REOEPT # AMOUNT C SUMMONS ISSUED -- LOCAL RULE 4. 1 WAIVER FORM MOF ISSUED UNITED STATES DISTRICT COURT' BY DPTY. CLK~ DISTRICT OF MASSACHUSETTS DATE 11
JAMES R. SHAW, on behalf of himself CASE NO.1 ! and all others similarly situated, JURY TRIAL DEMANDED
Plaintiff, v. 06 CA 112 3 9 RWZ BROOKS AUTOMATION, INC ., ROBERT J. THERRIEN, ELLEN B . RICHSTONE, ROGER D . EMERICK, Yjzxj;,V ) AMIN J. KIHOURY, ROBERT W . MAGISTRATE JUDG WOODBURY, JR ., and EDWARD C . GRADY,
Defendants .
CLASS ACTION COMPLAINT
Plaintiff, James R. Shaw, by his attorneys, on behalf of himself and all other s
similarly situated, alleges the following based upon the investigation of Plaintiff' s
counsel, except as to allegations specifically pertaining to Plaintiff, which are based on
personal knowledge . The investigation of counsel included; among other things, a review
of Brooks Automation, Inc .'s ("Brooks" or the "Company") public filings with the
United States Securities and Exchange Commission ("SEC"), press releases issued by th e
Company, public conference calls, media and news reports about the Company, an d
publicly available trading data relating to the price and volume of Brooks's securities .
359358-1 I. INTRODUCTION
This is a federal class action brought on behalf of a class consisting of al l persons who purchased or otherwise acquired the publicly traded securities of Brooks between July 25, 2001 and May 22, 2006, inclusive (the "Class Period" )
2. This securities class action is brought under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 ("Exchange Act"), 15 U.S.C. §§78j(b), and 78t(a), and the rules and regulations promulgated thereunder by the SEC, including Rule 1 Ob-5,
17 C.F.R. §240. 1 Ob-5 on behalf of all those who purchased or otherwise acquired the publicly traded securities of Brooks during the Class Period to recover damages caused t o the Class by defendants' violations of the securities laws .
3 . Brooks describes itself as a leading supplier of automation products and solutions primarily serving the worldwide semiconductor market and a supplier o f hardware, software and services to both chip manufacturers and original equipment manufacturers, or OEMs, who make semiconductor device manufacturing equipment.
4. A series of recent reports made in The Wall Street Journal has revealed that stock option grants to Brooks's CEO and other Brooks directors were dated just prior to substantial run-ups in share price, often after steep declines. The low prices on the day of the grants meant these insiders received options with unusually low exercise prices , providing more profit for the insiders if the option is cashed out.
5. An analysis by The Wall Street Journal found that the odds of such patterns occurring by chance is extraordinarily remote and suggest that the grants ma y have been backdated to take advantage of the low prices .
359358-1 2 6. On March 1 8, 2006, The Wall Street Journal published a story titled "The
Perfect Payday - Some CEOs reap millions by landing stock options when they are most valuable; Luck - or something else?" that identified Brooks as one of several companie s
"with wildly improbable option-grant patterns."
7. The Wall Street Journal reported that "Year after year, some companies' top executives received options on unusually propitious dates . . . The analysis bolsters recent academic work suggesting that backdating was widespread, particularly from th e start of the tech-stock boom in the 1990s through the Sarbanes-Oxley corporate reform act of2002. If so , it was another way some executives en riched themselves during the boom at shareholders' expense . And because options grants are long-lived, som e executives holding backdated grants from the late 1990s could still profit from the m today."
8. The Wall Street Journal's analysis noted the following:
Brooks Automation Inc., a semiconductor-equipment maker in Chelmsford, Mass ., gave 233,000 options to its CEO, Robert Therrien, in 2000. The stated grant date was May 31 . That was a great day to have options priced . Brooks's stock plunged over 20% that day, to $39 .75. And the very next day it surged more than 30% .
A June 7 Brooks report to the SEC covering Mr. Therrien.'s May options activity made no mention of his having gotten a grant on May 31, even though the report - which Mr . Therrien signed - did cite other options-related actions he took on May 31 . Not until August was the May 31 grant reported to the SEC.
It wasn't the only well-timed option grant he got. One in October 2001 came at Brooks stock's lowest closing price that year, once again atrthe nadir of a sharp plunge . The Journal analysis puts the odds of such a consistent pattern occurring by chance at about I in nine million.
359358-1 3 Mr. Therrien, who stepped down as CEO in 2004 and retired as chairman this month, didn't return messages seeking comment. Chief Financial Officer Robert Woodbury said Brooks is in the process of revamping' practices so grants come at about the same time each year. Mr. Woodbury, who joined in 2003, said no one at Brooks would be able to explain the timing of Mr. Therrien's grants.
The highly favorable 2000 grant also benefited two others at Brooks-the compensation-committee members who oversaw the CEO's grants . Although Brooks directors typically got options only in July, that year a special grant was awarded just to these two directors, Roger Emerick and Amin J. Khoury. Each got 20,000 options at the low $39 .75 price. By the time of their regular July option-grant date, the stock was way up to $61 .75, a price far less favorable to options recipients .
9. On April 26, 2006, Brooks issued a press release titled "Brooks
Automation Announces Review of Past Stock Option Grants and Announces Q2
Earnings Conference Call" that stated, in part, the following :
CHELMSFORD, Mass., April 26, 2006 /PRNewswire- FirstCall via COMTEX News Network/ -- Brooks Automation, Inc. (Nasdaq: BRKS) today announced that its Board of Directors has created a special committee comprised of independent directors to conduct an internal review of matters related to past stock option grants, including the timing of such grants and associated documentation.
10. On May 11, 2006, Brooks issued a press release titled "Brooks
Automation to Restate Past Periods Related to Certain Stock Option Grants," that stated , in part, the following :
CHELMSFORD, Mass., May 11 /PRNewswire-FirstCall/ - - Brooks Automation, Inc . (Nasdaq: BRKS) today announced an update concerning the review into past stock option grants being conducted by a special committee of its board of directors. The review is not complete.
359358-1 4 Based on a report on May 10, 2006 from the special committee concerning the work done to date, the Company will be required to correct certain SEC filings, including particularly its financial statements contained in filings for some or all of the periods commencing in fiscal 1999 and ending in fiscal 2005. In light of the pending restatement, these financial statements, reported in SEC filings and elsewhere, and all earnings press releases and similar communications issued by the Company relating to fiscal years 1999 through 2005, should not be relied upon .
The Company believes that it accounted for certain matters concerning stock options incorrectly, and as a result recognized less compensation expense than it should have in periods prior to fiscal 2006 . . . .
The Company also announced that it filed with the SEC a Form 12b-25 that states that it did not timely file its Form 10-Q for the period ending March 31, 2006 . The Company expects to file the Form 10-Q for the period ending March 31, 2006 as soon as is practical after the special committee's review is complete . (Emphasis added).
11 . On May 12, 2006, Brooks issued a press release titled "Brooks
Automation Announces Informal Inquiry by SEC into Stock Option Practices and
Receipt of Staff Determination from Nasdaq Stock Exchange," that stated, in part, th e following:
CHELMSFORD, Mass., May 12 /PRNewswire-FirstCall/ - - Brooks Automation, Inc. (Nasdaq: BRKS) today announced that it. has received notice that the Securities and Exchange Commission is conducting an informal inquiry concerning stock option grant practices to determine whether violations of the federal securities laws have occurred. The Company is cooperating fully with the SEC in this matter.
The Company also announced that it received today a staff determination letter from the Nasdaq Stock Market stating that the Company fails to comply with Marketplace Rule 4310(c)(14) as a result of the fact that the Company did not make a timely filing of its quarterly report on Form 10-Q for its March 31, 2006 fiscal quarter and did not indicate i n
359358-1 5 its Form 12b-25 Notification of Late Filing that it would file the Form 10-Q on or before the fifth calendar day following the prescribed due date . The letter stated that the Company's securities will be delisted from the Nasdaq Stock Market at the opening of business on May 23, 2006 unless the Company requests a hearing in accordance with Nasdaq Marketplace Rules . . . .
12. On May 18, 2006, Brooks issued a press release that disclosed th e resignation of Amin J . Khoury and Roger D . Emerick from the Company's Board o f
Directors.
13 . On May 22, 2006, after the close of trading, Brooks disclosed that, o n
Friday, May 19, 2006, it received a grand jury document subpoena from the U.S.
Attorney for the Eastern District of New York requesting records pertaining to th e granting of stock options .
14. On May 23 , 2006, shares of Brooks declined from $12.37 per share to close at $12 per share, a decline of approximately 3% . Overall, since March 20, 2006, the first trading day after The Wall Street Journal first revealed on Saturday March 18 ,
2006 that Brooks engaged in backdating stock options, shares of Brooks have declined from $13.88 per share at the opening of trading on March 20, 2006, to close at $12 pe r share at the close of trading on May 23, 2006, a decline of $1 .88 per share, or approximately 14%.
FI. JURISDICTION AND VENUE
15 . This Court has jurisdiction over the subject matter of this action pursuant to Section 27 of t h e Exchange Act (15 U.S .C. §78aa) as well as 28 U.S .C. § 1331, 1337 and 1367.
359358-1 6 16. Venue is proper in this District pursuant to Section 27 of the Exchang e
Act (15 U.S.C. §78aa) and 28 U.S .C. §1391(b) and as defendant Brooks and/or th e
Individual Defendants conduct business in and the wrongful conduct alleged took plac e in this District.
III. THE PARTIES
17 . Plaintiff James R. Shaw acquired Brooks's publicly traded securities as . detailed in the attached Certification and was damaged thereby .
18 . Defendant Brooks, formerly known as Brooks-PRI Automation, Inc., is a
Delaware Corporation with its principal executive offices at 15 Elizabeth Drive,
Chelmsford, Massachusetts.
19 . Defendant Robert J. Therrien ("Therrien") was a CEO and Chairman of the Company during the Class Period . Therrien retired as CEO on September 30, 2004 , but remained Chairman of the Board . It has been reported that he retired as Chairman o f the Board in March 2006. During the Class Period, Therrien sold 304,687 Brooks shares at artificially inflated prices for proceeds of $5,919,479 .
20. Defendant Ellen B . Richstone ("Richstone") was Senior Vice President of
Finance and Administration and Chief Financial Officer until her resignation on October
31, 2002.
21 . Defendant Roger D. Emerick ("Emerick") was a director of the Company during the Class Period. During the Class Period, Emerick sold 11,000 Brooks shares a t artificially inflated prices for proceeds of $146,420 .
22 . Defendant Amin J. Khoury ("Khoury") was a director of the Compan y during the Class Period. During the Class Period, Khoury sold 5,000 Brooks shares a t
359358-1 7 artificially inflated prices for proceeds of $300,949 .
23 . Defendant Robert W . Woodbury, Jr. ("Woodbury") has been Senior Vice
President and Chief Financial Officer of Brooks since February 2003 .
24. Defendant Edward C. Grady ("Grady") has been President and Chie f
Operating Officer of Brooks since February 2003 and CEO since October 2004 .
25. The individuals named as defendants in ¶¶ 19-24 are referred to herein as the "Individual Defendants ." The Individual Defendants, because of their positions wit h the Company, possessed the power and authority to control the contents of Brooks' s quarterly reports, press releases and presentations to securities analysts, money and portfolio managers and institutional investors, i.e., the market. Each defendant was provided with copies of the Company's reports and press releases alleged herein to be misleading prior to or shortly after their issuance and had the ability and opportunity to prevent their issuance or cause them to be corrected . Because of their positions and access to material non-public information available to them but not to the public, each o f these defendants knew that the adverse facts specified herein had not been disclosed t o and were being concealed from the public and that the positive represen^tations which were being made were then materially false and misleading . The Individual Defendants are liable for the false statements pleaded herein .
IV. CLASS ACTION ALLEGATION S
26 . Plaintiff brings this action as a class action pursuant to Federal Rules o f
Civil Procedure 23(a) and 23 (b)(3) on behalf of a class of all persons who purchased th e publicly traded securities of Brooks during the period from July 25, 2001 through May
22, 2006, inclusive (the "Class").
359358-1 . 8 27. The members of the Class are so numerous that joinder of all members i s impracticable. While the exact number of Class members is unknown to Plaintiff at the present time and can only be ascertained through appropriate discovery, Plaintiff believe s that there are hundreds of members of the Class located throughout the United States . As of February 9, 2006, there were approximately 75 million shares of Brooks's commo n stock which were actively traded on the NASDAQ in an efficient market .
28. Plaintiff's claims are typical of the claims of the members of the Class.
Plaintiff and all members of the Class have sustained damages because of defendants ' unlawful activities alleged herein. Plaintiff has retained counsel competent an d experienced in class and securities litigation and intends to pursue this action vigorously .
The interests of the Class will be fairly and adequately protected by Plaintiff. Plaintiff has no interests which are contrary to or in conflict with those of the Class that Plaintiff seeks to represent .
29. A class action is superior to all other available methods for the fair an d efficient adjudication of this controversy . Plaintiff knows of no difficulty to be encountered in the management of this action that would preclude its maintenance as a class action.
30. Common questions of law and fact exist as to all members of the Clas s and predominate over any questions solely affecting individual members of the Class .
Among the questions of law and fact common to the Class are :
(a) whether the federal securities laws were violated by defendants ' acts and omissions as alleged herein ;
359358-1 9 (b) whether defendants misstated and/or omitted to state material fact s in their public statements and filings with the SEC ;
(c) whether defendants acted negligently or with the requisite state of mind;
(d) whether defendants participated directly or indirectly in the cours e of conduct complained of herein; and
(e) whether the members of the Class have sustained damages and the proper measure of such damages .
V. FALSE AND MISLEADING STATEMENTS
31 . The Class Period begins on July 25, 2001 when the Company issued a press release titled "Brooks Automation Announces Fiscal 2001 Third Quarter Results", that stated, among other things, that for the quarter ended June 30, 2001 Brooks reporte d net income of $304,000, or $0.02 per share.
32. On August 14, 2001 Brooks filed its quarterly report with the SEC on
Form 10-Q for the quarter ended June 30, 2001 . The Form 10-Q, signed by defendants
Richstone and Therrien, included the Company's previously reported financial results, fo r the quarter ended June 30, 2001 .
33 . On November 14, 2001, Brooks issued a press release titled "Brook s
Automation Reports Fiscal 2001 Fourth Quarter Results ; Results Better Than Guidance;
Acquisition of PRI Automation, Inc. On Track to Close Q2 FY2002", that stated, among other things, that for the quarter ended September 30, 2001, Brooks reported a net loss o f
$33 .3 million or $1 .76 per share and for the year ended September 30, 2001, Brook s reported a net loss of $26.6 million, or $1 .65 per share.
359358-1 10 34. On December 14, 2001, Brooks filed its annual report with the SEC o n
Form 10-K for the year ended September 30, 2001 . The Form 10-K, signed b y defendants Richstone, Therrien, Emerick and Khoury, included the Company' s previously reported financial results for the quarter and year-ended September 30, 2001 .
The annual report represented that the financial statements were prepared in accordanc e with generally accepted accounting principles.
35. Also, the annual report stated the following "[t]he Company's employee stock compensation plans are accounted for in accordance with Accounting Principle s
Board Opinion No . 25, `Accounting for Stock Issued to Employees,' ("APB 25 ") an d related interpretations . Under this method, no compensation expense is recognized as long as the exercise price equals or exceeds the market price of the underlying stock o n the date .of the grant ."
36. On January 23, 2002, Brooks issued a press release titled "Brook s
Automation Reports Fiscal 2002 First Quarter Results", that stated, among other things , that for the quarter ended December 31, 2001, Brooks reported a net loss of $7 .7 million or $0.39 per share.
37. On February 14, 2002 Brooks filed its quarterly report with the SEC on
Form 10-Q for the quarter ended December 31, 2001 . The Form 10-Q, signed by defendants Richstone and Therrien, included the Company's previously reporte d financial results for the quarter ended December 31, 2001 .
38 . On April 24, 2002, Brooks issued a press release titled "Brooks
Automation Reports Fiscal 2002 Second Quarter Results" that stated, among other things ,
359358-1 11 that for the quarter ended March 31, 2002, Brooks reported a net loss of $11 .7 million or
$0.58 per share.
39. On May 15, 2002, Brooks filed its quarterly report with the SEC on Form
10-Q for the quarter ended March 31, 2001 . The Form 10-Q, signed by defendants
Richstone and Therrien, included the Company's previously reported fin ancial results for the quarter ended March 31, 2002 .
40. On July 26, 2002, Brooks issued a press release titled "Brooks Automation
Reports Fiscal 2002 Third Quarter Results" that stated, among other things, that for the quarter ended June 30, 2002, Brooks reported a net loss of $24 .2 million or $0.89 per share.
41 . On August 14, 2002, Brooks filed its quarterly report with the SEC o n
Form 10-Q for the quarter ended June 30, 2002. The Form 10-Q, signed by defendant s
Richstone and Therrien, included the Company's previously reported financial results fo r the quarter ended June 30, 2002 .
42. On November 30, 2002, Brooks issued a press release titled "Brooks-Pri
Automation Reports Fiscal 2002 Fourth-Quarter And Full-Year Results"', that stated, i n part that Brooks reported a net loss for the quarter ended September 30, 2002 of $673 .3 million, or $18.76 per share, and a net loss for fiscal year ended September 30, 2002 o f
$720.0 million, or $27.90 per share.
43 . On December 27, 2002, Brooks filed its annual report with the SEC o n
Form 10-K for the year ended September 30, 2002. The Form 10-K, signed by defendants Therrien, Emerick and Khoury, included the Company's previously reported financial results for the qua rter and year-ended September 30, 2002. The annual report
359358-1 12 represented that the financial statements were prepared in accordance with generall y accepted accounting principles .
44. Also, the annual report stated that "[t]he Company's employee stoc k compensation plans are accounted for in accordance with Accounting Principles Board
Opinion No. 25, 'Accounting for Stock Issued to Employees,' ("APB 25") and relate d interpretations . Under this method, no compensation expense is recognized as long as the exercise price equals or exceeds the market price of the underlying stock on the date o f the grant."
45. On January 22, 2003, Brooks issued a press release titled "`Brooks-Pri
Automation Reports Fiscal 2003 First -Quarter Results", that stated, in part, that Brook s reported a net loss for the quarter ended December 31, 2002 of $59 .2 million, or $1 .63 per share.
46. On February 4, 2003, Brooks issued a press release that updated the earnings report provided on January 22, 2003 . The press release stated , in part, that the
Quarterly Report on Form 10-Q that will be filed by Brooks-PRI in . February 2003 for the quarter ended December 31, 2002 for a net loss for the fourth quarter of $71 . 0 million, or a loss of $1 .95 per share.
47. On February 14, 2003, Brooks filed its quarterly report with the SEC o n
Form 10-Q for the quarter ended December 31, 2002 . The Form 10-Q, signed by defendant Therrien included the Company's previously reported financial results for the
.quarter ended December 31, 2002 . The quarterly report also contained a certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by Defendant Therrie n that stated, in part, that "[tjhe information contained in the First Quarter Form 10-Q fairly
359358-1 13 presents, in all materials respects, the financial condition and results of operations of th e
Company."
48. On April 22, 2003, Brooks issued a press release titled "Brooks
Automation Reports Fiscal 2003 Second Quarter Results", that stated , in part, that Brooks reported a net loss for the quarter ended March 31, 2003 of $28 .8 million, or $0.79 per share.
49. On May 12, 2003, Brooks filed its quarterly report with the SEC on For m
10-Q for the quarter ended March 31, 2003 . The Form 10-Q, signed by defendants
Therrien and Woodbury, included the Company's previously reported financial result s for the quarter ended March 31, 2003 . The quarterly report also contained a certificatio n pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by Defendants
Therrien and Woodbury that stated, in part, that "[t]he information contained in the Firs t
Quarter Form 10-Q fairly presents, in all materials respects , the financial condition and results of operations of the Company."
50. On July 23 , 2003, Brooks issued a press release titled -'Brooks Automatio n
Reports Results for Fiscal 3rd Quarter Ended June 30, 2003", that stated, in part, that
Brooks reported a net loss for the quarter ended June 30, 2003 of $36 .4 million or $0.99 per share.
51 . On August 11, 2003, Brooks filed its quarterly report with the SEC on
Form 10-Q for the quarter ended June 30, 2003 . The Form 10-Q, signed by defendants
Therrien and Woodbury, included the Company's previously reported financial result s for the quarter ended June 30, 2003 . The quarterly report also contained a certificatio n pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 signed by Defendants
359358-1 14 Therrien and Woodbury that stated, in part, that "[t]he information contained in the Firs t
Quarter Form 10-Q fairly presents, in all materials respects, the financial condition an d results of operations of the Company."
52 . On October 30, 2003, Brooks issued a press release titled "Brooks
Automation Reports Fiscal 2003 Fourth-Quarter and Full-Year Results" that stated, i n part, that the net loss for the fourth quarter was $49.5 million, or $1 .33 per share and the net loss for fiscal 2003 was $185 .8 million or $5.05 per share.
53 . On December 27, 2003 Brooks filed its annual report with the SEC o n
Form 10-K for the year ended September 30, 2003 . The Form 10-K, signed by defendants Therrien, Woodbury, Emerick and Khoury, included the Company' s previously reported financial results for the quarter and year-ended September 30, 2003 .
The annual report represented that the financial statements were prepared in accordanc e with generally accepted accounting principles .
54 . The annual report also contained a certification pursuant to Section 302 o f the Sarbanes-Oxley Act of 2002 signed by Defendants Therrien and Woodbury that stated, in part, that "[b]ased on my knowledge, this report does not contain any untru e statement of a material fact or omit to state a material fact necessary to make th e statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report ."
55 . In addition, the annual report stated that "[t]he Company's employee stock compensation plans are accounted for in accordance with Accounting Principles Boar d
Opinion No . 25, "Accounting for Stock Issued to Employees" ("APB 25") and relate d interpretations . Under this method, no compensation expense is recognized as long as th e
359358-1 15 exercise price equals or exceeds the market price of the underlying stock on the date o f the grant."
56. On January 27, 2004, Brooks issued a press release titled "Brooks
Automation Reports Results for Fiscal 1st Quarter Ended December 31, 2003" tha t stated, in part, that the net loss for the first quarter was $8.9 million, or $0.23 per share.
57. On February 11, 2004, Brooks filed its quarterly report with the SEC on
Form 10-Q for the quarter ended December 31, 2003 . The Form 10-Q, signed b y defendants Therrien and Woodbury, included the Company's previously reporte d financial results for the quarter ended December 31, 2003 . The quarterly report also contained a certification pursuant to Section 302 of the Sarbanes-Oxley Act of 200 2 signed by Defendants Therrien and Woodbury that stated, in part, that "[b]ased on m y knowledge, this report does not contain any untrue statement of a material fact or omit t o state a material fact necessary to make the statements made, in light of the circumstance s under which such statements were made, not misleading with respect to the perio d covered by this report."
58. On April 22, 2004, Brooks issued a press release titled "Brooks
Automation Reports Results for Fiscal 2004 Second Quarter Ended March 31, 2004" that stated, in part, that net income for the second quarter 2004 was $6 .9 million, or $0.15 per diluted share. Brooks's CEO Therrien stated, in part, that "Brooks had a record-breaking fiscal second quarter" and "[o]ur ability to execute our disciplined growth strategy alon g with the pace of the industry recovery in semiconductor capital equipment spendin g resulted in bookings, revenues and profitability that exceeded our guidance for th e quarter. "
359358-1 16 59. On May 13, 2004, Brooks filed its quarterly report with the SEC on For m
10-Q for the quarter ended March 31, 2004 . The Form 10-Q, signed by defendants
Therrien and Woodbury, reported net income for the period ended March 31, 2004 o f
$6.2 million or $0.14 per share. The quarterly report also contained a certificatio n pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed by Defendant s
Therrien and Woodbury that stated, in part, that "[b]ased on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made , not misleading with respect to the period covered by this report ."
60. On July 29, 2004, Brooks issued a press release titled "Brooks Automation
Reports Results for Fiscal 2004 Third Quarter Ended June 30, 2004" that . stated, in part, that net income for the third quarter 2004 was $12 .3 million, or $0 .27 per diluted share.
Defendant Therrien stated "I am extremely proud of the Company's performance bot h financially and operationally during this growth cycle of our industry. GAAP earnings of
$0.27 per share exceeded our guidance for the quarter . Our ongoing earnings for the quarter were better than the Thomson FirstCall consensus estimates which exclude the restructuring charges and amortization of acquired intangibles ."
61 . Also. on July 29, 2004, Brooks filed its quarterly report with the SEC o n
Form 10-Q for the quarter ended June 30, 2004 . The Form 10-Q, signed by defendants
Therrien and Woodbury, included the Company's previously reported financial result s for the quarter ended December 31, 2003 . The quarterly report also contained a certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed b y
Defendants Therrien and Woodbury that stated, in part, that "[b]ased on my knowledge ,
359358-I 17 this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances unde r which such statements were made, not misleading with respect to the period covered b y this report."
62. On November 4, 2004, Brooks issued a press release titled "Brooks
Automation Reports Results for Fiscal 2004 Fourth Quarter and Fiscal Year Ended
September 30, 2004" that stated, in part, that net income for the fourth quarter 2004 was
$8 .0 million. Defendant Grady stated that "[f]iscal year 2004 was a record-setting year for Brooks as we delivered revenues, bookings and net income that exceeded previou s peak levels. Revenues for fiscal year 2004 were $539.8 million, which is a year- over- year growth of 57 .1 percent, and exceeds the previous peak revenues achieved in fiscal year 2001 . Net income for fiscal year 2004 was $17 .7 million, or $0.41 per diluted share on a GAAP basis."
63 . On December 14, 2004, Brooks filed its annual report with the SEC o n
Form 10-K for the year ended September 30, 2004. The Form 10-K, signed by defendants Grady, Therrien, Woodbury, Emerick and Khoury, included the Company' s previously reported financial results for the quarter and year-ended September 30, 2004 .
The annual report represented that the financial statements were prepared in accordanc e with generally accepted accounting principles .
64. The annual report also contained a certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed by Defendants Grady and Woodbury that stated , in part, that "[bjased on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made ,
359358-I 18 in light of the circumstances under which such statements were made, not misleadin g with respect to the period covered by this report ."
65 . Also, the annual report stated that "[t]he Company's employee stock compensation plans are accounted for in accordance with Accounting Principles Boar d
Opinion No. 25, "Accounting for Stock Issued to Employees" ("APB 25") and related interpretations . Under this method, no compensation expense is recognized as long as th e exercise price equals or exceeds the market price of the underlying stock on the date o f the grant."
66. On February 1, 2005, Brooks issued a press release titled "Brook s
Automation Reports Results for Fiscal 2005 First Quarter Ended December 31, 2004 " that stated, in part, that net income for the first quarter of fiscal 2005 was a loss of $0 .9 million, or $0 .02 per share.
67. On February 2, 2005, Brooks filed its quarterly report with the SEC o n
Form l0-Q for the quarter ended December 31, 2004 . The Form 10-Q, signed by defendants Grady and Woodbury, included the Company's previously reported financial results for the quarter ended December 31, 2004. The quarterly report also contained a certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed b y
Defendants Grady and Woodbury that stated, in part, that -'[b]ased on my knowledge, thi s report does not contain any untrue statement of a material fact or omit to state a materia l fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thi s report."
359358-1 19 68 . On May 3, 2005, Brooks issued a press release titled "Brooks Automation
Reports Results for Fiscal 2005 Second Quarter Ended March 31, 2005" that stated, in part, that net income for the second quarter of fiscal 2005 was a loss of $2 .5 million, or
$0.06 per share.
69. On May 6, 2005, Brooks filed its quarterly report with the SEC on For m
10-Q for the quarter ended March 31, 2005 . The Form 10-Q, signed by defendants Grad y and Woodbury, included the Company's previously reported financial results for the quarter ended March 31, 2005 . The quarterly report also contained a certificatio n pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed by Defendants Grady and Woodbury that stated, in part, that "[b]ased on my knowledge, this report does no t contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report." The quarterly report represented that "[t]he unaudited consolidated financial statements o f
Brooks . . . . included herein have been prepared in accordance with generally accepte d accounting principles ."
70. On August 1, 2005, Brooks issued a press release titled "Brooks
Automation Reports Results for Fiscal 2005 Third Quarter Ended June 30, 2005" that stated, in part, that net income for the third quarter of fiscal 2005 was $0.9 million, or
$0.02 earnings per share.
71 . On August 3, 2005, Brooks filed its quarterly report with the SEC o n
Form 10-Q for the quarter ended June 30, 2005. The Form 10-Q, signed by defendants
Grady and Woodbury, included the Company's previously reported financial results fo r
359358-1 20 the quarter ended June 30, 2005 . The quarterly report also contained a certificatio n pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed by Defendants Grady and Woodbury that stated, in part, that "[b]ased on my knowledge, this report does no t contain any untrue statement of a material fact or omit to state a material. fact necessary to make the statements made, in light of the circumstances under which such statement s were made, not misleading with respect to the period covered by this report." The quarterly report represented that "[t]he unaudited consolidated financial statements of
Brooks . . . . included herein have been prepared in accordance with generally accepte d accounting principles . "
72 . On September 26, 2006, Brooks filed a Joint Proxy/Prospectus with the
SEC pursuant to Rule 424(b)(3) in connection with the merger of Brooks and Heli x
Technology Corporation ("Helix") in which each share of Helix common stock was to be converted into the right to receive 1 .11 shares of Brooks common stock .' The Joint
Proxy/Prospectus, which is part of a registration statement on Form S-4 that Brooks file d with the SEC on August 30, 2005, included Brooks's net income and earnings per share , derived from Brooks's audited consolidated financial statements as of and for the years ended September 30, 2004, September 30, 2003, September 30, 2002, September 30 ,
2001, and September 30, 2000, and Brooks's unaudited consolidated financial statement s as of and for the nine months ended June 30, 2005 and June 30, 2004.
73 . On November 9, 2005, Brooks issued a press release titled "Brooks
Automation Reports Results for Fourth Quarter and Full Year Fiscal 2005 Ende d
September 30, 2005" that stated, in part, that net loss for the fourth quarter of fiscal 200 5
1 In the Joint Proxy/Prospectus, Brooks estimated it would issue approximately 29,796,123 shares of Brooks common stock in the merger . On October 27, 2005, Brooks disclosed that it completed its merger with Helix on October 26, 2005 .
359358-1 21 was $7.6 million or $0.17 per share and full year net loss was $6 .5 million or $0.15 per share.
74. On December 13, 2005, Brooks filed its annual report with the SEC on
Form 10-K for the year ended September 30, 2005. The Form 10-K, signed b y defendants Grady, Therrien, Woodbury, Emerick and Khoury, included the Company' s previously reported financial results for the quarter and year-ended September 30, 2005 .
The annual report represented that the financial statements were prepared in accordanc e with generally accepted accounting principles.
75. The annual report also contained a certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 signed by Defendants Grady and Woodbury that stated , in part, that "[b]ased on my knowledge, this report does not contain any untrue statemen t of a material fact or omit to state a material fact necessary to make the statements made , in light ofthe circumstances under which such statements were made, not misleading with respect to the period covered by this report ."
76. The annual report also stated that "[t]he Company's employee stock compensation plans are accounted for in accordance with Accounting Principles Boar d
Opinion No. 25, "Accounting for Stock Issued to Employees" ('-APB 25") and related interpretations . Under this method, no compensation expense is recognized as long as th e exercise price equals or exceeds the market price of the underlying stock on the date o f the grant."
77. The statements referenced above in ¶'J 31-76, were each materially fals e and misleading when made as they misrepresented and/or omitted the following advers e
359358-1. 22 facts which then existed and disclosure of which was necessary to make the statement s made not false and/or misleading, including :
(a) That Brooks failed to disclose that stock option grants were not given th e
fair market value of the stock on the grant date, but rather, wer e
improperly backdated ;
(b) That Brooks improperly accounted for stock options by recognizing les s
compensation expense than the Company should have recognized, thereby
improperly inflated the Company' s reported earnings ;
(c) That contrary to the representation contained certifications pursuant to the
Sarbanes-Oxley Act of 2002, the information contained in. the Brooks' s
10-Qs and 10-Ks did not fairly presents, in all materials respects, the
financial condition and results of operations of the Company and did, i n
fact, contain materially untrue statements;
(d) That Brooks's financial statements were not prepared in accordance wit h
GAAP , including APB 25 .
VI. THE TRUTH BEGINS TO EMERGE
78 . On March 18, 2006, The Wall Street Journal published a story titled "Th e
Perfect Payday - Some CEOs reap millions by landing stock options when they are mos t valuable; Luck - or something else?" that identified Brooks as one of several companie s
"with wildly improbable option-grant patterns ."
79. On April 26, 2006 , Brooks issued a press .release titled "Brooks
Automation Announces Review of Past Stock Option Grants and Announces Q 2
Earnings Conference Call" that stated that Brooks created a special committee comprise d
359358-1 23 of independent directors to conduct an internal review of matters related to past stoc k option grants, including the timing of such grants and associated documentation.
80. On May 11, 2006, Brooks issued a press release titled "Brooks
Automation to Restate Past Periods Related to Certain Stock Option Grants."
81 . On May 12, 2006, Brooks issued a press release titled "Brooks
Automation Announces Informal Inquiry by SEC into Stock Option Practices an d
Receipt of Staff Determination from Nasdaq Stock Exchange."
82. On May 18, 2006, Brooks issued a press release that disclosed the resignation of Amin J. Khoury and Roger D. Emerick from the Company's Board o f
Directors.
83 . On May 22, 2006, after the close of trading, Brooks disclosed that, o n
Friday, May 19, 2006, the Company received a grand jury document subpoena from the
U.S. Attorney for the Eastern District of New York requesting records pertaining to the granting of stock options .
84. On May 23, 2006, shares of Brooks declined from $12 .37 per share t o close at $12 per share , a decline of approximately 3%. Overall, since March 20, 2006 , the first trading day after the Wall Street Journal first revealed on Saturday March 18 ,
2006 that Brooks engaged in backdating stock options, shares of Brooks :.have declined from $13.88 per share at the opening of trading on March 20, 2006, to close at $12 pe r share at the close of trading on May 23, 2006, a decline of $1 .88 per share, or approximately 14%.
359358-1 24 VII. LOSS CAUSATION
85. During the Class Period, as detailed herein, defendants engaged in a
scheme to deceive the market and a course of conduct that artificially inflated Brooks's
stock price and operated as a fraud or deceit on Class Period purchasers of Brook s publicly traded securities by misrepresenting the Company's operating condition an d
future business prospects . Defendants achieved this by making positive statements about
Brooks's business while they knew that the Company was suffering from a variety o f
adverse factors which were then negatively impacting its financial results, as detaile d herein. Later, however, when defendants' prior misrepresentations were disclosed and became apparent to the market, the price of Brooks's stock fell precipitously as the prior artificial inflation came out of Brooks's stock price . As a result of their purchases of
Brooks publicly traded securities during the Class Period, Plaintiff and other members o f the Class suffered economic loss, i.e., damages under the federal securities laws.
86. The decline in Brooks's stock price at the end of the Class Period was a direct result of the nature and extent of defendants' fraud finally being revealed to investors and the market . The timing and magnitude of Brooks's stock price decline s negate any inference that the loss suffered by Plaintiff and other Class members wa s caused by changed market conditions, macroeconomic or industry factors, or Company- specific facts unrelated to the defendants' fraudulent conduct .
VIII. FRAUD-ON-THE-MARKET DOCTRINE
87. At all relevant times, the market for Brooks publicly traded secu rities was an efficient market for the following reasons, among others :
359358-1 25 (a) The Company's common stock met the requirements for publi c listing and was listed and actively traded on the NASDAQ, a highly efficient market ;
(b) As a regulated issuer, the Company filed periodic public report s with the SEC ; and
(c) The Company regularly issued press releases which were carried by national news wires . Each of these releases was publicly available and entered the public marketplace .
88. As a result, the market for the Company's publicly traded securitie s promptly digested current information with respect to Brooks from all publicly availabl e sources and reflected such information in the price of the Company's securities . Under these circumstances, all purchasers of the Company's publicly traded securities durin g the Class Period suffered similar injury through their purchase of the publicly trade d securities of Brooks at artificially inflated prices and a presumption of reliance applies.
IX. ADDITIONAL SCIENTER ALLEGATION S
89. As alleged herein, defendants acted with scienter in that defendants knew that the public documents and statements issued or disseminated in the name of th e
Company were materially false and misleading ; knew that such statements or documents would be issued or disseminated to the investing public ; and knowingly and substantially participated or acquiesced in the issuance or dissemination of such statements o r documents as primary violations of the federal securities laws . As set forth elsewhere herein in detail, defendants, by virtue of their receipt of information reflecting the tru e facts regarding Brooks, their control over, and/or receipt and/or modification of Brooks' s allegedly materially misleading misstatements and/or their associations with the
359358-1 26 Company which made them privy to confidential proprietary information concernin g
Brooks, participated in the fraudulent scheme alleged herein .
90. Defendants knew and/or recklessly disregarded the falsity and misleading nature of the information which they caused to be disseminated to the investing public .
The ongoing fraudulent scheme described in this complaint could not have bee n perpetrated over a substantial period of time, as has occurred, without the knowledge an d complicity of the personnel at the highest level of the Company, including the Individua l
Defendants .
91 . Defendants had the motive and opportunity to perpetrate the fraudulent scheme and course of business described herein because the Individual Defendants wer e the most senior officers of Brooks, issued statements and press releases on behalf o f
Brooks and had the opportunity to commit the fraud alleged herein .
X. NO SAFE HARBOR
92. The statutory safe harbor provided for forward-looking statements under certain circumstances does not apply to any of the allegedly false statements pleaded in this complaint. Many of the specific statements pleaded herein were not identified a s
"forward-looking statements" when made. To the extent there were any forward-looking statements, there were no meaningful cautionary statements identifying important factor s that could cause actual results to differ materially from those in the purportedly forward- looking statements. Alternatively, to the extent that the statutory safe harbor does appl y to any forward-looking statements pleaded herein, Defendants are liable for those fals e forward-looking statements because at the time each of those forward-looking statement s was made, the particular speaker knew that the particular forward looking statement wa s
359358-1 27 false, and/or the forward-looking statement was authorized and/or approved by a n executive officer of Brooks who knew that those statements were false when made .
FIRST CLAIM FOR RELIE F For Violation of Section 10(b) of the Exchange Act and Rule 10b -5 Against All Defendants
93. Plaintiff incorporates ¶¶1-92 by reference.
94. During the Class Period, defendants disseminated or approved the fals e statements specified above, which they knew or recklessly disregarded were materiall y false and misleading in that they contained material misrepresentations and failed to disclose material facts necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading .
95. Defendants violated Section 10(b) of the 1934 Act and Rule lOb-5 in that they:
(a) Employed devices, schemes and artifices to defraud;
(b) Made untrue statements of material facts or omitted to state material facts necessary in order to make statements made, in light of the circumstance s under which they were made not misleading; or
(c) Engaged in acts, practices, and a course of business that operated as a fraud or deceit upon Plaintiff and others similarly situated in connection with thei r purchases of Brooks publicly traded securities during the Class Period .
96. Plaintiff and the Class have suffered damages in that, in reliance on the integrity of the market, they paid artificially inflated prices for Brooks's publicly trade d securities . Plaintiff and the Class would not have purchased Brooks publicly trade d
359358-1 28 securities at the prices they paid, or at all, if they had been aware that the market price s had been artificially and falsely inflated by defendants' misleading statements .
97. As a direct and proximate result of these defendants' wrongful conduct ,
Plaintiff and the other members of the Class suffered damages in connection with thei r purchases of Brooks publicly traded securities during the Class Period .
SECOND CLAIM FOR RELIEF For Violation of Section 20(a) of the Exchange Act Against the Individual Defendants
98 . Plaintiff incorporates ¶¶1-92 by reference.
99 . The Individual Defendants acted as a controlling person of Brooks within the meaning of Section 20(a) of the Exchange Act as alleged herein. By virtue of their high-level positions, and their ownership and contractual rights, participation in and/o r awareness of the Company' s operations and/or intimate knowledge of the statements filed by the Company with the SEC and disseminated to the investing public, the
Individual Defendants had the power to influence and control and did influence an d control, directly or indirectly, the decision-making of the Company, including the conten t and dissemination of the various statements which Plaintiff contends are false and misleading. The Individual Defendants were provided with or had unlimited access to copies of the Company's reports, press releases, public filings and other statement s alleged by Plaintiff to be misleading prior to and/or shortly after these statements wer e issued and had the ability to prevent the issuance of the statements or cause th e statements to be corrected.
100. In particular, the Individual Defendants had direct and supervisor y involvement in the day-to-day operations of the Company and, therefore, are presumed t o
359358-1 29 have had the power to control or influence the particular transactions giving rise to th e securities violations as alleged herein, and exercised the same .
101 . As set forth above, Brooks and the Individual Defendants each violate d
Section 10(b) and Rule I Ob-5 by their acts and omissions as alleged in this Complaint .
By virtue of their positions each as a controlling person, the Individual Defendants are liable pursuant to Section 20(a) of the Exchange Act . As a direct and proximate result of
Brooks's and the Individual Defendants' wrongful conduct, Plaintiff and other member s of the Class suffered damages in connection with their purchases of the Company's securities during the Class Period.
PRAYER FOR RELIEF
WHEREFORE, plaintiff prays for judgment as follows: declaring this action to be a proper class action; awarding damages, including interest; awarding reasonable costs, including attorneys' fees ; and such equitable/injunctive relief as the Court may dee m proper.
JURY DEMAN D
Plaintiff demands a trial by jury.
Dated: July 19, 2006 BERMAN DEVALERIO PEASE TABACCO BURT & PUCILL O V,6StLA PnTh,- Peter A. Pease, BBO#392880 Bryan A. Wood, BBO#648414 One Liberty Square Boston, MA 02109 T : (617) 542-8300 F: (617) 542-1194
359358-1 30 Richard A. Lockridge Karen Hanson Riebe l LOCKRIDGE GRINDAL NAUEN P.L.L.P. 100 Washington Avenue South. Suite 2200 Minneapolis, MN 55410 T: (612) 339-6900 F: (612) 339-098 1
Carolyn G. Anderson ZIMMERMAN REED, P .L.L.P . 651 Nicollet Mall, Suite .501 Minneapolis, MN 55402 T: (612) 341-0400 F: (612) 341-0844
Jayne A. Goldstein MAGER & GOLDSTEIN LLP One Liberty Place, 21st Floor 1650 Market Street Philadelphia, PA 1910 3 T: (215) 640-3280 F: (215) 640-328 1
Attorneys for Plaintiff
359358-1 31 FROM : .- FRX NO . 7 13 200€ 06 :53AM P 1
P „ WF CERTIFICATION fi
hereby state : f. I
i. I have reviewed a Complaint against Brooks Automation, Inc., Robert S. Therrien Ellen B. RiehstQne, Roger D. Emeriek, Amin J. Khoury, Robert.W. Woodbury, JR., and Edward C. Grady, and have anthorized the filing of the saute or a similar cc mplaint on my behalf. rf4a: 2. 1 did not purchase any Brooks Automation, Inc. securities at the direction of counsel or in order to participate in this private action.
3. I am willing to serve as a representative party on behalfofa class, including providing testimony at deposition and trial, if necessay.
4. The following includes all of my i nsactions in Brooks Automatic , Inc. securities during the Class Period (July 25, 2001 through May 22, 2006) as defined in the Complaint:
TT ANSACTION Tit )E DATE PRICE QUANTITY (PURCHASE, SALE, EXCHANGE, CALL, Put, Ems.) 3o eo J, 2--o
0 6& , i 9 41
5. I have Med the following civil actions as a representative pwty on behalf of a ti class under the federal securities laws during the last three years.
6. 1 will not accept any payment for serving as a representative party on behalf ofa class a pt to receive nay pro rate share of any recovery, or as ordered or approved by the Court, includingthe award to a representative party ofreasonable costs and expenses including lost wages relating to the representation of the class. I declare under penalty of perjw7 that the foregoing is and correct.
Executed thist''v _ day of_ s7- l , 2006.
S (sigma ) -
(pmt name) 0S (county of residence)
359253.1