Wednesday, February 11, 2009

Brooks Automation Pays for Founder Bob Therrien's Lawyers

Automation equipment maker Brooks Automation (BRKS-$4.28) is aggressively moving to lower its cash breakeven level during the current semiconductor industry slump. Unfortunately, the company remains on the hook for millions in litigation costs being incurred by its former Chief Executive Officer Robert Therrien—currently on trial for income tax evasion in Massachusetts!

In response to deteriorating conditions in the semiconductor capital equipment industry and lowered revenue expectations in the quarters ahead, Brooks is looking to streamline its organizational structure (by combining product groups) and reducing its global workforce (by more than 20 percent). Brooks expects annual salary and benefit savings of approximately $8 million.

Pursuant to Brook’s prior employment agreement with Therrien, however, some employees who fell on their swords in service to Brooks will see their lost salaries directed to the benefit of Therrien for costs he incurs in connection with his trial, according to the company’s
first-quarter 2009 regulatory 10-Q filing:

On July 25, 2007, a criminal indictment was filed in the United States District
Court for the District of Massachusetts charging Robert J. Therrien, the former
Chief Executive Officer and Chairman of the Company, with income tax evasion.
Trial is scheduled to commence on March 9, 2009. A separate civil complaint was
filed by the SEC on July 25, 2007 against Mr. Therrien in the United States
District Court for the District of Massachusetts charging him with violations of
federal securities laws. This matter has been stayed by the court pending the
outcome of the criminal matter. In accordance with the provisions of the
Company’s indemnification agreement with Mr. Therrien, the Company is advancing
Mr. Therrien for costs he incurs in connection with these matters, which
amounted to $1.8 million for the three months ended December 31, 2008.

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

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