality control ("QC") and quality assurance
("QA") processes based on total quality management principles. QC is maintained
through incoming inspections of components and in-process inspection and testing
of subassemblies. After all manufacturing operations are completed through final
assembly, the Company's QA personnel perform final test and acceptance of each
system to make sure that it meets product specifications and quality standards
before it is shipped to the customer.

    The Company has implemented a Supplier Excellence Program to assist
management in qualifying and selecting external suppliers. By more effectively
managing its external supplier base, the Company can maximize the suppliers'
technical capabilities to provide the Company with the flexibility and capacity
utilization it needs to meet production requirements and lower the Company's
costs. Our commodity management group works closely with the design and
manufacturing engineering groups to provide multiple sources for most
components.

                                       7
<PAGE>
INTELLECTUAL PROPERTY RIGHTS

    At September 30, 1999, the Company holds seven patents relating to certain
key elements of its wafer-handling systems. The Company also has fourteen patent
applications pending and intends to file additional patent applications as
appropriate. The Company's patents expire at various times from 2007 to 2019.
The Company believes, however, that its success will depend more upon its
technological expertise and the capabilities of its employees than upon
protection through the legal system of its intellectual property rights. The
Company seeks to protect its trade secrets and other proprietary technology
through confidentiality agreements with employees, consultants and other
parties.

EMPLOYEES

    At September 30, 1999, the Company had 1,174 full-time employees. In
addition, the Company utilizes the services of temporary or contract personnel
within certain functional areas to assist on project related activities. The
number of such personnel varies depending on specific project activity. At
September 30, 1999, the Company employed 116 temporary or contract personnel.
Substantially all employees have stock options that provide for vesting over
five years. The Company believes that its future success will depend in large
part on its ability to attract and retain highly skilled employees. None of the
employees of the Company is covered by a collective bargaining agreement. The
Company considers its relationship with its employees to be good.

ITEM 2. PROPERTIES

FACILITIES

    The Company's corporate headquarters are located in a 122,342-square foot
leased building in Billerica, Massachusetts. The lease on this facility expires
in 2001, and provides for average annual lease payments of approximately
$563,000. The Company also leases three additional facilities, with lease
expiration dates in 2000 and 2001, in Billerica, Massachusetts, with a total of
117,100 square feet and average annual lease payments of approximately $466,000.
The Billerica, Massachusetts facilities are primarily used by the Company's
Factory Automation Systems group for engineering and manufacturing. The Company
also leases facilities in Dallas and Austin, Texas; Mesa, Arizona; Menlo Park
and Mountain View, California; Toronto, Canada; as well as South Korea, Taiwan,
Singapore, France, Germany, United Kingdom, Switzerland and Japan, under leases
with expiration dates ranging from February 2000 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

    From time to time, the Company may be involved in certain legal proceedings
incidental to its normal business activities. There are no pending legal
proceedings to which the Company is a party or to which any of its properties
are subject which, either individually or in the aggregate, are expected by the
Company to have a material adverse effect on its business, financial position or
results of operations.

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 1999.

                                       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 283 holders of
record of the Company's common stock as of December 3, 1999. 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, 1999.

<TABLE>
<CAPTION>
                                         1(ST) QUARTER   2(ND) QUARTER   3(RD) QUARTER   4(TH) QUARTER
                                         -------------   -------------   -------------   -------------
<S>                                      <C>             <C>             <C>             <C>
Fiscal 1999............................  $ 9.57-27.75    $24.06-44.31    $20.75-39.00    $24.75-39.75
Fiscal 1998............................  $27.25-55.81    $23.62-37.00    $14.06-28.38    $10.44-17.88
</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 reinvest for 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,
                                            ----------------------------------------------------
                                              1999       1998       1997       1996       1995
                                            --------   --------   --------   --------   --------
                                                   (IN THOUSANDS, EXCEPT PER SHARE DATA)
<S>                                         <C>        <C>        <C>        <C>        <C>
OPERATIONS:
  Total net revenue.......................  $136,296   $203,545   $236,100   $166,256   $106,278
  Gross profit(1).........................    52,542     78,790    115,128     89,970     57,281
  Operating (loss) profit(1)(2)(3)(6).....   (37,955)   (31,014)    35,316     31,973      7,599
  Net (loss) income(1)(2)(3)(4)(6)........   (36,085)   (22,623)    27,497     27,279      5,186
  Net (loss) income per common
    share:(1)(2)(3)(4)(5)(6)
    Basic.................................     (1.67)     (1.08)      1.35       1.40       0.32
    Diluted...............................     (1.67)     (1.08)      1.27       1.33       0.29
BALANCE SHEET:
  Total assets............................  $146,552   $167,478   $195,315   $147,797   $114,915
  Long-term obligations, less current
    portions..............................       411        734        823        735        204
</TABLE>

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

(1) For the year ended September 30, 1998, reflects charges of $13,987,000 for
    inventory and warranty provisions.

(2) 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.

(3) 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.

                                       9
<PAGE>
(4) 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.

(5) Reflects a two-for-one stock split effective May 2, 1997 for shareholders of
    record as of April 22, 1997.

(6) For the year ended September 30, 1995, reflects charges of $7,025,000 by
    Promis for the write-off of goodwill and intellectual property due to
    impairment in value, and special charges of $1,750,000 related to workforce
    reductions and lease abandonments.

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 1999, and the Equipe Combined Companies ("Equipe"), acquired
in fiscal 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>
                                                                    1999          1998          1997
                                                                  --------      --------      --------
<S>                                                               <C>           <C>           <C>
Net revenue:
  Product and equipment.....................................        73.4%         84.4%         92.1%
  Services and maintenance..................................        26.6          15.6           7.9
                                                                   -----         -----         -----
  Total net revenue.........................................       100.0         100.0         100.0

Cost of revenue:
Product and equipment.......................................        46.9          51.8          44.7
Services and maintenance....................................        14.6           9.5           6.5
                                                                   -----         -----         -----
Total cost of revenue.......................................        61.5          61.3          51.2
                                                                   -----         -----         -----
Gross profit................................................        38.5          38.7          48.8

Operating expenses:
  Research and development..................................        33.3          21.9          15.3
  Selling, general and administrative.......................        28.3          23.0          18.5
  Acquired in-process research and development..............          --           4.1            --
  Merger costs and special charges..........................         4.7           4.9            --
                                                                   -----         -----         -----
Operating (loss) profit.....................................       (27.8)        (15.2)         15.0
Other income, net...........................................         2.1           0.3           0.5
                                                                   -----         -----         -----
(Loss) income before income taxes...........................       (25.7)        (14.9)         15.5
Provision for (benefit from) income taxes...................         0.8          (3.8)          3.9
                                                                   -----         -----         -----
    Net (loss) income.......................................       (26.5)%       (11.1)%        11.6%
                                                                   =====         =====         =====
</TABLE>

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 is 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 Automation Systems and Tool Automation
Systems segments, which

                                       10
<PAGE>
declined by 34.7% and 41.1% in fiscal 1999, respectively. While product and
equipment revenue decreased, the Company gained market share in fiscal 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 Automation 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 margins for service and maintenance increased in fiscal year
1999 to 45.0% from 38.9% in fiscal 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. The Company believes
that these investments are critical to maintaining and improving its
technological and market leadership.

    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 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 1998. See "Merger costs and special
charges" for discussion of severance and reductions of leased facilities.

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

    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 and are expected to be
paid by December 2000.

                                       11
<PAGE>
    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 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.

    OPERATING (LOSS) PROFIT:  As a result of the decline in revenue and the
other foregoing factors, for fiscal year 1999 the Company experienced an
operating loss of $37,955,000, or negative 27.8% of total net revenue, compared
to an operating loss of $31,014,000, or negative 15.2% of total net revenue for
the prior fiscal year.

    OTHER INCOME, NET:  Other income, net, in fiscal 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 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 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.

FISCAL 1998 VS. FISCAL 1997

    TOTAL NET REVENUE:  Total net revenue for fiscal year 1998 decreased 13.8%
to $203,545,000, compared to $236,100,000 for fiscal year 1997. This decrease is
attributable to the downturn in the worldwide semiconductor industry which began
in fiscal year 1998, and which resulted in a significant slowdown in the
construction and expansion of semiconductor fabs. The decline in total net
revenue in fiscal 1998 occurred in the Factory Automation Systems segment which
declined 36.7%. This was partially offset by increases in the Tool Automation
Systems and MES and Other Systems segments of 61.3% and 12.8%, respectively. The
Company's service and maintenance revenue grew by 70.1% in fiscal 1998 while
product and equipment revenue declined by 21.0%. Net export sales outside of
North America were $72,238,000 or 35.5% of total net revenue for fiscal year
1998, compared to $110,055,000 or 46.6% of total net revenue for fiscal year
1997.

                                       12
<PAGE>
    GROSS PROFIT:  The Company's gross profit margin decreased to 38.7% for
fiscal year 1998, compared to 48.8% for the fiscal year 1997. In fiscal year
1998, there were $13,987,000 in charges to cost of sales related to inventory
and warranty provisions. Excluding these charges, the fiscal year 1998 gross
profit margin would have been 45.6%. The decrease in gross margin is
attributable to the industry downturn during which fixed capacity and the
related manufacturing costs could not be reduced proportionally with the decline
in production volume, and to declines in competitive pricing. The decline in
gross profit margin in fiscal 1998 was principally in the Factory Automation
Systems segment which declined to 25.1% from 43.6% in the prior year. The Tool
Automation Systems segment gross profit margin declined in fiscal year 1999 to
43.6% from 48.2%, while the MES and Other Systems segment gross margin remained
flat.

    RESEARCH AND DEVELOPMENT:  Research and development expenses increased to
$44,509,000 or 21.9% of total net revenue for fiscal year 1998, compared to
$36,198,000 or 15.3% of total net revenue for the prior fiscal year. The
increase in dollar amount reflects the company's investment in new product
development and enhancement to existing products. The Company continued to
invest in the development of 200mm and 300mm products throughout the factory
automation and tool automation product lines as well as the manufacturing
execution, advanced planning and scheduling software products.

    SELLING, GENERAL AND ADMINISTRATIVE:  Selling, general and administrative
expenses increased to $46,787,000 or 23.0% of net revenue for fiscal year 1998,
compared to $43,614,000 or 18.5% of total net revenue for the prior fiscal year.
The increase in dollar amount primarily reflects the increase in personnel, and
related expenses associated with expansion of the Company's marketing, market
research and communications programs and increased sales and marketing efforts
worldwide. See "Merger costs and special charges" for discussion of severance
and reductions of leased facilities.

    ACQUIRED IN-PROCESS RESEARCH AND DEVELOPMENT:  On October 29, 1997 the
Company acquired Interval Logic Corporation ("ILC"), a California corporation,
for aggregate consideration of 111,258 shares of the Company's common stock. In
addition, the Company issued or assumed options to purchase an aggregate of
199,170 shares of the Company's common stock. ILC was formed in 1995 to develop
advanced, high-performance planning and scheduling software solutions for the
semiconductor industry. The value of the transaction was $8,523,000, including
approximately $600,000 of expenses related to the acquisition. The transaction
was accounted for as a purchase.

    At the time of the acquisition, the purchase price was allocated to the
tangible and intangible assets of ILC. Management is aware that it is
responsible for estimating the fair value of purchased in-process research and
development. The value assigned to the intangible assets, primarily the acquired
technology, was based on the fair market value using a risk-adjusted discounted
cash flow approach. ILC's sole product at the time of the acquisition was the
Leverage-TM- product, which was under development. ILC had no product revenues
during its prior existence and was a development stage enterprise. The total
development effort was estimated to take approximately 225 engineering
man-months at a cost of approximately $2,800,000. The 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 year 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 specification 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

                                       13
<PAGE>
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.

    MERGER COSTS AND SPECIAL CHARGES:  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 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.

    OPERATING (LOSS) PROFIT:  As a result of the foregoing factors, the
operating loss for fiscal year 1998 was $31,014,000 or negative 15.2% of total
net revenue, compared to the operating profit of $35,316,000 or 15.0% of total
net revenue for the prior fiscal year.

    OTHER INCOME, NET:  Other income, net, decreased to $625,000 or 0.3% of
total net revenue, compared to $1,223,000 or 0.5% of total net revenue for the
prior fiscal year. Interest income was $1,991,000 and $1,523,000 and interest
expense was $137,000 and $116,000 for fiscal 1998 and 1997, respectively. Net
translation and foreign exchange losses were $1,086,000 and $520,000 in fiscal
years 1998 and 1997 respectively.

    PROVISION FOR (BENEFIT FROM) INCOME TAXES:  The income tax benefit for
fiscal year 1998 was $7,776,000 as compared to a provision of $9,042,000 for the
previous fiscal year. The effective tax rate in fiscal year 1998 was 25.6% as
compared to 24.7% in the previous fiscal year. The effective tax benefit for the
fiscal year 1998 was unfavorably affected by 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. The fiscal 1997
effective tax rate reflects the fact that Equipe Technologies and a related
company acquired by the Company were not subject to federal income taxes prior
to the acquisition due to S corporation status.

LIQUIDITY AND CAPITAL RESOURCES

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

    At September 30, 1999 the Company had working capital of $78,936,000. During
fiscal year 1999, cash and cash equivalents decreased by $5,182,000 to
$51,865,000. Net cash used in operations was $10,462,000, compared to net cash
provided by operations of $37,837,000 in fiscal 1998. The net cash used by
operating activities in fiscal 1999 was primarily attributable to the net loss.
Additionally, cash used in operations included increases in inventory of
$1,642,000 and decreases in billings in excess of revenues and customer advances
of $2,795,000. These cash outflows were partially offset by the non-cash items
of $19,460,000 consisting primarily of depreciation and amortization and
deferred income 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

                                       14
<PAGE>
from operations. Net cash used in operations in fiscal 1998 was primarily
attributable to the significant increase in accounts receivable of $46,386,000.

    Net cash used in investing activities was $6,823,000 in fiscal year 1999,
compared to $13,300,000 in fiscal year 1998. The net cash used in investing
activities was lower primarily due to reduced purchases of property and
equipment which amounted to $6,249,000 in fiscal 1999 and $13,665,000 in fiscal
1998.

    Net cash provided by financing activities was $12,124,000 in fiscal year
1999, compared to cash used in financing activities of $3,550,000 in fiscal year
1998. The net cash provided by financing activities in fiscal 1999 was primarily
attributable to proceeds from the exercise of stock options and the Employee
Stock Purchase Plan of $12,487,000, along with proceeds from minority
shareholders of $199,000. This was offset partially by the repayment of capital
leases and lines of credit of $562,000.

    At September 30, 1999, 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, 1999, the LIBOR borrowing rate would have been 6.50%. 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 June 16, 2000. The Company had outstanding letters of credit with the
Bank of $1,875,000 at September 30, 1999, and therefore, the available balance
under this credit agreement was $18,125,000 at September 30, 1999. At
September 30, 1999, the Company was not in compliance with certain of the
required covenants but has subsequently received a waiver from the Bank through
September 30, 1999, on November 15, 1999. The Company was in default of the
minimum consolidated net worth requirement, the minimum fixed charge coverage
ratio, and the minimum consolidated net income requirements of the revolving
credit agreement for the three months ended September 30, 1999. The Company
expects to seek future waivers as necessary from the Bank, on the next
measurement date of January 2, 2000. 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.

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. The
words "expect," "anticipate," "internal," "plan," "believe," "seek," "estimate"
and similar expressions are intended to identify such forward-looking
statements. In particular, statements in Management's Discussion and Analysis of
Financial Condition and Results of Operations relating to the Company's expected
shipment levels and profitability and the sufficiency of capital to meet working
capital and capital expenditure requirements may be forward-looking statements.
This Report also contains other forward-looking statements. Such statements are
not guarantees of future performance and involve risks, uncertainties and
assumptions that could cause the Company's future results to differ materially
from those expressed in any forward-looking statements made by or on behalf of
the Company. Many of such factors are beyond the Company's ability to control or
predict. Readers are accordingly cautioned not to place undue reliance on
forward-looking statements. The Company disclaims any intent or obligation to
update publicly any forward-looking statements, whether in response to new
information or future events or otherwise. Important factors that may cause the
Company's actual results to differ from such forward-looking statements include,
but are not limited to, the factors discussed below.

                                       15
<PAGE>
    The Company's business and results of operations depend in significant part
upon capital expenditures of manufacturers of semiconductors, which in turn
depend upon the current and anticipated market demand for semiconductors and
products incorporating semiconductors. Historically, the semiconductor industry
has been highly cyclical, with recurring periods of over-supply. This recurring
over-supply often has had a severe effect on the semiconductor industry's
capital expenditures and, consequently, on demand for products manufactured and
marketed by the Company. The recent downturn in the semiconductor industry has
materially adversely affected the Company's business, and could continue to do
so in the future. The Company believes that the markets for newer generations of
semiconductors will be subject to similar fluctuations. Also, the recent high
rate of technical innovation and resulting improvements in the performance and
price of semiconductor devices, which have driven much of the demand for the
Company's products, could slow, or encounter limits, in the future. In addition,
any other factor adversely affecting the semiconductor industry or particular
segments within the semiconductor industry may adversely effect the Company's
business, financial condition and operating results.

    In addition to the risks and uncertainties posed generally by the
cyclicality of the semiconductor industry and the effects of the continued
downturn throughout the industry, the Company faces the following risks and
uncertainties: continuation of the semiconductor industry downturn and expense
reduction measures the Company might take in response could interfere with the
Company's product development efforts and jeopardize its ability to respond
rapidly to an industry recovery; the Company's restructuring costs have
adversely affected its financial position; the lengthy sales cycle for the
Company's products makes it difficult to anticipate sales; the Company's
operating results fluctuate significantly and are affected by the high price and
relatively small number of systems it sells, variations in its gross margins,
and its significant fixed costs; the Company depends on a limited number of
customers; the Company's future revenue sources are uncertain; changes in the
economies of foreign countries in which the Company operates could have an
adverse effect on the Company's business; the Company has invested heavily in
300mm wafer technology, which is being adopted more slowly than the Company
expected; the Company needs employees who, because of competition for their
skills and experience, may be difficult to hire and retain; the Company may have
difficulty managing growth in light of fluctuating demand; the Company's recent
acquisitions may disrupt its operations; acquisitions may dilute the equity
interests of the Company's stockholders and reduce the Company's liquidity; the
Company's international operations create special risks and uncertainties over
which the Company has substantially less control than those relating to its
domestic operations; the Company faces significant competition from other
automation companies; the Company must continually improve its technology to
remain competitive; the Company may experience delays in product development and
technical difficulties; the Company depends on one or a few suppliers for some
materials; the Company may be unable to protect its proprietary technology;
claims by others that the Company infringes their proprietary technology could
harm the Company's business; the Company uses small quantities of toxic and
hazardous substances that could expose it to liability; the Company depends on
Mordechai Weisler, its chairman, and Mitchell G. Tyson, its President and Chief
Executive Officer; Year 2000 problems may disrupt the Company's operations; the
market price of the Company's common stock is volatile; future sales of the
Company's common stock by existing stockholders could depress the market price
of the Company's common stock; and certain provisions of the Company's charter
and by-laws and Massachusetts law make a takeover of the Company more difficult.
As a result of the foregoing and other factors, the Company may experience
material fluctuations in its future operating results on a quarterly or annual
basis which could materially adversely affect its business, financial condition,
operating results and stock price.

                                       16
<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. The Company will adopt SFAS No. 133 by fiscal
2001, in accordance with SFAS No. 137, which deferred the effective date of SFAS
No. 133. The Company is evaluating SFAS No. 133 to determine the impact on its
consolidated financial statements.

YEAR 2000

GENERAL

    Many computer systems and software products are expected to experience
problems handling dates beyond the year 1999 because the systems are coded to
accept only two-digit entries in the date code fields. Inability of the
Company's products, or of products and systems on which the Company relies, to
process these dates could have a material adverse effect on the Company's
business. The Company has implemented a company-wide Year 2000 Project (the
"Project") with the objective of minimizing the impact of Year 2000 issues on
its products, services, infrastructure, and internal business support
applications. The Project's goals are to ensure Year 2000 readiness and
compliance for: (i) all of the Company's products; (ii) all business systems
that are used by the Company; and (iii) all critical business services or
products provided to the Company by its vendors. The Project is now complete and
the Company is Year 2000-ready. In addition, we have prepared contingency plans
to monitor and react to unforeseen issues from our suppliers.

PROJECT

    The Company has implemented a plan to ensure that all of the Company's
processes and systems have been assessed, tested and made Year 2000 compliant.
The Company engaged the services of an information technology consulting firm to
assist in the program management of the Project, and has created a Project Team
which includes representatives from each of the Company's divisions and
locations worldwide.

    The Project has addressed the impact of Year 2000 on Company products,
internal information technology (IT) systems, internal non-IT systems, and
systems and products of the Company's suppliers and other third parties. The
steps in completing the project were to: (1) identify software systems and
products that pose potential Year 2000 issues; (2) assess the Year 2000
readiness of each item identified; (3) develop and implement programs that will
achieve Year 2000 compliance; (4) test to verify compliance; and (5) develop
contingency plans as required.

    At December 20, 1999, the Project is in various stages of progress as
discussed below:

    - PRI PRODUCTS: The Company has completed all of the testing and
      verification portion of the project for all of its current products. New
      products not yet released to customers are being designed and tested to
      achieve Year 2000 readiness prior to the Company's sale of these products.
      The Company does not foresee any issues with Year 2000 compliance of its
      products.

    - INTERNAL IT SYSTEMS: The Company has assessed its internal IT systems,
      including business information systems, systems utilized in its
      manufacturing and service operations, and systems providing electronic
      interfaces between the Company and its customers, to determine whether the
      Company's operations will be interrupted by Year 2000 issues. The Company
      has completed

                                       17
<PAGE>
      testing and verifying Year 2000 compliance of its internal IT systems. The
      Company does not foresee any issues with its Year 2000 compliance of
      internal IT systems.

    - INTERNAL NON-IT SYSTEMS: Internal non-IT systems include
      telecommunications systems, security systems, HVAC systems and utilities.
      Testing and verification of these systems are complete. The Company does
      not foresee any Year 2000 issues in this area.

    - SUPPLY CHAIN: The Company has worked with suppliers and other third
      parties upon which it is dependent to determine the extent of their Year
      2000 compliance. The Company's inquiry and assessment of their Year 2000
      readiness is complete and it does not foresee any Year 2000 issues with
      its supply chain. However, we have also developed contingency plans to
      monitor and react to any unforeseen issues from our suppliers.

COSTS

    Based on its investigation to date, the Company does not expect the total
cost of its Year 2000 Project to have a material adverse effect on the Company's
business or financial results. The estimated total cost of the Year 2000 Project
is approximately $400,000. The total amount charged to expense through
September 30, 1999 was approximately $360,000. The remaining amounts are
expected to be spent in early fiscal 2000.

RISK

    The Project is intended to reduce the Company's risk of experiencing
significant Year 2000 problems. Based on the progress that the Company has made
to date in addressing its Year 2000 issues, and its plan and timetable to
complete the Project, the Company does not anticipate significant interruption
of normal operations. The risk posed by Year 2000 issues depends substantially
on the number and type of any instances of non-compliance that have not yet been
discovered by the Company. To the extent that the Company's internal systems, or
products and services obtained from third parties, are found not to be Year 2000
compliant, the Company could face disruptions in its business which could, in
turn, cause delays in meeting production and shipping goals and could divert
significant management resources.

    To minimize potential disruptions, the Company has implemented a contingency
plan to address any unresolved issues affecting Year 2000 compliance, if needed.
The Company's contingency plan identifies potential issues and contingency
actions to be taken in case of Year 2000 non-readiness. The contingency plan
addresses actions such as disaster recovery, emergency notification systems,
employee staffing, suitability of alternate suppliers, and critical data backups
in the key areas of manufacturing and services, supply chain management,
marketing, sales and customer support, facilities, finance, legal and human
resources.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

FOREIGN CURRENCY AND EXCHANGE RATE RISK

    A portion of the Company's business is conducted outside the United States
through its foreign subsidiaries. The Company has foreign currency exposure
related to its operations in international markets, where certain business is
transacted in foreign currencies and accordingly is subject to exposure from
adverse movements in foreign currency exchange rates. The Company's foreign
subsidiaries maintain their accounting records in their local currencies.
Consequently, changes in currency exchange rates may impact the translation of
foreign statements of operations into U.S. dollars, which may in turn affect the
Company's consolidated statement of operations. The Company's functional
currency is the U.S. dollar for all of its subsidiaries, and therefore,
translation gains and

                                       18
<PAGE>
losses are included as a component of net income or loss. Substantially all of
the Company's revenues are invoiced and collected in U.S. dollars.

    The Company has entered into forward contracts in Canadian dollars to hedge
the expected operating expenses of its Canadian subsidiary that are denominated
in Canadian dollars. These contracts are used to mitigate the Company's risk
associated with exchange rate movements, as gains and losses on these contracts
are intended to offset exchange losses and gains on underlying cost exposures.
These contracts, for which the contract periods do not exceed sixteen months,
expire in December 1999 and are not expected to be renewed as part of the
Company's risk management strategies. Realized and unrealized gains and losses
on these contracts, which did not qualify for hedge accounting, are classified
in other income, net.

    At September 30, 1999 the notional amount of outstanding forward currency
contracts for Canadian dollars was $1,914,000, which was marked to market and
recognized in the consolidated statement of operations. The potential fair value
loss for a hypothetical 10% adverse change in Canadian currency exchange rates
at September 30, 1999, would be $186,000. The potential loss was estimated
calculating the fair value of the forward exchange contracts at September 30,
1999, and comparing that with the value calculated using the hypothetical
forward currency exchange rates.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

    Consolidated Financial Statements and Financial Statement Schedules as of
September 30, 1999 and 1998 and for each of the three years in the period ended
September 30, 1999 are included in Items 14(a)(1) and (2).

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

    Not applicable.

                                    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 28, 2000 (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.

                                       19
<PAGE>
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.

                                    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
           Reports of Independent Accountants
           Consolidated Balance Sheets as of September 30, 1999 and 1998
           Consolidated Statements of Operations for the years ended
       September 30, 1999, 1998 and 1997
           Consolidated Statements of Stockholders' Equity for the years ended
       September 30, 1999, 1998 and 1997
           Consolidated Statements of Cash Flows for the years ended
       September 30, 1999, 1998 and 1997

           Notes to Consolidated Financial Statements

    (2) Financial Statement Schedule

    The following financial statement schedule is incorporated in this report on
page S-1:

    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.

                                       20
<PAGE>
    (3) Exhibits

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION
---------------------                           -----------
<C>                     <S>
          2.1           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           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).

          3.2           Restated Articles of Organization (filed as Exhibit 3.5 to
                        the Company's Registration Statement on Form S-1, File No.
                        33-81836, and incorporated herein by reference).

          3.6           Articles of Amendment to the Restated Articles of
                        Organization (filed as Exhibit 3.6 to the Company's
                        Quarterly Report on Form 10-Q for the quarter ended March
                        30, 1997 and incorporated herein by reference).

          3.7           Articles of Amendment to the Restated Articles of
                        Organization of the Company (filed as Exhibit 3.7 to the
                        Company's Quarterly Report on Form 10-Q for the quarter
                        ended June 28, 1998 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 Certificate of Designation of Series A Participating
                        Cumulative Preferred Stock of PRI Automation, Inc. (filed as
                        Exhibit 4.2 to the Company's Form 8-K filed on November 25,
                        1998 and incorporated herein by reference).

          4.4           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).

          4.5           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).

        10.1*           1984 Incentive Stock Option Plan of the Company (filed as
                        Exhibit 10.4 to the Company's Registration Statement on Form
                        S-1, File No. 33-81836, and incorporated herein by
                        reference).

        10.2*           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).

        10.10           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*           1994 Employee Stock Purchase Plan of the Company (filed as
                        Exhibit 10.16 to the Company's Registration Statement on
                        Form S-1, File No. 33-81836, and incorporated herein by
                        reference).
</TABLE>

                                       21
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION
---------------------                           -----------
<C>                     <S>
        10.12           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).

        10.13           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).

        10.14           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).

       10.15*           PRI Automation, Inc. 1997 Non-Incentive Stock Option Plan of
                        the Company, as amended (filed as Exhibit 10.22 to the
                        Company's Quarterly Report on Form 10-Q for the quarter
                        ended December 28, 1997 and incorporated herein by
                        reference).

        10.16           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).

        10.17           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).

        10.18           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).

        10.19           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).

        10.20           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).

        10.21           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).

        10.22           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).

        10.23           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).

        10.24           Lease Agreement dated as of May 28, 1996 by and between 170
                        University (Toronto) Partnership and Promis Systems
                        Corporation Ltd. **
</TABLE>

                                       22
<PAGE>

<TABLE>
<CAPTION>
       EXHIBIT
       NUMBER                                   DESCRIPTION
---------------------                           -----------
<C>                     <S>
         21.1           List of Subsidiaries of the Company**

         23.1           Consent of PricewaterhouseCoopers LLP**

         23.2           Consent of Ernst & Young LLP, Independent Auditors**

         23.3           Report of Ernst & Young LLP, Independent Auditors, dated
                        February 27, 1998**

         27.1           Financial Data Schedule**

         27.2           Financial Data Schedule**

         27.3           Financial Data Schedule**
</TABLE>

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

*   management contracts and compensatory arrangements

**  filed herewith

(B) REPORTS ON FORM 8-K

    The Company filed a Current Report on Form 8-K ("Form 8-K") with the
Securities and Exchange Commission on July 20, 1999. The Company attached as an
exhibit to that report a press release announcing its financial results for the
fiscal quarter ended June 27, 1999.

                                       23
<PAGE>
                       REPORT OF INDEPENDENT ACCOUNTANTS

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

    In our opinion, based upon our audits and the report of other auditors, 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, 1999 and 1998, and
the results of their operations and their cash flows for each of the three years
in the period ended September 30, 1999, in conformity with generally accepted
accounting principles in the United States. 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 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 statement schedule based on our audits. The
consolidated financial statements and financial statement schedule give
retroactive effect to the merger of Promis Systems Corporation, Ltd. in a
transaction accounted for as a pooling of interests, as described in Note N to
the consolidated financial statements. We did not audit the consolidated
financial statements of Promis Systems Corporation, Ltd., which statements, not
included herein, reflect total revenues of $23,967,000, before conforming
accounting policy adjustments, for the year ended December 31, 1997. Those
statements were audited by other auditors whose report thereon has been
furnished to us, and our opinion expressed herein, insofar as it relates to the
amounts included for Promis Systems Corporation, Ltd., is based solely on the
report of the other auditors. We conducted our audits of these statements in
accordance with generally accepted auditing standards in the United States,
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 and the report of
other auditors provide a reasonable basis for the opinion expressed above.

/s/ PricewaterhouseCoopers LLP
Boston, Massachusetts
November 15, 1999

                                       24
<PAGE>
                              PRI AUTOMATION, INC.

                          CONSOLIDATED BALANCE SHEETS

                       (IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
                                                                 SEPTEMBER 30,
                                                              -------------------
                                                                1999       1998
                                                              --------   --------
<S>                                                           <C>        <C>
                                     ASSETS
Current assets:
  Cash and cash equivalents.................................  $ 51,865   $ 57,047
  Trade accounts receivable, less allowance for doubtful
    accounts of $2,646 at 1999 and $3,252 at 1998...........    31,436     34,443
  Contracts in progress.....................................     6,018      9,017
  Inventories...............................................    28,351     27,494
  Deferred income taxes.....................................        --      7,832
  Other current assets......................................     7,063      7,254
                                                              --------   --------
    Total current assets....................................   124,733    143,087
Property and equipment, net.................................    19,128     20,306
Deferred income taxes.......................................        --        559
Other assets, net...........................................     2,691      3,526
                                                              --------   --------
    Total assets............................................  $146,552   $167,478
                                                              ========   ========
                      LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
  Accounts payable..........................................  $ 16,900   $ 12,281
  Accrued expenses and other liabilities....................    16,396     14,823
  Line of credit............................................        --         11
  Current portion of obligation under capital lease.........       570        798
  Billings in excess of revenues and customer advances......    11,931     14,726
                                                              --------   --------
    Total current liabilities...............................    45,797     42,639
Obligation under capital lease..............................       411        734
Other non-current liabilities...............................       788        965
Commitments and contingencies (Notes F, I and U)
Minority interest...........................................        56         --
Stockholders' equity:
  Preferred stock, 400,000 shares authorized; none
    outstanding.............................................        --         --
  Common stock, $.01 par value; 50,000,000 shares
    authorized; 22,265,676 and 21,235,525 issued and
    outstanding at September 30, 1999 and 1998,
    respectively............................................       223        212
  Additional paid-in capital................................   141,469    129,035
  Accumulated deficit.......................................   (42,192)    (6,107)
                                                              --------   --------
    Total stockholders' equity..............................    99,500    123,140
                                                              --------   --------
    Total liabilities and stockholders' equity..............  $146,552   $167,478
                                                              ========   ========
</TABLE>

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

                                       25
<PAGE>
                              PRI AUTOMATION, INC.

                     CONSOLIDATED STATEMENTS OF OPERATIONS

                     (IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED SEPTEMBER 30,
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Net revenue:
  Product and equipment.....................................  $100,074   $171,791   $217,437
  Services and maintenance..................................    36,222     31,754     18,663
                                                              --------   --------   --------
      Total net revenue.....................................   136,296    203,545    236,100
Cost of revenue:
  Product and equipment.....................................    63,850    105,342    105,616
  Services and maintenance..................................    19,904     19,413     15,356
                                                              --------   --------   --------
      Total cost of revenue:................................    83,754    124,755    120,972
                                                              --------   --------   --------
Gross profit................................................    52,542     78,790    115,128
Operating expenses:
  Research and development..................................    45,480     44,509     36,198
  Selling, general and administrative.......................    38,642     46,787     43,614
  Acquired in-process research and development..............        --      8,417         --
  Merger costs and special charges..........................     6,375     10,091         --
                                                              --------   --------   --------
Operating (loss) profit.....................................   (37,955)   (31,014)    35,316
Other income, net...........................................     2,935        625      1,223
                                                              --------   --------   --------
(Loss) income before income taxes...........................   (35,020)   (30,389)    36,539
Provision for (benefit from) income taxes...................     1,065     (7,766)     9,042
                                                              --------   --------   --------
Net (loss) income...........................................  $(36,085)  $(22,623)  $ 27,497
                                                              ========   ========   ========
Net (loss) income per common share:
  Basic.....................................................  $  (1.67)  $  (1.08)  $   1.35
  Diluted...................................................  $  (1.67)  $  (1.08)  $   1.27
Weighted average number of shares outstanding:
  Basic.....................................................    21,628     20,988     20,408
  Diluted...................................................    21,628     20,988     21,570

UNAUDITED PRO FORMA NET (LOSS) INCOME PER COMMON SHARE:
Historical net (loss) income:...............................  $(36,085)  $(22,623)  $ 27,497
  Adjustment to Equipe income tax expense to convert from
    S-corporation to C-corporation status...................        --     (1,156)    (3,639)
                                                              --------   --------   --------
Unaudited pro forma net (loss) income.......................  $(36,085)  $(23,779)  $ 23,858
                                                              ========   ========   ========
Unaudited pro forma net (loss) income per common share:
  Basic.....................................................  $  (1.67)  $  (1.13)  $   1.17
  Diluted...................................................  $  (1.67)  $  (1.13)  $   1.11
</TABLE>

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

                                       26
<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, 1996.................   20,039      $200      $100,525      $  5,702                        $106,427
Exercise of stock options...................      371         4         2,396                                         2,400
Tax benefit on exercise of stock options....                            2,065                                         2,065
Proceeds from warrants offering.............                            5,990                                         5,990
Conversion of warrants to common shares.....      271         3            (3)                                           --
Stock-based compensation....................                              140                                           140
Issuance of common stock in connection with
  the Employee Stock Purchase Plan..........       49                     812                                           812
Distributions to shareholders of Equipe.....                                         (8,011)                         (8,011)
Adjustment to conform fiscal year of
  Equipe....................................                                          3,705                           3,705
Comprehensive income:
    Net income..............................                                         27,497                          27,497
    Other comprehensive income:
      Change in unrealized gain on
        securities..........................                                                         $  2                 2
                                                                                                                   --------
  Total comprehensive income................                                                                         27,499
                                               ------      ----      --------      --------          ----          --------
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
                                               ======      ====      ========      ========          ====          ========
</TABLE>

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

                                       27
<PAGE>
                              PRI AUTOMATION, INC.

                     CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                 YEAR ENDED SEPTEMBER 30,
                                                              ------------------------------
                                                                1999       1998       1997
                                                              --------   --------   --------
<S>                                                           <C>        <C>        <C>
Cash flows from operating activities:
  Net (loss) income.........................................  $(36,085)  $(22,623)  $ 27,497
  Adjustments to reconcile net (loss) income to net cash
    (used in) provided by operating activities:
    Depreciation and amortization expense...................     8,679      8,307      5,396
    Provisions for write-downs of inventories...............       785     12,389      5,024
    Provision for bad debts.................................      (523)     1,724        956
    Deferred income taxes...................................     8,391     (5,329)    (2,674)
    Tax benefit from disqualified dispositions..............        --        439      2,065
    Net loss on disposal of assets..........................        54      2,042        125
    Stock-based compensation................................       236         --        140
    Amortization of premiums or discounts on marketable
     securities.............................................        --         42         64
    Translation (gains) losses, net.........................      (854)     1,086        520
    Minority interests in losses of subsidiaries............      (143)        --         --
    Write-off of acquired in-process research and
     development............................................        --      8,417         --
    Changes in operating assets and liabilities:
      Trade accounts receivable.............................     3,726     46,386    (40,805)
      Contracts in progress.................................     2,999      6,446      6,361
      Inventories...........................................    (1,642)    (5,739)   (16,075)
      Other assets..........................................        34     (5,984)    (1,630)
      Accounts payable......................................     4,760    (12,050)     3,186
      Accrued expenses and other liabilities................     1,916     (4,605)     9,981
      Billings in excess of revenues and customer
       advances.............................................    (2,795)     6,889      3,000
                                                              --------   --------   --------
Net cash (used in) provided by operating activities.........   (10,462)    37,837      3,131
                                                              --------   --------   --------
Cash flows from investing activities:
  Proceeds from the sale of marketable securities...........        --      6,867      9,079
  Proceeds from maturities of marketable securities.........        --      2,035      5,390
  Purchases of marketable securities........................        --     (5,798)    (5,431)
  Purchases of intangible assets............................      (305)      (112)        --
  Proceeds from sale of property and equipment..............         9         24         --
  Purchases of property and equipment.......................    (6,249)   (13,665)    (7,677)
  Cash paid for contingent consideration....................      (278)    (1,364)        --
  Net effect on cash balances from Chiptronix acquisition...        --        246         --
  Net effect on cash balances from MASE acquisition.........        --     (1,533)    (1,533)
                                                              --------   --------   --------
Net cash used in investing activities.......................    (6,823)   (13,300)      (172)
                                                              --------   --------   --------
Cash flows from financing activities:
  Proceeds from borrowings..................................        --         --      1,769
  Repayments of borrowings..................................        --     (1,913)    (1,702)
  Proceeds from borrowings under capital lease
    obligations.............................................        --      1,001        510
  Repayment of capital lease obligations....................      (551)      (758)      (461)
  Proceeds from issuance of warrants........................        --         --      5,990
  Proceeds from minority shareholders.......................       199         --         --
  Distributions to shareholders of Equipe...................        --     (4,507)    (8,011)
  Repayments under line of credit...........................       (11)        --         --
  Proceeds from exercise of stock options and Employee Stock
    Purchase Plan...........................................    12,487      2,627      3,212
                                                              --------   --------   --------
Net cash provided by (used in) financing activities.........    12,124     (3,550)     1,307
                                                              --------   --------   --------
Adjustment to conform fiscal years of Promis and Equipe.....        --        (50)       218
Effect of changes in exchange rates on cash.................       (21)      (642)      (283)
                                                              --------   --------   --------
Net (decrease) increase in cash and cash equivalents........    (5,182)    20,295      4,201

Cash and cash equivalents at beginning of year..............    57,047     36,752     32,551
                                                              --------   --------   --------
Cash and cash equivalents at end of year....................  $ 51,865   $ 57,047   $ 36,752
                                                              ========   ========   ========

Supplemental disclosures of cash flow information:
  Cash paid during the year for:
    Interest................................................  $    125   $    155   $    113
    Income taxes............................................       908      8,730      5,314
  Non-cash transactions:
    Property and equipment acquired under capital leases....        --         --        265
    Acquisition of Interval Logic Corporation (see Note Q)
    Acquisition of Chiptronix Handling Systems GmbH (see
     Note P)
</TABLE>

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

                                       28
<PAGE>
                              PRI AUTOMATION, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

A. DESCRIPTION OF BUSINESS:

    PRI Automation, Inc. (the "Company") designs, develops, manufactures and
markets factory automation systems, process tool wafer-handling systems and
related software used by semiconductor and precision electronics manufacturers
and OEM equipment suppliers to automate the fabrication of integrated circuits
in cleanroom manufacturing operations. The Company also provides a broad range
of integrated solutions, including system integration of hardware and software,
factory simulation, project management, 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, the effects of the Year 2000 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.

                                       29
<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, Eurodollars, money market
mutual funds, short-term guaranteed investment certificates and other highly
liquid investments with original maturities of three months or less.

MARKETABLE SECURITIES

    Current marketable securities include all investments with remaining
maturities of twelve months or less. Non-current marketable securities include
all investments with remaining maturities greater than twelve months. 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, 1999 and 1998. Gross
realized gains and losses from marketable securities for the year ended
September 30, 1998 were $6,000 and $1,000, respectively. Gross realized gains
and losses for the year ended September 30, 1997 were $9,000 and $7,000,
respectively. Gross unrealized gains and losses at September 30, 1997 were
$3,000 and $1,000, respectively. Interest income included in other income, net
was $2,233,000, $1,991,000 and $1,523,000 for the years ended September 30,
1999, 1998 and 1997, 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 has entered into forward contracts in Canadian dollars to hedge
the expected operating expenses of its Canadian subsidiary that are denominated
in Canadian dollars. These contracts are used to mitigate the Company's risk
associated with exchange rate movements, as gains and losses on these contracts
are intended to offset exchange losses and gains on underlying cost exposures.
These contracts do not qualify for hedge accounting. The contract periods which
do not exceed sixteen months expire monthly through December 1999. The Company
does not enter into forward currency contracts for speculative purposes. Both
realized and unrealized gains and losses on the contracts are 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.

                                       30
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

    The fair value of these contracts as of September 30, 1999 and 1998,
determined by applying fiscal year end currency exchange rates to the notional
contract amounts, represented a net unrealized gain of $131,000 and net
unrealized loss of $60,000, respectively.

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 $9,605,000 and $13,832,000 at September 30, 1999
and 1998, 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, 1999 and
1998 were $7,701,000 and $24,757,000, 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) except that Equipe
Technologies, Inc. and E-Machine, Inc. were subject to California franchise tax
based on 1.5% of taxable income.

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 leases is included in depreciation and amortization
expense. Upon retirement or sale, the cost of the

                                       31
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

B. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)

assets disposed and the related accumulated depreciation are removed from the
accounts and any resulting gain or loss is credited or charged to operations.

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, including intellectual property
acquired in Promis' MASE acquisition and capitalized software licenses are
amortized on a straight line basis over the estimated useful lives of the assets
ranging from two to five years. The Company periodically reviews the value of
intangible assets in relation to the expected associated undiscounted cash flows
in order to assess whether there has been a permanent impairment in carrying
value. The Company 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.

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 $23,383,000, $54,999,000 and $100,699,000 during fiscal years
1999, 1998 and 1997, 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 receipt
of a written agreement from the customer, provided that acceptance is not
uncertain, fees are fixed and 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.

COMMISSIONS

    The Company pays certain commissions to agents and distributors under
certain agreements in return for obtaining orders; and, in certain cases,
providing installation and warranty services. Commissions that are due upon the
Company receiving payment in full from the customers are charged against the
related revenues. These amounts totaled approximately $98,000 and $2,381,000 for
fiscal years 1998 and 1997, respectively. No such commissions were paid in
fiscal 1999.

                                       32
<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

    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. The Company's
functional currency is the U.S. dollar for all of its subsidiaries. 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) income and pro forma net (loss) income per share in the
footnotes using the fair value based method.

NET (LOSS) INCOME PER COMMON SHARE

    Basic net (loss) income per common share is based upon the weighted average
number of common shares outstanding during each period. Diluted net (loss)
income per common share gives effect to all dilutive potential common shares
outstanding during the period. The computation of diluted net (loss) income per
common share does not assume the issuance of potential common shares that have
an anti-dilutive effect.

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. The Company will adopt SFAS No. 133 by fiscal
2001, in accordance with SFAS No. 137, which deferred the effective date of SFAS
No. 133. The Company is evaluating SFAS No. 133 to determine the impact on its
consolidated financial statements.

                                       33
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

C. CASH AND CASH EQUIVALENTS:

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

<TABLE>
<CAPTION>
                                                              1999       1998
                                                            --------   --------
                                                              (IN THOUSANDS)
<S>                                                         <C>        <C>
Cash on hand..............................................  $    11    $    21
Cash deposited with banks.................................    4,660      5,924
Eurodollars...............................................   10,967     32,088
Money market funds........................................   36,179     11,014
Time deposits.............................................       48      8,000
                                                            -------    -------
                                                            $51,865    $57,047
                                                            =======    =======
</TABLE>

D. INVENTORIES:

    Inventories consisted of the following at September 30:

<TABLE>
<CAPTION>
                                                              1999       1998
                                                            --------   --------
                                                              (IN THOUSANDS)
<S>                                                         <C>        <C>
Raw materials.............................................  $16,492    $19,072
Work-in-process...........................................    5,804      5,242
Finished goods............................................    6,055      3,180
                                                            -------    -------
                                                            $28,351    $27,494
                                                            =======    =======
</TABLE>

E. PROPERTY AND EQUIPMENT:

    Property and equipment consisted of the following at September 30:

<TABLE>
<CAPTION>
                                                      DEPRECIABLE                  1999       1998
                                        ---------------------------------------  --------   --------
                                                                                   (IN THOUSANDS)
<S>                                     <C>                                      <C>        <C>
Machinery and equipment...............  2-7 years                                $ 31,259   $ 27,058
Furniture and fixtures................  5-7 years                                   6,479      6,025
Leasehold improvements................  Shorter of life of lease or useful life     5,883      5,475
                                                                                 --------   --------
                                                                                   43,621     38,558
Accumulated depreciation and
  amortization........................                                            (24,493)   (18,252)
                                                                                 --------   --------
                                                                                 $ 19,128   $ 20,306
                                                                                 ========   ========
</TABLE>

    Depreciation expense was $7,364,000, $6,691,000 and $4,733,000 for the years
ended September 30, 1999, 1998 and 1997, respectively. Assets capitalized under
leases totaled $3,415,000 and $3,083,000 as of September 30, 1999 and 1998,
respectively. Accumulated amortization of these assets was $1,822,000 and
$1,148,000 as of September 30, 1999 and 1998, respectively.

F. LEASE COMMITMENTS:

    The Company leases manufacturing and office facilities and equipment under
noncancelable operating and capital leases expiring through the year 2006 (see
Notes E and K). Rent expense under

                                       34
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

F. LEASE COMMITMENTS: (CONTINUED)

operating leases was $4,418,000, $4,343,000 and $2,680,000 for fiscal years
1999, 1998 and 1997, respectively.

    At September 30, 1999, future minimum payments, net of sub-lease proceeds,
required under all noncancelable operating and capital leases were as follows:

<TABLE>
<CAPTION>
                                                            OPERATING   CAPITAL
FISCAL YEAR                                                  LEASES      LEASES
-----------                                                 ---------   --------
                                                               (IN THOUSANDS)
<S>                                                         <C>         <C>
2000......................................................   $ 4,373     $  594
2001......................................................     3,555        368
2002......................................................     2,642         87
2003......................................................     1,469         --
2004......................................................       603         --
2005 and thereafter.......................................       601         --
                                                             -------     ------
Total minimum lease payments..............................   $13,243     $1,049
                                                             =======     ------
Less: amount representing interest........................                   68
                                                                         ======
Present value of minimum lease payments...................               $  981
                                                                         ------
</TABLE>

G. ACCRUED EXPENSES AND OTHER LIABILITIES:

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

<TABLE>
<CAPTION>
                                                              1999       1998
                                                            --------   --------
                                                              (IN THOUSANDS)
<S>                                                         <C>        <C>
Accrued expenses..........................................  $ 7,295    $ 6,699
Accrued compensation......................................    4,718      3,086
Warranty reserves.........................................    4,383      5,038
                                                            -------    -------
                                                            $16,396    $14,823
                                                            =======    =======
</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.
Incentive stock options generally vest over

                                       35
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

H. STOCKHOLDERS' EQUITY: (CONTINUED)

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. Additionally, the Company assumed Promis 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.

    Information with respect to option activity for the fiscal years 1997, 1998
and 1999 is as follows:

<TABLE>
<CAPTION>
                                                    NUMBER OF    WEIGHTED AVERAGE
                                                      SHARES      EXERCISE PRICE
                                                    ----------   ----------------
<S>                                                 <C>          <C>
Outstanding at September 30, 1996.................   1,609,087        $ 7.94
Granted...........................................     877,248         20.52
Canceled..........................................    (260,573)        11.98
Exercised.........................................    (371,474)         6.64
                                                    ----------
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
                                                    ==========
</TABLE>

    Summarized information about stock options outstanding at September 30, 1999
is as follows:

<TABLE>
<CAPTION>
                                             OPTIONS OUTSTANDING                  OPTIONS EXERCISABLE
                                    -------------------------------------   --------------------------------
                                        WEIGHTED
                                        AVERAGE             WEIGHTED                           WEIGHTED
      RANGE OF          NUMBER         REMAINING            AVERAGE           NUMBER           AVERAGE
  EXERCISE PRICES     OUTSTANDING   CONTRACTUAL LIFE   EXERCISE PRICE ($)   EXERCISABLE   EXERCISE PRICE ($)
--------------------  -----------   ----------------   ------------------   -----------   ------------------
<S>                   <C>           <C>                <C>                  <C>           <C>
   $ 3.33-$13.63         676,705           3.52                10.66           520,402          10.24
    13.74- 14.75       1,179,350           4.84                14.75           203,712          14.74
    15.13- 25.50       1,000,575           5.10                21.98           237,714          19.66
    25.88- 41.44         902,757           5.50                28.22            63,326          27.81
                       ---------                                             ---------
   $ 3.33-$41.44       3,759,387           4.83                19.17         1,025,154          14.40
</TABLE>

                                       36
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

H. STOCKHOLDERS' EQUITY: (CONTINUED)

    At September 30, 1998 and 1997 options exercisable were 822,914 and 523,696,
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. 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.

    Information with respect to the ILC options activity for fiscal years 1998
and 1999 is as follows:

<TABLE>
<CAPTION>
                                                     NUMBER OF   WEIGHTED AVERAGE
                                                      SHARES      EXERCISE PRICE
                                                     ---------   ----------------
<S>                                                  <C>         <C>
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)          --
                                                     ---------
Outstanding at September 30, 1999..................  2,228,217        $0.11
                                                     =========
</TABLE>

    Summarized information about ILC stock options outstanding at September 30,
1999 is as follows:

<TABLE>
<CAPTION>
                                           OPTIONS OUTSTANDING                  OPTIONS EXERCISABLE
                                  -------------------------------------   --------------------------------
                                      WEIGHTED
                                      AVERAGE             WEIGHTED                           WEIGHTED
     RANGE OF         NUMBER         REMAINING            AVERAGE           NUMBER           AVERAGE
 EXERCISE PRICES    OUTSTANDING   CONTRACTUAL LIFE   EXERCISE PRICE ($)   EXERCISABLE   EXERCISE PRICE ($)
------------------  -----------   ----------------   ------------------   -----------   ------------------
<S>                 <C>           <C>                <C>                  <C>           <C>
      $0.10          2,192,817          8.30                0.10            938,632            0.10
       1.00             35,400          6.42                1.00                 --              --
                     ---------
   $0.10-$1.00       2,228,217          8.27                0.11            938,632            0.10
</TABLE>

    There were no ILC options exercisable as of September 30, 1998 and 1997.

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.
Shares purchased during fiscal years 1999, 1998 and 1997, were 171,436, 114,996
and 49,044, respectively, at average prices ranging from $9.78 to $22.26 per
share. Shares available for future purchase under the ESPP totaled 9,320 at
September 30, 1999.

                                       37
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

H. STOCKHOLDERS' EQUITY: (CONTINUED)

STOCK-BASED COMPENSATION PLANS

    The Company applies APB Opinion No. 25 and related Interpretations in
accounting for its stock-based compensation plan and 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) income and net (loss) income per diluted share for the years ended
September 30 would have been as follows:

<TABLE>
<CAPTION>
                                                   1999       1998       1997
                                                 --------   --------   --------
<S>                                              <C>        <C>        <C>
Net (loss) income:
  As Reported..................................  $(36,085)  $(22,623)  $27,497
  Pro Forma....................................   (50,304)   (28,816)   25,018
Net (loss) income per share:
  Basic
    As Reported................................     (1.67)     (1.08)     1.35
    Pro Forma..................................     (2.33)     (1.37)     1.23
  Diluted
    As Reported................................     (1.67)     (1.08)     1.27
    Pro Forma..................................     (2.33)     (1.37)     1.16
</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
1999, 1998 and 1997, to purchase the Company's common stock, were $16.86, $12.78
and $11.87, 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>
                                       1999         1998         1997
                                    -----------  -----------  -----------
<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...........  4.59%-5.86%  5.42%-5.74%  5.51%-6.52%
Volatility........................      71%          67%          64%
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 year to four years, risk-free interest rate of 4.84% to 5.77%, volatility
of 85% and dividend yield of 0. The estimated weighted average fair value of
options granted in fiscal year 1999 and 1998 was $0.13 and $0.07, respectively.

STOCK WARRANTS

    Pursuant to an agreement dated February 26, 1996, prior to the acquisition
of Promis by the Company, Promis issued and sold 270,600 warrants, converted at
the common stock exchange ratio of 0.1353, at $22.09 per warrant for aggregate
proceeds of $6.6 million. Each warrant was convertible into

                                       38
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

H. STOCKHOLDERS' EQUITY: (CONTINUED)

one common share. The associated costs of the warrants offering were
approximately $0.6 million. On June 16, 1997, the 270,600 warrants were
converted into 270,600 common shares.

    On May 1, 1996, Promis granted warrants to a third party to purchase up to
13,530 common shares, as converted at the common stock exchange ratio. These
warrants have an expiration date of April 30, 2000.

    Summarized information about warrants outstanding at September 30, 1999 is
as follows:

<TABLE>
<CAPTION>
                        WEIGHTED
                        AVERAGE
      WARRANTS          EXERCISE
     OUTSTANDING         PRICE
---------------------   --------
<S>                     <C>
       10,148            $11.75
        3,382             12.27
       ------
       13,530            $11.88
       ======
</TABLE>

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, 1999, the Company had a contingent liability of
approximately $0.8 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
agreements. 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

                                       39
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

I. CONTINGENT LIABILITY: (CONTINUED)

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, 1999, calculated based on the market value of the
Company's common stock at September 30, 1999, is approximately $0.8 million.

J. INCOME TAXES:

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

<TABLE>
<CAPTION>
                                                     1999       1998       1997
                                                   --------   --------   --------
                                                           (IN THOUSANDS)
<S>                                                <C>        <C>        <C>
Current tax (benefit) provision:
  Federal........................................  $(7,667)   $(2,806)   $10,871
  State..........................................       21         17        845
  Foreign........................................      320        267         --
                                                   -------    -------    -------
Total current (benefit) provision................   (7,326)    (2,522)    11,716
                                                   -------    -------    -------
Deferred provision (benefit):
  Federal........................................    4,570     (3,349)    (2,324)
  State..........................................    2,643     (1,895)      (350)
  Foreign........................................    1,178         --         --
                                                   -------    -------    -------
Total deferred provision (benefit)...............    8,391     (5,244)    (2,674)
                                                   -------    -------    -------
Total provision for (benefit from) income
  taxes..........................................  $ 1,065    $(7,766)   $ 9,042
                                                   =======    =======    =======
</TABLE>

    The tax benefit recognized from the Chiptronix acquisition was recorded
directly to stockholders' equity and, therefore, the deferred tax benefit does
not reflect the change in the deferred tax assets in fiscal 1998.

                                       40
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

J. INCOME TAXES: (CONTINUED)

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

<TABLE>
<CAPTION>
                                                     1999         1998         1997
                                                   --------     --------     --------
<S>                                                <C>          <C>          <C>
U.S. federal income tax statutory rate...........   (34.0)%      (34.0)%       35.0%
Change in valuation allowance....................    43.4          0.0          0.0
State income taxes, net of federal benefit.......    (0.4)        (2.6)         2.9
Foreign rate differential........................    (0.1)         0.6          0.3
U.S. and foreign tax credits.....................    (9.6)        (2.1)        (4.1)
Foreign sales corporation tax benefit............     0.0          0.0         (2.4)
S-corporation income of Equipe...................     0.0         (1.4)        (9.3)
Acquisition costs not deductible for tax
  purposes.......................................     3.9         14.3          0.0
Other............................................    (0.2)        (0.4)         2.3
                                                    -----        -----         ----
Effective tax rate...............................     3.0%       (25.6)%       24.7%
                                                    =====        =====         ====
</TABLE>

    At September 30, the components of net deferred tax assets (liabilities)
were as follows:

<TABLE>
<CAPTION>
                                                            1999       1998
                                                          --------   --------
                                                            (IN THOUSANDS)
<S>                                                       <C>        <C>
Gross deferred tax assets:
  Bad debts.............................................  $    306   $    622
  Inventory.............................................     3,087      5,599
  Compensation..........................................       322        270
  Intangible assets.....................................     2,338      2,477
  Tax credits...........................................     6,890      3,178
  Canadian R&D and capital cost allowances..............     9,884      9,572
  Net operating losses..................................    10,715      1,069
  Warranty..............................................     1,332      1,559
  Other.................................................     1,815      1,519
                                                          --------   --------
    Subtotal............................................    36,689     25,865
                                                          --------   --------
Gross deferred tax liabilities:
  Long-term contracts...................................      (993)    (1,753)
  Accounts receivable...................................      (698)      (334)
  Depreciation..........................................    (1,650)    (1,719)
                                                          --------   --------
    Subtotal............................................    (3,341)    (3,806)
                                                          --------   --------
Valuation allowance.....................................   (33,348)   (13,668)
                                                          --------   --------
      Net deferred tax assets...........................  $     --   $  8,391
                                                          ========   ========
</TABLE>

    The Company experienced net operating losses during fiscal years 1998 and
1999 and, therefore, believes sufficient uncertainty exists regarding the
realizability of the net deferred tax assets and accordingly has established a
full valuation allowance in fiscal 1999. The net increase in the valuation
allowance during 1999 and 1998 was $19,680,000 and $2,459,000, respectively.

                                       41
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

J. INCOME TAXES: (CONTINUED)

    At September 30, 1999, the Company had U.S. federal net operating losses
(NOLs) of $43,814,000, of which $19,868,000 is expected to be utilized in full
upon carryback and the remaining amount of $23,946,000 is available to offset
future taxable income. The Company has recorded a tax receivable related to the
NOL carryback claim which is classified in other current assets. Approximately
$8,343,000 of the NOL is attributable to the exercise of stock options for which
the tax benefit and related valuation allowance was recorded directly to
stockholder's equity. The U.S. federal net operating losses are available for
carryforward and expire in fiscal year 2020. The Company also has U.S. federal
credit carryforwards of $1,926,000 that begin to expire in fiscal year 2012. The
Company has available state net operating losses of $39,455,000 that expire in
fiscal year 2004 to fiscal year 2020 and state credit carryforwards of
$2,673,000 that expire beginning in fiscal year 2013. The Company also has
non-U.S. losses of $2,130,000 that expire beginning in fiscal year 2005, and
non-U.S. credits of $3,200,000 that begin to expire in fiscal year 2005.

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, 1999, the LIBOR borrowing rate would have been 6.50%. 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 June 16, 2000. The Company had outstanding letters
of credit with the Bank of $1,875,000 at September 30, 1999, and therefore, the
available balance under this credit agreement was $18,125,000 at September 30,
1999. At September 30, 1999, the Company was not in compliance with certain of
the required covenants but has subsequently received a waiver from the Bank on
November 15, 1999 for the quarter ended September 30, 1999. The Company was in
default of the minimum consolidated net worth requirement, the minimum fixed
charge coverage ratio, and the minimum consolidated net income requirements of
the revolving credit agreement for the three months ended September 30, 1999.
The Company expects to seek future waivers as necessary from the Bank, on the
next measurement date of January 2, 2000. However, there can be no assurance
that such waivers will be obtained.

    Promis' operating line of credit of $2.9 million with the Bank of Nova
Scotia expired on April 30, 1999 and was not renewed. There were no borrowings
against this operating facility while in effect.

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 secured 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 2002 (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

                                       42
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

L. DEFINED CONTRIBUTION PLANS: (CONTINUED)

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
$1,118,000, $1,101,000, and $780,000 for fiscal years 1999, 1998 and 1997,
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 $172,000, $148,000, and $129,000 in fiscal years 1999, 1998 and
1997, respectively.

M. SEGMENT REPORTING AND GEOGRAPHIC INFORMATION:

    Effective for fiscal year 1999, the Company adopted SFAS No. 131,
"Disclosure about Segments of an Enterprise and Related Information." This
standard designates the Company's internal organization as used by management
for making operating decisions and assessing performance as the source of
business segments.

    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
Automation Systems, Tool Automation Systems and MES and Other 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 Automation Systems segment provides automation products for
interbay, intrabay and lithography automation as well as integration and support
services to semiconductor manufacturers. The Tool Automation Systems segment
provides wafer-handling systems, software and services for process tool
equipment suppliers. The MES and Other 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

                                       43
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

M. SEGMENT REPORTING AND GEOGRAPHIC INFORMATION: (CONTINUED)

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."

                          SUMMARY OF BUSINESS SEGMENTS

<TABLE>
<CAPTION>
                                                  YEARS ENDED SEPTEMBER 30,
                                                ------------------------------
                                                  1999       1998       1997
                                                --------   --------   --------
                                                        (IN THOUSANDS)
<S>                                             <C>        <C>        <C>
TOTAL NET REVENUE TO UNAFFILIATED CUSTOMERS
Factory Automation Systems....................  $ 70,046   $107,215   $169,465
Tool Automation Systems.......................    41,496     70,459     43,694
MES and Other Systems.........................    24,754     25,871     22,941
                                                --------   --------   --------
    Total net revenue.........................  $136,296   $203,545   $236,100
                                                ========   ========   ========
SEGMENT OPERATING (LOSS) PROFIT
Factory Automation Systems....................  $(21,454)  $ (3,531)  $ 33,183
Tool Automation Systems.......................     1,426      9,781      9,715
MES and Other Systems.........................    (3,062)    (6,785)       965

Other reconciling items:
Corporate and other expenses..................   (14,865)   (30,479)    (8,547)
                                                --------   --------   --------
    Consolidated operating (loss) profit......  $(37,955)  $(31,014)  $ 35,316
                                                --------   --------   --------
Other income, net.............................     2,935        625      1,223
    Consolidated (loss) income before income
      taxes...................................  $(35,020)  $(30,389)  $ 36,539
                                                ========   ========   ========
IDENTIFIABLE SEGMENT ASSETS
Factory Automation Systems....................  $ 52,094   $ 58,791   $111,804
Tool Automation Systems.......................    19,097     14,543     15,087
MES and Other Systems.........................     9,253     12,858     13,481
                                                --------   --------   --------
    Identifiable segment assets...............    80,444     86,192    140,372
                                                --------   --------   --------
Corporate and other...........................    66,108     81,286     56,782
                                                --------   --------   --------
    Consolidated total assets.................  $146,552   $167,478   $197,154
                                                ========   ========   ========
</TABLE>

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

<TABLE>
<CAPTION>
                                                               1999       1998       1997
                                                             --------   --------   --------
<S>                                                          <C>        <C>        <C>
Customer A (1).............................................     21%        19%        32%
</TABLE>

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

(1) Total net revenue for this customer in fiscal years 1999, 1998, and 1997
    were recorded by the Factory Automation Systems segment.

                                       44
<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 sales in different geographical areas for
the years ended September 30 were as follows (2):

<TABLE>
<CAPTION>
                                                  1999       1998       1997
                                                --------   --------   --------
                                                        (IN THOUSANDS)
<S>                                             <C>        <C>        <C>
United States.................................  $ 91,632   $130,718   $125,895
Taiwan........................................     6,012     13,274     24,442
Germany.......................................    15,990     23,699      4,011
Rest of world.................................    22,662     35,854     81,752
                                                --------   --------   --------
  Total net revenue...........................  $136,296   $203,545   $236,100
                                                ========   ========   ========
</TABLE>

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

(2) 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 (3):

<TABLE>
<CAPTION>
                                                     1999       1998       1997
                                                   --------   --------   --------
                                                           (IN THOUSANDS)
<S>                                                <C>        <C>        <C>
United States....................................  $17,651    $19,149    $14,463
Canada...........................................    3,041      3,711      5,715
Rest of world....................................      495        514        430
                                                   -------    -------    -------
  Total long-lived assets........................  $21,187    $23,374    $20,608
                                                   =======    =======    =======
</TABLE>

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

(3) Long-lived assets of countries outside of the United States and Canada are
    individually not a significant portion of the Company's assets.

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

                                       45
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

N. ACQUISITION OF PROMIS: (CONTINUED)

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 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. The Company made certain adjustments, as
shown below, to Promis' accounting policies related to software revenue
recognition under SOP 97-2, "Software Revenue Recognition," and to limit the
life of goodwill in a technology-related acquisition to no more than 10 years:

<TABLE>
<CAPTION>
                                                PRI       HISTORICAL                ADJUSTED   COMBINED
                                             AUTOMATION     PROMIS     ADJUSTMENT    PROMIS    COMPANIES
                                             ----------   ----------   ----------   --------   ---------
<S>                                          <C>          <C>          <C>          <C>        <C>
Net revenue for:
  Three months ended December 27, 1998.....   $ 25,316      $ 4,319          --     $ 4,319    $ 29,635
  Fiscal 1998..............................    178,193       25,352          --      25,352     203,545
  Fiscal 1997..............................    213,159       23,967     $(1,026)     22,941     236,100
Net (loss) income for:
  Three months ended December 27, 1998.....   $ (5,608)     $(2,047)         --     $(2,047)   $ (7,655)
  Fiscal 1998..............................    (23,942)       1,319          --       1,319     (22,623)
  Fiscal 1997..............................     26,572        2,073     $(1,148)        925      27,497
</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. Accordingly, Equipe's results of operations,
statements of stockholders' equity and cash flows

                                       46
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

O. ACQUISITION OF EQUIPE: (CONTINUED)

for the year ended December 31, 1996 were combined with the Company's results of
operations, statements of stockholders' equity and cash flows for the year ended
September 30, 1996. The results of operations, statements of stockholders'
equity and cash flows for fiscal 1997 are for the twelve months ended
September 30, 1997 for both the Company and Equipe. Equipe's results of
operations for the three months ended December 31, 1996 (including revenues, net
income and distributions to shareholders of $6,906,000, $1,582,000 and
$5,287,000, respectively) are included in the Company's consolidated statements
of operations, statements of stockholders' equity and cash flows for both the
years ended September 30, 1997, as presented herein, and 1996. Therefore, an
amount equal to Equipe's net income and distributions to shareholders for the
three months ended December 31, 1996 was eliminated from the consolidated
statement of stockholders' equity for the year ended September 30, 1997.
Equipe's decrease in cash and cash equivalents for the three months ended
December 31, 1996 of $218,000 is included in the consolidated statement of cash
flows for both the years ended September 30, 1997, as presented herein, and
1996. Therefore, this amount was eliminated from the consolidated statement of
cash flows for the year ended September 30, 1997.

    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.

    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
  Fiscal 1997.............................    169,465     43,694     213,159     22,941       236,100
Net (loss) income for:
  Three months ended December 28, 1997....   $ (3,449)   $ 3,042    $   (407)   $   403      $     (4)
  Fiscal 1997.............................     17,076      9,496      26,572        925        27,497
</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.

                                       47
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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
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.

                                       48
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 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, 1999, $424,000 of these charges remained in
accrued expenses and are expected to be paid by December 2000.

    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. Approximately $35,000 remained in accrued expenses at
September 30, 1999 in connection with these direct acquisition costs and are
expected to be paid by the end of the second fiscal quarter of 2000.

    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.

                                       49
<PAGE>
                              PRI AUTOMATION, INC.

             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

T. NET (LOSS) INCOME PER SHARE:

    A reconciliation between basic and diluted net (loss) income per share for
the years ended September 30 is as follows (in thousands, except per share
data):

<TABLE>
<CAPTION>
                                                   1999       1998       1997
                                                 --------   --------   --------
<S>                                              <C>        <C>        <C>
Net (loss) income:.............................  $(36,085)  $(22,623)  $27,497
Shares used in computation:
  Weighted average common shares outstanding
    used in computation of basic net (loss)
    income per common share....................    21,628     20,988    20,408
  Dilutive effect of stock options and
    warrants...................................        --         --     1,162
                                                 --------   --------   -------
  Shares used in computation of diluted net
    (loss) income per common share.............    21,628     20,988    21,570
                                                 ========   ========   =======
  Basic net (loss) income per common share.....  $  (1.67)  $  (1.08)  $  1.35
  Diluted net (loss) income per common share...  $  (1.67)  $  (1.08)  $  1.27
</TABLE>

    During the years ended September 30, 1999 and 1998, options to purchase
3,759,387 and 3,545,670 shares of common stock were outstanding but were not
included in the computation of diluted net loss per common share because the
Company was in a loss position and, the inclusion of such shares would be
anti-dilutive. Options to purchase 55,281 shares of common stock were
outstanding for fiscal year 1997 but were not included in the computation of
diluted net loss per common share because the options' exercise prices were
greater than the average market price of the common shares, and therefore, would
be anti-dilutive under the treasury stock method.

U. 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.

                                       50
<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 21, 1999                                    /s/ MITCHELL G. TYSON
                                               --------------------------------------------
                                                             Mitchell G. Tyson
                                                   President and Chief Executive Officer

Date: December 21, 1999                                   /s/ STEPHEN D. ALLISON
                                               --------------------------------------------
                                                            Stephen D. Allison
                                                          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>
                        NAME                                      TITLE                   DATE
                        ----                                      -----                   ----
<C>                                                    <S>                          <C>
                                                       Chief Executive Officer,
                /s/ MITCHELL G. TYSON                  President and Director
     -------------------------------------------       (principal executive         December 21, 1999
                  Mitchell G. Tyson                    officer)

                /s/ MORDECHAI WIESLER
     -------------------------------------------       Treasurer and Director       December 21, 1999
                  Mordechai Wiesler

               /s/ STEPHEN D. ALLISON                  Chief Financial Officer
     -------------------------------------------       (principal financial and     December 21, 1999
                 Stephen D. Allison                    accounting officer)

             /s/ ALEXANDER V. D'ARBELOFF
     -------------------------------------------       Director                     December 21, 1999
               Alexander V. d'Arbeloff

                /s/ BORUCH FRUSZTAJER
     -------------------------------------------       Director                     December 21, 1999
                  Boruch Frusztajer

                  /s/ AMRAM RASIEL
     -------------------------------------------       Director                     December 21, 1999
                    Amram Rasiel

               /s/ KENNETH M. THOMPSON
     -------------------------------------------       Director                     December 21, 1999
                 Kenneth M. Thompson
</TABLE>

                                       51
<PAGE>
                                  SCHEDULE II
                              PRI AUTOMATION, INC.

               FOR YEARS ENDED SEPTEMBER 30, 1999, 1998, AND 1997
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                       BALANCE AT                               BALANCE
                                                       BEGINNING    CHARGED TO     AMOUNTS      AT END
                                                       OF PERIOD     EXPENSE     WRITTEN OFF   OF PERIOD
                                                       ----------   ----------   -----------   ---------
<S>                                                    <C>          <C>          <C>           <C>
ALLOWANCE FOR DOUBTFUL ACCOUNTS:
September 30, 1999...................................    $ 3,252      $  (523)     $   83       $ 2,646
September 30, 1998...................................    $ 1,600      $ 1,652          --       $ 3,252
September 30, 1997...................................    $   700      $   900          --       $ 1,600

INVENTORY RESERVES:
September 30, 1999...................................    $15,147      $   785      $9,677       $ 6,255
September 30, 1998...................................    $ 5,125      $12,389      $2,367       $15,147
September 30, 1997...................................    $ 1,126      $ 5,024      $1,025       $ 5,125
</TABLE>

                                      S-1
<PAGE>
                                 EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                          DESCRIPTION
-------                                         -----------
<C>                     <S>
         2.1            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            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).

         3.2            Restated Articles of Organization (filed as Exhibit 3.5 to
                        the Company's Registration Statement on Form S-1, File No.
                        33-81836, and incorporated herein by reference).

         3.6            Articles of Amendment to the Restated Articles of
                        Organization (filed as Exhibit 3.6 to the Company's
                        Quarterly Report on Form 10-Q for the quarter ended March
                        30, 1997 and incorporated herein by reference).

         3.7            Articles of Amendment to the Restated Articles of
                        Organization of the Company (filed as Exhibit 3.7 to the
                        Company's Quarterly Report on Form 10-Q for the quarter
                        ended June 28, 1998 and incorporated herein by reference).

         4.6            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).

         4.7            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).

         4.8            Form of Certificate of Designation of Series A Participating
                        Cumulative Preferred Stock of PRI Automation, Inc. (filed as
                        Exhibit 4.2 to the Company's Form 8-K filed on November 25,
                        1998 and incorporated herein by reference).

         4.9            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).

         4.10           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).

        10.1*           1984 Incentive Stock Option Plan of the Company (filed as
                        Exhibit 10.4 to the Company's Registration Statement on Form
                        S-1, File No. 33-81836, and incorporated herein by
                        reference).

        10.2*           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).

        10.10           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*          1994 Employee Stock Purchase Plan of the Company (filed as
                        Exhibit 10.16 to the Company's Registration Statement on
                        Form S-1, File No. 33-81836, and incorporated herein by
                        reference).

        10.12           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).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
EXHIBIT
NUMBER                                          DESCRIPTION
-------                                         -----------
<C>                     <S>
        10.13           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).

        10.14           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).

        11.15*          PRI Automation, Inc. 1997 Non-Incentive Stock Option Plan of
                        the Company, as amended (filed as Exhibit 10.22 to the
                        Company's Quarterly Report on Form 10-Q for the quarter
                        ended December 28, 1997 and incorporated herein by
                        reference).

        10.16           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).

        10.17           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).

        10.18           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).

        10.19           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).

        10.20           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).

        10.21           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).

        10.22           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).

        10.23           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).

        10.24           Lease Agreement dated as of May 28, 1996 by and between 170
                        University (Toronto) Partnership and Promis Systems
                        Corporation Ltd. **

        21.1            List of Subsidiaries of the Company**

        23.1            Consent of PricewaterhouseCoopers LLP**

        23.2            Consent of Ernst & Young LLP, Independent Auditors**

        23.3            Report of Ernst & Young LLP, Independent Auditors, dated
                        February 27, 1998**

        27.1            Financial Data Schedule **

        27.2            Financial Data Schedule **

        27.3            Financial Data Schedule **
</TABLE>

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

*   management contracts and compensatory arrangements

**  filed herewith