Table of Contents

 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
(Mark One)   
þ
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
  For fiscal year ended September 30, 20112014
or
o
 or
¨
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
  For the transition period from                 to                 .
Commission File Number: 0-25434
Brooks Automation, Inc.
(Exact name of Registrant as Specified in Its Charter)
Delaware04-3040660
(State or Other Jurisdiction of
Incorporation or Organization)
(I.R.S. Employer
Identification No.)
  
Delaware
(State or Other Jurisdiction of
Incorporation or Organization)

15 Elizabeth Drive
Chelmsford, Massachusetts
(Address of Principal Executive Offices)
  
04-3040660
(I.R.S. Employer
Identification No.)

01824
(Zip Code)
978-262-2400
978-262-2400
(Registrant’sRegistrant's telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class 
Name of Each Exchange on Which Registered
Common Stock, $0.01 par value
 The NASDAQ Stock Market LLC
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  o¨       No  þ
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  o¨         No  þ
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  þ         No  o¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ         No  o¨
Indicate by check mark if disclosure of delinquent filers pursuant to Rule 405 ofRegulation S-K is not contained herein, and will not be contained, to the best of registrant’sregistrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of thisForm 10-K or any amendment to theForm 10-K.    oþ
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” inRule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ
Accelerated filer ¨
Non-accelerated filer ¨
Smaller reporting company ¨
  
Large accelerated filer þ
Accelerated filer oNon-accelerated filer o
(Do not check if a smaller reporting company)
 Smaller reporting company o
Indicate by check mark whether the registrant is a shell company (as defined in Exchange ActRule 12b-2).    Yes  o¨         No  þ
The aggregate market value of the registrant’sregistrant's Common Stock, $0.01 par value, held by nonaffiliatesnon-affiliates of the registrant as of March 31, 2011,2014, was approximately $884,316,500$706,764,000 based on the closing price per share of $13.73$10.93 on that date on the Nasdaq Stock Market. As of March 31, 2011, 66,150,2942014, 66,806,263 shares of the registrant’sregistrant's Common Stock, $0.01 par value, were outstanding. As of November 10, 2011, 66,275,3205, 2014, 66,927,388 shares of the registrant’sregistrant's Common Stock, $0.01, par value, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’sregistrant's Proxy Statement involving the election of directors, which is expected to be filed within 120 days after the end of the registrant’sregistrant's fiscal year, are incorporated by reference in Part III of this Report.




BROOKS AUTOMATION, INC.


 



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PART I
Item 1.
Business
Brooks Automation, Inc. (“Brooks”, “we”, “us”, or “our”), a Delaware corporation, isWe are a leading worldwide provider of automation vacuum and instrumentationcryogenic solutions for multiple markets including semiconductor manufacturing and life sciences, and clean energy.sciences. Our technologies, engineering competencies and global service capabilities provide customers speed to market and ensure high uptime and rapid response, which equate to superior value in theirour customers' mission-critical controlled environments. Since 1978, we have been a leading partner to the global semiconductor manufacturing markets and through product development initiatives and strategic business acquisitions we have expanded our reachproducts and services to meet the needs of customers in technology markets adjacent to semiconductor manufacturing and life sciences, analytical and research markets, and clean energy solutions. Brooks issciences. We are headquartered in Chelmsford, MA withMassachusetts and have full service operations in North America, Europe and Asia.
Our company initially developed and marketed automated handling equipment for front endfront-end semiconductor manufacturing tools and became a publicly traded company in February 1995. Through both internal product development and significant business acquisition activityacquisitions we became the leading provider of these automation solutions in this market. Since that time, we have diversifiedexpanded both the markets we serve as well as our core product capabilities. A notable step in our diversificationexpansion was the acquisition of Helix Technology Corporation in 2005, which provided us with leading technology solutions in vacuum and instrumentation equipment and which allowed us to serve a broader set of markets.
During the period 2006 through June In 2011, we acquired and then further developed a significantdivested our contract manufacturing business providing leading wafer front-end equipment manufacturers with an extension of their own assembly and test capability to better focus on theirour core processes and to offer flexibility during industry cycles. technology solutions.
In June 2011, we divested this business in order to focus on technology solutions for other markets. Because we continue to have significant commerce with this business (both providing automation components for integration in the tools built by the contract manufacturing business and as a supplier of certainsub-contractedsub-systems), the disposition did not qualify for discontinued operations treatment. Accordingly, we continue to present the historical results of the business as continuing operations in our consolidated financial statements.
We recently identified life sciences as a strategicallyan underserved strategic market with favorable growth opportunities where Brooks’our core competencies ofin automation and cold temperature management of a controlled environmentcryogenic solutions could provide enabling technology solutions. Duringproducts and services to the market and favorable opportunities for growth of our business. Since 2011, we have made twoseveral strategic acquisitions to penetrate thisthe automated sample storage system market, and we now are a leading worldwide provider of these solutions. In addition to automated sample management, our life sciences business offers related services, along with consumables and complementary bench-top instruments.
In addition to the acquisitions made to expand the non-semiconductor portions of our business, we have continued to make investments to maintain and grow our semiconductor product and service offerings. In 2012, we acquired Crossing Automation Inc., a Fremont, CA-based provider of automation solutions for the global semiconductor front-end market. In April 2011,2014, we acquired RTS Life Sciences,Dynamic Micro Systems Semiconductor Equipment GmbH, or DMS, a Manchester, UK-basedGerman provider of automated contamination control solutions for front opening unified pod, or "FOUP," carriers and reticle storage.
In March 2014, we entered into an agreement to sell the Granville-Phillips Gas Analysis & Vacuum Measurement, or Granville-Phillips, business unit to MKS Instruments, Inc. for $87.0 million in cash and we completed this sale in July 2011,May 2014. Unless otherwise noted, the description of our business relates solely to our continuing operations and does not include the operations of our former Granville-Phillips business unit.
We expect to continue our internal development efforts and seek acquisitions where we acquired Nexus Biosystems, Inc., a Poway, CA-based business with a significant presence in Oberdiessbach, Switzerland. We are currently integrating these businesses that now operate as Brooks Life Science Systems (“BLSS”).can expand or enhance our product and service offerings.
Markets
Our fiscal 2011years 2014, 2013 and 2010 revenues2012 percentage of revenue by end market werewas as follows:
         
  2011  2010 
 
Semiconductor capital equipment  65%  71%
Service and spares  13%  13%
Industrial capital equipment  11%  8%
Life sciences  2%   
Other adjacent markets  9%  8%
         
   100%  100%
 2014 2013 2012
Semiconductor capital equipment46% 46% 51%
Service and spares19% 21% 17%
Industrial capital equipment11% 12% 11%
Other adjacent technology markets11% 11% 10%
Life sciences13% 10% 11%
 100% 100% 100%
The markets we serve areproportion of our revenue by end market is changing rapidly as a result of our internal product and sales initiatives, our acquisitions and divestituredivestitures and the cyclical nature of the semiconductor capital equipment market. Our divested contract manufacturingOver time, we expect the percentage of revenue from our life science business exclusively servedto increase given its higher expected growth rate. Changes from year to year, however, will depend on a variety of factors, including the cyclicality of the semiconductor product end markets whereas our most recent acquisitions exclusively serve life sciences markets. We remain committed to growing our semiconductor market


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share and during fiscal year 2011, semiconductor end market product revenues, excluding contract manufacturing revenues, increased by 18% from the prior year. Industrial and other adjacent market revenues increased 42% during that same period.market.
Semiconductor capital equipment
The global semiconductor capital equipment industry is a highly cyclical industry with a long term growth profile driven by the expanded use of semiconductor devices and the increase in device complexity, each necessitating incremental equipment purchases.purchases by manufacturers. This growth is increasingly focused in Asia. The production of advanced semiconductor chips is an extremelya complex and logistically challenging manufacturing activity. To create the tens of millions of microscopic transistors and connect them both


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horizontally and in vertical layers in order to produce a functioning integrated circuit chip, or IC chip, the silicon wafers must go through hundreds of process steps that requireperformed by complex processing equipment, or tools, to create the integrated circuits.tools. A large production fabrication plant, or fab, may have more than 70 different types of process and metrology tools, totaling as many as 500 tools or more. Up to 40% of these tools perform processes in a vacuum, such as removing, depositing, or measuring material on wafer surfaces. Wafers can go through as many as 400 different process steps before fabrication is complete. These steps, which comprise the initial fabrication of the integrated circuit and are referred to in the industry as front-end processes, are repeated many times to create the desired pattern on the silicon wafer. As the complexity of semiconductors continues to increase, the number of process steps that occur in a vacuum environment have also increases,increased, resulting in a greater need for both automation and vacuum technology solutions due to the sensitive handling requirements and increased number of tools. The requirement for efficient, higher throughput and extremely clean manufacturing for semiconductor wafer fabs and other high performance electronic-based products has created a substantial market for substrate handling automation (moving the wafers around and between tools in a semiconductor fab), tool automation (the use of robots and modules used in conjunction with and inside process tools that move wafers from station to station)station-to-station), and vacuum systems technology to create and sustain the clean environment necessary to fabricate various products. Advanced chipThe use of advanced processing used to form three dimensional structures of the previously patterned integrated circuitcircuits is emerging.emerging in the industry. This processing, often referred to as wafer level packaging,Wafer Level Packaging, or WLP, is typically performed at what would be considered the back-end processing of aan IC chip. To accomplish this work, there is an extension of someSome traditional front-end processes into theare being used in this back-end advance packaging, thereby increasing the market for automation solutions.
Service and spares
Whereas sales for production equipment are typically made to original equipment manufacturers (“OEMs”), the service and spares support of that equipment is more typicallycan be provided in collaboration with the OEMs, or through a relationship with the end-user manufacturer who is using that equipment in a productive capacity. While the majority of the market that we currently address with our service and spares activities is the semiconductor manufacturing market, we are actively looking to increase our service and spares offerings in the life science market.
Industrial capital equipment
ThereIn addition to semiconductor manufacturing, there are a variety of industrial manufacturing operations that require either a vacuum or significant cooling for effective deposition of films or coatings.coatings during the production process. The expansion of technologiesthe use of mobile devices such as touch screen equipment is driving greater application of these operationssmart phones, tablets, and wearable technologies, and the requirementresulting increase in the need for associated manufacturing equipment continues to drive demand for the associateduse of vacuum and instrumentation solutions that we provide. These deposition processes are typically performed on equipment that cycle from an uncontrolled atmospheric environment for loading and unloading to a controlled vacuum environment for processing. The transition to the controlled vacuum environment requires removal of large amounts of moisture inherent fromin the air in a typical operation. This moisture removal is accomplished by deep cooling of coils within the vacuum chamber and thechamber. The increased need for the equipment necessary to deliver refrigerant supply to thosethese coils resultshas resulted in increased demand for our products.
Life Sciences
There is a broad market of devices, systems and consumables that support the pharmaceutical, biotechnology, health care research and diagnostics industries in the advanced handling, processing, storage and distribution of biological and compound samples. At the heart of these activities is sample storage. Facilities that store biological


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samples are commonly called biobanks or biorepositories. Such sample storage is generally more effective in maintaining a controlled environment, tracking samples, and reliably and quickly handling samples, if the store is automated. These automated sample management systems are at the heart of the complete sample handling process. With the advent of personalized medicine linking DNA to optimal treatment regimens, the expansion of mass storage of key biological material to support rapidly expanding comparative and longitudinal studies, and the accumulation of samples taken from surgical and other procedures, we believe that the numbers of samples in storage is expanding at between 25 — 30% per annum on a global basis. We believe that this expansion, together with manual stores that become overwhelmed by the numbers of samples they accumulate, will drive a solid growth in automated sample management equipment.
Other adjacent technology markets
There are a variety of markets that have adopted, or are adopting, similar manufacturing methods to those utilized by the semiconductor industry. Frequently, these markets have common customers but technology applications in the end markets are still maturing. We serve a variety of these evolving markets including light emitting diode, (“LED”)or LED, applications. High Brightness LED, (“HBLED”)or HBLED, is a potential clean energy solution replacing incandescent lighting sources. We believe that the application of HBLED solutions to these general illumination applications is expected towill expand as manufacturing processes for these products advance, resulting in lower costs of production and more attractive pricing for these products. Organic LED, (“OLED”)or OLED, solutions provide lower power consumption for high clarity video.still and video images. OLED applications are gaining traction in the mobile computing and telecommunications device markets. Other evolving markets which utilize our products include microelectronic mechanical systems (“MEMS”)Micro-Electro-Mechanical Systems, or MEMS, manufacturing and solar panel manufacturing. MEMS applications, which include accelerometers, self tuning antennae and pressure gauges, are expanding in automotive, mobile computing and telecommunications device markets. We believe that solar panel production is also expanding, and our products are used in the production of thin film solar panels which require cooling to effectuate deposition and adhesion.adhesion of the film on and to the panel.
Life Sciences
ProductsThere is a broad market of devices, systems and consumables that support the pharmaceutical, biotechnology, healthcare research and diagnostics industries in the advanced handling, processing, storage and distribution of biological and compound samples. At the core of these activities is sample storage. Automated sample stores are generally more effective in maintaining a controlled environment, tracking samples, reliably processing and quickly handling samples, than are manual systems. These automated sample storage management systems are at the center of the complete sample handling process. With the advent of personalized medicine linking DNA to optimal treatment regimens, the expansion of mass storage of key biological material to support rapidly expanding comparative and longitudinal studies, and the accumulation of samples taken from surgical and other


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procedures, we believe that the numbers of samples in storage is expanding between 25 and 30% per annum on a global basis. We believe that this expansion, together with the problems associated with traditional manual storage systems, will drive consistent growth in automated sample management equipment.
Products
In the semiconductor industry, wafer handling robotics have emerged as a critical technology in determining the efficacy and productivity of the complex production tools which process 300mm wafers in the world’sworld's most advanced 300mm wafer fabs. A tool is designed and built around a process chamber using automation technology to move wafers into and out of the chamber. Today, OEMs design and build their tools using a cluster architecture, whereby several process chambers are mounted to one central frame that processes wafers.transfer module. High wafer throughput and new materials require advanced automation solutions to address the challenging equipment needs for multiple substrate sizes, including the emerging sub 20nm technology nodes, Thru Silicon Via, EUV Lithography and 450mm substrates. We specialize in developing and building the handling system,systems, as well as the vacuum technologytechnologies used in these tools. Our products can be providedutilized as an individual componentcomponents or as a complete integrated handling system. Automationsystems. In addition, our automation products are provided to support both atmospheric and vacuum based processes.
processes and are designed to improve performance and productivity of the manufacturing process. The majority of our product revenue is derived from sales to OEMs and end-user semiconductor device manufacturers.
We provide high vacuum pumps and instrumentation which are required in certain process steps to condition the processing environmentcreate and to optimize thatthe process environment by maintaining pressure consistency of the known process gas. To achieve optimal production yields, semiconductor manufacturers must ensure that each process operates at carefully controlled pressure levels. Impurities or incorrect pressure levels can lower production yields, thereby significantly increasing the cost per useable semiconductorusable IC chip produced. We provide various pressure measurement instruments that form part of this pressure control loop on production processing equipment. Some key vacuum processes include: dry etching and dry stripping, chemical vapor deposition, or CVD, physical vapor deposition, or PVD, and ion implantation.
Our cryogenic vacuum pumps are considered the industry standard by many leading semiconductor device manufacturers for ion implant and PVD applications.
In the HBLED market we have worked with leading manufacturers to develop advanced automation solutions that improve the productivity of processes that were previously manual. These LEDs are also made using vacuum processes for certain production steps, very similar to the steps used in semiconductor manufacturing. We have been successful in capturing LED market share for our vacuum product offerings and for high payload automated tool architectures. In other adjacent markets, we either provide standard vacuumsuch as MEMS and instrumentation solutions or have adapted ourWLP applications, unique wafer handling and automation solutions are required to specific payload, throughputaccommodate increasingly thinner and tool architecture requirements.
sometimes bowed substrates. We are developing differentiated solutions to address the requirements in these high growth market segments.
For the life science markets we provide automated sample management systemsplatforms that store samples (e.g.: DNA,, nucleic acid, blood, drug compounds, biologics)biological tissue, etc.) in a controlled environment and automate the process of storing samples (typically(vials are typically stored in racks or plates) and the subsequent extractions of subsequently retrieving specifically selected samples from those racks or plates. The controlled storage environments ensure that samples are preserved within a narrow temperature band to maintain their integrity for long periods


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and provide for while providing absolute accuracy in the identification and selection of samples. We are an early pioneer in bringing to market stores that operate as low as minus 80OC.
samples during the storage and retrieval processes.
In providing comprehensive solutions to the life science markets we also provide systemsequipment for automated blood fractionation, sealing and de-sealing equipment for samples stored on plates and automated cappers and de-cappers for samples stored in tubes. We also provide consumables in the form of sample plates, micro-plates and tubes.tubes and support services for many of the customers who have purchased our equipment.
Segments
Segments
In the third and fourth quarters of fiscal 2011 we realigned our management structure and its underlying financial reporting structure. As a result of this realignment, we nowWe report financial results in fourthree segments: Brooks Product Solutions; Brooks Life Science Systems; Brooks Global Services; and Contract Manufacturing.
Brooks Life Science Systems.
The Brooks Product Solutions segment provides a variety of products critical to technology equipment productivity and availability.solutions that enable improved throughput and yield in controlled operating environments. Those products include atmospheric and vacuum robots, robotic modules, and tool automation systems atmosphericthat provide precision handling and vacuum robots and robotic modules and cryogenicclean wafer environments as well as vacuum pumping and thermal management and vacuum measurement solutions used to create measure and control critical process vacuum applications.
The Brooks Life Science Systems segment provides automated sample management systems including automated sample storage, automated blood fractionation equipment, sample preparation and handling equipment, consumables, parts and support services to a wide range of life science customers including pharmaceutical companies, biotechnology companies, biobanks, national laboratories, research institutes and research universities.
The Brooks Global Services segment provides an extensive range of support services, including on and off-site repair services, on and off-site diagnostic support services, and installation services toin support of the base equipment installed by our Brooks Product Solutions segment, which enable our customers to maximize process tool uptime and productivity. This segment also provides end-user customers with spare part support servicesparts to maximize customer tool productivity. The segment predominantly serves semiconductor industry customers.
The business of the Contract ManufacturingBrooks Life Science Systems segment which provided outsourced contract manufacturingprovides automated sample management systems for automated cold sample storage, equipment for sample preparation and handling, consumables, and parts and support services to semiconductor equipment manufacturers was sold in June 2011.a wide range of life science customers including pharmaceutical companies, biotechnology companies, national laboratories, research institutes and research hospitals.


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Customers
Within the semiconductor industry, we sell our products and services to most of the major semiconductor chip manufacturers and semiconductor equipment OEMs in the world. Our customers outside the semiconductor industry are broadly diversified. We have major customers in North America, Europe and Asia. Additionally, although much of our equipment sales ship to OEMs in the United States, OEMs, many of thoseour products are incorporated into equipment that is ultimately are utilized in international markets.outside of North America. See Part I, Item 1A, “Risk Factors” for a discussion of the risks related to foreign operations. The Brooks Global Services business provides support to leading OEMs, fabs and foundries across the globe.
 
Our life sciences systems solutions are used by pharmaceutical customers (including the top twenty),companies, biotechnology companies, national laboratories, biological drug development companies, research institutes and research hospitals. There is no continuing concentration of customers for BLSSthe Brooks Life Science Systems segment although given the size of particular projects, an individual customer may be significant to the life science segment in a given quarter or fiscal year.
Relatively few customers account for a substantial portion of our revenues,revenue, with the top 10 customers accounting for approximately 55%37% of our business in fiscal 2011.year 2014. We have two customers,one customer, Applied Materials, Inc. and Lam Research Corporation,, that each accounted for more than 10%11% of our overall revenuesrevenue for the year.
In our assessmentFor purposes of determining the percentage of revenue from any OEM customer, concentration, we primarily consider the OEM who designs the proprietary tool as our customer since they make the design-in decision rather than an intermediarydo not include revenue from products sold to a contract manufacturer who iscustomer which in turn sells to the entityOEM. If we did include revenue from products sold to whom we invoice. For fiscal 2011, no contract manufacturer represented more than 10% of revenues. In addition, ifcustomers supporting our OEM customers, the salepercentage of our Contract Manufacturing segment occurred on October 1, 2010, none of our contract manufacturingtotal revenue derived from certain OEM customers would have exceeded 10% of our fiscal year 2011 revenues.be higher.


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Sales, Marketing and Customer Support
We market and sell most of our semiconductor, industrial and other adjacent technology market products and services in Asia, Europe, the Middle East and North America through our direct sales organization. The sales process for our products is often multilevel, involving a team comprised of individuals from sales, marketing, engineering, operations and senior management. In many cases we assign a team to a customer is assigned aand that team that engages the customer at different levels of its organization to facilitate planning, provide product customization when required, and to ensure open communication and support. Some of our vacuum and instrumentation products and services for certain international markets are sold through local country distributors. Additionally, we serve the Japanese market for our robotics and automation products through our Yaskawa Brooks Automation, (YBA)our joint venture with Yaskawa Electric Corporation of Japan.
We market to mostMuch of our life sciences customerssales are completed through our direct Brooks Life Science Systems sales force.force, particularly our store systems and services. In addition, we facilitate the sale of consumables and instruments with distributors which reach a broader range of customers. In regions with emerging life science industries such as China, India and the Middle East, we leverage local distributors to assist in the sales process.process of stores. The sales process for our larger sample management systems may take 6-18 months to complete and it involves a team typically comprised of individuals from sales, marketing, engineering and senior management.
We typically provide warranties from one to two years, depending upon the type of product, with the average warranty on our products lasting for 15 months.
Our marketing activities include participation in trade shows, delivery of seminars, participation in industry forums, distribution of sales literature, publication of press releases and articles in business and industry publications. To enhance communication and support, particularly with our international customers, we maintain sales and service centers in Asia, Europe, the Middle East and North America. These facilities, together with our headquarters, maintain local support capabilitycapabilities and demonstration equipment for customers to evaluate. Customers are encouraged to discuss features and applications of our demonstration equipment with our engineers located at these facilities.
Net revenuesrevenue for the fiscal years ended September 30, 2011, 20102014, 2013 and 20092012 based upon the source of the order by geographic area areis as follows (in thousands):
 
             
  Year Ended September 30, 
  2011  2010  2009 
 
North America $349,456  $322,542  $115,734 
Asia/Pacific  244,524   203,172   68,393 
Europe  94,125   67,258   34,579 
             
  $688,105  $592,972  $218,706 
             
 Year Ended September 30,
 2014 2013 2012
North America$174,343
 $177,779
 $214,060
Asia/Pacific198,695
 154,358
 183,406
Europe109,810
 90,303
 91,517
 $482,848
 $422,440
 $488,983
The geographic location of an OEM is not indicative of where our products will eventually be used. The geographic area for our orders is determined by the onward sale of an OEM system which incorporates our sub-systems and/or components.


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Our property, plant and equipment as of September 30, 2014 and 2013 by geographic area is as follows (in thousands):
 
Competition
 September 30,
 2014 2013
North America$40,232
 $38,505
Asia/Pacific870
 1,646
Europe/Middle East9,081
 7,355
 $50,183
 $47,506
Competition
We operate in a variety of niches of varying breadth and with differing competitors and competitive dynamics. The semiconductor and adjacent market,technology markets, and process equipment manufacturing industries are highly competitive and characterized by continual changes and improvements in technology. TheA significant portion of equipment automation is still done in-house by OEMs. Our competitors among external vacuum automation suppliers are primarily Japanese companies such as Daihen Corporation, Daikin Industries, Ltd. and Rorze.Rorze Corporation. Our competitors among vacuum components suppliers include Sumitomo Heavy Industries Genesis and Telemark. We have a significant share of the market for vacuum cryogenic pumps and mixed gas cryo-chillers. Competitors in markets for our instrumentation products include MKS Instruments and Inficon.Telemark, Inc. Atmospheric tool automation is typically less demanding, has fewer barriers to entry and has a larger field of competitors. We compete directly with other equipment automation suppliers of atmospheric modules and systems such as Hirata Corporation, Kawasaki Heavy Industries, Ltd., Genmark Automation, Inc., Rorze Corporation, Sankyo Seisakusho Co., Ltd., TDK Corporation and Symphonia.Sinfonia Technology Co., Ltd. Contract manufacturers such as Celestica Inc. and Flextronics areInternational Ltd. also providingprovide assembly and manufacturing services for atmospheric systems.
Our Life Science Systems business unit competes with a number of smaller private companies in providing automated sample management systems. These competitors include Hamilton Matrical, HighRes Biosolutions,Company, Liconic AG and TTP and Tusbakimoto Chain.
LabTech, Ltd.
We believe our customers will purchase our equipment automation products and vacuum subsystems as long as weour products continue to provide the necessary throughput, reliability, contamination control and accuracy in our products at


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an acceptable price point.price. We believe that we have competitive offerings with respect to all of these factors; however, wefactors. We cannot guarantee, however, that we will be successful in selling our products to OEMs who currently satisfy a portion of their automation needs in-house or from other independent suppliers, regardless of the performance or price of our products.
Research and Development
Our research and development efforts are focused on developing new products and also enhancing the functionality, degree of integration, reliability and performance of our existing products. Our engineering, marketing, operations and management personnel leverage their close collaborative relationships with many of their counterparts in customer organizations in an effort to proactively identify market demands with an ability towhich helps us refocus our research and development investment to meet our customercustomers' demands. With the rapid pace of change that characterizes the markets we serve, it is essential for us to provide high-performance and reliable products in order for us to maintain our leadership position.
Our research and development spending for fiscal years 2011, 20102014, 2013 and 20092012 was $39.8$52.6 million, $31.2$46.2 million and $31.6$44.7 million, respectively. We expect to increase the pace of spending forThe expansion in research and development spending primarily reflects our investment in life sciences as we have developed the near termTwinbank platform and continue to support new generations of products, most notablydevelop automated bio-sample storage solutions for automated sample management.environments operating at ultra-low temperatures.
Manufacturing
Our manufacturing operations are used for product assembly, integration and testing. We have adoptedimplemented quality assurance procedures that include standard design practices including reliability testing and analysis, supplier and component selection procedures, vendor control procedurescontrols, manufacturing process controls, and comprehensive reliability testing and analysis toservice processes that ensure thehigh-quality performance of our products. Our major manufacturing facilities are located in Chelmsford, Massachusetts; Poway, California; Petaluma, California; Longmont, Colorado;Spokane, Washington; Monterrey, Mexico; Yongin-City, South KoreaKorea; Manchester, UK; and Manchester, UK.Jena, Germany. We also provide service and spare parts support to end usersend-users throughout the world. Many of our service customers are based outside of the U.S.,United States, with many in Asia. We have service and support locations close to these customers to provide rapid response to their service needs. We have service and support locations in Chelmsford, Massachusetts; Poway, California; Fremont, California; Spokane, Washington; Chu Bei City, Taiwan; Yongin City,Yongin-City, South Korea; Yokohama, Japan; Shanghai, China; Singapore; Jena, Germany; Oberdiessbach, Switzerland; Manchester, UK; and Kiryat-Gat, Israel.
Our manufacturing operations are designed to provide high quality, low cost, differentiated products to our customers in short lead times through responsive and flexible processes and sourcing strategies. We utilize ajust-in-timelean manufacturing strategy, based on the concepts of demand flow technology,techniques for a large portion of our manufacturing process. We believe that this strategy, coupled withcapabilities. This includes the outsourcing of non-critical components such as machined parts, wire harnessesassemblies and PC boards, reduces our fixed operating costs, improves our working capital efficiency, reduces our manufacturing cycle times and improves our flexibilityproducts to rapidly adjust production capacities. While we often use single source suppliers for certain key components and common assemblies to achieve quality control and the benefits of economies of scale, we believe that these parts and materials are readily available from other supply sources.competitive regions, including Asia. We expect to continue to broaden theour sourcing of certain portions of our componentsmanufacturing process to low cost


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ensure we continue to provide high quality products at competitive costs. We also believe the continued sourcing of portions of our manufacturing processes in these regions including Asia.allows us to better serve our customers in these regions. 
Patents and Proprietary Rights
We rely on patents, trade secret laws, confidentiality procedures, copyrights, trademarks and licensing agreements to protect our technology. Our United States patents expire at various times through April 2030. Due to the rapid technological change that characterizes the life sciences, semiconductor, flat panel displayadjacent technology markets and related process equipment industries, we believe that the improvement of existing technology, reliance upon trade secrets and unpatented proprietary know-how and the development of new products may be as important as patent protection in establishing and maintaining a competitive advantage. To protect trade secrets and know-how, it is our policy to require all technical and management personnelemployees to enter into proprietary information and nondisclosure agreements. We cannot guarantee that these efforts will meaningfully protect our trade secrets.
As of September 30, 2014, we owned approximately 480 issued U.S. patents, with various corresponding patents issued in foreign jurisdictions. We have successfully licensed our FOUP (front-opening unified pod) load port technology to significant FOUP manufacturers.


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Backlog
also had approximately 140 pending U.S. patent applications, with foreign counterparts of certain of these applications having been filed or may be filed at the appropriate time. Our patents will expire at various dates through 2032.
Backlog
Total backlog for our products as of September 30, 2011,2014, totaled $99.7$126.9 million as compared to $106.4$107.2 million at September 30, 2010.2013. Backlog consists ofor total backlog, includes all purchase orders for which a customer has scheduled delivery, regardless of the expected delivery date, and consists principally of orders for products and service agreements. The backlog for our products within the next 12 months was $113.6 million and $104.9 million at September 30, 2014 and 2013, respectively. Twelve-month backlog includes orders scheduled to be delivered within the next 12 months. Backlog consists of orders principally for hardware and service agreements. Orders included in the backlog may be cancelled or rescheduled by customers without significant penalty. products with scheduled deliveries beyond one year relate primarily to our life science products.
Backlog as of any particular date should not be relied upon as indicative of our revenuesrevenue for any future period. A substantial percentage of current business generates no backlog because we deliver our products and services in the same period in which the order is received.received. The orders included in our backlog may also be canceled or rescheduled by customers without significant penalty. 
Environmental Matters
EmployeesWe are subject to federal, state, and local environmental laws and regulations, as well as the environmental laws and regulations of the foreign national and local jurisdictions in which we have manufacturing facilities. We believe we are in material compliance with all such laws and regulations.
Compliance with foreign, federal, state, and local laws and regulations has not had, and is not expected to have, an adverse effect on our capital expenditures, competitive position, financial condition or results of operations.
Employees
At September 30, 2011,2014, we had 1,4331,455 full time employees. In addition, we utilized 217employ part time employeesworkers and contractors. Approximately 4645 employees in our facility in Jena, Germany are covered by a collective bargaining agreement. We consider our relationships with these and all employees to be good.
Available Information
We file annual, quarterly, and current reports, proxy statements, and other documents with the Securities and Exchange Commission, (“SEC”)or SEC, under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”).or the Exchange Act. The public may read and copy any materials that we file with the SEC at the SEC’sSEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at1-800-SEC-0330. Also, the SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers, including Brooks Automation, Inc., that file electronically with the SEC. The public can obtain any documents that we file with the SEC atwww.sec.gov.
Our internet website address ishttp://www.brooks.com. Through our website, we make available, free of charge, our annual report onForm 10-K, quarterly reports onForm 10-Q, current reports onForm 8-K and any amendments to those reports, as soon as reasonably practicable after such materials are electronically filed, or furnished to, the SEC. These SEC reports can be accessed through the investor relationsinvestors section of our website. The information found on our website is not part of this or any other report we file with or furnish to the SEC.


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Item 1A.Risk Factors
Factors That May Affect Future Results
You should carefully consider the risks described below and the other information in this report before deciding to invest in shares of our common stock. These are the risks and uncertainties we believe are most important for you to consider. Additional risks and uncertainties not presently known to us, which we currently deem immaterial or which are similar to those faced by other companies in our industry or business in general, may also impair our business operations. If any of the following risks or uncertainties actually occurs, our business, financial condition and operating results would likely suffer. In that event, the market price of our common stock could decline and you could lose all or part of your investment.
Risks Relating to Our Industry
Due in part to the cyclical nature of the semiconductor manufacturing industry and related industries, as well as due to volatility in worldwide capital and equity markets, we have previously incurred operating losses and may have future losses.
Our business is largely dependent on capital expenditures in the semiconductor manufacturing industry and other businesses employing similar manufacturing technology.technologies. The semiconductor manufacturing industry in turn depends on current and anticipated demand for integrated circuits and the products that use them. In recent years, these businesses have experienced unpredictable and volatile business cycles due in large part to rapid changes in demand and manufacturing capacity for semiconductors, and these cycles have had an impact on our business, sometimes causing declining revenuesrevenue and operating losses. We could experience future operating losses during an


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industry downturn. If an industry downturn continues for an extended period of time, our business could be materially harmed. Conversely, in periods of rapidly increasing demand, we could have insufficient inventory and manufacturing capacity to meet our customercustomers' needs on a timely basis, which could result in the loss of customers and various other expenses that could reduce gross margins and profitability.
We face competition which may lead to price pressure and otherwise adversely affect our sales.
We face competition throughout the world in each of our product areas. This comesand service areas, including from the competitors as discussed in Part I, Item 1, “Business - Competition” as well as from internal roboticautomation capabilities at larger OEMs. Many of our competitors have substantial engineering, manufacturing, marketing and customer support capabilities. We expect our competitors to continue to improve the performance of their current products and services and to introduce new products, services and technologies that could adversely affect sales of our current and future products and services. New products, services and technologies developed by our competitors or more efficient production of their products or provisions of their services could require us to make significant price reductions or decide not to compete for certain orders. If we fail to respond adequately to pricing pressures or fail to develop products with improved performance or developments or better quality services with respect to the other factors on which we compete, we could lose customers or orders. If we are unable to compete effectively, our business and prospects could be materially harmed.
Risks Relating to BrooksOur Operations
Our operating results could fluctuate significantly, which could negatively impact our business.
Our revenues,revenue, operating margins and other operating results could fluctuate significantly from quarter to quarter depending upon a variety of factors, including:
demand for our products as a result of the cyclical nature of the semiconductor manufacturing industry and the markets upon which the industry depends or otherwise;
• demand for our products as a result of the cyclical nature of the semiconductor manufacturing industry and the markets upon which it depends or otherwise;
• changes in the timing and terms of product orders by our customers as a result of our customer concentration or otherwise;
• changes in the mix of products and services that we offer;
• changes in the demand for the mix of products and services that we offer;
• timing and market acceptance of our new product introductions;
• delays or problems in the planned introduction of new products, or in the performance of any such products following delivery to customers;
• new products, services or technological innovations by our competitors, which can, among other things, render our products less competitive due to the rapid technological change in our industry;
• the timing and related costs of any acquisitions, divestitures or other strategic transactions;
• our ability to reduce our costs in response to decreased demand for our products and services;
• disruptions in our manufacturing process or in the supply of components to us;
• write-offs for excess or obsolete inventory; and
• 
changes in the timing and terms of product orders by our customers as a result of our customer concentration or otherwise;
changes in the mix of products and services that we offer;
changes in the demand for the mix of products and services that we offer;
timing and market acceptance of our new product and services introductions;
delays or problems in the planned introduction of new products or service, or in the performance of any such products following delivery to customers or the quality of such services;
new products, services or technological innovations by our competitors, which can, among other things, render our products less competitive due to the rapid technological changes in the markets in which we provide products and services;
the timing and related costs of any acquisitions, divestitures or other strategic transactions;


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our ability to reduce our costs in response to decreased demand for our products and services;
our ability to accurately estimate customer demand, including the accuracy of demand forecasts used by us;
disruptions in our manufacturing process or in the supply of components to us;
write-offs for excess or obsolete inventory; and
competitive pricing pressures.
As a result of these risks, we believe that quarter to quarterquarter-to-quarter comparisons of our revenue and operating results may not be meaningful, and that these comparisons may not be an accurate indicator of our future performance.


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If we do not continue to introduce new products and services that reflect advances in technology in a timely and effective manner, our products and services may become obsolete and our operating results will suffer.
Our success is dependent on our ability to respond to the technological change present in the markets we serve. The success of our product development and introduction depends on our ability to:
accurately identify and define new market opportunities, products and services;
• accurately identify and define new market opportunities and products;
• obtain market acceptance of our products;
• timely innovate, develop and commercialize new technologies and applications;
• adjust to changing market conditions;
• differentiate our offerings from our competitors’ offerings;
• obtain intellectual property rights where necessary;
• continue to develop a comprehensive, integrated product and service strategy;
• properly price our products and services; and
• design our products to high standards of manufacturability such
obtain market acceptance of our products and services;
timely innovate, develop and commercialize new technologies and applications;
adjust to changing market conditions;
differentiate our offerings from our competitors' offerings;
obtain and maintain intellectual property rights where necessary;
continue to develop a comprehensive, integrated product and service strategy;
properly price our products and services; and
design our products to high standards of manufacturability so that they meet customer requirements.
If we cannot succeed in responding in a timely manner to technologicaland/or market changes or if the new products and services that we introduce do not achieve market acceptance, it could diminish our competitive position would diminish which could materially harm our business and our prospects.
The global nature of our business exposes us to multiple risks.
For the fiscal years ended September 30, 20112014 and 2010,2013, approximately 49%64% and 46%58%, respectively, of our revenues wererevenue was derived from sales outside North America. We expect that international sales, including increased sales in Asia, will continue to account for a significant portion of our revenues.revenue. We maintain a global footprint of sales, service and repair operations. As a result of our international operations, we are exposed to many risks and uncertainties, including:
longer sales-cycles and time to collection;
• longer sales-cycles and time to collection;
• tariff and international trade barriers;
• fewer or less certain legal protections for intellectual property and contract rights abroad;
• different and changing legal and regulatory requirements in the jurisdictions in which we operate;
• government currency control and restrictions on repatriation of earnings;
• fluctuations in foreign currency exchange and interest rates, particularly in Asia and Europe; and
• 
tariff and international trade barriers;
fewer or less certain legal protections for intellectual property and contract rights abroad;
different and changing legal and regulatory requirements in the jurisdictions in which we operate;
government currency control and restrictions on repatriation of earnings;
fluctuations in foreign currency exchange and interest rates, particularly in Asia and Europe; and
political and economic instability, changes, hostilities and other disruptions in regions where we operate.
Negative developments in any of these areas in one or more countries could result in a reduction in demand for our products, the cancellation or delay of orders already placed, threats to our intellectual property, difficulty in collecting receivables, and a higher cost of doing business, any of which could materially harm our business and profitability.
Our business could be materially harmed if we fail to adequately integrate the operations of the businesses that we have acquired or may acquire.
We have made in the past, and may make in the future, acquisitions or significant investments in businesses with complementary products, servicesand/or technologies. Our acquisitions present numerous risks, including:
difficulties in integrating the operations, technologies, products and personnel of the acquired companies and realizing the anticipated synergies of the combined businesses;
• difficulties in integrating the operations, technologies, products and personnel of the acquired companies and realizing the anticipated synergies of the combined businesses;

defining and executing a comprehensive product strategy;
managing the risks of entering markets or types of businesses in which we have limited or no direct experience;

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• defining and executing a comprehensive product strategy;
• managing the risks of entering markets or types of businesses in which we have limited or no direct experience;
• the potential loss of key employees, customers and strategic partners of ours or of acquired companies;
• unanticipated problems or latent liabilities, such as problems with the quality of the installed base of the target company’s products or infringement of another Company’s intellectual property by a target Company’s activities or products;
• problems associated with compliance with the target company’s existing contracts;
• difficulties in managing geographically dispersed operations; and
• the diversion of management’s
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the potential loss of key employees, customers and strategic partners of ours or of acquired companies;
unanticipated problems or latent liabilities, such as problems with the quality of the installed base of the target company's products or infringement of another company's intellectual property by a target company's activities or products;
problems associated with compliance with the acquired company's existing contracts;
difficulties in managing geographically dispersed operations; and
the diversion of management's attention from normal daily operations of the business.
If we acquire a new business, we may be required to expend significant funds, incur additional debt or issue additional securities, which may negatively affect our operations and be dilutive to our stockholders. In periods following an acquisition, we will be required to evaluate goodwill and acquisition-related intangible assets for impairment. When such assets are found to be impaired, they will be written down to estimated fair value, with a charge against earnings. The failure to adequately address these risks or the impairment of any assets could materially harm our business and financial results.
Entering new markets introduces new competitors and commercial risks.
A key part of our growth strategy is to continue expanding into markets beyond the semiconductor manufacturing market as evidenced by our recent acquisitions of RTSinto semiconductor adjacent and Nexus Biosystems in the life sciences market.markets. As part of this strategy, we expect to diversify our product sales and service revenue by leveraging our core technologies, which requires investments and resources which may not be available as needed. We cannot guarantee that we will be successful in leveraging our capabilities into the life sciences market or any other new markets to meet all the needs of these new customers and to compete favorably. Because a significant portion of our growth potential may be dependent on our ability to increase sales to markets beyond semiconductor manufacturing, anour inability to successfully enter new markets may adversely impact future financial results.
Changes in key personnel could impair our ability to execute our business strategy.
The continuing service of our executive officers and essential engineering, technical and management personnel, together with our ability to attract and retain such personnel, is an important factor in our continuing ability to execute our strategy. There is substantial competition to attract such employees and the loss of any such key employees could have a material adverse effect on our business and operating results. The same could be true if we were to experience a high turnover rate among engineering and technical personnel and we were unable to replace them.
We may be subjectOur failure to claims of infringement of third-partyprotect our intellectual property rights, or demands that we license third-party technology, which could result in significant expense and prevent us from usingadversely affect our technology.future operations.
Our ability to compete is significantly affected by our ability to protect our intellectual property. We rely upon patents, trade secret laws, confidentiality procedures, copyrights, trademarks and licensing agreements to protect our technology. Existing trade secret, trademark and copyright laws offer only limited protection. Our success depends in part on our ability to obtain and enforce patent protection for our products both in the United States and in other countries. We own numerous U.S. and foreign patents, and we intend to file additional applications, as appropriate, for patents covering our products and technology. Any issued patents owned by or licensed to us may be challenged, invalidated or circumvented, and the rights under these patents may not provide us with competitive advantages. In addition, the laws of some countries in which our products are or may be developed, manufactured or sold may not fully protect our products. Due to the rapid technological change that characterizes the semiconductor and flat panel display process equipment industries,adjacent technology markets, we believe that the improvement of existing technology, reliance upon trade secrets and unpatented proprietary know-how and the development of new products may be as important as patent protection in establishing and maintaining competitive advantage. To protect trade secrets and know-how, it is our policy to require all technical and management personnel to enter into nondisclosure agreements.
We cannot guarantee that these effortsthe steps we have taken to protect our intellectual property will meaningfullybe adequate to prevent the misappropriation of our technology. Other companies could independently develop similar or superior technology without violating our intellectual property rights. In the future, it may be necessary to engage in litigation or like activities to enforce our intellectual property rights, to protect our trade secrets.secrets or to determine the validity and scope of proprietary rights of others, including our customers. This could require us to incur significant expenses and to divert the efforts and attention of our management and technical personnel from our business operations.
The expiration of our patents over time could lead to an increase of competition and a decline in our revenue.
One of our main competitive strengths is our technology and we are dependent on our patent rights and other intellectual property rights to maintain our competitive position. While our current patents will expire from time to time through 2032, certain significant patents will expire within two years, including a patent related to technology in one of our core automation products expiring in 2015 and patents which we license to third parties in exchange for agreed upon royalties expiring in 2016. In addition to the loss of revenue from royalties, the expiration of patents could result in increased competition and declines in product and service revenue.


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We may be subject to claims of infringement of third-party intellectual property rights, or demands that we license third-party technology, which could result in significant expense and prevent us from using our technology.
There has been substantial litigation regarding patent and other intellectual property rights in the semiconductor relatedsemiconductor-related industries. We have in the past been, and may in the future be, notified that we may be infringing


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intellectual property rights possessed by third parties. We cannot guarantee that infringement claims by third parties or other claims for indemnification by customers or end usersend-users of our products resulting from infringement claims will not be asserted in the future or that such assertions, ifwhether or not proven to be true, will not materially and adversely affect our business, financial condition and results of operations.
We cannot predict the extent to which we might be required to seek licenses or alter our products so that they no longer infringe the rights of others. We also cannot guarantee that licenses will be available or the terms of any licenses we may be required to obtain will be reasonable. Similarly, changing our products or processes to avoid infringing the rights of others may be costly or impractical and could detract from the value of our products. If a judgment of infringement were obtained against us, we could be required to pay substantial damages and a court could issue an order preventing us from selling one or more of our products. Further, the cost and diversion of management attention brought about by such litigation could be substantial, even if we were to prevail. Any of these events could result in significant expense to us and may materially harm our business and our prospects.
Our failure to protect our intellectual property could adversely affect our future operations.
Our ability to compete is significantly affected by our ability to protect our intellectual property. Existing trade secret, trademark and copyright laws offer only limited protection. Our success depends in part on our ability to obtain and enforce patent protection for our products both in the United States and in other countries. We own numerous U.S. and foreign patents, and we intend to file additional applications, as appropriate, for patents covering our products and technology. Our current patents will expire from time to time through April 2030 and new patents may not be issued for any pending or future patent applications, and the claims allowed under any issued patents may not be sufficiently broad to protect our technology. Any issued patents owned by or licensed to us may be challenged, invalidated or circumvented, and the rights under these patents may not provide us with competitive advantages. In addition, the laws of some countries in which our products are or may be developed, manufactured or sold may not fully protect our products. We cannot guarantee that the steps we have taken to protect our intellectual property will be adequate to prevent the misappropriation of our technology. Other companies could independently develop similar or superior technology without violating our intellectual property rights. In the future, it may be necessary to engage in litigation or like activities to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of proprietary rights of others, including our customers. This could require us to incur significant expenses and to divert the efforts and attention of our management and technical personnel from our business operations.
If our manufacturing sites were to experience a significant disruption in operations, our business could be materially harmed.
harmed, while the failure to estimate customer demand accurately could result in excess or obsolete inventory.
We have a limited number of manufacturing facilities for our products.products and we have moved portions of our manufacturing to third parties, including some in lesser developed countries. If the operations at any one of these facilities were disrupted as a result of a natural disaster, fire, power or other utility outage, work stoppage or other similar event, our business could be seriously harmed because we may be unable to manufacture and ship products and parts to our customers in a timely fashion. The impact of any disruption at one of our facilities may be exacerbated if the disruption occurs at a time when we need to rapidly increase our manufacturing capabilities to meet increased demand or expedited shipment schedules.
Moreover, if actual demand for our products is different than expected, we may purchase more/fewer component parts than necessary or incur costs for canceling, postponing or expediting delivery of such parts. If we purchase inventory in anticipation of customer demand that does not materialize, or if our customers reduce or delay orders, we may incur excess inventory charges. Any or all of these factors could materially and adversely affect our business, financial condition and results of operations.
Our business could be materially harmed if one or more key suppliers fail to continuously deliver key components of acceptable cost and quality.
We currently obtain many of our key components on an as-needed, purchase order basis from numerous suppliers. In some cases we have only a single source of supply for necessary components and materials used in the manufacturing of our products. Further, we are increasing our sourcing of products in Asia, and particularly in China, and we do not have a previous course of dealing with many of these suppliers. We do not generally have long-term supply contracts with any of these suppliers, and many of them underwent cost-containment measures in light of the last significant industry downturn.downturn in 2008 and 2009. As the industry has recovered, these suppliers have faced challenges in delivering components on a timely basis. ThisThe volatility in demand of these components has led some of our vendors to exit the semiconductor market, and other vendors may also decide to exit this market. Our inability to obtain components or materials in required quantities or of acceptable cost and quality and with the necessary continuity of supply could result in delays or reductions in product shipments to our customers. In addition, if a supplier orsub-supplier suffers a production stoppage or delay for any reason, including natural disasters likesuch as the onestsunamis that recently affected Japan


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and Thailand, this could result in a delay or reduction in our product shipments to our customers. Any of these contingencies could cause us to lose customers, result in delayed or lost revenue and otherwise materially harm our business.
Our outsource providers may fail to perform as we expect.
Our stock price is volatile.
The market priceOutsource providers have played and will continue to play a key role in our manufacturing operations and in many of our common stock has fluctuated widely. From the beginningtransactional and administrative functions, such as information technology and facilities management. Although we attempt to select reputable providers and secure their performance on terms documented in written contracts, it is possible that one or more of fiscal year 2010 through the endthese providers could fail to perform as we expect and such failure could have an adverse impact on our business.


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Our business relies on certain critical information systems and a lowfailure or breach of $5.46 per share. Consequently,such a system could harm our business and results of operations and, in the current market priceevent of unauthorized access to a customer’s data or our data, incur significant legal and financial exposure and liabilities.
We maintain and rely upon certain critical information systems for the effective operation of our common stockbusiness. These information systems include telecommunications, the internet, our corporate intranet, various computer hardware and software applications, network communications and e-mail. These information systems may be owned and maintained by us, our outsource providers or third parties such as vendors and contractors. These information systems are subject to attacks, failures, and access denials from a number of potential sources including viruses, destructive or inadequate code, power failures, and physical damage to computers, hard drives, communication lines and networking equipment. To the extent that these information systems are under our control, we have implemented security procedures, such as virus protection software and emergency recovery processes, to mitigate the outlined risks. However, security procedures for information systems cannot be guaranteed to be failsafe and our inability to use or access these information systems at critical points in time, or unauthorized releases of confidential information, could unfavorably impact the timely and efficient operation of our business.
Confidential information stored on these information systems could also be compromised. If a third party gains unauthorized access to our data, including any information regarding our customers, such security breach could expose us to a risk of loss of this information, loss of business, litigation and possible liability. These security measures may be breached as a result of third-party action, including intentional misconduct by computer hackers, employee error, malfeasance or otherwise. Additionally, third parties may attempt to fraudulently induce employees or customers into disclosing sensitive information such as user names, passwords or other information in order to gain access to our customers' data or our data, including our intellectual property and other confidential business information, or our information technology systems. Because the techniques used to obtain unauthorized access, or to sabotage systems, change frequently and generally are not be indicative of future market prices, andrecognized until launched against a target, we may be unable to sustainanticipate these techniques or increaseto implement adequate preventative measures. Any security breach could result in a loss of confidence by our customers, damage our reputation, disrupt our business, lead to legal liability and negatively impact our future sales.
Our intangible assets may become impaired.
As of September 30, 3014, we had $109.5 million of goodwill and $59.6 million in net intangible assets as a result of our acquisitions. We periodically review our goodwill and the estimated useful lives of our identifiable intangible assets, taking into consideration any events or circumstances that might result in either a diminished fair value, of an investment in our common stock. Factors affecting our stock price may include:
• variations in operating results from quarter to quarter;
• or for intangible assets, a revised useful life. These events and circumstances include significant changes in earnings estimates by analysts or our failure to meet analysts’ expectations;
• changes in the market price per share of our public company customers;
• market conditions in the semiconductor and other industries into which we sell products;
• economic conditions in Europe and general economic conditions;
• political changes, hostilities or natural disasters such as hurricanes and floods;
• low trading volume of our common stock; and
• the number of firms making a market in our common stock.
In addition, the stock market has in the past experienced significant pricebusiness climate, legal factors, operating performance indicators, advances in technology and volume fluctuations. These fluctuationscompetition. Any impairment or revised useful life could have particularly affecteda material and adverse effect on our financial position and results of operations, and could harm the market prices of the securities of high technology companies like ours. These market fluctuations could adversely affect the markettrading price of our common stock.
Changes in tax rates or tax regulation could affect results of operations.
As a global company, we are subject to taxation in the United States and various other countries. Significant judgment is required to determine and estimate worldwide tax liabilities. Our future annual and quarterly effective tax rates could be affected by numerous factors, including changes in the: applicable tax laws; composition of pre-tax income in countries with differing tax rates; and/or valuation of our deferred tax assets and liabilities. In addition, we are subject to regular examination by the Internal Revenue Service and state, local and foreign tax authorities. We regularly assess the likelihood of favorable or unfavorable outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. Although we believe our tax estimates are reasonable, there can be no assurance that any final determination will not be materially different from the treatment reflected in our historical income tax provisions and accruals, which could materially and adversely affect our financial condition and results of operations.
We are subject to numerous governmental regulations.
We are subject to federal, state, local and foreign regulations, including environmental regulations and regulations relating to the design and operation of our products and control systems. We might incur significant costs as we seek to ensure that our products meet safety and emissions standards, many of which vary across the states and countries in which our products are used. In the past, we have invested significant resources to redesign our products to comply with these directives. Compliance with future regulations, directives, and standards could require us to modify or redesign some products, make capital expenditures, or incur substantial costs. If we do not comply with current or future regulations, directives, and standards:
we could be subject to fines;
our production or shipments could be suspended; and
we could be prohibited from offering particular products in specified markets.
Any of these events could materially and adversely affect our business, financial condition and results of operations.


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New regulations and customer demands related to conflict minerals may adversely affect us.
The Dodd-Frank Wall Street Reform and Consumer Protection Act imposes new disclosure requirements regarding the use in our products of “conflict minerals” mined from the Democratic Republic of Congo and adjoining countries, whether or not the components of our products are manufactured by us or third parties. This new requirement could affect the pricing, sourcing and availability of minerals used in the manufacture of components we use in our products. In addition, there are additional costs associated with complying with the disclosure requirements and customer requests, such as costs related to our due diligence to determine the source of any conflict minerals used in our products. We may face difficulties in satisfying customers who may require that all of the components of our products are certified as conflict mineral free and/or free of numerous other hazardous materials.
Unfavorable currency exchange rate fluctuations may lead to lower operating margins, or may cause us to raise prices, which could result in reduced sales.
Currency exchange rate fluctuations could have an adverse effect on our sales and results of operations and we could experience losses with respect to forward exchange contracts into which we may enter. Unfavorable currency fluctuations could require us to increase prices to foreign customers, which could result in lower net sales by us to such customers. Alternatively, if we do not adjust the prices for our products in response to unfavorable currency fluctuations, our results of operations could be materially and adversely affected. In addition, most sales made by our foreign subsidiaries are denominated in the currency of the country in which these products are sold and the currency they receive in payment for such sales could be less valuable as compared to the U.S. dollar at the time of receipt as a result of exchange rate fluctuations. From time to time, we enter into forward exchange contracts to reduce currency exposure. However, we cannot be certain that our efforts will be adequate to protect us against significant currency fluctuations or that such efforts will not expose us to additional exchange rate risks, which could materially and adversely affect our results of operations.
Risks Relating to Our Customers
Because we rely on a limited number of customers for a large portion of our revenues,revenue, the loss of one or more of these customers could materially harm our business.
We receive a significant portion of our revenuesrevenue in each fiscal period from a relatively limited number of customers, and that trend is likely to continue. Sales to our ten largest customers accounted for approximately 55%37%, 63%40% and 44%45% of our total revenuesrevenue in the fiscal years ended September 30, 2011, 20102014, 2013 and 2009,2012, respectively. While we expect this percentage to decrease due to the sale of our contract manufacturing business and our recent life sciences acquisitions, theThe loss of one or more of these major customers, a significant decrease in orders from one of these customers, or the inability of one or more customers to make payments to us when they are due could materially affect our revenue, business and reputation. In addition, there has been and may continue to be significant consolidation among some of our largest OEM customers, which could lead to increased pressure to reduce the price of our products and/or decreased market share of our products with the combined companies.
Because of the lengthy sales cycles of many of our products, we may incur significant expenses before we generate any revenuesrevenue related to those products.
Our customers may need several months to test and evaluate our products. This increases the possibility that a customer may decide to cancel an order or change its plans, which could reduce or eliminate our sales to that customer. The impact of this risk can be magnified during the periods in which we introduce a number of new products, as has been the case in recent years. As a result of this lengthy sales cycle, we may incur significant research and development expenses, and selling, general and administrative expenses before we generate the related revenuesrevenue for these products, and we may never generate the anticipated revenuesrevenue if our customer cancels an order or changes its plans.
In addition, many of our products will not be sold directly to the end-user but will be components of other products.products manufactured by OEMs. As a result, we rely on OEMs to select our products from among alternative offerings to be incorporated into their equipment at the design stage; so-called design-ins. The OEMs’OEMs' decisions often precede the generation of volume sales, if any, by a year or more. Moreover, if we are unable to achieve these design-ins from an OEM, we


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would have difficulty selling our products to that OEM because changing suppliers after design-ins involves significant cost, time, effort and risk on the part of that OEM.
Customers generally do not make long term commitments to purchase our products and our customers may cease purchasing our products at any time.
Sales of our products are often made pursuant to individual purchase orders and not under long-term commitments and contracts. Our customers frequently do not provide any assurance of minimum or future sales and are not prohibited from purchasing products from our competitors at any time. Accordingly, we are exposed to competitive pricing pressures on each order. Our customers also engage in the practice of purchasing products from more than one manufacturer to avoid dependence on sole-source suppliers for certain of their needs. The existence of these practices makes it more difficult for us to increase price, gain new customers and win repeat business from existing customers.


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We may face claims for liability related to damages of customer materials attributed to the failure of our products, exposing us to significant financial or reputational harm.
Our automation products for the semiconductor manufacturing market are used in the handling and movement of silicon wafers at various points in the production process, and our automated cold storage systems for the life sciences market are used in the handling, movement and storage of biological and chemical samples. In either case, damage to our customers' materials may be attributed to a failure of our products which could lead to claims for damages made by our customers and could also harm our relationship with our customers and damage our reputation in each of these industries, resulting in material harm to our business.
Risks Relating to Owning Our Securities
Our stock price is volatile.
The market price of our common stock has fluctuated widely. From the beginning of fiscal year 2013 through the end of fiscal year 2014, our stock price fluctuated between a high of $11.64 per share and a low of $7.00 per share. Consequently, the current market price of our common stock may not be indicative of future market prices, and we may be unable to sustain or increase the value of an investment in our common stock. Factors affecting our stock price may include:
variations in operating results from quarter to quarter;
changes in earnings estimates by analysts or our failure to meet analysts' expectations;
changes in the market price per share of our public company customers;
market conditions in the semiconductor and other industries into which we sell products and services;
global economic conditions;
political changes, hostilities or natural disasters such as hurricanes and floods;
low trading volume of our common stock; and
the number of firms making a market in our common stock.
In addition, the stock market has in the past experienced significant price and volume fluctuations. These fluctuations have particularly affected the market prices of the securities of high technology companies like ours. These market fluctuations could adversely affect the market price of our common stock.
We may not pay dividends on our common stock.
Holders of our common stock are only entitled to receive dividends when and if they are declared by our Board of Directors. Although we have declared cash dividends on our common stock for the past few years, we are not required to do so and may reduce or eliminate our cash dividends in the future. This could adversely affect the market price of our common stock.
Provisions in our charter documents and, Delaware law may delay or prevent an acquisition of us, which could decrease the value of your shares.
Our restated certificate of incorporation and by-laws and Delaware law contain provisions that could make it harder for a third party to acquire us without the consent of our Board of Directors. These provisions include limitations on actions by our stockholders by written consent, the inability of stockholders to call special meetings and the potential for super majority votes of our stockholders in certain circumstances. In addition, our Board of Directors has the right to issue preferred stock without stockholder approval, which could be used to dilute the stock ownership of a potential hostile acquirer.
Our restated certificate of incorporation makes us subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits publicly held Delaware corporations to which it applies from engaging in a “business combination” with an “interested stockholder” for a period of three years after the date of the transaction in which the person became an interested stockholder, unless the business combination is approved in a prescribed manner. This provision could discourage others from bidding for our shares of common stock and could, as a result, reduce the likelihood of an increase in the price of our common stock that would otherwise occur if a bidder sought to buy our common stock.
Delaware law also imposes restrictions on mergers and other business combinations between us and any holder of 15% or more of our outstanding common stock. Although we believe these provisions provide for an opportunity to receive a higher bid by requiring potential acquirers to negotiate with our Board of Directors, these provisions apply even if the offer may be considered beneficial by stockholders. If a change of control or change in management is delayed or prevented, the market price of our common stock could decline.


15


Our certificate of incorporation authorizes the issuance of shares of blank check preferred stock.
Our certificate of incorporation provides that our Board of Directors is authorized to issue from time to time, without further stockholder approval, up to 1,000,000 shares of preferred stock in one or more series and to fix and designate the rights, preferences, privileges and restrictions of the preferred stock, including dividend rights, conversion rights, voting rights, redemption rights and terms of redemption and liquidation preferences. Such shares of preferred stock could have preferences over our common stock with respect to dividends and liquidation rights. Our issuance of preferred stock may have the effect of delaying or preventing a change in control. Our issuance of preferred stock could decrease the amount of earnings and assets available for distribution to the holders of common stock or could adversely affect the rights and powers, including voting rights, of the holders of common stock. The issuance of preferred stock could have the effect of decreasing the market price of our common stock.
Item 1B.Unresolved Staff Comments
None.
Item 2.Properties
Our corporate headquarters and primary manufacturing/research and development facilities are currently located in three buildings in Chelmsford, Massachusetts, whichwhere we purchased in January 2001. We leaseown two buildings and are committed to purchase the third under a fourth building in Chelmsford adjacent to the three that we own.long term purchase option. In summary, we maintain the following active principal facilities:
Location Functions 
Square Footage
Ownership Status/Lease
Location(Approx.)
 
FunctionsOwnership Status/Lease
(Approx.)
Expiration
Chelmsford, Massachusetts Corporate headquarters, training, manufacturing, R&D and R&Dsales & support 201,000214,000
 Owned
Chelmsford, Massachusetts Manufacturing 97,00097,000
 October 2014
Petaluma, CaliforniaManufacturing and R&D72,300September 2013Committed to purchase
Poway, California Manufacturing, R&D and R&Dsales & support 67,600
 July 2015
Longmont, ColoradoFremont, CaliforniaR&D and sales & support44,900
August 2018
Manchester, UK Manufacturing, R&D and R&Dsales & support 42,00060,900
 February 2015December 2019
Yongin-City, South Korea Manufacturing, R&D and sales & support 34,10051,700
 November 2021
Manchester, UKManufacturing, R&D and sales & support42,000DecemberAugust 2019
Jena, Germany Manufacturing, R&D and sales & support 30,10030,140
 FebruaryJanuary 2017
ChuBeiChu Bei City, Taiwan Sales & support 28,600
 June 20122016
Our Brooks Product Solutions segment utilizes the facilities in Massachusetts, Petaluma,Fremont, California, Colorado and South Korea as well as a smaller manufacturing and R&D facility in Germany. Our Brooks Global Services segment utilizes the facilities in Massachusetts, South Korea, Germany and Taiwan. Our Brooks Life Science Systems segment utilizes the facilities in Poway, California and the UK.
UK as well as an additional facility in Spokane, Washington.
We maintain additional sales and support and training offices in California and Texas and overseas in Europe (France, Germany and Switzerland), as well as in Asia (Japan, China, Singapore and Taiwan) and the Middle East (Israel).
We utilize a third party to manage aour manufacturing operation in Mexico. As part of our arrangement with this third party, we guarantee a lease for a 56,100 square foot manufacturing facility. The remaining payments under this lease, which expires in 2013,2018, are approximately $0.5$1.4 million.
Item 3.
Legal Proceedings
On August 22, 2006, an action captioned asMark Levy v. Robert J. Therrien and Brooks Automation, Inc., was filed in the United States District Court for the District of Delaware, seeking recovery, on behalf of Brooks, from Mr. Therrien (the Company’s former Chairman and CEO) under Section 16(b) of the Exchange Act for alleged


15


“short-swing” profits earned by Mr. Therrien due to the loan and stock option exercise in November 1999, and a sale by Mr. Therrien of Brooks stock in March 2000. The complaint sought disgorgement of all profits earned by Mr. Therrien on the transactions, attorneys’ fees and other expenses. On February 20, 2007, a second Section 16(b) action, concerning the same loan and stock option exercise in November 1999 discussed above and seeking the same remedy, was filed in the United States District Court of the District of Delaware, captionedAron Rosenberg v. Robert J. Therrien and Brooks Automation, Inc. On April 4, 2007, the court issued an order consolidating theLevyandRosenbergactions (the “Section 16(b) Action”).
On February 24, 2011, the parties executed a settlement agreement which, upon court approval, would resolve the Section 16(b) Action. Pursuant to this agreement, Mr. Therrien sold 150,000 shares of Brooks stock, the proceeds of which form the settlement fund and totaled approximately $1.9 million. The plaintiffs agreed to seek a fee not exceeding 30 percent of this settlement fund, the remainder of which would be delivered to the Company following court approval. Notice of the proposed settlement, which described the proposed settlement in further detail, was mailed to shareholders of record as of March 31, 2011.
In connection with the agreement to settle the Section 16(b) Action, the Company reached an agreement with Mr. Therrien and the Company’s former Directors and Officers Liability Insurance Carriers (the “Global Settlement Agreement”) to resolve (1) Mr. Therrien’s civil litigation with the United States Securities and Exchange Commission (“SEC”), (2) any of the Company’s advancement or indemnification obligations to Mr. Therrien in connection with that matter, and (3) the Company’s claim against these insurance carriers for reimbursement of certain defense costs which the Company paid to Mr. Therrien pursuant to his indemnification agreement with the Company. Pursuant to the Global Settlement Agreement, Mr. Therrien agreed to enter into a settlement with the SEC. If approved by the SEC and the court in that matter, in addition to delivering to the Company the net proceeds of the sale of 150,000 shares of Brooks stock in connection with the Section 16(b) matter, Mr. Therrien would pay the SEC approximately $728,000 in disgorgement and $100,000 in fines. To resolve any indemnification claim by Mr. Therrien against the Company in connection with this matter, the Company has agreed to reimburse him $500,000 towards his disgorgement payment. Finally, upon resolution of both the Section 16(b) matter and the SEC matter, the Company’s insurers have agreed to pay Brooks a net sum of approximately $3.4 million. This payment would resolve any claim the Company may have against its former insurers for certain defense costs paid to Mr. Therrien.
On May 17, 2011, the court in the Section 16(b) Action held a hearing to determine the fairness of the proposed settlement in that action. Following the hearing, the court approved that settlement, finding that the settlement in the Section 16(b) Action and the Global Settlement Agreement were both in the best interest of the parties and the Company’s shareholders. On June 16, 2011, the settlement of the Section 16(b) Action became final and the Company received $1.3 million in settlement proceeds of which 50% will be paid to our insurance company and the remaining 50% has been recorded as income. Mr. Therrien has agreed to and submitted a proposed settlement to the SEC for approval by the Commission, which must also be approved by the court before it becomes final. If this settlement becomes final, then the contingencies within the Global Settlement Agreement will be satisfied, which will have the effect of resolving all pending litigation related to the Company’s past stock option granting practices, and the Company would expect to record income of approximately $4 million upon final resolution, inclusive of the $0.7 million previously recognized.
The Company isWe are subject to various legal proceedings, both asserted and unasserted, that arise in the ordinary course of business. The Company believesWe cannot predict the ultimate outcome of such legal proceedings or in certain instances provide reasonable ranges of potential losses. However, as of the date of this report, we believe that none of these claims will have a material adverse effect on itsour consolidated financial condition or results of operations. In the event of unexpected subsequent developments and given the inherent unpredictability of these legal proceedings, there can be no assurance that our assessment of any claim will reflect the ultimate outcome and an adverse outcome in certain matters could, from time-to-time, have a material adverse effect on our consolidated financial condition or results of operations in particular quarterly or annual periods.



16



Item 4.
Removed and ReservedMine Safety Disclosures
Not applicable.
PART II
Item 5.Market for Registrant’sRegistrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Our common stock is traded on the NASDAQ Stock Market LLC under the symbol “BRKS”.“BRKS.” The following table sets forth for the periods indicated, the high and low closeintraday sales prices per share of our common stock as reported by the NASDAQ Stock Market LLC:LLC and the cash dividends declared per common share for the periods indicated:
         
  High Low
 
Fiscal year ended September 30, 2011        
First quarter $9.48  $6.37 
Second quarter  13.94   8.72 
Third quarter  14.59   9.96 
Fourth quarter  11.66   7.74 
Fiscal year ended September 30, 2010        
First quarter $9.11  $6.13 
Second quarter  10.82   7.20 
Third quarter  10.23   6.63 
Fourth quarter  9.17   5.46 
 Market Price 
Dividends
Declared
 High Low 
Fiscal year ended September 30, 2014     
  First quarter$10.75
 $9.01
 $0.08
  Second quarter11.64
 9.43
 0.08
  Third quarter11.50
 8.75
 0.08
  Fourth quarter11.53
 9.86
 0.10
Fiscal year ended September 30, 2013     
  First quarter$8.24
 $7.00
 $0.08
  Second quarter10.50
 8.23
 0.08
  Third quarter10.97
 8.78
 0.08
  Fourth quarter10.56
 8.74
 0.08
Number of Holders
As of October 31, 2011,November 5, 2014, there were 980672 holders of record of our common stock.
Dividend Policy
Dividends are declared at the discretion of our Board of Directors and depend on actual cash from operations, our financial condition and capital requirements and any other factors our Board of Directors may consider relevant. Future dividend declarations, as well as the record and payment dates for such dividends, will be determined by our Board of Directors on a quarterly basis.
On August 3, 2011,November 5, 2014, our Board of Directors approved a cash dividend of $0.08$0.10 per share of the Company’s stock. A dividend of approximately $5.2 million was paidpayable on September 30, 2011December 26, 2014 to shareholderscommon stockholders of record at the close of business on September 9, 2011. An additional $0.1 million was recorded as dividends payable at September 30, 2011, to be paid as restricted shares vest. If restricted shares are forfeited prior to vesting, the unpaid dividends will be canceled.
On November 8, 2011, our Board of Directors approved a cash dividend of $0.08 per share of the Company’s stock. The total dividend of approximately $5.3 million will be paid on December 30, 2011 to shareholders5, 2014.


17


17


Comparative Stock Performance
The following graph compares the cumulative total shareholder return (assuming reinvestment of dividends) from investing $100 on September 30, 2006,2009, and plotted at the last trading day of each of the fiscal years ended September 30, 2007, 2008, 2009, 2010, 2011, 2012, 2013 and 2011,2014, in each of (i) the Company’sour Common Stock; (ii) the NASDAQ/AMEX/NYSE MarketMKT/NYSE Index of companies; and (iii) a peer group comprised of: Advanced Energy Industries, Inc., Cymer, Inc.Bruker Corp., Entegris, Inc., FEI Company, LAM Research Corporation, Mattson Technology Corporation,Formfactor Inc., MKS Instruments, Inc., Novellus Systems,Photronics, Inc., Phototronics,Teradyne Inc., Ultra Clean Technology, Inc., Varian Semiconductor Equipment Associates, Inc. and Veeco Instruments Inc. We believe this graph best represents our peer groups in the end markets that we serve.and Xcerra Corp. The stock price performance on the graph below is not necessarily indicative of future price performance.

Performance Graph

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among Brooks Automation, Inc., Thethe NASDAQ/AMEX/NYSE MKT/NYSE Index,
and a Peer Group

* $100 invested on September 30, 2009 in stock or index, including reinvestment of dividends.
*$100 invested on 9/30/06 in stock or index, including reinvestment of dividends.
Fiscal year ending September 30.
                         
  9/29/06  9/28/07  9/30/08  9/30/09  9/30/10  9/30/11 
 
Brooks Automation, Inc.   100.00   109.12   64.06   59.23   51.42   63.01 
NASDAQ/AMEX/NYSE  100.00   122.06   95.47   92.26   100.97   96.91 
Peer Group  100.00   115.49   71.97   81.63   88.50   100.16 
 9/30/09 9/30/10 9/30/11 9/30/12 9/30/13 9/30/14
Brooks Automation, Inc.100.00
 86.80 106.38 108.40 130.06 151.69
NASDAQ/NYSE MKT/NYSE100.00
 109.28 105.09 132.49 158.51 181.57
Peer Group100.00
 102.67 101.89 125.13 167.58 173.52
The information included under the heading “Performance Graph”“Comparative Stock Performance” in Item 5 of this Annual Report onForm 10-K"this report" shall not be deemed to be “soliciting material” or subject to Regulation 14A, shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act.


18


IssuanceUnregistered Sales of Unregistered Common Stock
Securities
Not applicable.
Issuer’sIssuer's Purchases of Equity Securities
As part of our equity compensation program, we offer recipients of restricted stock awards the opportunity to elect to sell their shares at the time of vesting to satisfy tax obligations in connection with such vesting. The following table provides


18


information concerning shares of our Common Stock, $0.01 par value, purchased in connection with the forfeiture of shares to satisfy the employees’employees' obligations with respect to withholding taxes in connection with the vesting of certain shares of restricted stock during the three months ended September 30, 2011.2014. Upon purchase, these shares are immediately retired.
                 
           Maximum
 
           Number (or
 
           Approximate
 
        Total Number of
  Dollar Value) of
 
  Total
     Shares Purchased as
  Shares that May Yet
 
  Number
  Average Price
  Part of Publicly
  be Purchased Under
 
  of Shares
  Paid
  Announced Plans
  the Plans or
 
Period
 Purchased  per Share  or Programs  Programs 
 
July 1 — 31, 2011    $     $ 
August 1 — 31, 2011  1,587   9.20   1,587    
September 1 — 30, 2011  2,116   8.37   2,116    
                 
Total  3,703  $8.73   3,703  $ 
                 
Period 
Total
Number
of Shares
Purchased
 
Average Price
Paid
per Share
 
Total Number of
Shares  Purchased as
Part of Publicly
Announced Plans
or Programs
 
Maximum
Number (or
Approximate
Dollar Value) of
Shares that  May Yet
be Purchased Under
the Plans or
Programs
July 1 - 31, 2014 
 $
 
 $
August 1 - 31, 2014 8,608
 10.56
 8,608
 
September 1 - 30, 2014 
 
 
 
Total 8,608
 $10.56
 8,608
 $
Item 6.
Selected Financial Data
The selected consolidated financial data set forth below should be read in conjunction with our consolidated financial statements and notes thereto and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” appearing elsewhere in this report.
                     
  Year Ended September 30, 
  2011(6)(7)  2010(5)  2009(4)  2008(3)  2007(1)(2) 
     (In thousands, except per share data) 
 
Revenues $688,105  $592,972  $218,706  $526,366  $743,258 
Gross profit (loss) $223,021  $166,295  $(5,996) $126,828  $219,595 
Income (loss) from continuing operations before income taxes and equity in earnings (losses) of joint ventures $127,576  $56,064  $(226,917) $(236,152) $55,636 
Net income (loss) from continuing operations $128,404  $59,025  $(227,773) $(236,678) $54,369 
Net income (loss) attributable to Brooks Automation, Inc.  $128,352  $58,982  $(227,858) $(235,946) $151,472 
Basic net income (loss) from continuing operations per share attributable to Brooks Automation, Inc. common stockholders $1.99  $0.92  $(3.62) $(3.67) $0.74 
Diluted net income (loss) from continuing operations per share attributable to Brooks Automation, Inc. common stockholders $1.97  $0.92  $(3.62) $(3.67) $0.73 
Shares used in computing basic earnings (loss) per share  64,549   63,777   62,911   64,542   73,492 
Shares used in computing diluted earnings (loss) per share  65,003   64,174   62,911   64,542   74,074 
Cash dividends per share $0.08  $  $  $  $ 
 Year Ended September 30,
 
2014(1)(2)(3) 
 
2013(1)(4)(5) 
 
2012(1)(6)(7)(8) 
 2011(1)(9)(10) 2010(1)(11)
 (In thousands, except per share data)
Revenue$482,848
 $422,440
 $488,983
 $653,299
 $562,744
Gross profit$167,337
 $132,307
 $159,453
 $207,012
 $152,605
Operating income (loss)$(2,699) $(16,798) $1,642
 $70,301
 $39,295
Income (loss) from continuing operations$1,520
 $(7,114) $131,835
 $121,141
 $52,172
Income from discontinued operations, net of tax$30,002
 $4,964
 $5,000
 $9,296
 $7,712
Net income (loss) attributable to Brooks Automation, Inc.$31,361
 $(2,215) $136,789
 $130,385
 $59,841
Basic net income (loss) per share attributable to Brooks Automation, Inc. common stockholders:         
Income (loss) from continuing operations$0.02
 $(0.11) $2.02
 $1.88
 $0.82
Income from discontinued operations, net of tax0.45
 0.08
 0.08
 0.14
 0.12
Basic net income (loss) per share attributable to Brooks Automation, Inc.$0.47
 $(0.03) $2.10
 $2.02
 $0.94
Diluted net income (loss) per share attributable to Brooks Automation, Inc. common stockholders:         
Income (loss) from continuing operations$0.02
 $(0.11) $2.01
 $1.86
 $0.81
Income from discontinued operations, net of tax0.44
 0.08
 0.08
 0.14
 0.12
Diluted net income (loss) per share attributable to Brooks Automation, Inc.$0.46
 $(0.03) $2.08
 $2.01
 $0.93
Dividend declared per share$0.34
 $0.32
 $0.32
 $0.08
 $


19


                     
  As of September 30, 
  2011  2010  2009  2008  2007 
  (In thousands) 
 
Total assets $636,620  $518,224  $413,322  $663,638  $1,014,838 
Working capital $224,785  $219,176  $150,700  $235,795  $346,883 
Total Brooks Automation, Inc. stockholders’ equity $518,009  $388,815  $319,129  $541,995  $859,779 
 As of September 30,
 2014 2013 2012 2011 2010
 (In thousands)
Cash and cash equivalents and marketable securities$245,456
 $173,362
 $200,231
 $205,818
 $142,427
Working capital(12)
$98,228
 $105,511
 $121,709
 $95,579
 $107,064
Total assets$778,038
 $736,763
 $741,960
 $636,958
 $517,040
Total capital lease obligation$8,298
 $
 $
 $
 $
Total equity$642,889
 $632,656
 $649,301
 $518,936
 $388,168
                 
  Year Ended September 30, 2011 
  First
  Second
  Third
  Fourth
 
  Quarter  Quarter  Quarter(7)  Quarter 
  (In thousands, except per share data) 
 
Revenues $178,367  $192,651  $186,136  $130,951 
Gross profit $57,319  $61,674  $56,970  $47,058 
Net income $23,486  $26,603  $66,189  $12,126 
Net income attributable to Brooks Automation, Inc.  $23,486  $26,585  $66,183  $12,098 
Basic net income per share attributable to Brooks Automation, Inc. common stockholders $0.37  $0.41  $1.02  $0.19 
Diluted net income per share attributable to Brooks Automation, Inc. common stockholders $0.36  $0.41  $1.02  $0.19 


19




                     
  Year Ended September 30, 2010    
  First
  Second
  Third
  Fourth
    
  Quarter  Quarter(5)  Quarter  Quarter    
  (In thousands, except per share data) 
 
Revenues $106,197  $148,353  $156,790  $181,632     
Gross profit $26,246  $38,950  $45,905  $55,194     
Net income (loss) $(2,877) $20,948  $16,646  $24,308     
Net income (loss) attributable to Brooks Automation, Inc.  $(2,795) $21,029  $16,572  $24,176     
Basic and diluted net income (loss) per share attributable to Brooks Automation, Inc. common stockholders $(0.04) $0.33  $0.26  $0.38     
 Year Ended September 30, 2014
 
First
Quarter(1)
 
Second
Quarter
 
Third
Quarter(2)(3)
 
Fourth
Quarter(3)
 (In thousands, except per share data)
Revenue$117,072
 $125,900
 $117,359
 $122,517
Gross profit$40,891
 $44,298
 $40,746
 $41,402
Operating income (loss)$1,458
 $2,396
 $(5,910) $(643)
Income (loss) from continuing operations$1,919
 $2,103
 $(2,764) $262
Income from discontinued operations, net of tax$1,577
 $1,162
 $27,263
 $
Net income attributable to Brooks Automation, Inc.$3,448
 $3,189
 $24,476
 $248
Basic net income per share attributable to Brooks Automation, Inc. common stockholders:       
Income (loss) from continuing operations$0.03
 $0.03
 $(0.04) $0.00
Income from discontinued operations, net of tax0.02
 0.02
 0.41
 
Basic net income per share attributable to Brooks Automation, Inc.$0.05
 $0.05
 $0.37
 $0.00
Diluted net income per share attributable to Brooks Automation, Inc. common stockholders:       
Income (loss) from continuing operations$0.03
 $0.03
 $(0.04) $0.00
Income from discontinued operations, net of tax0.02
 0.02
 0.40
 
Diluted net income per share attributable to Brooks Automation, Inc.$0.05
 $0.05
 $0.36
 $0.00
 
 Year Ended September 30, 2013
 
First
Quarter(5)
 
Second
Quarter(5)
 
Third
Quarter(5)
 
Fourth
Quarter(4)(5)
 (In thousands, except per share data)
Revenue$91,506
 $109,482
 $110,771
 $110,681
Gross profit$26,281
 $33,083
 $36,075
 $36,868
Operating income (loss)$(14,468) $(3,170) $2,133
 $(1,293)
Income (loss) from continuing operations$(10,407) $(3,165) $4,549
 $1,909
Income (loss) from discontinued operations, net of tax$1,188
 $2,654
 $(2,981) $4,103
Net income (loss) attributable to Brooks Automation, Inc.$(9,236) $(538) $1,544
 $6,015
Basic net income (loss) per share attributable to Brooks Automation, Inc. common stockholders:       
Income (loss) from continuing operations$(0.16) $(0.05) $0.07
 $0.03
Income (loss) from discontinued operations, net of tax0.02
 0.04
 (0.05) 0.06
Basic net income (loss) per share attributable to Brooks Automation, Inc.$(0.14) $(0.01) $0.02
 $0.09
Diluted net income (loss) per share attributable to Brooks Automation, Inc. common stockholders:       
Income (loss) from continuing operations$(0.16) $(0.05) $0.07
 $0.03
Income (loss) from discontinued operations, net of tax0.02
 0.04
 (0.04) 0.06
Diluted net income (loss) per share attributable to Brooks Automation, Inc.$(0.14) $(0.01) $0.02
 $0.09
(1)Amounts from continuing operations exclude resultsIn March 2014, we entered into an agreement to sell the Granville-Phillips Gas Analysis & Vacuum Measurement, or Granville-Phillips, business unit for $87.0 million in cash. In the second quarter of operations offiscal year 2014, we determined that the Specialty Equipment and Life Sciences division andGranville-Phillips business met the Software division which were reclassifiedcriteria to be reported as a discontinued operation in October 2006.operation. As a result, the selected financial data presented for periods prior to the second quarter of fiscal year 2014 has been revised to present the


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operating results of the Granville-Phillips business as a discontinued operation. Refer to Note 3, “Discontinued Operations” in the Notes to the Consolidated Financial Statements for additional information regarding this transaction.
(2)Amounts include resultsWe completed the sale of operationsthe Granville-Phillips business in May 2014. We realized a pre-tax gain of Keystone Electronics (Wuxi) Co., Ltd. (acquired effective July 1, 2007) for the periods subsequent to its acquisition. Net income (loss) attributable to Brooks Automation, Inc. includes a $97.2$56.8 million and an after-tax gain from discontinued operationsof $26.9 million in connection with the Software division.sale. The tax charge of $29.9 million on the gain is substantially non-cash as it is offset by our net operating losses in the United States.
(3)We acquired Dynamic Micro Systems Semiconductor Equipment GmbH, or DMS, in April 2014. The results of DMS have been included in our results of operations from the date of acquisition. Refer to Note 4, “Acquisitions” in the Notes to the Consolidated Financial Statements for additional information regarding this transaction.
(4)We acquired certain assets and assumed certain liabilities of Matrical, Inc.’s life science businesses, collectively referred to as Matrical, in August 2013. The results of Matrical have been included in our results of operations from the date of acquisition. Refer to Note 4, “Acquisitions” in the Notes to the Consolidated Financial Statements for additional information regarding this transaction.
(5)We acquired Crossing Automation Inc., or Crossing, in October 2012. The results of Crossing have been included in our results of operations from the date of acquisition. Refer to Note 4, “Acquisitions” in the Notes to the Consolidated Financial Statements for additional information regarding this transaction.
(6)We acquired the Celigo® product line in December 2011. The results from the Celigo® product line were included in our results of operations from the date of acquisition through March 2014, when we completed the sale of this product line. Refer to Note 4, “Acquisitions” in the Notes to the Consolidated Financial Statements for additional information regarding this transaction.
(7)Income (loss) from continuing operations before income taxes and equity in earnings of joint ventures, income (loss) from continuing operations and net income (loss) attributable to Brooks Automation, Inc. includes a $197.9$121.8 million deferred income tax benefit in connection with a reversal of a majority of the valuation allowance against our net deferred tax assets.
(8)Income (loss) from continuing operations and net income (loss) attributable to Brooks Automation, Inc. includes an $8.9 million charge forin connection with the impairmentsettlement of goodwill and a $5.7 million charge for the impairment of long-lived assets.our U.S. defined benefit pension plan.
(9)We acquired RTS Life Science Limited, or RTS, in April 2011 and Nexus Biosystems, Inc., or Nexus, in July 2011. The results of RTS and Nexus have been included in our results of operations from the date of each acquisition.
(4)(10)Gross profit (loss) includes a $20.9 million impairmentOn June 28, 2011, we disposed of long-lived assets.our contract manufacturing business which did not qualify as discontinued operations because of the significance of the ongoing commercial arrangements between us and the buyer. As such, the operations prior to the divestiture are included in our results of operations. Income (loss) before income taxes and equity in earnings of joint ventures, income (loss)from continuing operations and net income (loss) attributable to Brooks Automation, Inc. includes a $71.8$45.0 million charge forpre-tax gain on the impairmentsale of goodwill and a $35.5 million charge for the impairment of long-lived assets.our contract manufacturing business.
(5)(11)Income (loss) before income taxes and equity in earnings of joint ventures, income (loss)from continuing operations and net income (loss) attributable to Brooks Automation, Inc. includes a $7.8 million gain on the sale of certain patents and patents pending related to a legacy product line.
(6)Amounts include results of operations of RTS Life Science Limited (acquired effective April 1, 2011) and Nexus Biosystems, Inc. (acquired effective July 25, 2011) for the periods subsequent to their acquisition.

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(7)On June 28, 2011, we disposed of our contract manufacturing business which did not qualify as discontinued operations. As such, the operations prior to the divestiture were included in our results of operations. Income (loss) before income taxes and equity in earnings of joint ventures, income (loss) and net income (loss) attributable to Brooks Automation, Inc. includes a $45.0 million pre-tax gain on the sale of our contract manufacturing business.
(12)The calculation of working capital excludes "Cash and cash equivalents" and "Marketable securities," as well as assets and liabilities identifiable within the Granville-Phillips business reported as “Assets held for sale” and “Liabilities held for sale,” respectively, in the Consolidated Balance Sheets.
Item 7.Management’s Discussion and Analysis of Financial Condition and Results of Operations
Certain statements in thisForm 10-K, and in particular in “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” constitute “forward-looking statements”forward-looking statements, which involve knownare subject to the safe harbor provisions created by the Private Securities Litigation Reform Act of 1995. Certain, but not all, of the forward-looking statements in this report are specifically identified as forward-looking, by use of phrases and words such as “we believe,” “we estimate,” “we expect,” “may,” “should,” “could,” “intend,” “likely,” and other future-oriented terms. The identification of certain statements as “forward-looking” is not intended to mean that other statements not specifically identified are not forward-looking. Forward-looking statements include, but are not limited to, statements that relate to our future revenue, margin, costs, earnings, product development, demand, acceptance and market share, competitiveness, market opportunities and performance, levels of research and development, or R&D, the success of our marketing, sales and service efforts, outsourced activities and operating expenses, anticipated manufacturing, customer and technical requirements, the ongoing viability of the solutions that we offer and our customers’ success, tax expenses, our management’s plans and objectives for our current and future operations and business focus, the levels of customer spending, general economic conditions, the sufficiency of financial resources to support future operations, and capital expenditures. Such statements are based on current expectations and are subject to risks, uncertainties, and changes in condition, significance, value and effect, including without limitation those discussed above under the heading “Risk Factors” within Item 1A and elsewhere in this report and other factors which maydocuments we file from time to time with the Securities and Exchange Commission (the “SEC”), such as our quarterly reports on Form 10-Q and our current reports on Form 8-K. Such risks, uncertainties and changes in condition, significance, value and effect could cause theour actual results, our performance or our achievements to be materially different from any future results, performance or achievements to differ materially from those expressed or implied by suchin this report and in ways we cannot readily foresee. Readers are cautioned not to place undue reliance on these forward-looking statements, suchwhich speak only as estimates of future revenue, gross margin, and expense levels as well as the performance of the semiconductor industry as a whole. Such factors includedate hereof and are based on information currently and reasonably known to us. We do not undertake any obligation to release the “Risk Factors” set forth in Part I, Item 1A.results of any


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revisions to these forward-looking statements, which may be made to reflect events or circumstances that occur after the date of this report or to reflect the occurrence or effect of anticipated or unanticipated events. Precautionary statements made herein should be read as being applicable to all related forward-looking statements wheneverwherever they appear in this report.
Overview
We are a leading provider of automation vacuum and instrumentationcryogenic solutions for multiple markets including semiconductor manufacturing and life sciences and are a valued business partner to original equipment manufacturers, (“OEMs”)or OEMs, and equipment users throughout the world. We serve markets where equipment productivity and availability is a critical factor for our customers’ success, typically in demanding temperatureand/or pressure environments. Our largest served market is the semiconductor capital equipment industry, for which products sold through our Brooks Product Solutions segment represented approximately 65%51%, 52% and 71%56% of our consolidated revenuesrevenue for fiscal years 20112014, 2013 and 2010,2012, respectively. We have targeted certain non-semiconductor revenue opportunities and made recent acquisitions and a divestiture which has led to an increaseThe decrease in the non-semiconductor portion of our revenues. Fortotal revenues represented by products sold through our Brooks Product Solutions segment is due in part to the fourth quartercyclical nature of fiscal year 2011, the demand from the customer for semiconductor capital equipment portioncombined with the growth of sales of our revenues declined to 47%.Brooks Life Science Systems segment. The non-semiconductor markets served by us include life sciences,also includes industrial capital equipment and other adjacent markets which includes clean energy.technology markets.
The demand for semiconductors and semiconductor manufacturing equipment is cyclical, resulting in periodic expansions and contractions. Demand for our products has been impacted by these cyclical industry conditions. We expect the semiconductor equipment market will continue to be a key end market for our products, however,and we continue to make investments to maintain and grow our semiconductor product and service offerings. We acquired DMS Dynamic Micro Systems Semiconductor Equipment GmbH, or DMS, in April 2014 for approximately $31.6 million. DMS is a German based provider of automated contamination control solutions for front opening unified pod, or FOUP, carriers and reticle storage, for improving yield of semiconductor processes at semiconductor fabrication plants. In October 2012, we acquired Crossing Automation Inc., or Crossing, a U.S. based provider of automation solutions for the global semiconductor front-end markets. The purchase price was $59.0 million. The acquisition of these businesses provides us with the opportunity to enhance our existing capabilities with respect to manufacturing of atmospheric and vacuum automation solutions within the semiconductor front-end market.
We also intend to acquirecontinue development and developacquisition of technologies that will create opportunities outside of the semiconductor equipment market. On April 1, 2011,In fiscal year 2014, our Brooks Life Science Systems segment began shipping our Twinbank platform of automated systems for compound and biological sample storage. In addition, in the last eighteen months we completed two acquisitions that expanded our offerings to our life science customers. In August 2013 we acquired RTS Life Sciences (“RTS”)certain assets related to biological sample preparation, management and storage solutions from Matrical, Inc. for $9.3 million. In October 2014, subsequent to the reporting period of this filing, we announced the acquisition of FluidX Ltd., or FluidX, a United Kingdom-basedUK based provider of automation solutionsbiological sample storage tubes and complementary bench-top instruments for approximately $16.0 million.
In September 2014, we acquired the remaining interest in the equity of our majority owned subsidiary, Brooks Automation Asia, Ltd., or BAA, for $3.2 million. We have historically consolidated the financial position and results of operations from BAA and presented the portion of the income attributable to the life sciences markets.minority shareholders in the Consolidated Statements of Operations. The purchase price was approximately $3.4 million, netacquisition of cash on hand. On July 25, 2011, we acquired Nexus Biosystems, Inc. (“Nexus”),this additional interest has been accounted for as an equity transaction, and as aU.S.-based provider of automation solutions and consumables result, no additional assets or liabilities were recognized related to the life sciences markets, specifically biobanking and compound sample management. The Company paid, in cash, an aggregate merger consideration of $84.9 million, net of cash on hand to acquire Nexus.additional interest acquired. We will no longer report a noncontrolling interest.
On April 20, 2011,In March 2014, we entered into an agreement with affiliates of Celestica Inc. (the “Buyers”) to sell the assets of our extended factory contract manufacturingGranville-Phillips Gas Analysis & Vacuum Measurement, or Granville-Phillips, business (the “Business”). The Buyers also agreedunit to assume certain liabilities related to the Business (the “Asset Sale”). The Asset Sale was completed on June 28, 2011 (the “Closing”). At the Closing, the Buyers paid Brooks a total purchase price of $78.0MKS Instruments, Inc. for $87.0 million in cash, plus $1.3cash. We completed the sale on May 30, 2014. We recorded a pre-tax gain of $56.8 million and an after-tax gain of $26.9 million. The tax charge of $29.9 million on the gain is substantially non-cash as consideration for cash acquiredit is offset by our net operating losses in the Asset Sale. An additional $2.5 million of proceeds was paid during our fourth quarter of 2011, which represents a working capital normalizing adjustment.
Brooks andU.S. Our historical financial statements have been revised to present the Buyers also entered into certain commercial supply and license agreements at the Closing which will govern the ongoing relationship between the Buyers and Brooks. Pursuant to those agreements, Brooks will supply the Buyers with certain products and has licensed to the Buyers certain intellectual property needed to run the Business and the Buyers will supply certain products to Brooks.
Effective asoperating results of the beginning of our third quarter of fiscal year 2011, we implementedGranville-Phillips business as a discontinued operation.
We report financial reporting structure that includedresults in three segments: Brooks Product Solutions, Brooks Global Services and Contract Manufacturing. This structure was implemented in response to changes in our management structure and in anticipation of the sale of our Contract Manufacturing segment. Effective as of the beginning of our fourth quarter of fiscal year


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2011, we added a fourth segment, Brooks Life Science Systems, which includes the operations of the businesses acquired from RTS and Nexus, which have been consolidated into one operating segment. Historic results included in this annual report have been reclassified where applicable to conform to this new operating segment structure.
The Brooks Product Solutions segment provides a variety of products critical to technology equipment productivity and availability.solutions that enable improved throughput and yield in controlled operating environments. Those products include atmospheric and vacuum robots, robotic modules, and tool automation systems atmosphericthat provide precision handling and vacuum robots and robotic modules and cryogenicclean wafer environments as well as vacuum pumping and thermal management and vacuum measurement solutions used to create measure and control critical process vacuum applications.
The Brooks Global Services segment provides an extensive range of support services, including on and off-site repair services, on and off-site diagnostic support services, and installation services toin support of the base equipment installed by our Brooks Product Solutions segment, which enable our customers to maximize process tool uptime and productivity. This segment also provides end-user customers with spare part support servicesparts to maximize customer tool productivity.
The Brooks Life Science Systems segment provides automated cold sample management systems including automatedfor compound and bio sample storage, automated blood fractionation equipment for sample preparation and handling, equipment, consumables, and parts and support services to a wide range of life science customers including pharmaceutical companies, biotechnology companies, biobanks, national laboratories, research institutes and research universities.


The Contract Manufacturing segment provided services22


During fiscal year 2014, we had net income attributable to build equipment front-end modules and other subassembliesBrooks Automation, Inc. of $31.4 million, of which enable$30.0 million was from discontinued operations, including the gain on sale of the Granville-Phillips business unit. Income from continuing operations was $1.5 million in fiscal year 2014 after a loss of $7.1 million in fiscal year 2013. In addition to the acquisitions activity described above, we intend to continue to implement measures to improve the profitability of our customers to effectively develop and source high quality and high reliability process tools for semiconductor and adjacent market applications. We sold this segmentcontinuing operations. For example, during fiscal year 2014, we discontinued certain product lines in the Asset Sale which closed on June 28, 2011.Brooks Life Science Systems and Brooks Product Solutions segments, transitioned manufacturing of our line of Polycold cryochillers to a third party contract manufacturer, consolidated our global footprint and implemented other programs designed to improve our cost structure. In connection with these initiatives, we recorded restructuring charges of $6.3 million for fiscal year 2014, compared to $6.4 million of restructuring charges recorded in fiscal year 2013. We expect these changes to improve our profitability in future periods.
Critical Accounting Policies and Estimates
The preparation of the Consolidated Financial Statementsconsolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenuesrevenue and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to revenue, bad debts, inventories, derivative instruments, intangible assets, goodwill, income taxes, warranty obligations, pensions and contingencies.stock-based compensation. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, including current and anticipated worldwide economic conditions both in general and specifically in relation to the semiconductor industry,and life science industries, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. As discussed in the year over year comparisons below, actualUsing different estimates could have a material impact on our financial condition and results may differ from these estimates under different assumptions or conditions.
of operations.
We believe the following critical accounting policies affectincorporate our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements.consolidated financial statements.
Revenues
Revenue
Product revenues arerevenue is associated with the sale of hardware systems, components and spare parts as well as product license revenue. Service revenues arerevenue is associated with service contracts, repairs, upgrades and field service. Shipping and handling fees if any, billed to customers, if any, are recognized as revenue. The related shipping and handling costs are recognized in cost of sales.revenue.
Revenue from product sales that does not include significant customization is recorded upon delivery and transfer of risk of loss toWe recognize revenue when the customer provided there isfollowing criteria have been met: persuasive evidence of an arrangement exists with the customer; delivery of the specified products has occurred or services have been rendered; fees are fixed or determinable,determinable; and collection of the related receivable is reasonably assured and, if applicable,assured. The arrangements for the sale of certain of our products include customer acceptance criteria have been successfully demonstrated. Customer acceptanceprovisions. These provisions include final testing and acceptance carried out priorare included in these arrangements to shipment. These pre-shipment testing and acceptance procedures ensure that the product delivered to the customer meets published specifications. Prior to shipment of our products, we typically inspect the product, test its functionality and document that it meets the published specification requirements beforespecifications. In general, our inspections and testing replicate the testing that will be performed at the customer site prior to final acceptance by the customer. In situations where we have sufficient history of objectively demonstrating that the acceptance criteria in the arrangement have been achieved prior to delivery, which are typically for products with limited customization, we recognize revenue in advance of final customer acceptance because there are no remaining substantive contingencies. Arrangements with certain customers also include contingent revenue provisions, in which a portion of the selling price of a delivered item is contingent on the delivery of other items or on the delivered items meeting specified performance criteria. In arrangements that include contingent revenue, the amount of revenue that we recognize is limited to the lower of either: the amount billed that is not contingent on acceptance; or the value of the arrangement consideration allocated to the delivered elements, if the product is shipped.part of a multiple-element arrangement. When significant on siteon-site customer acceptance provisions are present in the arrangement, or we are not able to objectively demonstrate that the acceptance criteria have been met, revenue is recognized upon completion of customerreceiving acceptance testing.
from the customer.
Revenue from product sales that does include significant customization, which primarily include life science automation systems, is recorded using the percentage of completion method. Under the percentage of completion method, whereby revenue is recorded as work progresses based on a percentage that incurred costslabor effort to date bearbears to total estimated costs. In addition,projected labor effort. Profit estimates on long-term contracts are


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reviewed revised periodically based on changes in circumstances, and any losses on contracts are accrued in the same period we determine that the loss is probable. If we determine that a regular basisloss is probable, we estimate the amount of the loss by comparing total estimated contract revenue to determinethe total estimated contract costs. Significant judgment is required when estimating total labor costs and progress to completion on these arrangements, as well as whether a loss exists. A loss willis expected to be accruedincurred on the contract due to several factors, including the degree of customization required and the customer’s existing environment. We use historical experience, project plans, and an assessment of the risks and uncertainties inherent in the periodarrangement to establish these estimates. Uncertainties in which estimatedthese arrangements include implementation delays or performance issues that may or may not be within our control. We also have certain arrangements for products with significant


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customization that include contractual terms that prohibit us from using the percentage of completion method. In some circumstances, percentage of completion is not appropriate, as it relates to the contractual rights of the customer, and in these cases we use the completed-contract method. Under the completed-contract method, income is recognized only when a contract is completed or substantially completed.
Generally, the terms of long-term contracts provide for progress billings based on completion of milestones or other defined phases of work. In certain instances, payments collected from customers in advance of recognizing the related revenue is less than the current estimate of total contract costs.
recorded as deferred revenue.
Revenue associated with service agreements is generally recognized ratably over the term of the contract.contract, with payments from customers being recorded as deferred revenue. Revenue from repair services or upgrades of customer-owned equipment is recognized upon completion of the repair effort and upon the shipment of the repaired item back to the customer. In instances where the repair or upgrade includes installation, revenue is recognized when the installation is completed.
A portion of the revenue arrangements for our products, particularly in sales of life science automation systems, are multiple element arrangements that can include product, service and other elements. For revenue arrangements with multiple elements, arrangement consideration is allocated to each element based upon their relative selling price using vendor-specific objective evidence, or VSOE, or third-party evidence, or TPE, or based upon the relative selling price using estimated selling prices if VSOE or TPE does not exist. We rely primarily on estimated selling prices because we generally do not have VSOE or TPE. We recognize revenue on each element of the arrangement in accordance with our policies for revenue recognition. The fair value of any undelivered elements is deferred until the undelivered element is delivered and all other criteria for revenue recognition have been met.
Intangible Assets, Goodwill and Other Long-Lived Assets
As a result of our acquisitions, we have identified intangible assets other than goodwill and generated significant goodwill. General intangibleIntangible assets other than goodwill are valued based on estimates of future cash flows and amortized over their estimated useful life. Goodwill is subject to annual impairment testing as well as testing upon the occurrence of any event that indicates a potential impairment. General intangibleIntangible assets other than goodwill and other long-lived assets are subject to an impairment test if there is an indicator of impairment. We conduct our annual goodwill impairment test as of our fiscal year end, or September 30th. Management's judgments are based on market and operational conditions at the time of the evaluation and can include management's best estimate of future business activity, which in turn drives estimates of future cash flows from these assets and the reporting units with associated goodwill. These periodic evaluations could cause management to conclude that impairment factors exist, requiring an adjustment of these assets to their then-current fair market value. Future business conditions and/or activity could differ materially from the projections made by management causing the need for additional adjustments and impairment charges.
Under U.S. Generally Accepted Accounting Principles (“GAAP”), theThe testing of goodwill for impairment is to be performed at a level referred to as a reporting unit. A reporting unit is either the “operating segment level” or one level below, which is referred to as a “component”.“component.” The level at which the impairment test is performed requires an assessment as to whether the operations below the operating segment constitute a self-sustaining business, in which case testing is generally required to be performed at this level. We currently have threefour reporting units that have goodwill, including two reporting unitscomponents that are part of our Brooks Product Solutions operating segment and the sole reporting unit included inunits that are our Brooks Global Services and Brooks Life Science Systems operating segment.
We determine the fair value of our reporting units using the Income Approach, specifically the Discounted Cash Flow Method (“DCF Method”). The DCF Method includes five year future cash flow projections, which are discounted to present value, and an estimate of terminal values, which are also discounted to present value. Terminal values represent the present value an investor would pay today for the rights to the cash flows of the business for the years subsequent to the discrete cash flow projection period. We consider the DCF Method to be the most appropriate valuation indicator as the DCF analyses are based on management’s long-term financial projections.
segments.
Goodwill impairment testing is a two-step process. The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of each reporting unit to its respective carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. If the reporting unit’s carrying amount exceeds the fair value, the second step of the goodwill impairment test must be completed to measure the amount of the impairment loss, if any. The second step compares the implied fair value of goodwill with the carrying value of goodwill. The implied fair value is determined by allocating the fair value of the reporting unit to all of the assets and liabilities of that unit, and the excess of the fair value over amounts assigned to its assets and liabilities is the implied fair value of goodwill. The implied fair value of goodwill determined in this step is compared to the carrying value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, an impairment loss is recognized equal to the difference.
We determine the fair value of our reporting units using an Income Approach, specifically the Discounted Cash Flow Method, or DCF Method. The DCF Method includes future cash flow projections, which are discounted to present value, and an estimate of terminal values, which are also discounted to present value. Terminal values represent the present value an investor would pay today for the rights to the cash flows of the business for the years subsequent to the discrete cash flow projection period. We consider the DCF Method to be the most appropriate valuation indicator as the DCF analyses are based on management’s long-term financial projections. Given the dynamic nature of the cyclical semiconductor equipment market, management’s projections as of the valuation date are considered more objective since other market metrics for peer companies fluctuate over the cycle. However, we also use market-based valuation techniques to test the reasonableness of the reporting


We recorded24


unit fair values determined by the DCF Method. In addition, we compare the aggregate fair value of our reporting units plus our net corporate assets to our overall market capitalization.
For our annual goodwill impairment charges of $71.8 million in the three month period ended March 31, 2009. The details of this goodwill impairment charge are discussed further under the Impairment Charges caption in our comparison of fiscal year 2010 and 2009 results. Our tests of goodwilltest as of September 30, 2009, 20102014, we determined that the estimated fair value of each reporting unit substantially exceeded its carrying value and 2011 indicated that no impairment existed. The observable inputs used in our DCF approach include discount rates that are at or above our weighted-average cost of capital. We derive discount rates that are commensurate with the risks and uncertainties inherent in the respective businesses and our internally developed projections of future cash flows. In addition, we did notdetermine the terminal value of each reporting unit using the Gordon growth method. The Gordon growth method assumes that the reporting unit will grow and generate free cash flow at a constant rate. We believe that the Gordon growth method is the most appropriate method for determining the terminal value because the terminal value was calculated at the point in which we have any further impairment to goodwill.assumed that our reporting units have reached stable growth rates.
Under GAAP, weWe are required to test long-lived assets, which excludeother than goodwill, and intangible assets that are not amortized, when indicators of impairment are present. For purposes of this test, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. When we determine that indicators of potential impairment exist, the next step of the impairment test requires that the potentially impaired long-lived asset group is tested for recoverability. The test for recoverability compares the undiscounted future cash flows of the long-lived asset group to its carrying value. If the carrying values of the long-lived asset group exceed the future cash flows, the assets are considered to be potentially impaired. The next step in the impairment process is to determine the fair value of the individual net


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assets within the long-lived asset group. If the aggregate fair values of the individual net assets of the group are less than the carrying values, an impairment charge is recorded equal to the excess of the aggregate carrying value of the group over the aggregate fair value. The loss is allocated to each asset within the group based on their relative carrying values, with no asset reduced below its fair value.
We recordeddetermined that impairment charges of $35.5 millionindicators were present for long-lived assets related to certainthe Celigo product line as of September 30, 2013. Indicators of impairment for this asset group included declining sales in the trailing twelve months and negative cash flows from the asset group. We tested the recoverability of the asset group by comparing the sum of the expected future undiscounted cash flows directly attributable to the assets to their carrying values, which resulted in the conclusion that the carrying amounts of the assets were not recoverable. The fair value of the long-lived assets related to the Celigo products was based primarily on market-based valuation techniques reflecting the view of a market participant using the assets in the year ended September 30, 2009, whichgroup to their best possible use. We determined that the carrying value of the asset group exceeded the fair value of the asset group by approximately $2.0 million and we discussrecorded this amount as an impairment charge in further detail under the Impairment Charges caption.fourth quarter of 2013. We revised our estimate of the fair value of these assets in the first fiscal quarter of 2014 and determined that an additional impairment charge, representing the remaining carrying value of the long-lived assets, of $0.4 million was required.
Except as described above, we have not tested any other long-lived assets, other than goodwill, since 2009 sincebecause no events have occurred that would require an impairment assessment.
Accounts Receivable
We record trade accounts receivable at the invoiced amount. Trade accounts receivables do not bear interest. TheWe maintain an allowance for doubtful accounts isrepresenting our best estimate of the amount of probable credit losses in our existing accounts receivable. We determineIf the allowance based on historical write-off experience. We reviewfinancial results of our allowance for doubtful accounts quarterly. Past due balances are reviewed individually for collectibility. Account balances are charged off against the allowance when we feel it is probable the receivable will notcustomers deteriorate, reducing their ability to make payments, additional allowances would be recovered.required, resulting in a charge to operations. We do not have any off-balance-sheet credit exposure related to our customers.
Derivative Financial Instruments
We record all derivative instruments as assets or liabilities at their fair value, which is determined by estimating future cash flows of the instrument. Subsequent changes in a derivative’s fair value are recognized in income, unless specific hedge accounting criteria are met. Changes in the fair value of a derivative that is highly effective and designated as a cash flow hedge are recognized in accumulated other comprehensive income until the forecasted transaction occurs or it becomes probable that the forecasted transaction will not occur. We perform an assessment at the inception of the hedge and on a quarterly basis thereafter, to determine whether our derivatives are highly effective in offsetting changes in the value of the hedged items. Any changes in the fair value resulting from hedge ineffectiveness are immediately recognized as income or expense.
Warranty
We provide for the estimated cost of product warranties at the time revenue is recognized. While we engage in extensive product quality programs and processes, including actively monitoring and evaluating the quality of our component suppliers, our warranty obligation is estimatedaffected by assessing product failure rates, material usage and service delivery costs incurred in correcting a product failure. Should actual product failure rates, material usage or service delivery costs differ from our estimates, revisions to the estimated warranty liability would be required and may result in additional benefits or charges to operations.


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Inventory
We provide reserves for estimated obsolescence or unmarketable inventory equal to the difference between the cost of inventory and the estimated market value based upon assumptions about future demand and market conditions. We fully reserve for inventories and noncancelable purchase orders for inventory deemed obsolete. We perform periodic reviews of all inventory items to identify excess inventories on hand by comparing on-hand balances to anticipated usage using recent historical activity as well as anticipated or forecasted demand, based upon sales and marketing inputs through our planning systems. If estimates of demand diminish further or actual market conditions are less favorable than those projected by management, additional inventory write-downs may be required.
Deferred Income Taxes
We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized. We have consideredconsider recent historical income, estimated future taxable income, carry-forward periods of tax attributes, the volatility of the semiconductor industry and ongoing tax planning strategies in assessing the need for the valuation allowance. In the event we determine that we would be able to realize our deferred tax assets in excess of their net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made. Likewise, should we subsequently determine that we would not be able to realize all or part of our netWe maintain a valuation allowance against certain deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to incomeU.S. and in the period such determination was made.
Management has considered the weight of all available evidence in determining whether a valuation allowance continues to be required against its deferred tax assets. We continued to provide a full valuation allowance for our net deferred tax assets at September 30, 2011, as we believe it is more likely than not that the future tax benefits from accumulated net operating losses and other temporary differences will not be realized.certain foreign jurisdictions. We will continue to assess the need for a valuation allowance in future periods. If we continue to generate profits in mostfuture operating results of ourthe U.S. or these foreign jurisdictions deviate from long-term expectations, it is reasonably possible that there willcould be a significant reductionchange in the valuation allowance in the next twelve months. Reduction offuture. A change in the valuation allowance, in whole or in part, would result in a non-cash income tax expense or benefit during the period of reduction.change.


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Pension Plans
We sponsor a defined benefit pension planplans in the U.S.Switzerland and twonon-U.S. defined benefit pension plans.Taiwan. The cost and obligations of these arrangements are calculated using many assumptions to estimate the benefits that the employee earns while working, the amount of which cannot be completely determined until the benefit payments cease. Major assumptions used in the accounting for these employee benefit plans include the discount rate, expected return on plan assets and rate of increase in employee compensation levels. Assumptions are determined based on company data and appropriate market indicators in consultation with third-party actuaries, and are evaluated each year as of the plans’ measurement date. Net periodic pension costs for our pension plans totaled $0.7 million for fiscal year 2011. Our unfunded benefit obligation totaled $7.9 million at September 30, 2011, as compared to $5.9 million at September 30, 2010.  Should any of our assumptions change, they would have an effect on net periodic pension costs and the unfunded benefit obligation. We expect to contribute approximately $0.7 million to our defined benefit pension plans during fiscal year 2012.
Stock-Based Compensation
We measure compensation cost for all employee stock awards at fair value on the date of grant and recognize compensation expense over the service period for awards expected to vest. The fair value of restricted stock units is determined based on the number of shares granted and the excess of the quotedclosing price of our common stock over the exercise price of the restricted stockquoted on NASDAQ on the date of grant, if any, and the fair value of stock options is determined using the Black-Scholes valuation model. Such value isfair values are recognized as expense over the service period, net of estimated forfeitures. The estimation of stock awards that will ultimately vest requires significant judgment. We consider many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience. In addition, for stock-based awards where vesting is dependent upon achieving certain operating performance goals, we estimate the likelihood of achieving the performance goals. Actual results, and future changes in estimates, may differ from our current estimates. Restricted stock with market-based vesting criteria is valued using a lattice model.
Year Ended September 30, 2011,2014 Compared to Year Ended September 30, 20102013
Revenues Revenue
We reported revenuesrevenue of $688.1$482.8 million for fiscal year 2011,2014, compared to $593.0$422.4 million in the previous fiscal year, a 16% increase. The totalan increase of 14%. All three of our segments contributed to the increase in revenues of $95.1revenue. Revenue from Brooks Product Solutions and Brooks Global Services increased $35.1 million isand $5.4 million, respectively, and benefited from stronger demand from the semiconductor capital equipment market. Brooks Life Science Systems’ revenue increased $19.9 million, primarily as a result of increased demand for our products and services which resultedautomated cold storage systems. Acquisitions completed in $88.8the last twelve months contributed $5.5 million of increased revenues fromrevenue. We continue to seek opportunities to expand our market share in the semiconductor and adjacent technology markets served by our Brooks Product Solutions segment and $13.9 million of higher revenues from our Brooks Global Services segment. In addition,segments. However, these markets are cyclical and demand for the acquisitions of RTSproducts and Nexus provided $10.6 million of increased revenuesservices offered will be affected by these cycles. We anticipate continued growth in revenue from our Brooks Life Science Systems segment. These increases were partially offset by an $18.2 million decrease in Contract Manufacturing revenues, due to the salesegment through our internally developed products and services, including our Twinbank platform for automated systems, and through acquisition of products and services that segment at the endexpand our addressable markets, including our recent acquisition of our third fiscal quarter. Recent order rates from semiconductor companies have moderated and we anticipate that revenues for our first quarter of fiscal year 2012 will be 7% to 12% lower than those achieved for the fourth quarter of fiscal year 2011.
FluidX.
Our Brooks Product Solutions segment reported revenuesrevenue of $451.3$325.6 million for fiscal year 2011,2014, an increase of 24%12% from $362.5$290.5 million in the prior fiscal year. These increases are primarilywere mostly attributable to higher volumes of shipments toincreased demand from the semiconductor capital equipment customers, which increased $46.8market. Revenue from the acquisition of DMS contributed $5.5 million for fiscal year 2011 as compared to the prior year, and an increaseincrease.


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Our Brooks Global Services segment reported revenuesrevenue of $88.8$94.1 million for fiscal year 2011,2014, a 19%6% increase from $74.9$88.6 million in the prior fiscal year. The increase includes a $1.0 million increase in product revenues, which are comprised mostly of spare part sales to end users, and a $12.9 million increase in revenues from services. These increases arewas primarily attributabledue to increased demand from our semiconductor customers.
capital equipment end-users.
Our Brooks Life Science Systems segment reported revenuesrevenue of $10.6$63.1 million for fiscal year 2011. This segment includes revenues for RTS, which was acquired on April 1, 2011 and for Nexus, which was acquired on July 25, 2011. Revenues2014, an increase of 46% from these newly acquired entities are included in our operating results from their


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respective acquisition dates through the end of our fiscal year. Revenue from this segment includes $7.7 million for the sale of product, including automation systems and consumables, and includes $2.9 million of service revenue for the support of deployed automation systems.
Our Contract Manufacturing segment reported revenues of $137.3 million for fiscal year 2011, a 12% decrease from $155.5$43.3 million in the prior fiscal year. This decrease is dueRevenue growth was supported by the launch and accelerating sales of the first internally developed Twinbank platform for automated cold storage systems. The acquisition of Matrical provided $6.0 million and $1.0 million of revenue from automated cold storage systems, instrumentation and consumables in fiscal years 2014 and 2013, respectively. Many of the opportunities for Matrical automated cold storage systems were transitioned to the sale of this segment at the end of our third fiscal quarter. Through the first nine months ofTwinbank platform that we launched in fiscal year 2011, Contract Manufacturing revenues increased 28% as compared to the same prior year period.2014.
Revenues from the Brooks Product Solutions segment for the fiscal years 2011 and 2010 include intercompany sales of $49.2 million and $62.9 million, respectively, from this segment to the Contract Manufacturing segment. These intercompany revenues have been eliminated from the revenues of Contract Manufacturing.
Revenues for the Contract Manufacturing segment for the fiscal years 2011 and 2010 exclude intercompany sales of $10.7 million and $12.5 million, respectively, from this segment to the Brooks Product Solutions segment.
RevenuesRevenue outside the United States were $339.9was $308.5 million, or 49%64% of total revenues,revenue, and $271.5$244.7 million, or 46%58% of total revenues,revenue, for fiscal years 20112014 and 2010,2013, respectively. We expect that foreign revenues will continue to account for a significant portion of total revenues.
Gross Margin
Gross margin dollars increased by 3.4 percentage points to $223.0 million34.7% for fiscal year 2011 as2014, compared to $166.3 million in the prior year. This increase was attributable to higher revenues of $95.1 million and the acquisitions of RTS and Nexus which increased gross margin by $2.3 million. These increases were partially offset by reduced benefits from the sale of previously reserved excess and obsolete inventory. The net benefit in the prior period exceeded the net charge in the current period by $4.1 million. Gross margin was reduced by $2.2 million of amortization expense for completed technology intangible assets, as compared to $1.9 million in the prior year period. This increase in amortization expense is primarily due to the acquisitions of RTS and Nexus.
Gross margin percentage increased to 32.4% for fiscal year 2011, compared to 28.0%31.3% for the prior year. This increase is primarily attributable to higher absorption of indirect factory overhead on higher revenues. Further, the sale of our Contract Manufacturing segment, which earned lower gross margins than our other operating segments, favorably impacted our gross margin percentage in the fourth quarter of fiscal year 2011. We estimate that the impact of the sale of Contract Manufacturing will increase our annual gross margin percentage by approximately 6% as compared to historical levels that included the operations of the business. These increases in gross margin percentage were partially offset by reduced benefits from the sale of previously reserved excess and obsolete inventory.year. The increase was driven by leverage on increased volume in the net charge for excess and obsolete inventoryall three segments, favorable mix in fiscal year 2011 as compared to the prior year decreased gross margin percentage by 0.6%.
Gross margin of our Brooks Product Solutions segment and execution of operational initiatives related to material and warranty cost reduction. Gross margin in fiscal year 2014 included $3.0 million of charges related to the step-up of inventory balances in purchase accounting, impairment of intangible assets and restructuring charges compared with $5.0 million of such charges in fiscal year 2013. These charges reduced gross profit margin by 0.6 percentage points in fiscal year 2014 and 1.2 percentage points in fiscal year 2013.
Our gross margin percentage for our Brooks Products Solutions segment increased to $171.8 million34.3% for fiscal year 20112014 as compared to $128.5 million for31.4% in the prior fiscal year. ThisThe increase was attributableprimarily driven by leverage on increased volume, execution of operational initiatives related to higher revenues of $88.8 million formaterial and warranty cost reduction and favorable product mix. Operational improvements were partially offset by an increase in inventory step-up charges associated with acquisitions which reduced gross profit margin by 0.6 percentage points in fiscal year 20112014 as compared to the prior year. This increase was offset by reduced benefits from the sale of previously reserved excess and obsolete inventory. The net benefit0.5 percentage points in the prior period exceeded the net charge in the current period by $3.8 million. Gross margin for this segment was reduced by amortization of completed technology intangible assets of $1.5 million for both fiscal year 2011 and 2010. Gross margin percentage for this segment was 38.1% for fiscal year 2011 as compared to 35.4% in the prior year. This increase is primarily the result of higher absorption of indirect factory overhead on higher revenues. This increase was partially offset by increased net charges for excess and obsolete inventory which reduced2013.
Our gross margin percentage by 1.0% as compared to the prior year.
Gross margin offor our Brooks Global Services segment increased to $31.8 million34.2% for fiscal year 20112014 as compared to $20.4 million30.4% in the prior fiscal year. The increase was attributable to higher revenuesprimarily driven by leverage on increased volume, improved utilization of $13.9our field service organization and a reduction in inventory step-up charges associated with acquisitions. Gross margin in fiscal 2013 included $1.3 million forof step-up charges which reduced gross margin by 1.5 percentage points. Our Brooks Global Services segment did not have any step-up charges in fiscal year 2011 as compared to the prior year and $0.7 million of reduced charges for excess and obsolete inventory as compared to the prior year. Gross margin was reduced by $0.4 million for amortization of completed technology intangible assets for fiscal years 2011 and 2010. Gross margin percentage was 35.7% for fiscal year 2011 as compared to 27.2% in the prior year. The increase in2014.
Our gross margin percentage was attributable to higher absorption


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of indirect service overhead on higher revenues. In addition, decreased charges for excess and obsolete inventory led to an increase in gross margin percentage of 0.9% for fiscal year 2011 as compared to the prior year.
Gross margin for our Brooks Life Science Systems segment was $2.3 millionincreased to 37.1% for fiscal year 2011,2014 as compared to 32.7% in the prior fiscal year. The increase was driven by leverage on increased volume, a reduction in inventory step-up charges associated with acquisitions and includes only those amounts earned since the acquisition date of RTS and Nexus. Gross margin has been reduced by $1.3 million for the impact of the valuation of inventory and deferred revenue obligations as of the purchase date for both RTS and Nexus. Gross margin has also been reduced by $0.6 million fora reduction in impairment charges for excess and obsolete inventory related to Nexus, based on a review of inventories performed by us after the acquisition date. Gross margin was reduced by $0.3 million for amortization of completed technology intangible assets. Gross margin percentage was 21.2% forThe segment operating leverage drove significant benefits with revenue growth of 46% compared to fiscal year 2011, and has been reduced 7.3% for2013. The operational improvements in the impactsegment were partially offset by one $3.6 million project, recognized in the third quarter of the valuation of deferred revenue obligations and thestep-upfiscal 2013, that made a minimal contribution to gross margin. Gross profit margin in value of acquired inventory. Gross margin percentage was also decreased by 6.0% for charges for excess and obsolete inventories. Gross margin was further reduced by 2.8% for amortization of completed technology intangible assets.
Gross margin of our Contract Manufacturing segment decreased slightly to $17.2 million for fiscal year 2011 as compared2014 benefited from $2.0 million of lower costs related to $17.5 million for the prior year. This decrease is due to an $18.2 million decreasestep-up of inventory balances in revenues, caused by the salepurchase accounting, impairment of this segment at the end of our third quarter. For the first nine months of fiscal year 2011, revenues for Contract Manufacturing had increased 28% over the same prior year period. This increase in revenues led to higher absorption of indirect factory overheadintangible assets and resulted in a higher gross margin percentage. Gross margin percentage was 12.5% for fiscal year 2011 as compared to 11.2% in the prior year.restructuring charges.
Research and Development
Research and development, or R&D, expenses for fiscal year 20112014 were $39.8$52.6 million, an increase of $8.6$6.4 million, compared to $31.2$46.2 million in the previous fiscal year. ThisThe increase includes $1.8 million ofin R&D expenses, which consist primarily of employee-related and project costs, incurred by RTS and Nexus since their respective acquisition dates. The balance of the increase is the result of our increased pace of spending for R&D throughout fiscal year 2011 as we supportrelates to developing enhancements to our current product offerings and investing in new product development as part of our strategy to grow longer-term revenues outside of the semiconductor market. We expect the rate of growth inrevenue. R&D spending to moderate in the near term from the levels incurred during the fourth quarter ofexpenses for fiscal year 2011.2014 also increased as compared to the prior fiscal year as a result of our recently completed acquisitions.
Selling, General and Administrative
Selling, general and administrative, or SG&A, expenses were $102.5$111.1 million for fiscal year 2011,2014, an increase of $16.9$14.6 million compared to $85.6$96.5 million in the prior fiscal year. The increase is partlythe result of $10.4 million of higher costs for incentive compensation and stock-based compensation resulting from our improved execution against financial performance objectives. SG&A expenses in fiscal year 2014 also includes $2.6 million of expenses related to the impairment of a note receivable. Our recently completed acquisitions also contributed to the increase in SG&A in fiscal year 2014 as compared to fiscal year 2013. These increases were partially offset by lower employee-related and facility costs attributable to cost savings initiatives undertaken over the last twelve months.
We recorded the impairment charge on the note receivable in the third quarter of fiscal year 2014, after a strategic partner informed us of their intent to secure additional funding through an investment program designed to support early-stage


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companies being funded by the Commonwealth of Massachusetts. In connection with efforts to secure additional financing, we agreed to subordinate our first-priority security interest to the new lender and to extend the due date of our loan to coincide with the due date of the new loan, which is September 2019. The partner also provided revised assumptions about their future cash flows. Based on the information provided by the partner, and the subordination, we determined it was probable that we would not recover all amounts due from the loan and recorded an impairment charge. We determined the fair value of the loan by considering the fair value of the collateral using certain valuation techniques, principally, the discounted cash flow method, and the subordination to the new lender. As a result, the fair value of the loan, which we currently estimate to be $1.0 million, could be different under different conditions or different assumptions, including the varying assumptions regarding future cash flows of the partner or discount rates.
Restructuring and Other Charges
We recorded restructuring charges of $6.3 million for fiscal year 2014. These charges relate primarily to our decision to discontinue certain product lines in the Brooks Life Science Systems and Brooks Product Solutions segments, the transition of manufacturing certain products in our line of Polycold cryochillers and compressors to a third party contract manufacturer, the consolidation of our global footprint and other programs designed to improve our cost structure.
Restructuring costs recorded in fiscal year 2014 include $5.7 million of severance costs resulting from workforce reductions of approximately 70 positions across all of our reportable segments and our corporate function. Total severance charges related to the outsourcing of the Polycold manufacturing operation, which relate to the Brooks Product Solutions and Brooks Global Services segments, were $1.2 million, of which $0.6 million was recorded in fiscal year 2014. The charge for this program was recorded ratably over the period from notification of the closing in October 2012 to the actual service end date in September 2014.
Unpaid severance charges of $3.4 million as of September 30, 2014 are expected to be paid during fiscal year 2015.
In addition to the workforce-related charges described above, we recorded $0.6 million of facility-related costs which consisted of lease payments and fixed asset write-offs associated with our efforts to reduce the space used in our operations. We also recorded $0.3 million of inventory write-offs associated primarily with discontinuing certain product lines and is included in cost of revenue in our Consolidated Statements of Operations.
We recorded restructuring charges of $6.4 million for fiscal year 2013. These charges related primarily to workforce reductions implemented to consolidate the operations of Crossing into our operations, the transition of manufacturing certain our line of Polycold cryochillers and compressors to a third party contract manufacturer and other programs designed to improve our cost structure. Restructuring charges also included facility-related costs incurred in connection with the consolidation of Crossing facilities with our facilities. Restructuring costs recorded in fiscal year 2013 consisted of $5.5 million of severance costs and $0.8 million of facility related costs. Severance costs related to a series of workforce reductions implemented to improve our cost structure by eliminating approximately 200 positions. Restructuring and other charges recorded in fiscal year 2013 also included $0.1 million related to a partial settlement of a defined benefit pension plan that covered substantially all of our Swiss employees.
Interest Income
Interest income was $1.0 million for both fiscal year 2014 and 2013.
Interest Expense
Interest expense was $0.2 million in fiscal year 2014 and relates to the capital lease we entered in March 2014.
Other Income, net
Other income, net of $0.3 million for fiscal year 2014 consists primarily of $1.4 million of other income, of which $0.6 million is attributable to joint venture management fee income, and is partially offset by $1.2 million of foreign exchange losses.
Other income, net of $1.2 million for fiscal year 2013 consists primarily of a $1.4 million gain on the sale of certain underutilized buildings in Chelmsford, MA and Oberdiessbach, Switzerland and $0.6 million of joint venture management fee income which was partially offset by foreign exchange losses of $0.9 million.
Income Tax Benefit
We recorded an income tax benefit of $2.0 million for fiscal year 2014. The tax benefit is driven by U.S. and German pre-tax losses and $1.2 million of reductions in unrecognized tax benefits resulting from the expiration of the statute of limitations in various foreign jurisdictions. These benefits are partially offset by foreign income taxes and interest related to unrecognized tax benefits.


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The net deferred tax assets, including current and noncurrent, decreased from $115.0 million to $83.2 million during the fiscal year ended September 30, 2014. The decrease of $31.8 million was primarily driven by a tax provision of $29.9 million related to the gain on the sale of discontinued operations. The gain on sale of discontinued operations was reported net of the tax effect in the Consolidated Statements of Operations.
We recorded an income tax benefit of $5.0 million for fiscal year 2013. This benefit consists of deferred tax benefits in the U.S. generated by pre-tax losses and tax credits of $5.1 million. We recorded the benefit in the U.S. because there was no valuation allowance against the deferred tax assets generated in fiscal year 2013. This benefit is partially offset by foreign taxes on profits of our foreign subsidiaries. Additionally, we recorded $1.0 million of tax benefits for the reversal of tax reserves resulting from the expiration of statutes of limitations in certain foreign jurisdictions. The U.S. tax benefit includes $0.9 million of U.S. tax credits from fiscal year 2012 that were recognized in fiscal year 2013. These credits were reinstated under The American Taxpayer Relief Act of 2012 that was signed into law on January 2, 2013.
Equity in Earnings of Equity Method Investments
Our proportional share of income from our equity method investments was $1.2 million in fiscal year 2014 compared with $2.4 million in fiscal year 2013. The decrease is driven primarily from lower income from our 50% interest in ULVAC Cryogenics, Inc., a joint venture with ULVAC Corporation of Japan, which contributed $1.6 million of income in fiscal year 2014 as compared to $2.6 million for fiscal year 2013. The remaining decrease in income from our equity method investments is attributable to higher labor-relatedlosses generated by our 50% interest in Yaskawa Brooks Automation, Inc., a joint venture with Yaskawa Electric Corporation of Japan and our proportional share of losses generated by BioCision LLC, a privately-held company based in Larkspur, California, in which we made an equity investment in March 2014.
Income from Discontinued Operations, Net of Tax
We determined that the Granville-Phillips business was not consistent with our strategy to expand our leadership positions in our core semiconductor and life science market segments. We entered into an agreement to sell this business unit for $87.0 million in cash that we completed in May 2014. We determined that our Granville-Phillips business unit met the criteria to be reported as a discontinued operation. As a result, our historical financial statements have been revised to present the operating results of the Granville-Phillips business as a discontinued operation.
Reported revenue for the fiscal years ended September 30, 2014 and 2013 have been reduced by $19.3 million and $28.5 million, respectively, for amounts attributable to Granville-Phillips. The pre-tax income from the discontinued operation was $61.7 million and $7.8 million for the fiscal years ended September 30, 2014 and 2013, respectively. The after-tax income from the discontinued operation was $30.0 million and $5.0 million for the fiscal years ended September 30, 2014 and 2013, respectively. The results of the discontinued operation for the fiscal year ended September 30, 2014 include the pre-tax gain of $56.8 million and the after-tax gain of $26.9 million from the sale of the Granville-Phillips business unit. Tax expense related to the gain on the sale of the business was $29.9 million, representing a tax rate of 52.7%, which is higher than the U.S. statutory rate. The goodwill that was disposed of in this transaction had no basis for tax purposes and as a result, increased the gain recognized for tax purposes. The tax charge was substantially non-cash as it was offset by our net operating losses.
Year Ended September 30, 2013 Compared to Year Ended September 30, 2012
Revenue
We reported revenue of $422.4 million for fiscal year 2013, compared to $489.0 million in the previous fiscal year, a decrease of 14%. This decrease was due to reduced demand for our products, primarily due to weakness in demand for semiconductor capital equipment which led to a reduction of $94.4 million in revenue from our Brooks Product Solutions segment and a $4.3 million reduction in revenue from our Brooks Global Services segment. These decreases were partially offset by the acquisition of Crossing which added $33.5 million of revenue to our Brooks Product Solutions segment and $8.0 million of revenue to our Brooks Global Services segment for fiscal year 2013. Our Brooks Life Science Systems segment had lower sales of $9.3 million for fiscal year 2013 as compared to the previous year due to lower demand.
Our Brooks Product Solutions segment reported revenue of $290.5 million for fiscal year 2013, a decrease of 17% from $351.4 million in the prior fiscal year. These decreases were mostly attributable to lower volumes of shipments to semiconductor capital equipment and semiconductor adjacent customers, which decreased by $94.4 million for fiscal year 2013, as compared to the prior fiscal year. This decrease was partially offset by $33.5 million of product revenue for fiscal year 2013, contributed by our acquisition of Crossing.
Our Brooks Global Services segment reported revenue of $88.6 million for fiscal year 2013, a 4% increase from $84.9 million in the prior fiscal year. Excluding the acquisition of Crossing, revenue for this segment declined $4.3 million for fiscal year 2013 as compared to the prior fiscal year period primarily due to weakness in demand.


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Our Brooks Life Science Systems segment reported revenue of $43.3 million for fiscal year 2013, a decrease of 18% from $52.6 million in the same prior fiscal year. These decreases were the result of delays in customer decisions to purchase automated sample management systems during the first half of fiscal year 2013.
Revenue outside the United States was $244.7 million, or 58% of total revenue, and $274.9 million, or 56% of total revenue, for fiscal years 2013 and 2012, respectively.
Gross Margin
Gross margin percentage decreased to 31.3% for fiscal year 2013, compared to 32.6% for the prior fiscal year. Gross margin in fiscal year 2013 included $2.7 million of charges related to the acquisition of Crossing, related primarily to the sale of acquired inventory to which a step-up in value was applied in our purchase accounting, which reduced gross margin by 0.6 percentage points. Gross margin in fiscal year 2013 also included $2.4 million of impairment charges and inventory reserves related to the Celigo product line which reduced gross margin by 0.6 percentage points. Gross margin was also negatively impacted by lower production which resulted in reduced absorption of our fixed costs. However, the decrease in absorption was offset by lower charges for excess and obsolete inventories, warranty costs and other manufacturing costs which increased gross margin by approximately 1.1 percentage points in fiscal year 2013.
Our gross margin percentage for our Brooks Products Services segment decreased to 31.4% for fiscal year 2013 as compared to 32.4% in the prior fiscal year. The decrease was due primarily to reduced demand for our products, which resulted in reduced absorption of $8.9our fixed costs. In addition, gross margin for the Brooks Products Services segment included $1.4 million related primarily to the sale of acquired inventory to which a step-up in value was applied in our purchase accounting, which reduced gross margin by 0.4 percentage points. The decreases in gross margin were partially offset by lower charges for excess and obsolete inventories and warranty costs which increased gross margin by 0.8 percentage points in fiscal year 2013.
Our gross margin percentage for our Brooks Global Services segment increased to 30.4% for fiscal year 2013 as compared to 29.5% in the prior fiscal year. The increase was due to lower charges for excess and obsolete inventories which increased gross margin by 1.3 percentage points in fiscal year 2013 and higher absorption of fixed costs resulting from an increase in revenue. The increase was partially offset by $1.3 million of charges related to the acquisition of Crossing, related primarily to the sale of acquired inventory to which a step-up in value was applied in our purchase accounting, which reduced gross margin by 1.5 percentage points. In addition, amortization expense associated with Crossing reduced gross margin by 0.2 percentage points in fiscal year 2013.
Our gross margin percentage for our Brooks Life Science Systems segment decreased to 32.7% for fiscal year 2013 as compared to 38.8% in the prior fiscal year. The decrease was due primarily to $2.4 million of impairment charges and inventory reserves related to the Celigo product line. The charges reduced gross profit margin by 5.5 percentage points for fiscal year 2013. The remaining decrease related to lower production and as a result, reduced absorption of our fixed costs.
Research and Development
Research and development, or R&D, expenses for fiscal year 2013 were $46.2 million, an increase of $1.5 million, compared to $44.7 million in the previous fiscal year. Lower labor and material costs resulting from restructuring actions and other cost saving initiatives were more than offset by our Crossing acquisition, which increased R&D expenses by $6.8 million and was not included in the prior fiscal year.
Selling, General and Administrative
Selling, general and administrative, or SG&A, expenses were $96.5 million for fiscal year 2013, a decrease of $1.5 million compared to $98.0 million in the prior fiscal year. The decrease was the result of $5.2 million of lower consulting costs and other professional service fees which decreased primarily because a project focused on improving operating efficiencies was completed in the prior fiscal year. We also reduced labor costs by $5.0 million through restructuring actions taken during fiscal year 2013 and incurred $1.2 million less stock-based compensation expense as a result of increased accrualsperformance-based vesting criteria that we no longer expected to achieve. Lower SG&A costs for incentive based compensation duefiscal year 2013 were partially offset by $6.9 million of SG&A expenses for Crossing, which were not included in the prior fiscal year. In addition, in the second quarter of fiscal year 2012, we received $3.3 million of insurance proceeds as reimbursement of previously incurred litigation related costs.
Restructuring and Other Charges
We recorded restructuring charges of $6.4 million for fiscal year 2013. These charges related primarily to workforce reductions implemented to consolidate the operations of Crossing into our improved financial performance, combined with a 3% increase in SG&A headcount. We have included the resultsoperations, to transition manufacturing of RTS and Nexuscertain products in our results since their respective acquisition dates, which increasedline of Polycold cryochillers and compressors to a third party contract manufacturer and other programs designed to improve our SG&Acost structure. Restructuring charges also included facility related costs by $4.0 million, which includes a $0.4 million increaseincurred in amortization of intangible assets. Other increases in SG&A costs include outside strategic consulting costs of $1.7 million, professional fees associatedconnection with the acquisitionconsolidation of NexusCrossing facilities with our facilities.


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Restructuring costs recorded in fiscal year 2013 consisted of $5.5 million higher commissions to independent sales representatives of severance costs and $0.8 million dueof facility related costs. Severance costs related to higher revenues and $0.7 milliona series of increased legal fees associated withworkforce reductions implemented to improve our intellectual property portfolio as we increase our investments in R&D.
Restructuring Charges
cost structure by eliminating approximately 200 positions.
We recorded a restructuring charge of $1.0$3.2 million for fiscal year 2011.2012. These charges include severance related costsprimarily to a series of $0.7workforce reductions of 118 employees implemented to improve our cost structure.
Pension Settlement
During fiscal year 2012, we advised participants of our frozen U.S. defined benefit pension plan that we intended to settle this pension obligation. This settlement occurred in the quarter ended September 30, 2012 and resulted in accelerated cash payments of approximately $6.4 million which are comprisedto fully satisfy the pension liability, and resulted in an accelerated amortization of $0.3approximately $8.9 million of severanceprior pension losses that were previously reported in accumulated other comprehensive income.
In-process Research and Development
During the three months ended March 31, 2012, we acquired assets consisting primarily of intellectual property from Intevac, Inc. for $3.0 million. Management evaluated this asset purchase to determine if this acquisition would be considered an acquisition of a business. Since only limited assets were acquired, management concluded that the eliminationinputs and processes required to meet the definition of 19 employees, including 13 employeesa business were not acquired in the Brooks Life Science Systems segment resulting from the consolidation of certain functionsthis transaction, and therefore, this transaction was treated as the operationspurchase of RTS and Nexus are combined into one operating segment, and $0.4 million of adjustments for contingent severance arrangements for corporate management positions eliminated in prior periods.an asset group. We also incurred $0.3 million of facility-related costs for facilities exited in previous years. We have reached the end


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of the lease period forexpensed essentially all of our exited leased facilitiesthis asset purchase as of September 30, 2011,an in-process research and do not expect further restructuring costs related to these facilities.development cost in fiscal 2012.
We recorded a restructuring charge of $2.5 million for fiscal year 2010. These charges include severance related costs of $0.9 million, and facility related costs of $1.6 million. The severance costs primarily include adjustments for contingent severance arrangements for corporate management positions eliminated in prior periods. The facility costs include $0.4 million to amortize the deferred discount on multi-year facility restructuring liabilities. In addition, we revised the present value discounting of multi-year facility related restructuring liabilities during the first quarter of fiscal year 2010 when certain accounting errors were identified in our prior period financial statements that, individually and in aggregate, are not material to our financial statements taken as a whole for any related prior periods, and recorded a charge of $1.2 million in the first quarter of fiscal year 2010.
Interest Income
Interest income was $1.0 million and $1.2 million, respectively, for fiscal years 2013 and 2012. The reduction was due to lower cash balances available for investing due to the cash acquisitions of Crossing in October 2012 and Matrical in August 2013.
Other Income, net
Other income, net, of $1.2 million for fiscal year 2011 as compared to $1.12013 consisted primarily of a $1.4 million for the prior year. The increase is primarily related to higher balances available for investing.
Sale of Intellectual Property Rights
During fiscal year 2010, we sold certain patents and patents pending related to a legacy product line and recorded a gain of $7.8 million. The terms of the sale permit us to continue to use these patents to support our ongoing service and spare parts business included within our Brooks Global Services segment.
Sale of Contract Manufacturing Business
We closed the sale of our extended factory contract manufacturing business on June 28, 2011 with affiliates of Celestica Inc. (the “Buyers”). The gross proceeds on this transaction were $81.8 million, of which $79.3 million was received on the closing. The balance of $2.5 million represents a working capital normalizing adjustment, and was received during our fourth quarter of 2011. The gross proceeds include the reimbursement of $1.3 million of cash on hand at the closing offset by $2.3 million of transaction expenses. The pre-tax gain on the sale was $45.0 million. Our income tax provision includes $2.4of certain underutilized buildings in Chelmsford, MA and Oberdiessbach, Switzerland and $0.6 million of incremental taxes on this gain.
We also entered into certain commercial supply and license agreements with the Buyers which will govern the ongoing relationship between the Buyers and us. Pursuant to those agreements we will supply the Buyers with certain products and have licensed to the Buyers certain intellectual property needed to run the business and the Buyers will supply certain products to us. Due to the significance of these ongoing commercial arrangements, the sale did not qualify for discontinued operations treatment. Therefore, historical financial results of the divested business will not be segregated within our consolidated financial statements for the historical periods in which this business was part of us.
Loss on Investment
During fiscal year 2010, we recorded a charge of $0.2 million for the sale of our minority equity investment in a closely-held Swiss public company. We no longer have an equity investment in this entity.
Other Income
Other income, net of $1.9 million for fiscal year 2011 consists primarily of joint venture management fee income of $1.1 million and $0.7 million from a litigation settlement. Other income, net of $0.4 million for fiscal year 2010 consists of joint venture management fee income of $0.7 million which has beenwas partially offset by foreign exchange losses of $0.3$0.9 million.
Income Tax Provision
We recorded an Other income, tax provisionnet of $2.0$0.7 million for fiscal year 2011, which includes $2.52012 consisted primarily of $1.0 million of joint venture management fee income partially offset by foreign and U.S. state income taxes, and an additional $2.4 millionexchange losses of income taxes relating to the sale of our Contract Manufacturing segment. These provisions have been reduced by net favorable adjustments of $3.9 million$0.4 million.


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Income Tax Benefit


to our liability for unrecognized tax benefits, primarily due to the expiration of certain statutes and a favorable audit outcome. We recorded an income tax benefit of $2.7$5.0 million for fiscal year 2010.2013. This benefit includes a $3.9 million refundconsists of deferred tax benefits in the U.S. generated by pre-tax losses and tax credits of $5.1 million. We recorded the benefit in the U.S. because there was no valuation allowance against the deferred tax assets generated in fiscal year 2013. Despite the current year loss in the U.S. for fiscal year 2013, we reported taxable income for federal tax purposes due to the reversal of book to taxable income differences and the inclusion of income from the carryback of alternative minimum tax losses asdiscontinued operations. As a result, we did not change any estimates with regard to long-term utilization of our net operating losses and credits. This benefit was partially offset by foreign taxes on profits of our foreign subsidiaries. Additionally, we recorded $1.0 million of tax benefits for the reversal of tax reserves resulting from the expiration of statutes of limitations in certain foreign jurisdictions. The U.S. tax benefit included $0.9 million of U.S. tax credits from fiscal year 2012 that were recognized in fiscal year 2013. These credits were reinstated under The American Taxpayer Relief Act of 2012 that was signed into law on January 2, 2013.
We recorded an income tax benefit of $126.2 million for fiscal year 2012. This benefit included a $121.8 million deferred income tax benefit, primarily resulting from a significant reduction in the valuation allowance against deferred tax assets. We considered the weight of both positive and negative evidence as of September 30, 2012 and concluded that a substantial portion of the Worker, Home Ownership and Business Assistance Act of 2009 which provides for 100% (previously 90%) of certain net operating loss carrybacks against alternative minimum taxable income.deferred tax assets would be realized. The tax benefit for fiscal year 20102012 was partially offset by U.S. state income taxes and foreign taxes. We continued to provide a full valuation allowance for our net deferred tax assets at September 30, 2011, as we believe it is more likely than not that the future tax benefits from accumulated net operating losses and other temporary differences will not be realized. We will continue to assess the need for a valuation allowance in future periods. If we continue to generate profits in most of our jurisdictions, it is reasonably possible that there will be a significant reduction in the valuation allowance in the next twelve months. Reduction of the valuation allowance, in whole or in part, would result in a non-cash income tax benefit during the period of reduction.
Of the unrecognized tax benefits of $11.0 million at September 30, 2011, we currently anticipate that the statute of limitations is expected to lapse on various uncertain tax positions in the next twelve months and accordingly it is reasonably possible that this will result in a potential decrease of $3.6 million to our unrecognized tax benefits all of which will impact net income.
Equity in Earnings of Joint Ventures
Equity Method Investments
Income associated with our 50% interest in ULVAC Cryogenics, Inc., a joint venture with ULVAC Corporation of Japan, was $2.3$2.6 million for fiscal year 20112013 as compared to $0.1$2.0 million for fiscal year 2010. Income2012. Loss associated with our 50% interest in Yaskawa Brooks Automation, Inc., a joint venture with Yaskawa Electric Corporation of Japan was $0.5$(0.2) million for fiscal year 20112012 as compared to a gain of $0.1 million for fiscal year 2010.2012.


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Liquidity and Capital Resources
Year Ended September 30, 2010, Compared to Year Ended September 30, 2009
Revenues
We reported revenues of $593.0 million for fiscal year 2010, compared to $218.7 million in the previous year, a 171% increase. The total increase in revenues of $374.3 million arose in allA considerable portion of our operating segments. Our Brooks Product Solutions segment revenues increased by $230.2 million, our Brooks Global Services segment revenues increased by $15.9 million and our Contract Manufacturing segment revenues increased by $128.2 million. These increases were primarilyrevenue is dependent on the result of increased volume of shipments in response to increasing demand for semiconductor capital equipment.
Our Brooks Product Solutions segment reported revenues of $362.5 million for fiscal year 2010, an increase of 174% from $132.3 million in the prior year. These increases are primarily attributable to higher volumes of shipments to semiconductor capital equipment customers, which increased $187.1 for fiscal year 2010 as compared to the prior year, and an increase of $43.1 million from non-semiconductor customers for fiscal year 2010 as compared to the prior year.
Our Brooks Global Services segment reported revenues of $74.9 million for fiscal year 2010, a 27% increase from $59.0 million in the prior year. The increase includes a $6.2 million increase in product revenues, which are comprised mostly of spare part sales to end users, and a $9.7 million increase in revenues from services. These increases are primarily attributable to increased demand from our semiconductor customers. All service revenues included in our consolidated statements of operations, which include service contract and repair services, are related to our Brooks Global Services segment.
Our Contract Manufacturing segment reported revenues of $155.5 million for fiscal year 2010, a 468% increase from $27.4 million in the prior year. This increase is related to increased volume of shipments in response to increased demand for semiconductor capital equipment.
Revenues from the Brooks Product Solutions segment for the fiscal years 2010 and 2009 include intercompany sales of $62.9 million and $11.2 million, respectively, from this segment to the Contract Manufacturing segment. These intercompany revenues have been eliminated from the revenues of Contract Manufacturing.


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Revenues for the Contract Manufacturing segment for the fiscal years 2010 and 2009 exclude intercompany sales of $12.5 million and $1.6 million, respectively, from this segment to the Brooks Product Solutions segment.
Revenues outside the United States were $271.5 million, or 46% of total revenues, and $103.0 million, or 47% of total revenues, for fiscal years 2010 and 2009, respectively.
Gross Margin
Gross margin dollars increased to $166.3 million for fiscal year 2010 as compared to a loss of $6.0 million in the prior year. This increase was attributable to higher revenues of $374.3 million, an asset impairment charge primarily related to intangible assets of $20.9 million which reduced the prior year gross profit, a $14.2 million reduction in charges for excess and obsolete inventory and $3.7 million of reduced amortization expense for completed technology intangible assets. The decrease in amortization expense is primarily the result of the impairment of these assets recorded in the second quarter of fiscal year 2009.
Gross margin percentage increased to 28.0% for fiscal year 2010, compared to (2.7)% for the prior year. This increase is primarily attributable to higher absorption of indirect factory overhead on higher revenues. Other factors that increased gross margin percentage include decreased charges for excess and obsolete inventory which increased gross margin percentage by 6.0% for fiscal year 2010 as compared to the prior year and reduced amortization expense for completed technology intangible assets which increased gross margin percentage by 0.6% for fiscal year 2010 as compared to the prior year. Further, the prior year gross margin percentage was adversely impacted by asset impairment charges which reduced gross margin percentage by 9.6% in fiscal year 2009. The increases in the current year gross margin percentage were partially offset by a less favorable product mix from the growth of our Contract Manufacturing segment, which earns margins that are below those earned by our other operating segments.
Gross margin of our Brooks Product Solutions segment increased to $128.5 million for fiscal year 2010 as compared to $15.1 million for the prior year. This increase was attributable to higher revenues of $230.2 million for fiscal year 2010 as compared to the prior year, reduced charges for excess and obsolete inventory of $10.0 million for fiscal year 2010 as compared to the prior year and reduced amortization expense for completed technology intangible assets of $1.2 million for fiscal year 2010 as compared to the prior year. Gross margin percentage Demand for this segment was 35.4% for fiscal year 2010 as compared to 11.4% in the prior year. This increase is primarily the result of higher absorption of indirect factory overhead on higher revenues. Other factors increasing gross margin percentage include decreased charges for excess and obsolete inventory which increased gross margin percentage by 6.6% for fiscal year 2010 as compared to the prior year and reduced amortization expense for completed technology intangible assets which increased gross margin percentage by 0.3% for fiscal year 2010 as compared to the prior year.
Gross margin of our Brooks Global Services segment increased to $20.4 million for fiscal year 2010 as compared to $6.5 million in the prior year. The increase was attributable to higher revenues of $15.9 million for fiscal year 2010 as compared to the prior year, $2.2 million of reduced amortization expense for completed technology intangible assets for fiscal year 2010 as compared to the prior year and decreased charges for excess and obsolete inventory of $1.7 million for fiscal year 2010 as compared to the prior year. Gross margin percentage was 27.2% for fiscal year 2010 as compared to 11.0% in the prior year. The increase in gross margin percentage was attributable to higher absorption of indirect service overhead on higher revenues. In addition, decreased charges for excess and obsolete inventory led to an increase in gross margin percentage of 3.1% for fiscal year 2010 as compared to the prior year and decreased amortization expense for completed technology intangible assets led to an increase in gross margin percentage of 2.9% for fiscal year 2010 as compared to the prior year.
Gross margin of our Contract Manufacturing segment increased to $17.5 million for fiscal year 2010 as compared to a loss of $6.7 million for the prior year. This increase was attributable to higher revenues of $128.2 million for fiscal year 2010 as compared to the prior year, decreased charges for excess and obsolete inventory of $2.5 million for fiscal year 2010 as compared to the prior year and $0.3 million of reduced amortization expense for completed technology intangible assets for fiscal year 2010 as compared to the prior year. Gross margin percentage for this segment increased to 11.2% for fiscal year 2010 as compared to (24.4)% in the prior year. This increase was primarily attributable to higher absorption of indirect factory overhead on higher revenues. In addition,


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decreased charges for excess and obsolete inventory led to an increase in gross margin percentage of 8.8% for fiscal year 2010 as compared to the prior year and decreased amortization expense for completed technology intangible assets led to an increase in gross margin of 0.2% for fiscal year 2010 as compared to the prior year.
Gross margin for fiscal year 2009 was reduced by $20.9 million for the impairment of certain long-lived assets, including a $19.6 million charge for completed technology intangible assets and $1.3 million charge for property and equipment. We did not incur any impairment charges for long-lived assets in fiscal year 2010. The details of our impairment charges are discussed in greater detail under the Impairment Charges caption.
Research and Development
Research and development, or R&D, expenses for fiscal year 2010 were $31.2 million, a decrease of $0.4 million, compared to $31.6 million in the previous year. This decrease is primarily related to lower labor related costs associated with headcount reductions initiated in fiscal years 2009 and 2008. Our R&D investments increased for each fiscal quarter throughout fiscal year 2010, including $8.0 million of R&D expenses for the fourth quarter of fiscal year 2010, as we increased our investments in certain new product programs.
Selling, General and Administrative
Selling, general and administrative, or SG&A, expenses were $85.6 million for fiscal year 2010, a decrease of $5.6 million compared to $91.2 million in the prior year. The decrease is primarily attributable to lower litigation costs of $6.2 million. We settled our litigation matters with the SEC during fiscal 2008; however, we continued to incur substantial litigation costs, net of insurance reimbursements, throughout fiscal year 2009 as we indemnified costs incurred by a former executive. We did not incur substantial litigation costs in fiscal year 2010. Other cost decreases in SG&A include $2.7 million of reduced amortization of intangible assets primarily due to the impairment of those assets recorded in the second quarter of fiscal year 2009. These costs decreases were partially offset by $1.5 million of increased depreciation expense for the implementation of the Oracle ERP system during the latter half of fiscal year 2009, with the balance related primarily to higher labor costs. During fiscal year 2009, we capitalized approximately $1.5 million of internal labor costs in connection with the Oracle ERP system implementation. After the implementation was complete, the labor costs for the employees previously assigned to the Oracle implementation was expensed as incurred. This decrease in capitalized labor is the primary cause of the increased labor costs in fiscal year 2010 as compared to fiscal year 2009.
Impairment Charges
We are required to test our goodwill for impairment at least annually. We conduct this test as of September 30th of each fiscal year. Our test of goodwill at September 30, 2010 and 2009 indicated that goodwill was not impaired. We have not tested other intangible assets since the end of the second quarter of fiscal 2009, since no events have occurred that would require an impairment assessment.
We experienced a weakness in demand for our products from the fourth quarter of fiscal year 2007 through the second quarter of fiscal year 2009. In response to this downturn, we restructured our business, which resulted in a change to our reporting units and operating segments. We reallocated goodwill to each of our newly formed reporting units as of March 31, 2009, based on such factors as the relative fair values of each reporting unit. We reallocated goodwill to five of our seven reporting units as of March 31, 2009. This reallocation, in conjunction with the continued downturn in the semiconductor markets indicated that a potential impairment may exist. As such, we tested our goodwill and other long-lived assets for impairment at March 31, 2009.
We determined the fair value of each reporting unit as of March 31, 2009 using the Income Approach, specifically the DCF Method. The material assumptions used in the DCF Method include: discount rates and revenue forecasts. Discount rates are based on a weighted average cost of capital (“WACC”), which represents the average rate a business must pay its providers of debt and equity capital. The WACC used to test goodwill is derived from a group of comparable companies. The average WACC used in the March 31, 2009 reallocation of goodwill was 16.2%. Management determines revenue forecasts based on its best estimate of near term revenue expectations which are corroborated by communications with customers, and longer-term projection trends, which are validated by published independent industry analyst reports. Revenue forecasts materially impact the amount of cash flow


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generated during the five year discrete cash flow period, and also impact the terminal value as that value is derived from projected revenue. The revenue forecasts used in the reallocation and assessment of goodwill as of March 31, 2009 were decreased from previously forecasted levels due to further market deterioration.
For three of the five reporting units containing goodwill at March 31, 2009, we determined that the carrying amount of their net assets exceeded their respective fair values, indicating that a potential impairment existed for each of those three reporting units. After completing the required steps of the goodwill impairment test, we recorded a goodwill impairment of $71.8 million as of March 31, 2009.
Under GAAP, we are required to test certain long-lived assets when indicators of impairment are present. We determined that impairment indicators were present for certain of our long-lived assets as of March 31, 2009. We tested the long-lived assets in question for recoverability by comparing the sum of the undiscounted cash flows attributable to each respective asset group to their carrying amounts, and determined that the carrying amounts were not recoverable. We then evaluated the fair values of each long-lived asset of the potentially impaired long-lived asset group to determine the amount of the impairment, if any. The fair value of each intangible asset was based primarily on an income approach, which is a present value technique used to measure the fair value of future cash flows produced by the asset. We estimated future cash flows over the remaining useful life of each intangible asset, which ranged from approximately 3 to 8 years, and used a discount rate of approximately 16%. As a result of this analysis, we determined that we had incurred an impairment loss of $35.1 million as of March 31, 2009, and we allocated that loss among the long-lived assets of the impaired asset group based on the carrying value of each asset, with no asset reduced below its respective fair value. The impairment charge was allocated as follows: $19.6 million related to completed technology intangible assets; $1.2 million to trade name intangible assets; $13.4 million to customer relationship intangible assets and $0.9 million to property, plant and equipment. Further, during the three months ended June 30, 2009 we recorded an additional impairment charge of $0.4 million for property, plant and equipment related to the closure and outsourcing of a small manufacturing operation located in the United States. The total impairment charges related to long-lived assets for fiscal 2009 are summarized as follows (in thousands):
     
  Year Ended
 
  September 30, 2009 
 
Reported as cost of sales:    
Completed technology intangible asset impairment $19,608 
Property, plant and equipment impairment  1,316 
     
Subtotal, reported as cost of sales  20,924 
     
Reported as operating expense:    
Trade name intangible asset impairment  1,145 
Customer relationship intangible asset impairment  13,443 
     
Subtotal, reported as operating expense  14,588 
     
  $35,512 
     
Restructuring Charges
We recorded a restructuring charge of $2.5 million for fiscal year 2010. These charges include severance related costs of $0.9 million, and facility related costs of $1.6 million. The severance costs primarily include adjustments for contingent severance arrangements for corporate management positions eliminated in prior periods. The facility costs include $0.4 million to amortize the deferred discount on multi-year facility restructuring liabilities. In addition, we revised the present value discounting of multi-year facility related restructuring liabilities during the first quarter of fiscal year 2010 when certain accounting errors were identified in our prior period financial statements that, individually and in aggregate, are not material to our financial statements taken as a whole for any related prior periods, and recorded a charge of $1.2 million in the first quarter of fiscal year 2010.
We recorded charges of $12.8 million for fiscal year 2009 in connection with our fiscal year 2009 restructuring plan. These charges consisted of $11.1 million of severance costs associated with workforce reductions of approximately 450 employees in operations, service and administrative functions across all the main geographies


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in which we operate, facility closure costs of $0.6 million related primarily to the closure of one manufacturing operation located in the United States, and other restructuring costs of $1.1 million. The restructuring charges by segment for fiscal 2009 were: Brooks Product Solutions — $5.6 million, Brooks Global Services — $3.3 million and Contract Manufacturing — $1.4 million. In addition, we incurred $2.5 million of restructuring charges for fiscal 2009 that were related to general corporate functions that support all of our segments.
Interest Income and Expense
Interest income was $1.1 million for fiscal year 2010 as compared to $2.7 million for the prior year. The decrease is mostly due to lower interest rates on our investments. Interest expense decreased to $0.1 million for fiscal year 2010 from $0.5 million for fiscal year 2009.
Gain on sale of Intellectual Property Rights
During fiscal year 2010, we sold certain patents and patents pending related to a legacy product line. We recorded a gain of $7.8 million for this sale during the second quarter of 2010. The terms of the sale permit us to continue to use these patents to support our ongoing service and spare parts business included within our Brooks Global Services segment.
Loss on Investment
During fiscal year 2010, we recorded a charge of $0.2 million for the sale of our minority equity investment in a closely-held Swiss public company. During fiscal year 2009, we recorded a charge of $1.2 million to write down this investment to its market value. As of September 30, 2010, we no longer have an equity investment in this entity.
Other Income
Other income, net of $0.4 million for fiscal year 2010 consists of joint venture management fee income of $0.7 million which has been partially offset by foreign exchange losses of $0.3 million. Other income, net of $0.0 million for fiscal year 2009 consists of management fee income of $0.6 million which has been fully offset by foreign exchange losses.
Income Tax Provision
We recorded an income tax benefit of $2.7 million for fiscal year 2010. This benefit includes a $3.9 million refund from the carryback of alternative minimum tax losses as a result of the Worker, Home Ownership and Business Assistance Act of 2009 which provides for 100% (previously 90%) of certain net operating loss carrybacks against alternative minimum taxable income. In addition, we can carryforward our remaining fiscal year 2009 alternative minimum tax net operating loss to future years to offset 100% (previously 90%) of alternative minimum taxes. The tax benefit for fiscal year 2010 was partially offset by U.S. state income taxes and foreign taxes. We recorded a tax provision of $0.6 million for fiscal year 2009 which was principally attributable to foreign income and interest related to unrecognized tax benefits. We continued to provide a full valuation allowance for our net deferred tax assets at September 30, 2010 and 2009, as we believe it is more likely than not that the future tax benefits from accumulated net operating losses and deferred taxes will not be realized.
Equity in Earnings of Joint Ventures
Income associated with our 50% interest in ULVAC Cryogenics, Inc., a joint venture with ULVAC Corporation of Japan, was $0.1 million for fiscal year 2010 and 2009. The income (loss) associated with our 50% interest in Yaskawa Brooks Automation, Inc., a joint venture with Yaskawa Electric Corporation of Japan was $0.1 million for fiscal year 2010 as compared to $(0.3) million in the prior year.
Liquidity and Capital Resources
Our business is significantly dependent on capital expenditures that are dependent on the current and anticipated market demand for the underlying products for which capacity is established. Demand for


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semiconductors is cyclical and has historically experienced periodic downturns. This cyclicality makes estimates of future revenues, results of operations and net cash flows inherently uncertain.
At September 30, 2011, we had cash, cash equivalents and marketable securities aggregating $205.8 million. This amount was comprised of $58.8 million of cash and cash equivalents, $65.7 million of investments in short-term marketable securities and $81.3 million of investments in long-term marketable securities. Our marketable securities are generally readily convertible to cash without an adverse impact.
Cash and cash equivalents were $58.8 million at September 30, 2011, a decrease of $1.0 million from September 30, 2010. The significant uses of cash during fiscal year 2011 included the acquisitions of RTS and Nexus, which cost $88.3 million, net of cash acquired, net investments in marketable securities of $66.6 million, capital expenditures of $6.5 million and the payment of $5.2 million in dividends. The significant sources of cash include $87.7 million of cash provided by operations and $78.2 million of cash generated from the sale of our Contract Manufacturing segment.
Cash provided by operating activities was $87.7 million for fiscal year 2011, and was comprised of net income of $128.4 million, which includes $26.3 million of non-cash related charges such as $17.2 million of depreciation and amortization and $6.8 million of stock-based compensation. Cash provided by operations was partially offset by $21.7 million of increases in working capital. Increases in inventory levels were the primary contributor to increased working capital. Increases in inventory were driven by reductions in demand from our semiconductor equipment customers during our fourth quarter, along with $5.0 million of increased service inventories to improve delivery and service responsiveness. In addition, the gain of $45.0 million from the sale of our Contract Manufacturing segment, which is included in our net income, has been removed from cash provided by operating activities since the cash flow from this transaction is considered to be an investing activity.
Cash used in investing activities was $84.3 million for fiscal year 2011 and was attributable to the acquisitions of RTS and Nexus, which cost $88.3 million, net investments in marketable securities of $66.6 million, capital expenditures of $6.5 million and a $1.3 million increase in restricted cash to support certain international letters of credit. These uses of cash were partially offset by $78.2 million of net proceeds from the sale of our Contract Manufacturing segment and $0.2 million from the sale of other assets.
Cash used in financing activities was $3.8 million for fiscal year 2011 and includes $5.2 million for our first quarterly cash dividend paid during the fourth quarter, which was partially offset by $1.4 million of cash generated from our employee stock purchase plans. We intend to pay quarterly cash dividends in the future; however, the amount and timing of these dividends may be impacted by the cyclical nature of the semiconductor capital equipment market. We may reduce, delay or cancel a quarterly cash dividend based on the severity of a cyclical downturn.
At September 30, 2010, we had cash, cash equivalents and marketable securities aggregating $142.4 million. This amount was comprised of $59.8 million of cash and cash equivalents, $49.0 million of investments in short-term marketable securities and $33.6 million of investments in long-term marketable securities.
Cash and cash equivalents were $59.8 million at September 30, 2010, a decrease of $0.2 million from September 30, 2009. This decrease was primarily due to $32.9 million of net purchases of marketable securities, capital expenditures of $3.5 million and purchases of intangible assets of $0.9 million. These decreases were partially offset by $27.9 million of cash provided by operating activities, proceeds from the sale of intellectual property of $7.8 million, proceeds from the sale of common stock through our employee stock purchase plan of $1.2 million and other cash items of $0.2 million.
Cash provided by operating activities was $27.9 million for fiscal year 2010, and was comprised of net income of $59.0 million, which includes $18.1 million of net non-cash related charges such as $18.4 million of depreciation and amortization, $6.6 million of stock-based compensation and $0.9 million of amortization of premiums paid on marketable security purchases which were partially offset by $7.8 million from our gain on sale of intellectual property rights. Further, cash provided by operations was reduced by net increases in working capital of $49.2 million, consisting primarily of $53.2 million of increases in accounts receivable, $31.3 million of increases in inventory and $4.1 million of payments related to our restructuring programs implemented in prior years. The increases in accounts receivable and inventory were caused by a 171% increase in revenues for fiscal year 2010 as


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compared to the prior year. These increases in working capital were partially offset by $39.4 million of increases in accounts payable, $2.5 million of increases in accrued warranty and retrofit costs and $1.5 million of higher deferred revenues. The increases in these liabilities are the result of increased business activities.
Cash used in investing activities was $29.2 million for fiscal year 2010 and was attributable to net purchases of marketable securities of $32.9 million, capital expenditures of $3.5 million and intangible assets of $0.9 million. These uses of cash were partially offset by $7.8 million of proceeds from the sale of intellectual property rights and $0.2 million of proceeds from the sale of a minority interest in a closely-held Swiss public company.
Cash provided by financing activities for fiscal year 2010 was $1.2 million, and is comprised entirely of proceeds from the sale of common stock to employees through our employee stock purchase plan.
At September 30, 2011, we had approximately $1.8 million of letters of credit outstanding.
Our contractual obligations consist of the following at September 30, 2011 (in thousands):
                     
     Less than
  One to
  Four to
    
  Total  One Year  Three Years  Five Years  Thereafter 
 
Contractual obligations                    
Operating leases $24,628  $6,575  $13,904  $2,137  $2,012 
Pension funding  7,895   734   2,358   1,937   2,866 
Purchase commitments and other  48,392   47,941   451       
                     
Total contractual obligations $80,915  $55,250  $16,713  $4,074  $4,878 
                     
As of September 30, 2011, the total amount of net unrecognized tax benefits for uncertain tax positions and the accrual for the related interest was $11.0 million, of which $9.8 million represents a potential future cash outlay. We are unable to make a reasonably reliable estimate of the timing of the cash settlement for this liability since the timing of future tax examinations by various tax jurisdictions and the related resolution is uncertain.
In connection with our acquisition of Helix Technology Corporation in October 2005, we assumed the responsibility for the Helix Employees’ Pension Plan (the “Helix Plan”). We froze the benefit accruals and future participation in the Helix Plan as of October 31, 2006. We currently have a liability of $6.3 million recorded on our consolidated balance sheet at September 30, 2011 related to the Helix Plan. The timing of payments we make for the Helix Plan is impacted by a number of estimates including earnings on plan assets and the timing of future distributions. Actual results may differ from these estimates, which may materially impact the timing of future payments. During the fourth quarter of fiscal year 2010, we made a voluntary contribution of $3.6 million to this plan, which was in addition to the $0.6 million of required minimum contributions made throughout fiscal year 2010. During the fourth quarter of fiscal year 2011, we made a voluntary contribution of $0.2 million to this plan, which was in addition to the $0.5 million of required minimum contributions made throughout fiscal year 2011.
In connection with our acquisition of Nexus, we assumed responsibility for the Nexus Biosystems AG Pension Plan (the “Nexus Plan”). The timing of payments we make for the Nexus Plan is impacted by a number of estimates including earnings on plan assets and the timing of future distributions. Actual results may differ from these estimates, which may materially impact the timing of future payments. Nexus prepaid contributions to the investment manager of this plan prior to the closing of the acquisition. The investment manager draws on these prepaid contributions to fund contributions to the plan, as required. As of September 30, 2011, we had $0.8 million on deposit for this plan which is expected to cover contribution requirements in the near term.
In addition, we are a guarantor on a lease in Mexico that expires in January 2013. The remaining payments under this lease at September 30, 2011 are approximately $0.5 million.
On June 21, 2010, we filed a registration statement onForm S-3 with the SEC to sell up to $200 million of securities, before any fees or expenses of the offering. Securities that may be sold include common stock, preferred stock, warrants or debt securities. Any such offering, if it does occur, may happen in one or more transactions. Specific terms of any securities to be sold will be described in supplemental filings with the SEC.


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On August 3, 2011, our Board of Directors approved a cash dividend of $0.08 per share of the Company’s common stock. The total dividend of approximately $5.2 million was paid on September 30, 2011 to shareholders of record at the close of business on September 9, 2011. On November 8, 2011, our Board of Directors approved a cash dividend of $0.08 per share of the Company’s common stock. The total dividend of approximately $5.3 million will be paid on December 30, 2011 to shareholders of record at the close of business on December 9, 2011.
Dividends are declared at the discretion of our Board of Directors and depend on actual cash from operations, our financial condition and capital requirements and any other factors our Board of Directors may consider relevant. Future dividend declarations, as well as the record and payment dates for such dividends, will be determined by our Board of Directors on a quarterly basis.
We believe that we have adequate resources to fund our currently planned working capital and capital expenditure requirements for the next twelve months. The cyclical nature of our served markets and uncertainty with the current global economic environment makes it difficult for us to predict longer-term liquidity requirements with certainty. We may be unable to obtain any required additional financing on terms favorable to us, if at all. If adequate funds are not available on acceptable terms, we may be unable to successfully develop or enhance products, respond to competitive pressure or take advantage of acquisition opportunities, any of which could have a material adverse effect on our business.
Other Key IndicatorsOur cash, cash equivalents and marketable securities as of Financial ConditionSeptember 30, 2014 and Operating Performance
EBITDA and Adjusted EBITDA presented below are supplemental measures2013 consist of our performance that are not required by, or presented in accordance with GAAP. EBITDA and Adjusted EBITDA are not measurements of our financial performance under GAAP and should not be considered as alternatives to net income (loss) or any other performance measures derived in accordance with GAAP.
EBITDA represents net income (loss) before interest income, income tax provision (benefit), depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to give effect to certain non-recurringand/or non-cash items and other adjustments. We believe that the inclusion of EBITDA and Adjusted EBITDA in thisForm 10-K is appropriate because we consider it an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors and other interested parties. We use Adjusted EBITDA internally as a critical measurement of operating effectiveness. We believe EBITDA and Adjusted EBITDA facilitates operating performance comparison from period to period and company to company by backing out potential differences caused by variations in capital structures, tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses) and the age and book depreciation of facilities and equipment (affecting relative depreciation expense).
In determining Adjusted EBITDA, we eliminate the impact of a number of items. For the reasons indicated herein, you are encouraged to evaluate each adjustment and whether you consider it appropriate. In addition, in evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses similar to the adjustments in the presentation of Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
• they do not reflect our cash expenditures for capital expenditure or contractual commitments;
• they do not reflect changes in, or cash requirements for, our working capital requirements;
• other companies, including other companies in our industry, may calculate these measures differently than we do, limiting their usefulness as a comparative measure.
Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. For these purposes, we rely on our GAAP results. For more information, see our consolidated financial statements and notes thereto appearing elsewhere in this report.


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The following table sets forth a reconciliation of net income (loss) to EBITDA for the years indicated (in thousands):
             
  Year Ended September 30, 
  2011  2010  2009 
 
Net income (loss) attributable to Brooks Automation, Inc.  $128,352  $58,982  $(227,858)
Interest income, net  (1,088)  (1,041)  (2,265)
Provision for (benefit from) income taxes  1,954   (2,746)  643 
Depreciation and amortization  17,249   18,420   25,856 
             
EBITDA $146,467  $73,615  $(203,624)
             
The following table sets forth a reconciliation
 September 30,
 2014 2013
Cash and cash equivalents$94,114
 $82,971
Short-term marketable securities68,130
 45,900
Long-term marketable securities83,212
 44,491
 $245,456
 $173,362
Our marketable securities are generally readily convertible to cash without an adverse impact.
Cash and cash equivalents were $94.1 million at September 30, 2014, an increase of EBITDA to Adjusted EBITDA for the years indicated (in thousands):
             
  Year Ended September 30, 
  2011  2010  2009 
 
EBITDA $146,467  $73,615  $(203,624)
Stock-based compensation  6,752   6,567   5,817 
Impairment of long-lived assets        35,512 
Impairment of goodwill        71,800 
Restructuring charges  1,036   2,529   12,806 
Restructuring and acquisition related inventory charges  625      3,612 
Purchase accounting impact on contracts acquired  1,270       
Merger costs  719       
Gain on sale of Contract Manufacturing business, pre-tax  (45,009)      
Litigation settlement  (664)      
Sale of intellectual property rights     (7,840)   
Loss on investment     191   1,185 
             
Adjusted EBITDA $111,196  $75,062  $(72,892)
             
$11.1 million from September 30, 2013. The increase in EBITDA from fiscal 2010cash was primarily due to fiscal 2011 is primarily related to increased profits on $95.1$85.4 million of higher revenues, and the $45.0 million gain onnet proceeds received from the sale of divested businesses and $53.8 million of cash flow from operations. These sources of cash were partially offset by $62.2 million of net purchases of marketable securities, $35.6 million used in acquisitions and $22.9 million of cash dividends paid to our contract manufacturing business. Theshareholders. Our cash and cash equivalents of $83.0 million at September 30, 2013 increased $28.3 million compared with cash and cash equivalents at September 30, 2012. In fiscal year 2013, the increase in EBITDAcash and cash equivalents was due primarily to $54.4 million of cash flow from fiscal 2009 to fiscal 2010 is primarily related to $374.3operations, $53.3 million increase in revenues, combined with reduced levels of operating expenses as a resultnet sales of restructuring actions taken during fiscal years 2008marketable securities and 2009.
Based on a review of Nexus inventory values performed shortly after the closing of the acquisition, we recorded a charge of $0.6 million for excess and obsolete inventories. In connection with our restructuring programs implemented in fiscal 2009, we took a $3.6 million charge for excess and obsolete inventories.
In connection with the acquisitions of RTS and Nexus, we allocated the purchase price to the net assets acquired based on the fair value of each asset and liability. As part of this allocation, we valued certain inventory and deferred revenue balances above and below their pre-acquisition carrying values, respectively. These adjustments will reduce the profit we will record in connection with these transactions. Post acquisition, these adjustments will reduce our net income by $1.9 million. For fiscal year 2011, we reduced our net income by $1.3 million.
We received $1.3$14.1 million of proceeds from the sale of our stockreal estate offset, in part, by a former executive,$68.3 million used for acquisitions and will remit half$21.3 million of these proceedscash dividends paid to our insurance providers. We recorded $0.7shareholders.
Cash provided by operating activities was $53.8 million for fiscal year 2014 compared with $54.4 million for fiscal year 2013. In fiscal year 2014, cash provided by operating activities was composed primarily of $31.5 million of net income from this settlement. For further details on this litigation matter, see Part I, Item 3, Legal Proceedings.
For a discussionadjusted by $8.2 million for non-cash related charges and $14.1 million of our restructuringnet working capital improvements. Non-cash related charges in fiscal year 2014 consisted of $23.5 million of depreciation and amortization and $10.9 million of stock-based compensation offset by $27.4 million related to gains from the sale of intellectual property rights,divested businesses. The decrease in working capital is primarily due to a $12.1 million decrease in accounts receivable and a $9.6 million decrease in inventory. In fiscal year 2013, cash provided by operating activities was composed primarily of a $2.2 million net loss adjusted by $28.4 million for non-cash related charges and a $28.1 million decrease in net working capital. Non-cash related charges in fiscal year 2013 consisted of $24.2 million of depreciation and amortization and $7.8 million of stock-based compensation. The decrease in working capital was primarily due to a $15.5 million decrease in inventory and $9.0 million increase in deferred revenue. The change in assets and liabilities due to acquisitions and divestitures is treated as an investing activity, not as an operating activity.
Cash used in investing activities was $17.8 million for fiscal year 2014, and included $62.2 million of net purchases of marketable securities, $35.6 million used for the acquisition of DMS and our investment in BioCision, LLC and $5.5 million of capital expenditures offset, in part, by $85.4 million of net proceeds from the sale of divested businesses. In fiscal year 2013, we used $7.1 million of cash in investing activities, which consisted of $68.3 million used for acquisitions and $3.6 million of capital expenditures offset, in part, by $53.3 million of net sales of marketable securities and $14.1 million of net proceeds from the contract manufacturing businesssale of certain real estate in the United States and Switzerland.
Cash used in financing activities was $24.5 million for fiscal year 2014 compared with $19.5 million for fiscal year 2013. In fiscal year 2014, we used $22.9 million for the quarterly cash dividends we paid to our shareholders and an additional $3.2 million to acquire the outstanding interest of our majority-owned subsidiary in Korea. Cash used in financing activities for fiscal year 2013 consisted of $21.3 million for quarterly cash dividends partially offset by $1.8 million of cash generated from employee contributions to our employee stock purchase plans.
We had approximately $21.1 million of letters of credit outstanding related primarily to customer advances and other performance obligations at September 30, 2014. These arrangements guarantee the refund of advance payments received from customers in the event that the product is not delivered or warranty obligations are not fulfilled in compliance with the terms of the contract. While we do not anticipate that these obligations will be called, they could be called by the beneficiaries at any time before the expiration date of the particular letter of credit should we fail to meet certain contractual requirements.


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Our contractual obligations consist of the following at September 30, 2014 (in thousands):  
 Total 
Less than
One Year
 
One to
Three Years
 
Four to
Five Years
 Thereafter
Operating leases$12,472
 $5,140
 $5,132
 $2,107
 $93
Capital lease9,544
 881
 8,663
 
 
Pension funding2,082
 309
 619
 311
 843
Purchase commitments and other72,353
 68,385
 3,829
 139
 
Total contractual obligations$96,451
 $74,715
 $18,243
 $2,557
 $936
In March 2014, we exercised an option to renew the lease of a building and the lossrelated land on investment, seeour Chelmsford, Massachusetts campus. We have leased this building since 2002. By exercising this option, we also contracted to purchase the discussionbuilding at the end of the lease period. The assets acquired under the capital lease were recorded at the net present value of the minimum lease payments. The cost of the building and the land under the capital lease were included in the Consolidated Balance Sheets as property, plant and equipment at $6.4 million and $2.1 million, respectively, and the building is being depreciated over its estimated useful life.
As of September 30, 2014, the total amount of net unrecognized tax benefits for uncertain tax positions and the accrual for the related interest was $5.8 million, all of which represents a potential future cash outlay. We are unable to make a reasonably reliable estimate of the timing of the cash settlement for this liability since the timing of future tax examinations by various tax jurisdictions and the related resolution is uncertain.
We are a guarantor on a lease in Mexico that expires in January 2018. The remaining payments under this lease at September 30, 2014 are approximately $1.4 million.
On June 25, 2013, we filed a shelf registration statement on Form S-3 with the SEC to sell up to $200 million of securities, before any fees or expenses of the offering. Securities that may be sold include common stock, preferred stock, warrants, debt securities, depository shares, purchase contracts and purchase units. Any such offering, if it does occur, may happen in one or more transactions. Specific terms of any securities to be sold will be described in supplemental filings with the SEC. This registration statement will expire on July 1, 2016.
Our Board of Directors declared the following dividends during the fiscal years ended September 30, 2014 and 2013 (in thousands, except per share data):  
Declaration Date 
Dividend
per
Share
 
Record
Date
 
Payment
Date
 Total
Fiscal year Ended September 30, 2014        
  November 12, 2013 $0.08
 December 6, 2013 December 27, 2013 $5,391
  February 5, 2014 0.08
 March 7, 2014 March 28, 2014 5,408
  May 7, 2014 0.08
 June 6, 2014 June 27, 2014 5,344
  July 30, 2014 0.10
 September 5, 2014 September 26, 2014 6,732
Fiscal year Ended September 30, 2013        
  November 7, 2012 $0.08
 December 7, 2012 December 28, 2012 $5,311
  January 30, 2013 0.08
 March 8, 2013 March 29, 2013 5,361
  May 8, 2013 0.08
 June 7, 2013 June 28, 2013 5,316
  August 7, 2013 0.08
 September 6, 2013 September 27, 2013 5,340
On November 5, 2014, our Board of Directors approved a cash dividend of $0.10 per share of our resultscommon stock. The total dividend of approximately $6.7 million will be paid on December 26, 2014 to shareholders of record at the close of business on December 5, 2014. Dividends are declared at the discretion of our Board of Directors and depend on actual cash from operations, above.our financial condition and capital requirements and any other factors our Board of Directors may consider relevant. We intend to pay quarterly cash dividends in the future; however, the amount and timing of these dividends may be impacted by the cyclical nature of certain markets that we serve. We may reduce, delay or cancel a quarterly cash dividend based on the severity of a cyclical downturn.


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Recent Accounting Pronouncements
In June 2009,July 2013, the Financial Accounting Standards Board, (“FASB”) issued an amendment to the accounting and disclosure requirements for the consolidation of variable interest entities (“VIEs”), which requires a qualitative approach to identifying a controlling financial interest in a VIE, and requires ongoing assessment of whether an entity is a VIE and whether an interest in a VIE makes the holder the primary beneficiary of the VIE. On October 1, 2010 we adopted this standard, which had no impact on our financial position or results of operations.
In December 2010, the FASB, issued an amendment to the accounting requirementsguidance for presentation of goodwill, which requiresunrecognized tax benefits. The prior guidance related to unrecognized tax benefits did not explicitly address financial statement presentation of unrecognized tax benefits when a qualitative approach to considering impairment fornet operating loss carryforward, a reporting unitsimilar tax loss or a tax credit carryforward exists. The amended guidance eliminates the existing diversity in practice in the presentation of


33


unrecognized tax benefits in these instances. Under the amended guidance, an unrecognized tax benefit, or a portion of an unrecognized tax benefit, will be presented in the financial statements as a reduction of a deferred tax asset when an operating loss carryforward, a similar tax loss or a tax credit carryforward exists, with zero or negative carrying value.limited exceptions. This amended guidance is effective for fiscal years beginning on or after December 15, 2010. We do not believe that the2013. The adoption of this standardguidance will not have a material impact on our financial position or results of operations.
In December 2010,April 2014, the FASB issued an amendment to the accounting requirementsguidance for reporting discontinued operations. The amended guidance raises the threshold for disposals to qualify as a discontinued operation by requiring a component of an entity that is held for sale, or has been disposed of by sale, to represent a strategic shift that has or will have a major effect on operations and financial results. Under the amended guidance, a strategic shift could include the disposal of a major line of business, combinations, which establishesa major geographical area, a major equity method investment or other major parts of an entity. In addition, the new guidance allows companies to have significant continuing involvement and continuing cash flows with the discontinued operation. The amended guidance is effective for fiscal years beginning on or after December 15, 2014. Early adoption is permitted but not required for disposals, or classifications as held for sale, that have not been previously reported in financial statements. We have elected not to adopt this amended guidance in regard to the Granville-Phillips discontinued operation.
In May 2014, the FASB issued new accounting guidance for reporting revenue recognition. The guidance recognizes revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The five step process may make it possible that more judgment and reporting standards for pro formaestimation will be required within the revenue recognition process than required under existing generally accepted accounting principles in the United States, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and earnings ofallocating the combined entity for the current and comparable reporting periods.transaction price to each separate performance obligation. This guidance is effective for fiscal years beginning after December 15, 2010.2016. Early adoption is not permitted. We do not believe thatare evaluating the adoption of this standard will have a material impact on our financial position or results of operations.
In May 2011, the FASB issued updated accounting guidance related to fair value measurements and disclosures that result in common fair value measurements and disclosures between GAAP and International Financial Reporting Standards. This guidance includes amendments that clarify the intent about the application of existing fair value measurements and disclosures, and change a principle or requirement for fair value measurements or disclosures. This guidance is effective for interim and annual periods beginning after December 15, 2011. We do not believe that the adoption of this guidance will have a material impact on our financial position orand results of operations.
In June 2011, the FASB issued an amendment to the accounting guidance for presentation of comprehensive income. Under the amended guidance, a company may present the total of comprehensive income, the components of net income, and the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This authoritative guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholder’s equity. The amendment is effective for interim and annual periods beginning after December 15, 2011. Other than a change in presentation, we do not believe that the adoption of this guidance will have a material impact on our financial position or results of operations.
In September 2011, the FASB issued new guidance intended to simplify goodwill impairment testing. Entities will be allowed to perform a qualitative assessment on goodwill impairment to determine whether a quantitative assessment is necessary. This new guidance is effective for goodwill impairment tests performed in interim and annual periods beginning after December 15, 2011. We do not believe that the adoption of this guidance will have a material impact on our financial position or results of operations.
Item 7A.
Quantitative and Qualitative Disclosures About Market Risk
We are exposed to a variety of market risks, including changes in interest rates affecting the return on our cash and cash equivalents, short-term and long-term investments and fluctuations in foreign currency exchange rates.
Interest Rate Exposure
As ourOur cash and cash equivalents consist principally of money market securities which are short-term in nature, our exposure to market risk related to interest rate fluctuations for these investments is not significant.nature. Our short-term and long-term investments consist mostly of highly rated corporate debt securities, U.S. Treasury securities, and as such, market risk to these investments is not significant.obligations of U.S. Government Agencies and other municipalities. At September 30, 2011,2014, the unrealized loss position on marketable securities was $192,000,$38,000, which is included in “Accumulated other comprehensive income” in the consolidated balance sheets. We did not have any realized losses on marketable securities for the year ended September 30, 2011.Consolidated Balance Sheets. A hypothetical 100 basis point change in interest rates would result in an annual change of approximately $2.1 million in interest income earned.


38


Currency Rate Exposure
We have transactions and balances denominated in currencies other than the U.S. dollar. Most of these transactions or balances are denominated in Euros, sterlingBritish Pounds and a variety of Asian currencies. Sales in currencies other than the U.S. dollar were 17%30% of our total sales for the fiscal year ended September 30, 2011.2014. These foreign sales were made primarily by our foreign subsidiaries, which have cost structures that substantially align with the currency of sale.
In the normal course of our business, we have short-term advances between our legal entities that are subject to foreign currency exposure. These short-term advances were approximately $16.6$18.7 million at September 30, 2011,2014, and relate to the Euro, British Pound and a variety of Asian currencies. A majorityWe mitigate the impact of potential currency translation losses on these short-term intercompany advances by the timely settlement of each transaction, generally within 30 days. We also utilize forward contracts to mitigate our exposures to currency movement. We incurred a foreign currency loss of $0.1$1.2 million for the fiscal year 2011ended September 30, 2014, which relates to the currency fluctuation on these advances between the time the transaction occurs and the ultimate settlement of the transaction. A hypothetical 10% change in foreign exchange rates at September 30, 20112014 would result in a $1.7$0.5 million change in our net income (loss). We mitigate the impactincome.


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40



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders
of Brooks Automation, Inc.:
Chelmsford, Massachusetts
In our opinion, the consolidated financial statements listed in
We have audited the accompanying index present fairly, in all material respects, the financial positionconsolidated balance sheets of Brooks Automation, Inc. and its subsidiaries at September 30, 2011 and 2010, and the results of their operations and their cash flows for each of the three years in the period ended September 30, 2011 in conformity with accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2011, based on criteria established2014 and 2013 and the related consolidated statements of operations, comprehensive income (loss), changes inInternal Control — Integrated Framework issued by equity, and cash flows for the Committee of Sponsoring Organizationsyears then ended. These financial statements are the responsibility of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A.management. Our responsibility is to express opinionsan opinion on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the auditsaudit to obtain reasonable assurance about whether the financial statements are free of material misstatementmisstatement. An audit also includes examining, on a test basis, evidence supporting the amounts and whether effectivedisclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Brooks Automation, Inc. at September 30, 2014 and 2013 and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Brooks Automation, Inc.’s internal control over financial reporting was maintainedas of September 30, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) and our report dated November 13, 2014 expressed an unqualified opinion thereon.
/s/ BDO USA, LLP
Boston, Massachusetts
November 13, 2014





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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

In our opinion, the consolidated statements of operations, comprehensive income (loss), changes in equity and cash flows for the year ended September 30, 2012 present fairly, in all material respects.respects, the results of their operations and cash flows of Brooks Automation, Inc. and its subsidiaries for the year ended September 30, 2012, in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our auditsresponsibility is to express an opinion on these financial statements based on our audit. We conducted our audit of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements includedare 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. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provideaudit provides a reasonable basis for our opinions.opinion.

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP

Boston, Massachusetts
November 28, 201121, 2012, except for the effects of discontinued operations discussed in Note 3 as to which the date is November 13, 2014


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37


BROOKS AUTOMATION, INC.
         
  September 30,
  September 30,
 
  2011  2010 
  (In thousands, except share and per share data) 
 
ASSETS
Current assets        
Cash and cash equivalents $58,833  $59,823 
Restricted cash  1,293    
Marketable securities  65,695   49,011 
Accounts receivable, net  76,701   92,273 
Inventories, net  107,654   115,787 
Prepaid expenses and other current assets  10,348   10,437 
         
Total current assets  320,524   327,331 
Property, plant and equipment, net  68,596   63,669 
Long-term marketable securities  81,290   33,593 
Goodwill  84,727   48,138 
Intangible assets, net  44,314   11,123 
Equity investment in joint ventures  34,612   31,746 
Other assets  2,557   2,624 
         
Total assets $636,620  $518,224 
         
 
LIABILITIES AND EQUITY
Current liabilities        
Accounts payable $40,199  $65,734 
Deferred revenue  14,073   4,365 
Accrued warranty and retrofit costs  7,438   8,195 
Accrued compensation and benefits  17,288   13,677 
Accrued restructuring costs  293   3,509 
Accrued income taxes payable  4,015   1,040 
Accrued expenses and other current liabilities  12,433   11,635 
         
Total current liabilities  95,739   108,155 
Income taxes payable  11,728   12,446 
Long-term pension liability  7,161   5,466 
Other long-term liabilities  3,394   2,805 
         
Total liabilities  118,022   128,872 
         
Commitments and contingencies (Note 18)        
Equity        
Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued and outstanding at September 30, 2011 and 2010      
Common stock, $0.01 par value, 125,000,000 shares authorized, 79,737,189 shares issued and 66,275,320 shares outstanding at September 30, 2011, 78,869,331 shares issued and 65,407,462 shares outstanding at September 30, 2010  797   789 
Additional paid-in capital  1,809,287   1,803,121 
Accumulated other comprehensive income  19,480   19,510 
Treasury stock at cost, 13,461,869 shares at September 30, 2011 and 2010  (200,956)  (200,956)
Accumulated deficit  (1,110,599)  (1,233,649)
         
Total Brooks Automation, Inc. stockholders’ equity  518,009   388,815 
Noncontrolling interests in subsidiaries  589   537 
         
Total equity  518,598   389,352 
         
Total liabilities and equity $636,620  $518,224 
         
 September 30,
2014
 September 30,
2013
 (In thousands, except share and per share data)
Assets   
Current assets   
Cash and cash equivalents$94,114
 $82,971
Restricted cash
 177
Marketable securities68,130
 45,900
Accounts receivable, net80,106
 77,483
Inventories93,567
 94,411
Deferred tax assets19,009
 16,839
Assets held for sale
 27,778
Prepaid expenses and other current assets19,387
 9,030
Total current assets374,313
 354,589
Property, plant and equipment, net50,183
 47,506
Long-term marketable securities83,212
 44,491
Long-term deferred tax assets67,563
 99,146
Goodwill109,501
 97,924
Intangible assets, net59,550
 60,088
Equity method investments28,944
 25,687
Other assets4,772
 7,332
Total assets$778,038
 $736,763
Liabilities and equity   
Current liabilities   
Accounts payable$33,740
 $35,392
Capital lease obligation881
 
Deferred revenue26,279
 19,610
Accrued warranty and retrofit costs6,499
 7,260
Accrued compensation and benefits21,663
 14,225
Accrued restructuring costs3,475
 1,412
Accrued income taxes payable1,808
 1,058
Deferred tax liabilities808
 19
Liabilities held for sale
 132
Accrued expenses and other current liabilities18,688
 13,453
Total current liabilities113,841
 92,561
Long-term capital lease obligation7,417
 
Long-term tax reserves5,708
 6,115
Long-term deferred tax liabilities2,567
 921
Long-term pension liability1,774
 815
Other long-term liabilities3,842
 3,695
Total liabilities135,149
 104,107
Commitments and contingencies (Note 22)
 
Equity   
Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding
 
Common stock, $0.01 par value, 125,000,000 shares authorized, 80,375,777 shares issued and 66,913,908 shares outstanding at September 30, 2014, 80,039,104 shares issued and 66,577,235 shares outstanding at September 30, 2013804
 800
Additional paid-in capital1,834,619
 1,825,499
Accumulated other comprehensive income15,687
 22,604
Treasury stock at cost, 13,461,869 shares(200,956) (200,956)
Accumulated deficit(1,007,265) (1,015,991)
Total Brooks Automation, Inc. stockholders’ equity642,889
 631,956
Noncontrolling interest in subsidiaries
 700
Total equity642,889
 632,656
Total liabilities and equity$778,038
 $736,763


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

38

42






BROOKS AUTOMATION, INC.
             
  Year Ended September 30, 
  2011  2010  2009 
  (In thousands, except per share data) 
 
Revenues            
Product $611,117  $531,807  $167,259 
Services  76,988   61,165   51,447 
             
Total revenues  688,105   592,972   218,706 
             
Cost of revenues            
Product  411,610   377,466   155,231 
Services  53,474   49,211   48,547 
Impairment of long-lived assets        20,924 
             
Total cost of revenues  465,084   426,677   224,702 
             
Gross profit (loss)  223,021   166,295   (5,996)
             
Operating expenses            
Research and development  39,846   31,162   31,607 
Selling, general and administrative  102,542   85,597   91,231 
Impairment of goodwill        71,800 
Impairment of long-lived assets        14,588 
Restructuring charges  1,036   2,529   12,806 
             
Total operating expenses  143,424   119,288   222,032 
             
Operating income (loss)  79,597   47,007   (228,028)
Interest income  1,153   1,121   2,719 
Interest expense  (65)  (80)  (454)
Gain on sale of intellectual property rights     7,840    
Gain on sale of contract manufacturing business  45,009       
Loss on investment     (191)  (1,185)
Other income, net  1,882   367   31 
             
Income (loss) before income taxes and equity in earnings (losses) of joint ventures  127,576   56,064   (226,917)
Income tax provision (benefit)  1,954   (2,746)  643 
             
Income (loss) before equity in earnings (losses) of joint ventures  125,622   58,810   (227,560)
Equity in earnings (losses) of joint ventures  2,782   215   (213)
             
Net income (loss) $128,404  $59,025  $(227,773)
Net income attributable to noncontrolling interests  (52)  (43)  (85)
             
Net income (loss) attributable to Brooks Automation, Inc.  $128,352  $58,982  $(227,858)
             
Basic net income (loss) per share attributable to
Brooks Automation, Inc. common stockholders
 $1.99  $0.92  $(3.62)
             
Diluted net income (loss) per share attributable
to Brooks Automation, Inc. common stockholders
 $1.97  $0.92  $(3.62)
             
Shares used in computing earnings (loss) per share            
Basic  64,549   63,777   62,911 
Diluted  65,003   64,174   62,911 
 Year ended September 30,
 2014 2013 2012
 (In thousands, except per share data)
Revenue     
Product$387,032
 $335,011
 $402,505
Services95,816
 87,429
 86,478
Total revenue482,848
 422,440
 488,983
Cost of revenue     
Product252,688
 229,411
 267,448
Services62,823
 60,722
 62,082
Total cost of revenue315,511
 290,133
 329,530
Gross profit167,337
 132,307
 159,453
Operating expenses     
Research and development52,649
 46,209
 44,717
Selling, general and administrative111,098
 96,516
 97,978
Restructuring and other charges6,289
 6,380
 3,153
Pension settlement
 
 8,937
In-process research and development
 
 3,026
Total operating expenses170,036
 149,105
 157,811
Operating income (loss)(2,699) (16,798) 1,642
Interest income950
 1,032
 1,213
Interest expense(202) (2) (14)
Other income, net256
 1,227
 660
Income (loss) before income taxes and equity in earnings of equity method investments(1,695) (14,541) 3,501
Income tax benefit(1,980) (4,985) (126,201)
Income (loss) before equity in earnings of equity method investments285
 (9,556) 129,702
Equity in earnings of equity method investments1,235
 2,442
 2,133
Income (loss) from continuing operations1,520
 (7,114) 131,835
Income from discontinued operations, net of tax30,002
 4,964
 5,000
Net income (loss)31,522
 (2,150) 136,835
Net income attributable to noncontrolling interests(161) (65) (46)
Net income (loss) attributable to Brooks Automation, Inc.$31,361
 $(2,215) $136,789
Basic net income (loss) per share attributable to Brooks Automation, Inc. common stockholders:     
Income (loss) from continuing operations$0.02
 $(0.11) $2.02
Income from discontinued operations, net of tax0.45
 0.08
 0.08
Basic net income (loss) per share attributable to Brooks Automation, Inc.$0.47
 $(0.03) $2.10
Diluted net income (loss) per share attributable to Brooks Automation, Inc. common stockholders:     
Income (loss) from continuing operations$0.02
 $(0.11) $2.01
Income from discontinued operations, net of tax0.44
 0.08
 0.08
Diluted net income (loss) per share attributable to Brooks Automation, Inc. common stockholders$0.46
 $(0.03) $2.08
Dividend declared per share$0.34
 $0.32
 $0.32
Weighted-average shares used in computing earnings (loss) per share:     
Basic66,648
 65,912
 65,128
Diluted67,644
 65,912
 65,722


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

39

43







BROOKS AUTOMATION, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWSCOMPREHENSIVE INCOME (LOSS)

             
  Year Ended September 30, 
  2011  2010  2009 
  (In thousands) 
 
Cash flows from operating activities            
Net income (loss) $128,404  $59,025  $(227,773)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:            
Depreciation and amortization  17,249   18,420   25,856 
Impairment of assets        107,312 
Gain on sale of intellectual property rights     (7,840)   
Stock-based compensation  6,752   6,567   5,817 
Amortization of premium on marketable securities  2,283   942   127 
Undistributed (earnings) losses of joint ventures  (383)  (215)  213 
Gain on sale of contract manufacturing business  (45,009)      
Loss on disposal of long-lived assets  10   4   17 
Loss on investment     191   1,185 
Changes in operating assets and liabilities, net of acquisitions and disposals:            
Accounts receivable  9,916   (53,163)  29,963 
Inventories  (19,131)  (31,341)  21,779 
Prepaid expenses and other current assets  1,806   (499)  4,527 
Accounts payable  (15,099)  39,352   (10,947)
Deferred revenue  1,841   1,487   (676)
Accrued warranty and retrofit costs  (1,420)  2,483   (2,496)
Accrued compensation and benefits  2,036   (913)  (3,869)
Accrued restructuring costs  (3,212)  (4,123)  (5,007)
Accrued expenses and other current liabilities  1,607   (2,505)  (2,522)
             
Net cash provided by (used in) operating activities  87,650   27,872   (56,494)
             
Cash flows from investing activities            
Purchases of property, plant and equipment  (6,455)  (3,472)  (11,339)
Purchases of marketable securities  (186,718)  (117,473)  (59,091)
Sale/maturity of marketable securities  120,095   84,546   75,628 
Increase in restricted cash  (1,293)      
Proceeds from the sale of the contract manufacturing business  78,249       
Acquisitions, net of cash acquired  (88,309)      
Proceeds from the sale of intellectual property rights     7,840    
Purchase of intangible assets     (892)   
Other  181   243   1,055 
             
Net cash (used in) provided by investing activities  (84,250)  (29,208)  6,253 
             
Cash flows from financing activities            
Proceeds from the issuance of common stock under stock option and stock purchase plans  1,358   1,245   1,248 
Common stock dividend paid  (5,180)      
             
Net cash (used in) provided by financing activities  (3,822)  1,245   1,248 
             
Effects of exchange rate changes on cash and cash equivalents  (568)  (71)  (1,291)
             
Net decrease in cash and cash equivalents  (990)  (162)  (50,284)
Cash and cash equivalents, beginning of year  59,823   59,985   110,269 
             
Cash and cash equivalents, end of year $58,833  $59,823  $59,985 
             
Supplemental disclosures:            
Cash paid during the year for interest $65  $80  $454 
Cash paid (refunded) during the year for income taxes, net $1,042  $(1,866) $246 
 Year ended September 30,
 2014 2013 2012
 (In thousands)
Net income (loss)$31,522
 $(2,150) $136,835
Comprehensive income (loss), net of tax:     
Change in cumulative translation adjustment(6,296) (2,113) (2,406)
Change in unrealized gain (loss) on marketable securities(104) (135) 393
Change in fair value on cash flow hedges(14) 14
 
Actuarial gain (loss)(503) 1,109
 (606)
Pension settlement
 87
 8,937
Comprehensive income (loss), net of tax24,605
 (3,188) 143,153
Comprehensive income attributable to noncontrolling interests(161) (65) (46)
Comprehensive income (loss) attributable to Brooks Automation, Inc., net of tax$24,444
 $(3,253) $143,107



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

40

44






BROOKS AUTOMATION, INC.
                                         
                       Total
       
              Accumulated
        Brooks
       
     Common
        Other
        Automation,
       
  Common
  Stock at
  Additional
  Comprehensive
  Comprehensive
        Inc.
  Noncontrolling
    
  Stock
  Par
  Paid-In
  Income
  Income
  Accumulated
  Treasury
  Stockholders’
  Interests in
  Total
 
  Shares  Value  Capital  (Loss)  (Loss)  Deficit  Stock  Equity  Subsidiaries  Equity 
  (In thousands, except share data) 
 
Balance September 30, 2008
  77,044,737  $770  $1,788,891      $18,063  $(1,064,773) $(200,956) $541,995  $409  $542,404 
Shares issued under stock option, restricted stock and purchase plans, net  838,436   9   911                   920       920 
Stock-based compensation          5,817                   5,817       5,817 
Comprehensive income (loss):                                        
Net loss             $(227,773)      (227,858)      (227,858)  85   (227,773)
Currency translation adjustments              4,276   4,276           4,276       4,276 
Changes in unrealized gain on marketable securities              471   471           471       471 
Actuarial loss arising in the year              (6,492)  (6,492)          (6,492)      (6,492)
                                         
Comprehensive loss             $(229,518)                        
                                         
Balance September 30, 2009
  77,883,173   779   1,795,619       16,318   (1,292,631)  (200,956)  319,129   494   319,623 
Shares issued under stock option, restricted stock and purchase plans, net  986,158   10   935                   945       945 
Stock-based compensation          6,567                   6,567       6,567 
Comprehensive income (loss):                                        
Net income             $59,025       58,982       58,982   43   59,025 
Currency translation adjustments              4,229   4,229           4,229       4,229 
Changes in unrealized loss on marketable securities              (36)  (36)          (36)      (36)
Actuarial loss arising in the year              (1,001)  (1,001)          (1,001)      (1,001)
                                         
Comprehensive income             $62,217                         
                                         
Balance September 30, 2010
  78,869,331   789   1,803,121       19,510   (1,233,649)  (200,956)  388,815   537   389,352 
Shares issued under stock option, restricted stock and purchase plans, net  867,858   8   (586)                  (578)      (578)
Stock-based compensation          6,752                   6,752       6,752 
Common stock dividend declared                      (5,302)      (5,302)      (5,302)
Comprehensive income (loss):                          ��             
Net income             $128,352       128,352       128,352   52   128,404 
Currency translation adjustments              1,459   1,459           1,459       1,459 
Changes in unrealized loss on marketable securities              (445)  (445)          (445)      (445)
Actuarial loss arising in the year              (1,044)  (1,044)          (1,044)      (1,044)
                                         
Comprehensive income             $128,322                         
                                         
Balance September 30, 2011
  79,737,189  $797  $1,809,287      $19,480  $(1,110,599) $(200,956) $518,009  $589  $518,598 
                                         
 Year ended September 30,
 2014 2013 2012
 (In thousands)
Cash flows from operating activities     
Net income (loss)$31,522
 $(2,150) $136,835
Adjustments to reconcile net income (loss) to net cash provided by operating activities:     
Depreciation and amortization23,459
 24,155
 21,620
Impairment of intangible assets398
 1,960
 
Impairment of other assets2,621
 
 
Stock-based compensation10,912
 7,757
 8,647
Amortization of premium on marketable securities1,255
 1,274
 2,401
Undistributed earnings of equity method investments(1,235) (2,442) (2,133)
Deferred income tax benefit(1,779) (2,936) (122,136)
Pension settlement
 87
 8,937
Gain on disposal of businesses(27,444) 
 
Loss (gain) on disposal of long-lived assets13
 (1,394) (63)
Changes in operating assets and liabilities, net of acquisitions and disposals:     
Accounts receivable12,098
 6,422
 (784)
Inventories9,598
 15,490
 5,874
Prepaid expenses and other current assets(12,325) 4,359
 5,801
Accounts payable(11,924) 3,123
 (11,182)
Deferred revenue5,900
 8,971
 (4,684)
Accrued warranty and retrofit costs(1,102) (1,806) (123)
Accrued compensation and benefits6,783
 (2,625) (4,878)
Accrued restructuring costs2,161
 (972) 1,930
Accrued pension997
 (950) (5,772)
Accrued expenses and other current liabilities1,873
 (3,934) (4,252)
Net cash provided by operating activities53,781
 54,389
 36,038
Cash flows from investing activities     
Purchases of property, plant and equipment(5,518) (3,635) (8,653)
Purchases of marketable securities(174,287) (91,740) (132,015)
Sale/maturity of marketable securities112,085
 145,023
 131,317
Proceeds from divestitures85,369
 
 
Acquisitions, net of cash acquired(35,625) (68,331) (9,216)
Decrease in restricted cash177
 586
 530
Other investment
 
 (3,000)
Proceeds from the sale of property, plant and equipment
 14,082
 
Payment of deferred leasing cost
 (3,134) 
Net cash used in investing activities(17,799) (7,149) (21,037)
Cash flows from financing activities     
Proceeds from issuance of common stock, net of issuance costs1,838
 1,851
 1,705
Repayment of capital lease obligations(239) 
 
Acquisition of noncontrolling interest(3,189) 
 
Common stock dividend paid(22,875) (21,328) (20,953)
Net cash used in financing activities(24,465) (19,477) (19,248)
Effects of exchange rate changes on cash and cash equivalents(374) 569
 53
Net increase (decrease) in cash and cash equivalents11,143
 28,332
 (4,194)
Cash and cash equivalents, beginning of year82,971
 54,639
 58,833
Cash and cash equivalents, end of year$94,114
 $82,971
 $54,639
Supplemental disclosures:     
       Cash paid during the year for interest$202
 $2
 $14
       Cash paid (refunded) during the year for income taxes, net$1,084
 $(762) $4,282
Supplemental disclosure of non-cash investing and financing activities:     
Acquisition of buildings and land through capital lease$8,537
 $
 $

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

41

45






BROOKS AUTOMATION, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
 Common
Stock
Shares
 Common
Stock at
Par
Value
 Additional
Paid-In
Capital  
 Accumulated
Other
Comprehensive
Income
 Accumulated
Deficit
 Treasury
Stock
 Total
Brooks
Automation,
Inc.
Stockholders’
Equity  
 Noncontrolling
Interests in
Subsidiaries
 Total
Equity  
 (In thousands, except share data)
Balance September 30, 201179,737,189
 $797
 $1,809,287
 $17,324
 $(1,108,105) $(200,956) $518,347
 $589
 $518,936
Shares issued under stock option, restricted stock and purchase plans, net53,368
 1
 (228)  
  
  
 (227)  
 (227)
Stock-based compensation 
  
 8,647
  
  
  
 8,647
  
 8,647
Common stock dividend declared 
  
  
  
 (21,208)  
 (21,208)  
 (21,208)
Net income        136,789
   136,789
 46
 136,835
Currency translation adjustments 
  
  
 (2,406)  
  
 (2,406)  
 (2,406)
Changes in unrealized gain on marketable securities 
  
  
 393
    
 393
  
 393
Actuarial loss arising in the year 
  
  
 (606)    
 (606)  
 (606)
Recognition of pension settlement in earnings 
  
  
 8,937
  
  
 8,937
  
 8,937
Balance September 30, 201279,790,557
 798
 1,817,706
 23,642
 (992,524) (200,956) 648,666
 635
 649,301
Shares issued under stock option, restricted stock and purchase plans, net248,547
 2
 186
  
  
  
 188
  
 188
Stock-based compensation 
  
 7,607
  
  
  
 7,607
  
 7,607
Common stock dividend declared 
  
  
  
 (21,252)  
 (21,252)  
 (21,252)
Net loss 
  
  
  
 (2,215)  
 (2,215) 65
 (2,150)
Currency translation adjustments 
  
  
 (2,113)  
  
 (2,113)  
 (2,113)
Changes in unrealized loss on marketable securities, net of tax of $79      (135)  
  
 (135)  
 (135)
Changes in unrealized gain on cash flow hedges, net of tax of $9 
  
  
 14
  
  
 14
  
 14
Actuarial gain arising in the year, net of tax of $360 
  
  
 1,109
  
  
 1,109
  
 1,109
Recognition of pension settlement in earnings 
  
  
 87
  
  
 87
  
 87
Balance September 30, 201380,039,104
 800
 1,825,499
 22,604
 (1,015,991) (200,956) 631,956
 700
 632,656
Shares issued under restricted stock and purchase plans, net336,673
 4
 386
  
  
  
 390
  
 390
Stock-based compensation 
  
 11,062
  
  
  
 11,062
  
 11,062
Common stock dividend declared 
  
  
  
 (22,635)  
 (22,635)  
 (22,635)
Acquisition of noncontrolling interest    (2,328)       (2,328) (861) (3,189)
Net income 
  
  
  
 31,361
  
 31,361
 161
 31,522
Currency translation adjustments 
  
  
 (6,296)  
  
 (6,296)  
 (6,296)
Changes in unrealized loss on marketable securities, net of tax of $62 
  
  
 (104)  
  
 (104)  
 (104)
Changes in unrealized loss on cash flow hedges, net of tax of $9 
  
  
 (14) 

  
 (14)  
 (14)
Actuarial loss arising in the year, net of tax of $471 
  
  
 (503)  
  
 (503)  
 (503)
Balance September 30, 201480,375,777
 $804
 $1,834,619
 $15,687
 $(1,007,265) $(200,956) $642,889
 $
 $642,889

The accompanying notes are an integral part of these consolidated financial statements.
42






BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    
Nature of the Business
Brooks Automation, Inc. (“Brooks” or the “Company”) is a leading worldwide provider of automation vacuum and instrumentationcryogenic solutions for multiple markets including semiconductor manufacturing and life sciences, and clean energy.sciences. The Company’sCompany's technologies, engineering competencies and global service capabilities provide customers speed to market and ensure high uptime and rapid response, which equate to superior value in their mission-critical controlled environments. Since 1978, the Company has been a leading partner to the global semiconductor manufacturing markets and through product development initiatives and strategic business acquisitions, Brooks has expanded its reachproducts and services to meet the needs of customers in the life sciences, analytical and researchscience markets and clean energy solutions.in technology markets adjacent to semiconductor.
In the second quarter of fiscal year 2014, the Company determined that its Granville-Phillips Gas Analysis & Vacuum Measurement ("Granville-Phillips") business met the criteria to be reported as a discontinued operation. As a result, the Company’s historical financial statements have been revised to present the operating results of the Granville-Phillips business as a discontinued operation. The results of operations from the Granville-Phillips business are presented as “Income from discontinued operations, net of tax” in the Consolidated Statements of Operations. Assets and liabilities identifiable within the Granville-Phillips business are reported as "Assets held for sale" and "Liabilities held for sale," respectively, in the Consolidated Balance Sheets. The Company has not separated cash flows of the Granville-Phillips business from those of its continuing operations and has not revised its historical statements of cash flows. The discussion in the notes to these consolidated financial statements, unless otherwise noted, relate solely to the Company's continuing operations.
2.    
Summary of Significant Accounting Policies
Principles of Consolidation and Basis of Presentation
The consolidated financial statements include the accounts of the Company and all majority-owned subsidiaries. All intercompany accounts and transactions are eliminated. Equity investments in which the Company exercises significant influence but does not control and is not the primary beneficiary are accounted for using the equity method.method of accounting.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States ("GAAP") requires management to make 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 revenuesrevenue and expenses during the reporting period. Significant estimates are associated with accounts receivable, inventories, intangible assets other than goodwill, goodwill, long-lived assets, derivative financial instruments, deferred income taxes, warranty obligations, revenue recognized using the percentage of completion method, pension obligations and warranty obligations.stock-based compensation expense. Although the Company regularly assesses these estimates, actual results could differ from those estimates. Changes in estimates are recorded in the period in which they become known.
Foreign Currency Translation
Some transactions of the Company and its subsidiaries are made in currencies different from their functional currency. Foreign currency gains (losses) on these transactions or balances are recorded in “Other (income) expense,income, net” when incurred. Net foreign currency transaction losses included in income (loss) before income taxestotaled $1.2 million, $0.9 million and equity in earnings (losses) of joint ventures totaled $0.1$0.4 million $0.3 million and $0.6 million for the fiscal years ended September 30, 2011, 20102014, 2013 and 2009,2012, respectively. Fornon-U.S. subsidiaries, assets and liabilities are translated at period-end exchange rates, and income statementstatements of operations items are translated at the average exchange rates for the period. The local currency for the majority of foreign subsidiaries is considered to be the functional currency for all of the Company's foreign subsidiaries and, accordingly, translation adjustments are reported in “Accumulated other comprehensive income”.income.” Foreign currency translation adjustments are one of the components of comprehensive income (loss).
Derivative Financial Instruments
All derivatives, whether designated in a hedging relationship or not, are recorded on the Consolidated Balance Sheets at fair value. The accounting for changes in fair value of a derivative instrument depends on whether it has been designated and qualifies as part of a hedging relationship and further, on the type of hedging relationship. For those derivative instruments that are designated and qualify as hedging instruments, the Company must designate the hedging instrument, based on the exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a foreign operation. Certain derivatives held by the Company are not designated as hedges but are used in managing exposure to changes in foreign exchange rates.


43

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

A fair value hedge is a derivative instrument designated for the purpose of hedging the exposure of changes in fair value of an asset or a liability resulting from a particular risk. If the derivative is designated as a fair value hedge, the changes in the calculationfair value of comprehensive net income (loss)the derivative and of the hedged item attributable to the hedged risk are both recognized in the same caption in the Consolidated Statements of Operations and Consolidated Statements of Comprehensive Income (Loss).
A cash flow hedge is a derivative instrument designated for the purpose of hedging the exposure to variability in future cash flows resulting from a particular risk. If the derivative is designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are recorded in accumulated other comprehensive income and are recognized in the results of operations when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow hedges are recognized in the results of operations.
A hedge of a net investment in a foreign operation is achieved through a derivative instrument designated for the purpose of hedging the exposure of changes in value of investments in foreign subsidiaries. If the derivative is designated as a hedge of a net investment in a foreign operation, the effective portions of changes in the fair value of the derivative are recorded in other comprehensive income as a part of the currency translation adjustment. Ineffective portions of net investment hedges are recognized in the results of operations.
For derivative instruments not designated as hedging instruments, changes in fair value are recognized in the Consolidated Statements of Operations as gains and losses consistent with the classification of the underlying risk.
Cash and Cash Equivalents
Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less. At September 30, 20112014 and 2010,2013, cash equivalents were $9.6$6.4 million and $21.1$7.8 million, respectively. Cash equivalents are held at cost which approximates fair value due to their short-term maturities and varying interest rates.
Concentration of Credit Risk
Financial instruments, thatwhich potentially subject the Company to concentrationconcentrations of credit risk, consist primarilyare cash deposits and cash equivalents, marketable securities, derivative instruments and accounts receivable. All of trade receivables and temporary and long-termthe Company’s cash, investments in treasury bills and commercial paper. The


46


BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Company restricts its investments to U.S. government and corporatecash equivalents, marketable securities and mutual fundsderivative instruments are maintained by major financial institutions. The Company invests cash not required for use in operations in high credit quality securities based on the Company's investment policy. The Company's investment policy provides guidelines and limits regarding credit quality, investment concentration, investment type, and maturity that invest in U.S. government securities.the Company believes will provide liquidity and reduce risk of loss of capital. The Company’s customers are concentrated in the semiconductor industry, and relatively few customers account for a significant portion of the Company’s revenues. The Company’s top ten largest customers account for approximately 55% of revenues for the year ended September 30, 2011. Two of the Company’s customers accounted for 15% and 13%, respectively, of revenues for the year ended September 30, 2011.revenue. The Company regularly monitors the creditworthiness of its customers and believes that it has adequately provided for exposure to potential credit losses. The Company's top ten largest customers account for approximately 37%, 40% and 45% of revenue for the fiscal years ended September 30, 2014, 2013 and 2012, respectively. One of the Company's customers accounted for 11% of revenue for the fiscal year ended September 30, 2014. At September 30, 2014, no single customer represented 10% of the Company’s accounts receivable.
Fair Value of Financial Instruments
The Company's financial instruments include cash and cash equivalents, restricted cash, marketable securities, derivative instruments, accounts receivable, note receivable and accounts payable. In the case of marketable securities and derivative instruments, measurement is based on quoted market prices for identical or similar securities or instruments which represent fair value. The carrying amounts of other financial instruments reported in the Consolidated Balance Sheets approximate their fair value because of their short-term nature.
Accounts Receivable and Allowance for Doubtful Accounts
and Sales Returns
Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’sCompany's best estimate of the amount of probable credit losses in its existing accounts receivable. The Company determines the allowance based on a number of factors, including an evaluation of customer credit worthiness, the age of the outstanding receivable, economic trends and historical write-off experience. The Company reviews its allowance for doubtful accounts quarterly. Past dueon a quarterly basis and changes in estimates are reflected in the period in which they become known. Accounts receivable balances are reviewed individually for collectibility. Account balances are charged offwritten-off against the allowance for doubtful accounts when the Company feels it is probabledetermines that the receivable willis not be recovered.recoverable. Provisions for doubtful accounts are recorded in "Selling, general and administrative expenses" in the Consolidated Statements of Operations. The allowance for sales returns is the Company's best estimate of probable returns from its customers. Provisions for sales returns are recorded in "Revenue" in the Consolidated Statements of Operations. The Company does not have any off-balance-sheet credit exposure related to its customers.


Inventories44

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Inventories
Inventories are stated at the lower of cost or market, cost being determined using a standard costing system which approximates cost based on afirst-in, first-out method. The Company provides inventory reserves for excess, obsolete or damaged inventory based on changes in customer demand, technology and other economic factors.
Fixed Assets, Intangible Assets and Impairment of Long-lived Assets
Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method. Depreciable lives are summarized below:
 
Buildings20 - 40 years
Computer equipment and software2 - 7 years
Machinery and equipment2 - 10 years
Furniture and fixtures3 - 10 years
Leasehold improvements and equipment held under capital leases are amortized over the shorter of their estimated useful lives or the term of the respective leases. Equipment used for demonstrations to customers is included in machinery and equipment and is depreciated over its estimated useful life. Repair and maintenance costs are expensed as incurred.
The Company has developed software for internal use. In accordance with U.S. GAAP, internalInternal and external labor costs incurred during the application development stage of a project are capitalized. Costs incurred prior to application development and post implementation are expensed as incurred. Training and data conversion costs are also expensed as incurred.
When an asset is retired, the cost of the asset disposed of and the related accumulated depreciation are removed from the accounts, and any resulting gain or loss is included in the determination of operating profitincome (loss).
As a result of the Company’sCompany's acquisitions, the Company has identified generalfinite-lived intangible assets other than goodwill. GeneralFinite-lived intangible assets other than goodwill are valued based on estimates of future cash flows and amortized over their estimated useful life.life using methods that approximate the pattern in which the economic benefits are expected to be realized.
Patents include capitalized direct costs associated with obtaining patents as well asFinite-lived intangibles assets that were acquired as a part of business combinations. Capitalized patent costs are amortized using the straight-line method over the


47


BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
estimated economic life of the patents. As of September 30, 2011 and 2010, the net book value of the Company’s patents was $0.8 million and $0.9 million, respectively.
Intangiblesfixed assets other than goodwill are tested for impairment when indicators of impairment are present. For purposes of this test, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. When the Company determines that indicators of potential impairment exist, the next step of the impairment test requires that the potentially impaired long-lived asset group is tested for recoverability. The test for recoverability compares the undiscounted future cash flows of the long-lived asset group to its carrying value. The future cash flow period is based on the future service life of the primary asset within the long-lived asset group. If the carrying values of the long-lived asset group exceed the future cash flows, the assets are considered to be potentially impaired. The next step in the impairment process is to determine the fair value of the individual net assets within the long-lived asset group. If the aggregate fair values of the individual net assets of the group are less than their carrying values, an impairment is recorded equal to the excess of the aggregate carrying value of the group over the aggregate fair value. The loss is allocated to each asset within the group based on their relative carrying values, with no asset reduced below its fair value.
The amortizable lives of intangible assets, including those identified as a result of purchase accounting, are summarized as follows:
 
Patents7 - 15 years
Completed technology25 - 10 years
License agreements5 years
Trademarks and trade names2 - 6 years
Non-competition agreements3 - 5 years
Customer relationships45 - 13 years
Goodwill
Goodwill represents the excess of purchase price over the fair value of net tangible and identifiable intangible assets of the businesses the Company acquired. The Company performs an annual impairment test of its goodwill on September 30 of each fiscal year unless interim indicators of impairment exist. Management's judgments are based on market and operational conditions at the time of the evaluation and can include management's best estimate of future business activity, which in turn drives estimates of future cash flows from these assets and the reporting units with associated goodwill. These periodic evaluations could cause management to conclude that impairment factors exist, (see Note 7).
requiring an adjustment of these assets to their then-current fair market value. Future business conditions and/or activity could differ materially from the projections made by management causing the need for additional adjustments and impairment charges.
The testing of goodwill for impairment is performed at a level referred to as a reporting unit. A reporting unit is either the “operating segment level” or one level below, which is referred to as a “component”.“component.” The level at which the impairment test is performed requires an assessment as to whether the operations below the operating segment constitute a self-sustaining


45

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

business, in which case testing is generally required to be performed at this level. The Company currently has threefour reporting units that have goodwill, including two reporting unitscomponents that are part of the Brooks Product Solutions operating segment, and the soleone reporting unit included inthat is the Brooks Global Services operating segment and one reporting unit that is the Brooks Life Science Systems operating segment.
The Company determines the fair value of its reporting units using thean Income Approach, specifically the Discounted Cash Flow Method (“DCF Method”). The DCF Method includes five year future cash flow projections, which are discounted to present value, and an estimate of terminal values, which are also discounted to present value. Terminal values represent the present value an investor would pay today for the rights to the cash flows of the business for the fiscal years subsequent to the discrete cash flow projection period. The Company considers the DCF Method to be the most appropriate valuation indicator as the DCF analyses are based on management’smanagement's long-term financial projections. Given the dynamic nature of the cyclical semiconductor equipment market, management’smanagement's projections as of the valuation date are considered more objective since otherthan comparisons to market metrics for peer companies, which fluctuate over the cycle.


48


BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
However, the Company also uses market-based valuation techniques to test the reasonableness of the reporting unit fair values determined by the DCF Method and compares the aggregate fair value of its reporting units plus its net corporate assets to its overall market capitalization.
Goodwill impairment testing is a two-step process. The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of each reporting unit to its respective carrying amount, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is not considered impaired. If the reporting unit’sunit's carrying amount exceeds the fair value, the second step of the goodwill impairment test must be completed to measure the amount of the impairment loss, if any. The second step compares the implied fair value of goodwill with the carrying value of goodwill. The implied fair value is determined by allocating the fair value of the reporting unit to all of the assets and liabilities of that unit, the excess of the fair value over amounts assigned to its assets and liabilities is the implied fair value of goodwill. The implied fair value of goodwill determined in this step is compared to the carrying value of goodwill. If the implied fair value of goodwill is less than the carrying value of goodwill, an impairment loss is recognized equal to the difference.
Pension Plans
The Company sponsors a defined benefit pension plan in the U.S. and twonon-U.S. defined benefit pension plans. The cost and obligations of these arrangementsthe Company's defined benefit pension plans are calculated using many assumptions to estimate the benefits that the employee earns while working, the amount of which cannot be completely determined until the benefit payments cease. Major assumptions used in the accounting for these employee benefit plans include the discount rate, expected return on plan assets and rate of increase in employee compensation levels. Assumptions are determined based on Company data and appropriate market indicators in consultation with third-party actuaries, and are evaluated each year as of the plans’plans' measurement date.
Revenue Recognition
Product revenues arerevenue is associated with the sale of hardware systems, components and spare parts as well as product license revenue. Service revenues arerevenue is associated with service contracts, repairs, upgrades and field service. Shipping and handling fees, if any, billed to customers, if any, are recognized as revenue. The related shipping and handling costs are recognized in cost of sales.revenue.
Revenue from product sales that does not include significant customization is recorded upon delivery and transfer of risk of loss toThe Company recognizes revenue when the customer provided there isfollowing criteria have been met: persuasive evidence of an arrangement exists with the customer; delivery of the specified products has occurred or services have been rendered; fees are fixed or determinable,determinable; and collection of the related receivable is reasonably assured and, if applicable,assured. The arrangements for the sale of certain of the Company's products include customer acceptance criteria have been successfully demonstrated. Customer acceptanceprovisions. These provisions include final testing and acceptance carried out priorare included in these arrangements to shipment. These pre-shipment testing and acceptance procedures ensure that the product delivered to the customer meets published specifications. Prior to shipment of its products, the Company typically inspects the product, tests its functionality and documents that it meets the published specification requirements beforespecifications. In general, the Company's inspections and testing replicate the testing that will be performed at the customer site prior to final acceptance by the customer. In situations where the Company has sufficient history of objectively demonstrating that the acceptance criteria in the arrangement has been achieved prior to delivery, which are typically for products with limited customization, revenue is recognized in advance of final customer acceptance because there are no remaining substantive contingencies. Arrangements with certain customers also include contingent revenue provisions, in which a portion of the selling price of a delivered item is contingent on the delivery of other items or on the delivered items meeting specified performance criteria. In arrangements that include contingent revenue, the amount of revenue that the Company recognizes is limited to the lower of either: the amount billed that is not contingent on acceptance; or the value of the arrangement consideration allocated to the delivered elements, if the product is shipped.part of a multiple-element arrangement. When significant on siteon-site customer acceptance provisions are present in the arrangement, or the Company is not able to objectively demonstrate that the acceptance criteria have been met, revenue is recognized upon completion of customerreceiving acceptance testing.
from the customer.
Revenue from product sales that does include significant customization, which primarily include life science automation systems, is recorded using the percentage of completion method. Under the percentage of completion method whereby revenue is


46

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

recorded as work progresses based on a percentage that incurred costslabor effort to date bearbears to total estimated costs. In addition,projected labor effort. Profit estimates on long-term contracts are reviewedrevised periodically based on changes in circumstances, and any losses on contracts are accrued in the same period the Company determines that the loss is probable. If the Company determines that a regular basisloss is probable, it estimates the amount of the loss by comparing total estimated contract revenue to determinethe total estimated contract costs. Significant judgment is required when estimating total labor costs and progress to completion on these arrangements, as well as whether a loss exists. A loss willis expected to be accruedincurred on the contract due to several factors, including the degree of customization required and the customer’s existing environment. The Company uses historical experience, project plans, and an assessment of the risks and uncertainties inherent in the periodarrangement to establish these estimates. Uncertainties in which estimatedthese arrangements include implementation delays or performance issues that may or may not be within the Company's control. The Company also has certain arrangements for products with significant customization that include contractual terms that prohibit use of the percentage of completion method. In some circumstances, percentage of completion is not appropriate, as it relates to the contractual rights of the customer, and in these cases the Company uses the completed-contract method. Under the completed-contract method, income is recognized only when a contract revenue is less than the current estimate of total contract costs.
completed or substantially completed.
Revenue associated with service agreements is generally recognized ratably over the term of the contract.contract, with payments from customers being recorded as deferred revenue. Revenue from repair services or upgrades of customer-owned equipment is recognized upon completion of the repair effort and upon the shipment of the repaired item back to the customer. In instances where the repair or upgrade includes installation, revenue is recognized when the installation is completed.
A portion of the revenue arrangements for the Company's products, particularly in sales of life science automation systems, are multiple element arrangements that can include product, service and other elements. For revenue arrangements with multiple elements, arrangement consideration is allocated to each element based upon their relative selling price using vendor-specific objective evidence (“VSOE”), or third-party evidence (“TPE”) or based upon the relative selling price using estimated selling prices if VSOE or TPE does not exist. The Company relies primarily on estimated selling prices because it generally does not have VSOE or TPE. The Company recognizes revenue on each element of the arrangement in accordance with its policies for revenue recognition. The fair value of any undelivered elements is deferred until the undelivered element is delivered and all other criteria for revenue recognition have been met.
Warranty
The Company offers warranties on the sales of certain of its products and records an accrual for estimated future claims. Such accruals are based upon historical experience and management’smanagement's estimate of the level of future claims.


49


BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Research and Development Expenses
Research and development costs are charged to expense when incurred.
Stock-Based Compensation
The Company measures compensation cost for all employee stock awards at fair value on the date of grant and recognizes compensation expense over the service period for awards expected to vest. The fair value of restricted stock is determined based on the number of shares granted and the excess of the quotedclosing price of the Company’sCompany's common stock over the exercise price of the restricted stockquoted on NASDAQ on the date of grant, if any, and the fair value of stock options is determined using the Black-Scholes valuation model. Such value is recognized as expense ratably over the service period, net of estimated forfeitures. The estimation of stock awards that will ultimately vest requires significant judgment. The Company considers many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience. In addition, for stock-based awards where vesting is dependent upon achieving certain operating performance goals, the Company estimates the likelihood of achieving the performance goals. Actual results, and future changes in estimates, may differ substantially from the Company’sCompany's current estimates. Restricted stock with market-based vesting criteria is valued using a lattice model.
During the year ended September 30, 2011, the Company granted 366,000 shares of restricted stock to members of senior management of which 183,000 shares vest over the service period and the remaining 183,000 shares vest upon the achievement of certain financial performance goals which will be measured at the end of fiscal year 2013. Total compensation on these awards is a maximum of $4.5 million. Awards subject to service criteria are being recorded to expense ratably over the vesting period. Awards subject to performance criteria are expensed over the related service period when attainment of the performance condition is considered probable. The total amount of compensation recorded will depend on the Company’s achievement of performance targets. Changes to the projected attainment of performance targets during the vesting period may result in an adjustment to the amount of cumulative compensation recorded as of the date the estimate is revised.
The following table reflects stock-based compensation expense, excluding amounts related to discontinued operations, recorded during the fiscal years ended September 30, 2011, 20102014, 2013 and 20092012 (in thousands):
             
  Year Ended September 30, 
  2011  2010  2009 
 
Stock options $  $170  $292 
Restricted stock  6,248   5,944   5,092 
Employee stock purchase plan  504   453   433 
             
  $6,752  $6,567  $5,817 
             
 Year ended September 30,
 2014 2013 2012
Restricted stock$10,469
 $7,112
 $7,949
Employee stock purchase plan445
 496
 549
 $10,914
 $7,608
 $8,498


47

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Valuation Assumptions for Stock Options and Employee Stock Purchase Plans
No stock options were granted for the years ended September 30, 2011, 2010 and 2009.
Plan
The fair value of shares issued under the employee stock purchase plan was estimated on the commencement date of each offering period using the Black-Scholes option-pricing model with the following assumptions:assumptions for the fiscal years ended September 30, 2014, 2013 and 2012:
 
             
  Year Ended September 30, 
  2011  2010  2009 
 
Risk-free interest rate  0.2%   0.2%   0.7%
Volatility  50%   58%   70%
Expected life  6 months    6 months    6 months 
Dividend yield  0% - 3%   0%   0%


50


BROOKS AUTOMATION, INC.
 Year ended September 30,
 2014 2013 2012
Risk-free interest rate0.1% 0.1% 0.1%
Volatility25% 32% 45%
Expected life6 months
 6 months
 6 months
Dividend yield3.40%
 3.30% - 3.40%
 2.75% - 3.30%
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Expected volatilities are based on historical volatilities of the Company’s common stock; the expected life represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting schedules and the Company’s historical exercise patterns; and theThe risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected life of the option.share; expected volatilities are based on historical volatilities of the Company's common stock; and the expected life represents the weighted average period of time that employee stock purchase plan shares are expected to be purchased. Dividend yields are projected based on the Company’sCompany's history of dividends declared, and management’smanagement's intention for future dividend declarations.
Equity Incentive Plans
The Company’sCompany's equity incentive plans are intended to attract and retain employees and to provide an incentive for them to assist the Company to achieve long-range performance goals and to enable them to participate in the long-term growth of the Company. The equity incentive plans consist of plans under which employees may be granted options to purchase shares of the Company’sCompany's stock, restricted stock and other equity incentives. Stock options generally had a vesting period of four4 years and are exercisable for a period not to exceed seven10 years from the date of issuance. Restricted stock awards generally vest over two to four years, with certain restricted stock awards vesting immediately.3 years. At September 30, 2011,2014, a total of 5,266,2102,486,983 shares were reserved and available for the issuance of awards under the plans.
Income Taxes
The Company records income taxes using the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax bases, and operating loss and tax credit carryforwards. The Company’sCompany's consolidated financial statements contain certain deferred tax assets which have arisen primarily as a result of operating losses, as well as other temporary differences between financial and tax accounting. A valuation allowance is established if the likelihood of realization of the deferred tax assets is not considered more likely than not based on an evaluation of objective verifiable evidence.positive and negative evidence and the extent to which that evidence is objectively verifiable. Significant management judgment is required in determining the Company’sCompany's provision for income taxes, the Company’sCompany's deferred tax assets and liabilities and any valuation allowance recorded against those net deferred tax assets. The Company evaluates the weight of all available evidence to determine whether it is more likely than not that some portion or all of the net deferred income tax assets will not be realized.
The calculation of ourthe Company's tax liabilities involves dealing with uncertainties in the application of complex tax regulations. We recognizeThe Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. If we determinethe Company determines that a tax position will more likely than not be sustained on audit, the second step requires usthe Company to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we havethe Company has to determine the probability of various possible outcomes. We re-evaluateThe Company re-evaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors such as changes in facts or circumstances, changes in tax law, new audit activity, and effectively settled issues. Determining whether an uncertain tax position is effectively settled requires judgment. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision.
Earnings (Loss) Per Share
Basic earnings (loss) per share is calculated based on the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share is calculated based on the weighted average number of common shares and dilutive common equivalent shares assumed outstanding during the period. Shares used to


51


BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
compute diluted earnings (loss) per share exclude common share equivalents if their inclusion would have an anti-dilutive effect.


Fair Value48

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company’s financial instruments include cash and cash equivalents, marketable securities, accounts receivable, accounts payable and accrued expenses. The carrying amounts of these items reported in the balance sheets approximate their fair value at September 30, 2011 and 2010. In the case of marketable securities, measurement is based on quoted market prices.
Reclassifications
Certain reclassifications have been made in the 2010 and 2009 consolidated financial statements to conform to the 2011 presentation.
Recent Accounting Pronouncements
In June 2009,July 2013, the Financial Accounting Standards Board (“FASB”("FASB") issued an amendment to the accounting and disclosure requirementsguidance for presentation of unrecognized tax benefits. The prior guidance related to unrecognized tax benefits did not explicitly address financial statement presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. The amended guidance eliminates the consolidationexisting diversity in practice in the presentation of variable interest entities (“VIEs”), which requiresunrecognized tax benefits in these instances. Under the amended guidance, an unrecognized tax benefit, or a qualitative approach to identifyingportion of an unrecognized tax benefit, will be presented in the financial statements as a controlling financial interest inreduction of a VIE, and requires ongoing assessmentdeferred tax asset when an operating loss carryforward, a similar tax loss or a tax credit carryforward exists, with limited exceptions. This amended guidance is effective for fiscal years beginning on or after December 15, 2013. The adoption of whether an entity isthis guidance will not have a VIE and whether an interest in a VIE makes the holder the primary beneficiary of the VIE. On October 1, 2010 the Company adopted this standard, which had nomaterial impact on itsthe Company's financial position or results of operations.
In December 2010,April 2014, the FASB issued an amendment to the accounting requirementsguidance for reporting discontinued operations. The amended guidance raises the threshold for disposals to qualify as a discontinued operation by requiring a component of goodwill, which requiresan entity that is held for sale, or has been disposed of by sale, to represent a qualitative approachstrategic shift that has or will have a major effect on operations and financial results. Under the amended guidance, a strategic shift could include the disposal of a major line of business, a major geographical area, a major equity method investment or other major parts of an entity. In addition, the new guidance allows companies to considering impairmenthave significant continuing involvement and continuing cash flows with the discontinued operation. The amended guidance is effective for afiscal years beginning on or after December 15, 2014. Early adoption is permitted but not required for disposals, or classifications as held for sale, that have not been previously reported in financial statements. The Company has elected not to adopt this amended guidance in regard to the Granville-Phillips discontinued operation.
In May 2014, the FASB issued new accounting guidance for reporting unit with zerorevenue recognition. The guidance recognizes revenue when promised goods or negative carrying value.services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The five step process may make it possible that more judgment and estimation will be required within the revenue recognition process than required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. This guidance is effective for fiscal years beginning after December 15, 2010.2016. Early adoption is not permitted. The Company does not believe thatis evaluating the adoption of this standard will have a material impact on its financial position or results of operations.
In December 2010, the FASB issued an amendment to the accounting requirements of business combinations, which establishes accounting and reporting standards for pro forma revenue and earnings of the combined entity for the current and comparable reporting periods. This guidance is effective for fiscal years beginning after December 15, 2010. The Company does not believe that the adoption of this standard will have a material impact on its financial position or results of operations.
In May 2011, the FASB issued updated accounting guidance related to fair value measurements and disclosures that result in common fair value measurements and disclosures between GAAP and International Financial Reporting Standards. This guidance includes amendments that clarify the intent about the application of existing fair value measurements and disclosures, and change a principle or requirement for fair value measurements or disclosures. This guidance is effective for interim and annual periods beginning after December 15, 2011. The Company does not believe that the adoption of this guidance will have a material impact on its financial position orand results of operations.


In June 2011, the FASB issued an amendment to the accounting guidance for presentation49

In September 2011, the FASB issued new guidance intended to simplify goodwill impairment testing. Entities will be allowed to perform a qualitative assessment on goodwill impairment to determine whether a quantitative


52


BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — - (Continued)

3. Discontinued Operations
The Granville-Phillips business unit develops, manufactures, sells and services vacuum measurement and gas analysis instrumentation to semiconductor and non-semiconductor customers. In March 2014, the Company entered into an agreement to sell this business for $87.0 million in cash. The sale was completed on May 30, 2014. The Company’s historical financial statements have been revised to present the operating results of the Granville-Phillips business as a discontinued operation. Summarized results of the discontinued operation are as follows for the fiscal years ended September 30, 2014, 2013 and 2012 (in thousands):
assessment is necessary. This new guidance is effective
 Year Ended September 30,
 2014 2013 2012
Revenue$18,921
 $28,512
 $30,468
      
Income from discontinued operations$4,888
 $7,779
 $7,919
Gain on the sale of the discontinued operations56,804
 
 
Income tax provision31,690
 2,815
 2,919
Income from discontinued operations, net of tax$30,002
 $4,964
 $5,000
The operating results of the Granville-Phillips business were historically included in the results of operations for goodwill impairment tests performedthe Brooks Product Solutions segment, except for revenues and expenses associated with support and repair services that were included in interim and annual periods beginning after December 15, 2011. the Brooks Global Services segment.
The Company does not believe thatpresentation of the adoption of this guidance will haveGranville-Phillips business as a materialdiscontinued operation had no impact on its financial positionpreviously reported net income (loss) or resultsstockholders' equity.
Assets and liabilities identifiable within the Granville-Phillips business are reported as "Assets held for sale" and "Liabilities held for sale," respectively, in the Consolidated Balance Sheets. The major classes of operations.assets and liabilities of the discontinued operation as of September 30, 2013 is as follows (in thousands):
3.  Acquisitions and Divestiture
Acquisition
 September 30,
2013
Inventory$3,308
Property, plant and equipment364
Goodwill24,106
Assets held for sale$27,778
  
Deferred revenue$43
Accrued warranty and retrofit costs89
Liabilities held for sale$132


50

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

4.     Acquisitions
Acquisitions Completed in 2014
On April 1, 2011,30, 2014, the Company acquired all of the outstanding stock of RTS Life Science LimitedDynamic Micro Systems Semiconductor Equipment GmbH (“RTS”DMS”), a privately held company,German provider of automated contamination control solutions for $3.4front opening unified pod, or "FOUP," carriers and reticle storage, which are targeted at improving yield of semiconductor processes at semiconductor fabrication plants. The Company paid, in cash, aggregate merger consideration of $31.6 million, net of cash acquired. RTS is a provider of automation solutions to the life sciences market, located in Manchester, United Kingdom. The acquisition provides the Company with biobanking and compound sample management, and the ability to leverageof DMS expands the Company’s existing automation technologies with those of RTS.
capabilities at semiconductor fabrication plants for yield improvement on new technology nodes.
The Company recorded the assets and liabilities of RTS were recordedassociated with DMS at their fair values as of the acquisition datedate. The preliminary amounts recorded were as follows (in thousands):
     
Accounts receivable $3,156 
Inventory  1,668 
Other current assets  1,008 
Property, plant and equipment  860 
Completed technology  1,524 
Customer relationships  577 
Trademarks and trade names  64 
Goodwill  3,556 
Accounts payable  (1,397)
Deferred revenue  (5,232)
Other current liabilities  (2,403)
     
Total purchase price, net of cash acquired $3,381 
     
Accounts receivable$15,262
Inventory10,051
Prepaid and other current assets2,727
Property, plant and equipment2,049
Completed technology3,610
Customer relationships7,100
Goodwill11,638
Accounts payable(10,393)
Accrued liabilities(5,522)
Deferred revenue(1,309)
Long-term deferred tax liabilities(3,588)
Total purchase price, net of cash acquired$31,625
The purchase price was allocated based on the fair value of the identified assets acquired and liabilities assumed as of the acquisition date from a market participant’s perspective.
The Company reached settlement on certain working capital adjustments with the sellers of DMS' stock in the fourth quarter of fiscal year 2014. As a result of this settlement, the Company will receive a refund of approximately $2.2 million from certain escrows established at the date of acquisition. The amount to be received is reflected in the allocation presented above as a reduction in the consideration transferred. At September 30, 2014, $3.2 million remained in escrow related to potential future claims against the sellers of DMS' stock. The Company has not yet completed the final allocation of the consideration paid in connection with the acquisition of DMS with respect to matters associated with the balances held in escrow and the potential impact of these matters on deferred tax liabilities. However, the Company expects to complete the final allocation within the measurement period.
The Company used the relief-from-royalty method, a form of the income approach, to value the completed technology acquired. The principle behind this method is that the value of an intangible asset is equal to the present value of the after-tax royalty savings attributable to owning that intangible asset. The Company used the excess-earnings method, a form of the income approach, to value the customer relationship acquired. The principle behind this method is that the value of the intangible asset is equal to the present value of the after-tax cash flows attributable to the intangible asset only. The weighted average amortization periods for intangible assets acquired in the DMS acquisition are 5.0 years for completed technologies and 8.0 years for customer relationships. The intangible assets acquired will be amortized using methods that approximate the pattern in which the economic benefits are expected to costbe realized, including variable declining balance and straight-line methods.
Goodwill represents the excess of revenuethe consideration transferred over its estimated useful lifethe net assets acquired and has been assigned to the Company's Brooks Product Solutions segment. Goodwill is primarily the result of 5 to 7 years,expected synergies from combining the customer relationships will be amortized to operating expense over 7 years andoperations of DMS with the trademarks and trade names will be amortized to operating expense over 3 years.Company. Goodwill arising from the acquisition willof DMS is not be deductible for tax purposes.
RTS’sThe operating results of DMS have been included in the Company’s results of operations for the Brooks Product Solutions segment from the acquisition date of the acquisition. Revenue from DMS for the fiscal year ended September 30, 2014 was $5.5 million and were not material. Pro forma results are not provided as RTS’s resultsthe net loss was $4.5 million. The net loss includes charges to expense of operations were not material. Transaction costs$1.9 million related to thisthe step-up in value of the acquired inventories, $0.9 million of amortization expense and $0.3 million of restructuring charges.


51

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following pro forma summary presents consolidated information of the Company for the fiscal years ended September 30, 2014 and 2013, as if the acquisition were $188,000 for fiscal year 2011,of DMS occurred on October 1, 2012 (in thousands):
 Year ended September 30,
 2014 2013
Revenue$501,951
 $456,588
Income (loss) from continuing operations(4,788) (10,678)
Net income (loss) attributable to Brooks Automation, Inc.25,053
 (5,779)
The pro forma income (loss) from continuing operations and are includednet income (loss) attributable to Brooks Automation, Inc. have been adjusted to reflect additional amortization from adjustments to intangible assets as if those adjustments had been applied as of October 1, 2012.
Acquisitions Completed in selling, general and administrative expense.2013
Acquisition of Nexus
On July 25, 2011,In August 2013, the Company acquired allcertain assets and assumed certain liabilities of the outstanding stockMatrical, Inc.’s (“Matrical”) life science businesses (collectively “the Matrical Assets”) for cash consideration of Nexus Biosystems, Inc. (“Nexus”), a privately held company, for $84.9approximately $9.3 million, net of cash acquired. NexusMatrical is a U.S.Spokane, Washington-based, privately held company that provided biological sample preparation, management and storage solutions to customers in agricultural biotechnology, biotechnology, life science and pharmaceutical markets. The acquisition of the Matrical Assets provides the Company with the opportunity to enhance its existing product offerings in biobanking and sample management for the Brooks Life Science Systems segment.
In October 2012, the Company acquired all the outstanding stock of Crossing Automation Inc. (“Crossing”), a Fremont, California based provider of automation solutions and consumablesservices primarily to the life sciences market, with a product development, service and support operation locatedglobal semiconductor front-end markets. The Company paid, in Switzerland, and service and support locations in Japan and Germany.cash, an aggregate merger consideration of $59.0 million, net of cash acquired. The acquisition significantly enhancesof Crossing provides the breadthCompany with the opportunity to enhance its existing capabilities with respect to manufacturing of the Company’s product offering for its main target marketatmospheric and vacuum automation solutions within the life sciences industry, specifically biobanking and compound sample management. Shortly after completing the Nexus acquisition, the Company reorganized the management of Nexus and RTS into one operating segment, Brooks Life Science Systems.


53


BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
semiconductor front-end market.
The Company recorded the assets and liabilities associated with the purchase of Nexus were recordedthe Matrical Assets and Crossing at their fair values as of thetheir respective acquisition datedates. The amounts recorded were as follows (in thousands):
     
Accounts receivable $5,708 
Inventory  7,481 
Other current assets  4,522 
Property, plant and equipment  12,527 
Completed technology  6,000 
Customer relationships  31,000 
Trademarks and trade names  100 
Goodwill  33,033 
Accounts payable and accrued expenses  (6,563)
Deferred revenue  (3,692)
Other current liabilities  (1,534)
Deferred tax liabilities  (2,584)
Other long-term liabilities  (1,070)
     
Total purchase price, net of cash acquired $84,928 
     
 Matrical Assets Crossing
Accounts receivable$636
 $5,356
Inventory2,095
 8,668
Prepaid and other current assets103
 1,968
Property, plant and equipment534
 2,270
Completed technology500
 10,530
Customer relationships1,500
 20,010
Goodwill7,076
 26,453
Other long-term assets
 885
Debt(902) 
Accounts payable(294) (3,024)
Deferred revenue(351) (319)
Customer deposits(1,249) 
Other current liabilities(322) (5,560)
Other long-term liabilities
 (8,232)
Total purchase price, net of cash acquired$9,326
 $59,005
The estimated fair value attributed to the completed technologies was determinedpurchase prices were allocated based upon a discounted cash flow forecast utilizing the relief from royalty method. The royalty rate was determined to be 6% based on a review of comparable royalty arrangements. Cash flows were discounted at a rate of 17%. The fair value of the identified assets acquired and liabilities assumed as of the acquisition date from a market participant’s perspective. The Company finalized the purchase price allocations for these acquisitions within the measurement periods. Subsequent adjustments to the initially reported purchase price allocations were not material.
The Company used the relief-from-royalty method to value the completed technology and the excess-earnings method to value the customer relationships. The weighted-average amortization periods for the intangible assets acquired in connection with the Matrical Assets are 4.6 years for completed technologies will beand 7.0 years for customer relationships and are being amortized over a period of 6 years on ausing the straight-line basis, whichmethod because it approximates the pattern in which the economic benefits of the completed technologies are expected to be realized. The weighted-average amortization periods for intangible assets acquired in the Crossing acquisition are 7.7 years for


52

The estimated fair value attributed to theNOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

completed technologies and 8.0 years for customer relationships was determined based upon a discounted forecast of estimated net future cash flows to be generated from the relationships discounted at a rate of 17% — 18%. The fair value of customer relationships for systems will beand are being amortized over a period of 6 years, while the estimated fair value of customer relationships for consumables and service are expected to be amortized over a period of 13 years. The amortization will be amortized on a straight-line basis, which approximatesusing methods that approximate the pattern in which the economic benefits of the customer relationships are expected to be realized.
The fair value of the trade name will be amortized over 2 years on arealized, including variable declining balance and straight-line basis, which approximates the pattern in which the economic benefits of the trade names will be realized.
methods.
Goodwill represents the excess of the purchase price over the fair values of the net tangible and intangible assets acquired. Goodwill arisingacquired and is primarily the result of expected synergies from combining the acquired products with the Company’s existing products and integrating the operations of the acquired businesses into those of the Company. The goodwill resulting from the acquisition willof the Matrical Assets has been allocated to the Brooks Life Science Systems segment and goodwill resulting from the Crossing acquisition has been allocated to the Brooks Product Solutions and Brooks Global Services segments. Goodwill from the acquisition of the Matrical Assets is deductible for tax purposes. Goodwill from the acquisition of Crossing is not be deductible for tax purposes.
Acquisitions Completed in 2012
Nexus operating results have been includedIn March 2012, the Company acquired assets, consisting primarily of intellectual property, from Intevac, Inc. for $3.0 million. Management evaluated this asset purchase to determine if this acquisition would be considered an acquisition of a business. Since only limited assets were acquired, management concluded that the inputs and processes required to meet the definition of a business were not acquired, and therefore, this transaction was treated as the purchase of an asset group. The Company expensed essentially all of this asset purchase as an in-process research and development cost in 2012.
In December 2011, the Company acquired the Celigo® automated Cell Cytometer product line (“Celigo”) from Cyntellect, Inc., for $8.7 million in cash, plus a deferred cash payment of $0.5 million that was paid in July 2012. The Celigo product line provided life science customers with cellular imaging in a high-throughput and easy-to-use platform. The Celigo product line was part of the Brooks Life Science Systems segment and provided a complementary analysis tool for customers currently using the Company’s automated sample management systems.
The Company completed the sale of the Celigo product line in the Company’s results of operations from the acquisition date. Nexus revenues and net loss for the period from July 26, 2011 to September 30, 2011 was $4.9 million and $(3.2) million, respectively. The net loss includes charges to expense from thestep-up of acquired inventories of $0.7 million and $0.6 million of charges for excess and obsolete inventory based on an assessment of inventory performed in the fourthsecond quarter of fiscal year 2011.
2014. The following unaudited pro forma summary presents consolidated information of the Company as if the acquisition of Nexus occurred on October 1, 2009 (in thousands):
         
  Year Ended
  September 30,
  2011 2010
 
Revenue $720,989  $625,128 
Net income attributable to Brooks Automation, Inc.   124,114   70,205 


54


BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The pro forma net income has been adjusted to reflect additional amortization and depreciation expense from the adjustments to intangible assets and property, plant and equipment as if those adjustments had been applied as of October 1, 2009.
Nexus net income for fiscal year 2010 included a $12.0recorded impairment charges totaling $2.4 million gain from the bargain purchase of Nexus Biosystems AG (formerly Remp AG), which is included in the pro forma net income attributable to Brooks Automation, Inc. for fiscal year 2010.
Transaction costs related to this acquisition were $719,000 for fiscal year 2011,long-lived assets acquired with the Celigo product line in connection with the sale. The impairment charge is described more fully in “Note 8. Goodwill and are included in selling, general and administrative expense.Intangible Assets."
Divestiture
On April 20, 2011, the Company entered into an agreement with affiliates of Celestica Inc. (the “Buyers”) to sell the assets of its extended factory contract manufacturing business (the “Business”). The Buyers also agreed to assume certain liabilities related to the Business (the “Asset Sale”). The Asset Sale was completed on June 28, 2011 (the “Closing”). At the Closing, the Buyers paid the Company a total purchase price of $78.0 million in cash, plus $1.3 million as consideration for cash acquired in the Asset Sale. An additional $2.5 million of proceeds was paid during our fourth quarter of 2011, which represents a working capital normalizing adjustment. The Company paid $2.3 million of transaction expenses. During the three months ended June 30, 2011, the Company recorded a gain on this sale of $45.0 million, before income taxes. Income taxes directly attributable to this gain of $2.4 million were also recorded during the three months ended June 30, 2011.
The Company and the Buyers also entered into certain commercial supply and license agreements at the Closing which will govern the ongoing relationship between the Buyers and the Company. Pursuant to those agreements, the Company will supply the Buyers with certain products and has licensed to the Buyers certain intellectual property needed to run the Business and the Buyers will supply certain products to the Company. Due to the significance of these ongoing commercial arrangements, the sale did not qualify for discontinued operations treatment. Therefore, historical financial results of the divested business will not be segregated in the Company’s consolidated financial statements for the historical periods in which this business was part of the Company.
4.  5.     Marketable Securities
The Company invests its cash in marketable securities and classifies them asavailable-for-sale. The Company records these securities at fair value. Marketable securities reported as current assets represent investments that mature within one year from the balance sheet date. Long-term marketable securities represent investments with maturity dates greater than one year from the balance sheet date. At the time that the maturity dates of these investments become one year or less, the securities are reclassified to current assets. Unrealized gains and losses are excluded from earnings and reported inas a separate component of stockholders’ equityaccumulated other comprehensive income until they arethe security is sold or mature.matures. At the time of sale, any gains or losses, calculated by the specific identification method, will be recognized as a component of operating results.


55


BROOKS AUTOMATION, INC.
53

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — - (Continued)

The following is a summary of marketable securities (included in short and long-term marketable securities in the consolidated balance sheets)Consolidated Balance Sheets), including accrued interest receivable, as of September 30, 20112014 and 20102013 (in thousands):
 
                 
     Gross
  Gross
    
  Amortized
  Unrealized
  Unrealized
    
  Cost  Gains  Losses  Fair Value 
 
September 30, 2011:
                
U.S. Treasury securities and obligations of U.S. government agencies $53,342  $17  $(21) $53,338 
Corporate securities  66,045   50   (203)  65,892 
Mortgage-backed securities(1)  786   26   (3)  809 
Other debt securities  434         434 
Municipal securities  24,915   9   (67)  24,857 
Bank certificate of deposits  1,655         1,655 
                 
  $147,177  $102  $(294) $146,985 
                 
September 30, 2010:
                
U.S. Treasury securities and obligations of U.S. government agencies $38,319  $62  $(8) $38,373 
Corporate securities  38,617   185   (4)  38,798 
Mortgage-backed securities(2)  1,771   23   (4)  1,790 
Other debt securities  186         186 
Municipal securities  2,405   1   (2)  2,404 
Bank certificate of deposits  1,053         1,053 
                 
  $82,351  $271  $(18) $82,604 
                 
(1)Fair value amounts include approximately $0.7 million of investments in the Federal Home Loan Mortgage and Federal National Mortgage Association.
(2)Fair value amounts include approximately $0.8 million of investments in the Federal Home Loan Mortgage and Federal National Mortgage Association.
 Amortized
Cost
 Gross
Unrealized
Gains
 Gross
Unrealized
Losses
 Fair Value
September 30, 2014:       
U.S. Treasury securities and obligations of U.S. government agencies$26,052
 $1
 $(39) $26,014
Corporate securities74,614
 23
 (174) 74,463
Mortgage-backed securities964
 36
 
 1,000
Other debt securities7,358
 
 (10) 7,348
Municipal securities15,888
 1
 (16) 15,873
Bank certificate of deposits26,645
 2
 (3) 26,644
 $151,521
 $63
 $(242) $151,342
September 30, 2013:       
U.S. Treasury securities and obligations of U.S. government agencies$19,528
 $6
 $(13) $19,521
Corporate securities35,045
 11
 (47) 35,009
Mortgage-backed securities1,093
 25
 (1) 1,117
Other debt securities88
 
 
 88
Municipal securities25,199
 15
 (7) 25,207
Bank certificate of deposits9,451
 
 (2) 9,449
 $90,404
 $57
 $(70) $90,391
Gross realized gains on sales ofavailable-for-sale marketable securities included in “Other (income) expense”income, net” in the Consolidated Statements of Operations was $24,000$35,000, $57,000 and $10,000$15,000 for the fiscal years ended September 30, 20112014, 2013 and 2010,2012, respectively. There were no grossGross realized gainslosses of $8,000 and $36,000 for the yearfiscal years ended September 30, 2009.2014 and 2013, respectively, were also recorded in "Other income, net." There were no gross realized losses for the yearsfiscal year ended September 30, 2011, 2010 and 2009.
2012.
The fair value of the marketable securities at September 30, 20112014 by contractual maturity, are shown below.below (in thousands). Expected maturities willcould differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties (in thousands).penalties. 
     
  Fair Value 
 
Due in one year or less $65,695 
Due after one year through five years  78,280 
Due after ten years  3,010 
     
  $146,985 
     


56


BROOKS AUTOMATION, INC.
 Fair Value
Due in one year or less$68,130
Due after one year through five years79,885
Due after ten years3,327
 $151,342
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Gain (Loss) on Investment
During fiscal 2010 and 2009, the Company recorded a charge of $0.2 million and $1.2 million, respectively, related to its minority equity investment in a Swiss public company. The charges during fiscal year 2009 reflect an other than temporary impairment of this investment. The $0.2 million charge during fiscal 2010 represents the loss on the sale of this investment. As of September 30, 2010, the Company no longer had an equity investment in this entity.
5.  6.     Fair Value Measurements
The fair value measurement guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:
Level 11: Quoted prices in active markets for identical assets or liabilities as of the reporting date. Active markets are those in which transactions for the asset and liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.
Level 22:Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 33:Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.


54

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Assets and liabilities of the Company measured at fair value on a recurring basis as of September 30, 20112014 and 20102013 are summarized as follows (in thousands):
                 
     Fair Value Measurements at Reporting Date Using 
     Quoted Prices in
  Significant Other
  Significant
 
     Active Markets for
  Observable
  Unobservable
 
  September 30,
  Identical Assets
  Inputs
  Inputs
 
Description
 2011  (Level 1)  (Level 2)  (Level 3) 
 
Assets                
Cash Equivalents $9,576  $9,576  $  $ 
Available-for-sale securities
  146,985   63,331   83,654    
                 
Total Assets $156,561  $72,907  $83,654  $ 
                 
                
   Fair Value Measurements at Reporting Date Using 
   Quoted Prices in
 Significant Other
 Significant
    Fair Value Measurements at Reporting Date Using
   Active Markets for
 Observable
 Unobservable
 
 September 30,
 Identical Assets
 Inputs
 Inputs
 
 2010 (Level 1) (Level 2) (Level 3) 
Description September 30,
2014
 Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 Significant Other
Observable Inputs
(Level 2)
 Significant
Unobservable Inputs
(Level 3)
Assets                        
Cash Equivalents $21,130  $21,130  $  $ 
Cash equivalents $6,404
 $5,166
 $1,238
 $
Available-for-sale securities
  82,604   38,798   43,806     151,342
 
 151,342
 
         
Total Assets $103,734  $59,928  $43,806  $  $157,746
 $5,166
 $152,580
 $
         
Liabilities        
Foreign exchange contracts $58
 $
 $58
 $
 
    Fair Value Measurements at Reporting Date Using
Description September 30,
2013
 Quoted Prices in
Active Markets for
Identical Assets
(Level 1)
 Significant Other
Observable Inputs
(Level 2)
 Significant
Unobservable Inputs
(Level 3)
Assets        
Cash equivalents $7,754
 $6,152
 $1,602
 $
Available-for-sale securities 90,391
 2,199
 88,192
 
Foreign exchange contracts 31
 
 31
 
Total Assets $98,176
 $8,351
 $89,825
 $
Liabilities        
Foreign exchange contracts $5
 $
 $5
 $
Cash Equivalents
Cash equivalents of $9.6$5.2 million and $21.1$6.2 million at September 30, 20112014 and 2010,2013, respectively, consisting primarily of Money Market Funds, are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.


57


BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Available-For-Sale Securities
Available-for-sale securities Cash equivalents of $63.3$1.2 million and $38.8$1.6 million at September 30, 20112014 and 2010,2013, respectively, consisting primarily of Bank Certificate of Deposits, are classified within Level 2 of the hierarchy because they are not actively traded.
Available-For-Sale Securities
Available-for-sale securities of $2.2 million at September 30, 2013 consisting of highly rated Corporate Bonds, are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets of identical assets or liabilities.Available-for-sale securities of $83.7$151.3 million and $43.8$88.2 million at September 30, 20112014 and 2010,2013, respectively, consisting of Mortgage-Backed Securities, Municipal Securities, Bank Certificate of Deposits, andCommercial Paper, U.S. Treasury Securities and Obligations of U.S. Government AgenciesAgency Securities, and Mortgage-Backed Securities are classified within Level 2 of the fair value hierarchy because they are not actively traded and are valued using matrix pricing and benchmarking. Matrix pricing is a mathematical technique used to value securities by relying on the securities’ relationship to other benchmark quoted prices.
Foreign Exchange Contracts
6.  
Foreign exchange contract assets and liabilities are classified within Level 2 of the fair value hierarchy because there may not be an active market for each contract. However, the inputs used to calculate the value of the contract were obtained from an active market.
Nonrecurring Fair Value Measurements
In addition to the assets and liabilities recorded at fair value on a recurring basis, the Company has a note receivable that is measured at fair value on a nonrecurring basis. During the third quarter of fiscal year 2014, the Company evaluated the recoverability of a loan provided to a strategic partner (the "Borrower") and adjusted its value based on fair value methods. The loan is represented by a note receivable, which is classified as a Level 3 instrument, as the inputs used in the analysis are unobservable and required significant management judgment. The fair value of the loan was determined by considering the fair value of the collateral using valuation techniques, principally the discounted cash flow method, and the subordination of the Company’s note to debt provided by a new lender as described in "Note 11. Note Receivable." The fair value of the loan, which


55

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

the Company currently estimates to be $1.0 million, could be different under different conditions or different assumptions, including the varying assumptions regarding future cash flows of the Borrower or discount rates.
7.    Property, Plant and Equipment
Property, plant and equipment as of September 30, 20112014 and 20102013, excluding amounts related to the discontinued operations, were as follows (in thousands):
 
         
  September 30, 
  2011  2010 
 
Buildings and land $54,330  $43,455 
Computer equipment and software  68,476   69,278 
Machinery and equipment  49,105   50,499 
Furniture and fixtures  10,451   10,817 
Leasehold improvements  17,301   22,758 
Capital projects in progress  1,899   1,201 
         
   201,562   198,008 
Less accumulated depreciation and amortization  (132,966)  (134,339)
         
Property, plant and equipment, net $68,596  $63,669 
         
 September 30,
 2014 2013
Buildings and land$47,639
 $38,539
Computer equipment and software59,962
 72,240
Machinery and equipment42,104
 49,947
Furniture and fixtures4,774
 9,456
Leasehold improvements17,771
 13,937
Capital projects in progress1,528
 2,042
 173,778
 186,161
Less accumulated depreciation and amortization(123,595) (138,655)
Property, plant and equipment, net$50,183
 $47,506
 
Depreciation expense, excluding amounts related to the discontinued operations, was $12.6$12.7 million, $14.6$13.7 million and $15.6$13.1 million for the fiscal years ended September 30, 2011, 20102014, 2013 and 2009,2012, respectively.
8.     Goodwill and Intangible Assets
The Company recorded an impairment charge of $1.3 million to write-down certain buildings and leasehold improvements to fair value in fiscal 2009, as a result of underlying circumstances discussed in Note 7.
7.  Goodwill and Intangible Assets
The Company performs an annual impairment test of its goodwill on September 30 of each fiscal year unless interim indicators of impairment exist. Goodwill is considered to be impaired when the net book value of a reporting unit exceeds its estimated fair value. Fair values are estimated using a discounted cash flow methodology. Discounted cash flows are based on the businesses’ strategic plans and management’s best estimate of revenue growth and gross profit by each reporting unit. The Company recorded charges for the impairment of goodwill at March 31, 2009. The Company performed its goodwill impairment test as of September 30, 2011, 20102014 and 2009,2013, and determined that no adjustment to goodwill was necessary.
The Company experienced a weakness in demand for its products from the fourth quarter As of fiscal year 2007 through the second quarter of fiscal year 2009. In response to this downturn, management restructured the business, which resulted in a change in reporting units and operating segments. The Company reallocated goodwill to each of its newly formed reporting units as of March 31, 2009, based on such factors as the relative fair values of each reporting unit. Goodwill was reallocated to five of the Company’s seven reporting units as of March 31, 2009. This reallocation, in conjunction with a continued downturn in the semiconductor markets indicated that a potential impairment may exist. As such, the Company tested goodwill and other long-lived assets for impairment at March 31, 2009.


58


BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The Company determinedSeptember 30, 2014, the fair value of eachall reporting unit as of March 31, 2009 usingunits substantially exceeded the Income Approach, specifically the DCF Method.respective carrying values. The material assumptionsobservable inputs used in the Company's DCF Method include:for the reporting units include discount rates and revenue forecasts. Discount rates are based on a weighted averageat our above the Company's weighted-average cost of capital (“WACC”), which represents the average rate a business must pay its providers of debt and equity capital. The WACC used to test goodwill is derived from a group of comparable companies. The average WACC usedCompany derives discount rates that are commensurate with the risks and uncertainties inherent in the March 31, 2009 reallocationrespective businesses and its internally developed projections of goodwill was 16.2%. Management determines revenue forecasts based on its best estimate of near term revenue expectations which are corroborated by communications with customers, and longer-term projection trends, which are validated by published independent industry analyst reports. Revenue forecasts materially impactfuture cash flows. In addition, the amount of cash flow generated during the five year discrete cash flow period, and also impactCompany determined the terminal value asusing the Gordon growth method which assumes that the reporting unit will grow and generate free cash flow at a constant rate. The Company believes that the Gordon growth method is the most appropriate method for determining the terminal value because the terminal value is derived from projected revenue. calculated at the point in which the Company has assumed that the reporting units have reached stable growth rates.
The revenue forecasts used in the reallocation and assessment of goodwill as of March 31, 2009 were decreased from previously forecasted levels due to further market deterioration.
For threecomponents of the five reporting units containingCompany’s goodwill, excluding amounts related to the discontinued operations, by business segment at March 31, 2009, the Company determined that the carrying amount of their net assets exceeded their respective fair values, indicating that a potential impairment existed for each of those three reporting units. After completing the required steps of the goodwill impairment test, a goodwill impairment of $71.8 million was recordedSeptember 30, 2014 and 2013 are as of March 31, 2009.follows (in thousands): 
Under GAAP, the
 
Brooks
Product
Solutions
 
Brooks
Global
Services
 
Brooks
Life Science
Systems
 Other 
Total 
Gross goodwill at September 30, 2012$461,738
 $151,238
 $40,302
 $26,014
 $679,292
Acquisitions and adjustments during fiscal year 201320,899
 5,554
 7,137
 
 33,590
Gross goodwill at September 30, 2013482,637
 156,792
 47,439
 26,014
 712,882
Acquisitions and adjustments during fiscal year 201411,638
 
 (61) 
 11,577
Gross goodwill at September 30, 2014$494,275
 $156,792
 $47,378
 $26,014
 $724,459
Accumulated goodwill impairments at September 30, 2012$(437,706) $(151,238) $
 $(26,014) $(614,958)
Impairments recorded during fiscal year 2013
 
 
 
 
Accumulated goodwill impairments at September 30, 2013(437,706) (151,238) 
 (26,014) (614,958)
Impairments recorded during fiscal year 2014
 
 
 
 
Accumulated goodwill impairments at September 30, 2014$(437,706) $(151,238) $
 $(26,014) $(614,958)
Goodwill, less accumulated impairments at September 30, 2013$44,931
 $5,554
 $47,439
 $
 $97,924
Goodwill, less accumulated impairments at September 30, 2014$56,569
 $5,554
 $47,378
 $
 $109,501
The Company is required to test certain long-lived assets when indicators of impairment are present. The Company determined that impairment indicators were present for certain of ourthe long-lived assets related to the Celigo product line as of March 31, 2009.September 30, 2013. The long-lived assets in question were tested for recoverability by comparing the sum of the undiscounted cash flows


56

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

directly attributable to each respective asset groupthe assets to their carrying amounts,values, which resulted in the determinationconclusion that the carrying amounts of the assets were not recoverable. The fair values of each potentially impaired long-lived asset groupthe assets were then evaluated to determine the amount of the impairment, if any. The fair value of each intangible assetthe assets was based primarily on an income approach, which is a present value technique used to measure the fair value of future cash flows produced by the asset. The Company estimated future cash flows over the remaining useful life of each intangible asset, which ranged from approximately 3 to 8 years, and used a discount rate of approximately 16%.market-based valuation techniques. As a result of this analysis, management determined that an impairment loss of $35.1$2.0 million had occurred as of March 31, 2009,September 30, 2013, and allocated thatthe loss amongamount to the long-lived assets ofin the impaired asset group based on the carrying value of each asset, with no asset reduced below its respective fair value. The Company revised its estimate of the fair value of these assets in the first fiscal quarter of 2014 and determined that an additional impairment loss of $0.4 million, representing the remaining carrying value of the long-lived assets, was required. These impairment losses were recorded in the Brooks Life Science Systems segment. The impairment charge was allocated as follows: $19.6 million related to completed technology intangible assets; $1.2 million to trade name intangible assets; $13.4 million to customer relationship intangible assets and $0.9 million to property, plant and equipment. Further, during the three months ended June 30, 2009, the Company recorded an additional impairment charge of $0.4 million for property, plant and equipment related to the closure and outsourcing of a small manufacturing operation located in the United States. The total impairment charges related to long-lived assetsConsolidated Statements of Operations for the fiscal 2009 are summarizedyears ended September 30, 2014 and 2013 as follows (in thousands):
     
  Year Ended
 
  September 30,
 
  2009 
 
Reported as cost of sales:    
Completed technology intangible asset impairment $19,608 
Property, plant and equipment impairment  1,316 
     
Subtotal, reported as cost of sales  20,924 
     
Reported as operating expense:    
Trade name intangible asset impairment  1,145 
Customer relationship intangible asset impairment  13,443 
     
Subtotal, reported as operating expense  14,588 
     
  $35,512 
     


59


BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 Year Ended September 30,
 2014 2013
Reported as cost of revenue:   
  Completed technology intangible asset impairment$398
 $1,910
    
Reported as selling, general and administrative expense:   
  Trademarks and trade name intangible asset impairment
 50
    Total impairment charges$398
 $1,960
The componentsCompany completed the sale of the Company’s goodwill by business segment at September 30, 2011 and 2010 are as follows (in thousands):Celigo product line in the second quarter of fiscal year 2014. The sale of the Celigo product line did not have a material impact on the Company's financial position or result of operations.
                         
  Brooks
  Brooks
  Brooks
          
  Products
  Global
  Life Science
  Contract
       
  Solutions  Services  Systems  Manufacturing  Other  Total 
 
Gross goodwill at September 30, 2009 $485,844  $151,238  $  $18,593  $7,421  $663,096 
Acquisitions and adjustments during fiscal 2010                  
                         
Gross goodwill at September 30, 2010  485,844   151,238      18,593   7,421   663,096 
Acquisitions and adjustments during fiscal 2011        36,589         36,589 
                         
Gross goodwill at September 30, 2011 $485,844  $151,238  $36,589  $18,593  $7,421  $699,685 
                         
Accumulated goodwill impairments at September 30, 2009 $(437,706) $(151,238) $  $(18,593) $(7,421) $(614,958)
Impairments recorded during fiscal 2010                  
                         
Accumulated goodwill impairments at September 30, 2010  (437,706)  (151,238)     (18,593)  (7,421)  (614,958)
Impairments recorded during fiscal 2011                  
                         
Accumulated goodwill impairments at September 30, 2011 $(437,706) $(151,238) $  $(18,593) $(7,421) $(614,958)
                         
Goodwill, less accumulated impairments at September 30, 2010 $48,138  $  $  $  $  $48,138 
                         
Goodwill, less accumulated impairments at September 30, 2011 $48,138  $  $36,589  $  $  $84,727 
                         
Components of the Company’s identifiable intangible assets, excluding amounts related to the discontinued operations, as of September 30, 2014 and 2013 are as follows (in thousands):
                        
 September 30, 2011 September 30, 2010 
   Accumulated
 Net Book
   Accumulated
 Net Book
 
 Cost Amortization Value Cost Amortization Value September 30, 2014 September 30, 2013
Cost Accumulated
Amortization
 Net Book
Value
 Cost Accumulated
Amortization
 Net Book
Value
Patents $7,808  $6,989  $819  $7,808  $6,886  $922 $7,808
 $7,300
 $508
 $7,808
 $7,196
 $612
Completed technology  50,975   39,235   11,740   43,502   37,108   6,394 57,155
 41,539
 15,616
 57,050
 40,354
 16,696
Trademarks and trade names  3,941   3,719   222   3,779   3,379   400 3,496
 3,496
 
 3,564
 3,554
 10
Customer relationships  49,029   17,496   31,533   18,860   15,453   3,407 73,389
 29,963
 43,426
 66,687
 23,917
 42,770
             $141,848
 $82,298
 $59,550
 $135,109
 $75,021
 $60,088
 $111,753  $67,439  $44,314  $73,949  $62,826  $11,123 
             
In connection with the acquisitions of Nexus and RTS during fiscal year 2011, the Company allocated a portion of the purchase priceAmortization expense, excluding amounts related to the following intangible assets: Completed Technology — $7.5 million, Customer Relationships - $31.6 million and Trademarks and Trade Names — $0.2 million. For details regarding these


60


BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
intangible assets see Note 3. These intangible assets will support the products and services provided by the Brooks Life Science Systems segment.
During fiscal year 2010, the Company acquired certain patents and other intellectual property from an entity that had ceased operations. This intellectual property supports certain products in the Company’s Brooks Product Solutions segment. The total cost of this property was $0.9 million, and this cost will be amortized to cost of sales over a ten year life.
Amortization expensediscontinued operations, for intangible assets was $4.6$10.6 million $3.9, $9.8 million and $10.2$6.7 million for the fiscal years ended September 30, 2011, 20102014, 2013 and 2009,2012, respectively.
Estimated future amortization expense for the intangible assets recorded by the Company as of September 30, 20112014 is as follows (in millions)thousands):
     
Year ended September 30,    
2012 $7.8 
2013  5.9 
2014  5.2 
2015  5.1 
2016  4.5 
Thereafter  15.8 
     
  $44.3 
     
8.  Investment in Affiliates
Joint Ventures
Year ended September 30, 
2015$11,555
201610,240
20179,536
20187,229
20196,660
Thereafter14,330
 $59,550
9.     Equity Method Investments
The Company accounts for certain of its investments using the equity method of accounting. Under this method of accounting, the Company records in income its proportionate share of the earnings (losses) of the investee with a corresponding increase (decrease) in the carrying value of the investment.


57

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

BioCision, LLC
In March 2014, the Company acquired a 22% equity interest in BioCision, LLC (“BioCision”), a privately-held company based in Larkspur, California, for $4.0 million. BioCision develops, manufactures and markets cell cryopreservation products used to improve and standardize the tools and methods for biomaterial sample handling.
The Company determined that the level of equity investment at risk was not sufficient for BioCision to finance its activities without additional financial support and as a result, represented a variable interest entity. However, the Company does not have the power to direct the activities that most significantly impact BioCision’s economic performance and would not absorb the majority of the expected losses, and therefore does not qualify as the primary beneficiary. The Company has no future contractual funding commitments to BioCision and as a result, the Company's exposure to loss was limited to the amount of its investment.
For the fiscal year ended September 30, 2014, the Company recorded a loss of $0.3 million representing its proportional share in the losses of BioCision. At September 30, 2014, the carrying value of the investment in BioCision in the Company’s Consolidated Balance Sheet was $3.7 million.
ULVAC Cryogenics, Inc.
The Company participates in a 50% joint venture, ULVAC Cryogenics, Inc. (“UCI”) with ULVAC Corporation of Chigasaki, Japan. UCI manufactures and sells cryogenic vacuum pumps, principally to ULVAC Corporation. At September 30, 2014 and 2013, the carrying value of UCI in the Company's Consolidated Balance Sheet was $22.6 million and $22.7 million, respectively. For the fiscal years ended September 30, 2011, 20102014, 2013 and 2009,2012, the Company recorded income associated with UCI of $2.3$1.6 million, $0.1$2.6 million and $0.1$2.0 million, respectively. For the fiscal years ended September 30, 2011, 20102014, 2013 and 2009,2012, management fee payments received by the Company from UCI were $1.1$0.6 million $0.7, $0.6 million and $0.6$1.0 million, respectively. For the fiscal years ended September 30, 2011, 20102014, 2013 and 2009,2012, the Company incurred charges from UCI for products or services of $0.4 million, $0.3$0.5 million and $0.4$0.8 million, respectively. At September 30, 20112014 and 20102013, the Company owed UCI $0.1 million$79,000 and $0.0 million,$26,000, respectively, in connection with accounts payable for unpaid products and services. During the fiscal yearyears ended September 30, 2011,2014 and 2013, the Company received $2.4$0.9 million as aand $5.0 million, respectively, of cash dividenddividends from UCI.UCI which reduced the carrying value of the Company's investment.
Yaskawa Brooks Automation, Inc.
The Company participates in a 50% joint venture with Yaskawa Electric Corporation (“Yaskawa”) called Yaskawa Brooks Automation, Inc. (“YBA”) to exclusively market and sell Yaskawa’sYaskawa's semiconductor robotics products and Brooks’Brooks' automation hardware products to semiconductor customers in Japan. At September 30, 2014 and 2013, the carrying value of YBA in the Company's Consolidated Balance Sheet was $2.6 million and $3.0 million, respectively. For the fiscal years ended September 30, 2011, 20102014, 2013 and 2009,2012, the Company recorded income (loss)(expense) associated with YBA of $0.5$(0.1) million $0.1, $(0.2) million and $(0.4)$0.1 million, respectively. For the fiscal years ended September 30, 2011, 20102014, 2013 and 2009,2012, the Company earned revenuesrevenue for sales to YBA of $9.6$7.4 million, $13.5$6.3 million and $6.7$8.0 million, respectively. The amount due from YBA included in accounts receivable at September 30, 20112014 and 20102013 was $2.2$2.1 million and $4.5$2.3 million, respectively. For the fiscal years ended September 30, 2011, 20102014, 2013 and 2009,2012, the Company incurred charges from YBA for products andor services of $0.3$0.7 million, $0.2$0.5 million and $0.6$0.5 million, respectively. At September 30, 20112014 and 20102013 the Company owed YBA $0.1 million$133,000 and $47,000, respectively, in connection with accounts payable for unpaid products and services.


58

These investments are accounted for using the equity method. Under this method of accounting, the Company records in income its proportionate share of the earnings of the joint ventures with a corresponding increase in the carrying value of the investment.


61


BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — - (Continued)

10.     Earnings per Share
9.  Earnings (Loss) Per Share
Below is a reconciliation of weighted average common shares outstanding for purposes of calculating basic and diluted earnings (loss) per share for the fiscal years ended September 30, 2014, 2013 and 2012 (in thousands, except per share data):
             
  Year Ended September 30, 
  2011  2010  2009 
 
Net income (loss) attributable to Brooks Automation, Inc.  $128,352  $58,982  $(227,858)
             
Weighted average common shares outstanding used in computing basic earnings (loss) per share  64,549   63,777   62,911 
Dilutive common stock options and restricted stock awards  454   397    
             
Weighted average common shares outstanding for purposes of computing diluted earnings (loss) per share  65,003   64,174   62,911 
             
Basic net income (loss) per share attributable to Brooks Automation, Inc. common stockholders $1.99  $0.92  $(3.62)
             
Diluted net income (loss) per share attributable to Brooks Automation, Inc. common stockholders $1.97  $0.92  $(3.62)
             
Approximately 387,000, 888,000 and 1,456,000 options
 Year ended September 30,
 2014 2013 2012
Income (loss) from continuing operations$1,520
 $(7,114) $131,835
Income from discontinued operations, net of tax30,002
 4,964
 5,000
Net income (loss)31,522
 (2,150) 136,835
Net income attributable to noncontrolling interests(161) (65) (46)
Net income (loss) attributable to Brooks Automation, Inc.$31,361
 $(2,215) $136,789
      
Weighted average common shares outstanding used in computing basic earnings per share66,648
 65,912
 65,128
Dilutive common stock options and restricted stock units996
 
 594
Weighted average common shares outstanding for purposes of computing diluted earnings per share67,644
 65,912
 65,722
      
Basic net income (loss) per share attributable to Brooks Automation, Inc. common stockholders:     
Income (loss) from continuing operations$0.02
 $(0.11) $2.02
Income from discontinued operations, net of tax0.45
 0.08
 0.08
Basic net income (loss) per share attributable to Brooks Automation, Inc.$0.47
 $(0.03) $2.10
      
Diluted net income (loss) per share attributable to Brooks Automation, Inc. common stockholders:     
Income (loss) from continuing operations$0.02
 $(0.11) $2.01
Income from discontinued operations, net of tax0.44
 0.08
 0.08
Diluted net income (loss) per share attributable to Brooks Automation, Inc. common stockholders$0.46
 $(0.03) $2.08
Options to purchase approximately 11,000 and 238,000 shares of common stock and 413,000, 187,0000 and 1,101,000 shares of2,000 restricted stock units were excluded from the computation of diluted earnings (loss) per share attributable to Brooks Automation, Inc. common stockholders for the fiscal years ended September 30, 2011, 20102014 and 2009,2012, respectively, as their effect would be anti-dilutive. Outstanding stock options of 43,000 shares and 3,006,000 of unvested shares of restricted stock units were excluded from the computation of diluted earnings per share for the fiscal year ended September 30, 2013 as a result of the net loss for that period.
11.    Note Receivable
In 2012, the Company provided the Borrower a loan of $3.0 million to support the Borrower's future product development and other working capital requirements. The loan had a stated interest rate of 9% and the outstanding principal and interest was payable in May 2015. The Company also received a warrant to purchase the Borrower's common stock in the event of an equity offering by the Borrower and certain other rights related to conversion of the loan, first refusal to acquire the Borrower and a redemption premium. The loan was secured by a security agreement granting the Company a first-priority security interest in all of the assets of the Borrower.
The Company determined that the level of equity investment at risk was not sufficient for the entity to finance its activities without additional financial support and as a result, represented a variable interest entity. However, the Company does not have the power to direct the activities that most significantly impact the Borrower's economic performance and would not absorb the majority of the expected losses from the Borrower, and therefore does not qualify as the primary beneficiary. The Company has no future contractual funding commitments to the Borrower and as a result, the Company's exposure to loss was limited to the outstanding principal and interest under the loan.
During the third quarter of fiscal year 2014, the Borrower informed the Company of its intent to secure additional funding from an investment program funded by the Commonwealth of Massachusetts designed to support early-stage


59

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

companies. In connection with the Borrower’s efforts to secure additional financing, the Company agreed to subordinate its security interest in the assets of the Borrower to the new lender. Additionally, the Company agreed to extend the due date of its loan by approximately 5 years, to September 2019, in order to coincide with the due date of the new loan. The amended loan has a stated interest rate of 10%.
In connection with its efforts to secure additional financial support, the Borrower developed revised assumptions about its future cash flows. Based on the information provided by the Borrower, and the subordination to the new lender, the Company determined it was probable that it would not recover all amounts due from the loan and recorded an impairment charge of $2.6 million in the third quarter of fiscal year 2014. The impairment charge was recorded in the Consolidated Statements of Operations in selling, general and administrative expenses.
The fair value of the loan was determined by considering the fair value of the collateral using valuation techniques, principally the discounted cash flow method, less amounts committed by the new lender. The observable inputs used in the Company's analysis were limited primarily to the discount rate, which was based on a rate commensurate with the risks and uncertainties of the Borrower. As a result, the fair value of the loan at September 30, 2014, which the Company currently estimates to be $1.0 million, could be different under different conditions or different assumptions, including the varying assumptions regarding future cash flows of the Borrower or discount rates.
12.    Derivative Instruments
In June 2013, the Company entered into foreign exchange contracts to reduce its exposure to changes in foreign exchange rates associated with an order for multiple automated sample management systems. The Company concluded that these foreign currency contracts met the criteria to qualify as a cash flow hedge. Accordingly, the Company reflected changes in the fair value of the effective portion of these foreign currency contracts in accumulated other comprehensive income. In the third quarter of fiscal year 2014, the Company reclassified the realized gain of $0.1 million on these contracts into revenue to coincide with recognition of the hedged transaction. The Company did not recognize any amounts related to ineffectiveness in the results of operations for the fiscal years ended September 30, 2014 or 2013 with respect to these contracts. The Company did not have any notional amounts outstanding under foreign currency contracts that qualify for cash flow hedge accounting at September 30, 2014.
The Company has transactions and balances denominated in currencies other than the U.S. dollar. Most of these transactions or balances are denominated in Euros, British Pounds and a variety of Asian currencies. These transactions and balances, including short-term advances between the Company and its subsidiaries, subject the Company's operations to exposure from exchange rate fluctuations. The impact of currency exchange rate movement can be positive or negative in any period. The Company mitigates the impact of potential currency translation gains and losses on short-term intercompany advances through timely settlement of each transaction, generally within 30 days.
The Company also enters into foreign exchange contracts to reduce its exposure to currency translation. Under forward contract arrangements, the Company typically agrees to purchase a fixed amount of U.S. dollars in exchange for a fixed amount of a foreign currency on specified dates with maturities of three months or less. These transactions do not qualify for hedge accounting. Net gains and losses recorded as a component of "Other income, net" in the Consolidated Statements of Operations related to these contracts is as follows for the fiscal years ended September 30, 2014, 2013 and 2012 (in thousands):
  Year ended September 30,
  2014 2013 2012
Realized gains (losses) on derivative instruments not designated as hedging instruments $185
 $123
 $(151)


60

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company had the following notional amounts outstanding under foreign currency contracts that do not qualify for hedge accounting at September 30, 2014 and 2013 (in thousands):
September 30, 2014:
Buy Currency Notional Amount
of Buy Currency
 Sell Currency Maturity Notional Amount
of Sell Currency
 Fair Value of
Assets
 Fair Value of
Liabilities
U.S. dollar 1,736
 Japanese yen October 2014 to December 2014 190,000
 $
 $11
U.S. dollar 1,395
 Euro October 2014 1,100
 
 16
U.S. dollar 656
 Taiwan dollar October 2014 20,000
 
 5
U.S. dollar 650
 British pound October 2014 400
 
 5
U.S. dollar 731
 Israeli shekel October 2014 2,700
 
 5
U.S. dollar 76
 Korean won October 2014 80,000
 
 1
British pound 3,513
 Euro October 2014 4,500
 
 15
          $
 $58
    
10.  Income Taxes
September 30, 2013:
Buy Currency Notional Amount
of Buy Currency
 Sell Currency Maturity Notional Amount
of Sell Currency
 Fair Value of
Assets
 Fair Value of
Liabilities
U.S. dollar 2,762
 Japanese yen October 2013 to December 2013 273,000
 $8
 $
Korean won 740,000
 U.S. dollar October 2013 688
 
 2
U.S. dollar 304
 Israeli shekel October 2013 1,075
 
 3
U.S. dollar 231
 Singapore dollar October 2013 290
 
 
          $8
 $5
The fair values of the forward contracts described above are recorded in the Company's Consolidated Balance Sheets as prepaid expenses and other current assets and accrued expenses and other current liabilities.
13.    Income Taxes
The components of the income tax provision (benefit)benefit, excluding amounts related to the discontinued operations, for the fiscal years ended September 30, 2014, 2013 and 2012 are as follows (in thousands):
             
  Year Ended September 30, 
  2011  2010  2009 
 
Current:            
Federal $16  $(3,883) $16 
State  1,356   616   13 
Foreign  858   521   614 
             
   2,230   (2,746)  643 
             
Deferred:            
Federal         
State         
Foreign  (276)      
             
  $1,954  $(2,746) $643 
             

 Year Ended September 30, 
 2014 2013   2012 
Current income tax provision (benefit):     
  Federal$15
 $15
 $15
  State177
 70
 213
  Foreign1,417
 681
 (1,374)
    Total current income tax provision (benefit)1,609
 766
 (1,146)
Deferred income tax benefit: 
  
  
  Federal(2,276) (5,245) (121,203)
  State(35) (183) (439)
  Foreign(1,278) (323) (3,413)
    Total deferred income tax benefit(3,589) (5,751) (125,055)
    Income tax benefit$(1,980) $(4,985) $(126,201)

62


BROOKS AUTOMATION, INC.
61

Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — - (Continued)

The components of income (loss) before income taxes and equity in earnings (losses) of joint venturesequity method investments for the fiscal years ended September 30, 2014, 2013 and 2012 are as follows (in thousands):
 
             
  Year Ended September 30, 
  2011  2010  2009 
 
Domestic $111,053  $44,956  $(213,687)
Foreign  16,523   11,108   (13,230)
             
  $127,576  $56,064  $(226,917)
             
 Year Ended September 30, 
 2014 2013 2012
Domestic$(7,338) $(14,747) $(5,715)
Foreign5,643
 206
 9,216
 $(1,695) $(14,541) $3,501
The differences between the income tax provisionbenefit and income taxes computed using the applicable U.S. statutory federal tax rate isfor the fiscal years ended September 30, 2014, 2013 and 2012 are as follows (in thousands):
             
  Year Ended September 30, 
  2011  2010  2009 
 
Income tax provision (benefit) computed at federal statutory rate $45,736  $19,622  $(79,420)
State income taxes, net of federal benefit  1,848   699   (1,308)
Net operating loss carryback refund     (3,899)   
Impairments        25,130 
Foreign income taxed at different rates  (1,546)  (1,650)  (1,233)
Dividends  (219)  1,006   1,362 
Change in deferred tax asset valuation allowance  (42,608)  (18,423)  55,211 
Reduction in uncertain tax positions  (3,719)  (609)  (712)
Other  2,462   508   1,613 
             
Income tax provision (benefit) $1,954  $(2,746) $643 
             
 Year Ended September 30,  
 2014 2013 2012
Income tax provision (benefit) computed at federal statutory rate$(217) $(4,257) $1,957
State income taxes, net of federal benefit(12) (101) 112
Foreign income taxed at different rates(596) 493
 (832)
Dividends(1,373) 115
 956
Change in deferred tax asset valuation allowance453
 523
 (125,479)
Reduction in uncertain tax positions(1,236) (1,022) (3,732)
Nondeductible compensation1,064
 474
 1,339
Tax credits(704) (2,002) (1,195)
Travel and entertainment220
 124
 139
Merger costs187
 251
 
Other234
 417
 534
Income tax benefit$(1,980) $(4,985) $(126,201)
The Company doeshas not provideprovided for U.S. income taxes applicable to undistributedon the unremitted earnings of itscertain foreign subsidiaries sinceas these earnings are considered to be indefinitely reinvested.
These earnings amounted to approximately $25.2 million at September 30, 2014. It is not practicable to compute the estimated deferred tax liability on these earnings as they vary with a high dependence on numerous factors including the timing of such future remittance and the future results of various foreign operations.
The significant components of the net deferred tax assets and liabilities as of September 30, 2014 and 2013 are as follows (in thousands):
         
  Year Ended September 30, 
  2011  2010 
 
Accruals and reserves not currently deductible $10,357  $9,739 
Federal, state and foreign tax credits  22,673   18,178 
Depreciation  527   7,946 
Amortization     4,406 
Other assets  3,304   7,463 
Net operating loss carryforwards  119,167   139,464 
Inventory reserves and valuation  11,650   12,284 
         
Deferred tax assets  167,678   199,480 
         
Intangible amortization  7,378    
Other liabilities     540 
         
Deferred tax liabilities  7,378   540 
         
Valuation allowance  162,208   198,940 
         
Net deferred tax liabilities $(1,908) $ 
         

 September 30,
 2014 2013
Accruals and reserves not currently deductible$12,456
 $11,050
Federal, state and foreign tax credits20,434
 20,084
Other assets3,523
 1,859
Net operating loss carryforwards67,380
 101,717
Inventory reserves and valuation9,956
 9,052
Deferred tax assets113,749
 143,762
Depreciation and intangible amortization12,198
 12,208
Deferred tax liabilities12,198
 12,208
Valuation allowance(18,354) (16,509)
Net deferred tax asset$83,197
 $115,045
The net deferred tax assets, including current and noncurrent, decreased from $115.0 million to $83.2 million during the fiscal year ended September 30, 2014. The decrease of $31.8 million was primarily driven by a tax provision of $29.9 million related to the taxable gain on the sale of discontinued operations. When the business was sold, the Company realized a higher gain on a tax basis than the gain reported on a GAAP basis. The higher taxable gain resulted in an effective tax rate on the sale

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BROOKS AUTOMATION, INC.
62

Table of Contents
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — - (Continued)

of 52.6% when calculated on GAAP results. The gain on sale of discontinued operations was reported net of the tax effect in the Consolidated Statements of Operations.
Management has considered the weight of all available evidence in determining whether a valuation allowance remains to beis required against its deferred tax assets at September 30, 2011. Given the significant losses incurred in fiscal 20092014. After consideration of both positive and the overall cumulative loss history combined with uncertainties in the global economic environment, the Companynegative evidence management has determinedconcluded that it is more likely than not that the neta substantial portion of its deferred tax assets will not be realized. The amount of the deferred tax assetpositive evidence considered realizable is subject to change based onwas three year U.S. historical cumulative profitability, projected future events, including generating taxable income and length of carry-forward periods of net operating losses and tax credits. The primary negative evidence considered is the volatile semiconductor industry in future periods. which the Company operates.
The Company continues to assessrecorded a tax benefit of $121.8 million resulting from the need forreduction in the valuation allowance at each balance sheet dateduring the fiscal year ended September 30, 2012. The Company has continued to maintain a valuation allowance in the United States against certain tax credits and state net operating losses due to the uncertainty of their realization based on all available evidence. long-term Company forecasts and the expiration dates on these attributes. The Company has also continued to maintain a valuation allowance in certain jurisdictions that have not generated historical cumulative profitability.
If future operating results of the Company continues to generate profits in mostU.S. or these foreign jurisdictions deviate from expectations, it is reasonably possible that there willcould be a significant reductionfurther change in the valuation allowance in the next twelve months. Reduction offuture. A change in the valuation allowance, in whole or in part, would result in a non-cash income tax expense or benefit during the period of reduction.change.
As of September 30, 2011,2014, the Company had federal, state and foreign net operating loss carryforwards from continuing and discontinued operations of approximately $433.0$143.5 million, $97.9 million and $29.5 million, respectively, and federal and state research and development tax credit carryforwards of approximately $22.7$24.4 million available to reduce future tax liabilities, which expire at various dates through 2031. Included in the2034. The net operating loss carryforwards arecarryforward includes excess deductions related to stock option deductionscompensation in the amount of approximately $19.5 million.$11.7 million which have not been recognized for financial statement purposes. The benefits of these tax deductions approximate $7.0 million of which approximately $4.0 million will be credited to additional paid-in capital upon being realized or recognized.realized.
As a result of ownership changes in previous years, theThe Company has performed a study and determinedstudies to determine if there was anare any annual limitationlimitations on the federal net operating losses under section 382 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”). However,As a result of these studies, the Company’s utilization of those losses did not exceedCompany has determined that ownership changes have occurred primarily in connection with acquisitions when the annual limitation amount. Since any unused annual limitation may be carried overCompany has issued stock to later years, there is no future limitation under section 382the sellers, as well as ownership changes in the subsidiaries acquired by the Company. Certain limitations have been calculated and the benefits of the Internal Revenue Code on the utilization of the federal net operating loss carryforwardslosses that will expire before utilization have not been recorded as of September 30, 2011.deferred tax assets in the financial statements. The Company’sCompany's U.S. net operating losses expire at various dates through 2029.


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BROOKS AUTOMATION, INC.
2030
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued).
A reconciliation of the beginning and ending amount of the consolidated liability for unrecognized income tax benefits during the fiscal years ended September 30, 2011, 20102014, 2013 and 20092012 is as follows (in thousands):
 
             
  Unrecognized
  Interest and
    
  Tax Benefit  Penalties  Total 
 
Balance at October 1, 2008 $10,463  $1,452  $11,915 
Additions for tax positions of prior years  43   483   526 
Additions for tax positions related to current year  228   5   233 
Reduction for tax positions related to acquired entities in prior years, offset to goodwill  (41)     (41)
Reductions for tax positions of prior years  (133)  (169)  (302)
Reductions from lapses in statutes of limitations  (223)     (223)
Reductions from settlements with taxing authorities  (426)  (102)  (528)
Foreign exchange rate adjustment  (117)     (117)
             
Balance at September 30, 2009  9,794   1,669   11,463 
Additions for tax positions of prior years  3,287   506   3,793 
Additions for tax positions related to current year  468      468 
Reductions for tax positions of prior years  (40)  (19)  (59)
Reductions from lapses in statutes of limitations  (413)     (413)
Reductions from settlements with taxing authorities  (193)  (4)  (197)
Foreign exchange rate adjustment  (87)     (87)
             
Balance at September 30, 2010  12,816   2,152   14,968 
Additions for tax positions of prior years  184   447   631 
Additions for tax positions related to current year  242      242 
Reductions from lapses in statutes of limitations  (961)     (961)
Reductions from settlements with taxing authorities  (3,392)  (610)  (4,002)
Foreign exchange rate adjustment  122      122 
             
Balance at September 30, 2011 $9,011  $1,989  $11,000 
             
 Unrecognized Tax
Benefit
 Interest
and
Penalties  
 Total
Balance at October 1, 2011$9,011
 $1,989
 $11,000
Additions for tax positions of prior years242
 247
 489
Reductions from lapses in statutes of limitations(3,125) (607) (3,732)
Foreign exchange rate adjustment(167) 15
 (152)
Balance at September 30, 20125,961
 1,644
 7,605
Additions for tax positions of prior years
 228
 228
Additions for tax positions related to acquired entities116
 
 116
Reductions from lapses in statutes of limitations(944) (78) (1,022)
Foreign exchange rate adjustment14
 
 14
Balance at September 30, 20135,147
 1,794
 6,941
Additions for tax positions of prior years
 286
 286
Reductions from lapses in statutes of limitations(861) (375) (1,236)
Foreign exchange rate adjustment(24) 
 (24)
Balance at September 30, 2014$4,262
 $1,705
 $5,967
As of September 30, 2011, 2010 and 2009,2014, all of the Company had approximately $9.8 million, $12.5 million and $11.5 million, respectively, ofCompany's unrecognized tax benefits, which if recognized, would affect the effective tax rate. As of September 30, 2011 and 2010, the additional $1.2 million and $2.5 million of unrecognized tax benefits would not impact the Company’s effective rate since they are offset by valuation allowances. The Company recognizes interest related to unrecognized benefits as a component of tax expense, of which $0.4$0.3 million $0.4, $0.2 million and $0.3$0.2 million was recognized for the fiscal years ended September 30, 2011, 20102014, 2013 and 2009,2012, respectively.


63

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company is subject to U.S. federal income tax and various state, local and international income taxes in various jurisdictions. The amount of income taxes paid is subject to the Company’sCompany's interpretation of applicable tax laws in the jurisdictions in which it files. In the normal course of business, the Company is subject to examination by taxing authorities throughout the world. The Company settled an incomestatute of limitations lapsed on several uncertain tax auditpositions in the foreign jurisdictions during thefiscal year 2014 that resulted in a $4.0$1.2 million reduction in gross unrecognized tax benefits including $2.8 million that impacted the effective tax rate. The Company hasis subject to income tax audits in progress in various global jurisdictions in which it operates. In the Company’sCompany's U.S. and international jurisdictions, the years that may be examined vary, with the earliest tax year being 2006.2008. Based on the outcome of these examinations, or the expiration of statutes of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized tax benefits could change from those recorded in the Company’sCompany's statement of financial position. The Company currently anticipates that it is reasonably possible that the unrecognized tax benefit will be reduced by approximately $3.6an amount in the range between $1.2 million and $2.3 million during the next twelve months primarily as the result of statutes of limitations expiring.


65


BROOKS AUTOMATION, INC.
14.    Postretirement Benefits
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
11.  Postretirement Benefits
Defined Benefit Pension Plans
On October 26, 2005, the Company purchased Helix Technology Corporation and assumed responsibility for the liabilities and assets of the Helix Employees’ Pension Plan (the “Helix Plan”). The Plan is a final average pay pension plan. In May 2006, the Company’s Board of Directors approved the freezing of benefit accruals and future participation in the Plan effective October 31, 2006.
The Company acquired Nexus on July 25, 2011, and in connection with this acquisition, assumed responsibility forhas two active defined benefit pension plans (collectively, the liabilities of the Nexus Biosystems AG Pension Plan (the “Nexus Plan”“Plans”). The Nexus Plan coversPlans cover substantially all employees of the Company’s Swiss subsidiary. Admittance for riskemployees in Switzerland and Taiwan. Retirement benefits (disabilityare generally earned based on years of service and death)compensation during active employment; however, the level of benefits varies within the Plans. Eligibility is as of January 1 for employees who are 17 or older. Admittance into thedetermined in accordance with local statutory requirements.
The Company previously had a defined benefit pension plan with retirement pension occurs as of January 1 forthat covered certain employees who are age 24 or older. Pension benefits are based onin the accumulated savings capital that comprises the sum of all savings credits, plus the credited interest, plus the vested benefits brought in. The amount of the savings credit is based on the employee’s age.
United States. The Company also has asettled its pension plan covering certain employees of its Taiwan subsidiary that were employed by this entity on or before July 1, 2005 (the “Taiwan Plan”). After July 1, 2005, mostobligation with the participants of this plan decidedin the fourth quarter of fiscal year 2012 which resulted in accelerated cash payments to jointhe participants of approximately $6.4 million. In addition, the settlement resulted in a defined contribution plan andcharge of $8.9 million for accelerated amortization of prior pension losses. The charge related to the settlement is included as a result, their service earned underpension settlement charge in the Taiwan Plan was frozen.Consolidated Statements of Operations.
The Company uses a September 30th measurement date in the determination of net periodic benefit costs, benefit obligations and the value of plan assets for all plans. The following tables set forth the funded status and amounts recognized in the Company’s consolidated balance sheetsConsolidated Balance Sheets as of September 30, 2014 and 2013 (in thousands):
 September 30,
 2014 2013
Benefit obligation at beginning of fiscal year$7,107
 $10,181
Service cost406
 604
Interest cost154
 148
Actuarial loss (gain)968
 (670)
Benefits paid(141) (1,421)
Settlements paid
 (1,383)
Curtailment gain
 (500)
Foreign currency translation(281) 148
Benefit obligation at end of fiscal year$8,213
 $7,107
Fair value of assets at beginning of fiscal year$5,996
 $8,015
Actual return on plan assets98
 304
Disbursements(264) (1,573)
Employer contributions302
 292
Employee contributions200
 194
Settlements paid
 (1,383)
Foreign currency translation(201) 147
Fair value of assets at end of fiscal year$6,131
 $5,996
Accrued benefit obligation$2,082
 $1,111
The accumulated benefit obligation of the Plans is $7.3 million and $6.3 million at September 30, 20112014 and 2010 for2013, respectively. All of the Plans have an accumulated benefit obligation and projected benefit obligation in excess of assets of the respective Plan (in thousands):at September 30, 2014 and 2013.


64
         
  Year Ended September 30, 
  2011  2010 
 
Benefit obligation at beginning of year $15,914  $14,390 
Acquisition date benefit obligations from entities acquired during the fiscal year  10,354    
Service cost  216   100 
Interest cost  796   775 
Actuarial loss  2,138   1,380 
Benefits paid  (356)  (731)
Foreign currency translation  (994)   
         
Benefit obligation at end of year $28,068  $15,914 
         


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BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — - (Continued)
         
  Year Ended
 
  September 30, 
  2011  2010 
 
Fair value of assets at beginning of year $9,990  $5,860 
Acquisition date fair value of assets for entities acquired during the fiscal year  9,226    
Actual return (loss) on plan assets  1,322   657 
Disbursements  (356)  (731)
Employer contributions  778   4,204 
Employee contributions  76    
Foreign currency translation  (863)   
         
Fair value of assets at end of year $20,173  $9,990 
         
         
  September 30, 
  2011  2010 
 
Funded status/accrued benefit liability $(7,895) $(5,924)
         

The following table provides pension amounts recorded within the account line items of the Company’s consolidated balance sheetsConsolidated Balance Sheets as of September 30, 2014 and 2013 (in thousands):
 
         
  September 30,
  2011 2010
 
Accrued compensation and benefits $734  $458 
Long-term pension liability  7,161   5,466 
 September 30,
 2014 2013
Accrued compensation and benefits$308
 $296
Long-term pension liability1,774
 815
In addition, accumulated other comprehensive income at September 30, 20112014 and 20102013 includes unrecognized net actuarial lossesgains (losses) of $8.9$(0.5) million and $8.4$0.5 million, respectively.
The estimated portioncomponents of the Company’s net actuarial loss remaining in accumulated other comprehensive income that is expected to be recognized as a component of net periodic pension cost for the yearfiscal years ended September 30, 2014, 2013 and 2012 is $0.6 million.
Net periodic pension cost consisted of the followingas follows (in thousands):
             
  Year Ended September 30, 
  2011  2010  2009 
 
Service cost $216  $100  $100 
Interest cost  796   775   702 
Expected return on assets  (764)  (604)  (709)
Amortization of losses  458   327   89 
Settlement loss        888 
             
Net periodic pension cost $706  $598  $1,070 
             

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BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
 Year ended September 30,
 2014 2013 2012
Service cost$406
 $604
 $787
Interest cost154
 148
 984
Expected return on plan assets(214) (247) (1,072)
Amortization of losses2
 4
 620
Other
 160
 
Net periodic pension cost348
 669
 1,319
Settlement loss
 87
 8,937
Total pension cost$348
 $756
 $10,256
Other changes in Plan assets and benefit obligations recognized in other comprehensive loss:
         
  September 30, 
  2011  2010 
 
Net loss $1,502  $1,328 
Amortization of net loss  (458)  (327)
         
Total recognized in other comprehensive income  1,044   1,001 
         
Total recognized in net periodic benefit cost and other comprehensive income $1,750  $1,599 
         
Certain information for the Plan with respect to accumulated benefit obligationsloss as of September 30, 2014 and 2013 is as follows (in thousands):
 
         
  September 30, 
  2011  2010 
 
Projected benefit obligation $28,068  $15,914 
Accumulated benefit obligation  26,663   15,914 
Fair value of plan assets  20,173   9,990 
Weighted-average assumptions used to determine net cost at September 30, 2011, 2010 and 2009 follows:
             
  Year Ended September 30, 
  2011  2010  2009 
 
Discount rate  3.99%  5.50%  7.12%
Expected return on plan assets  4.68%  8.00%  8.00%
Rate of compensation increase  1.79%  N/A   N/A 
 September 30,
 2014 2013
Net loss (gain)$961
 $(791)
Amortization of net loss(2) (3)
Curtailment loss
 (675)
Settlement loss
 (87)
Total recognized in other comprehensive income (loss)959
 (1,556)
Total recognized in net periodic pension cost and other comprehensive income (loss)$1,307
 $(887)
 
Weighted-average assumptions used to determine the pensionprojected benefit obligation atfor the fiscal years ended September 30, 2011, 20102014, 2013 and 20092012 are as follows:
 
             
  Year Ended September��30, 
  2011  2010  2009 
 
Discount rate  3.76%  4.75%  5.50%
Rate of compensation increase  1.79%  N/A   N/A 
Compensation increase assumptions
 Year Ended September 30,
 2014 2013 2012
Discount rate1.55% 2.15% 3.51%
Expected return on plan assets2.18% 2.17% 2.18%
Expected rate of compensation increases1.87% 1.89% 1.84%

In selecting the appropriate discount rate for the periodic pension costPlans, the Company uses country-specific information, adjusted to reflect the duration of the particular plan. The expected return on plan assets is based on an evaluation of fixed income yield curves and pension obligation applyequity return assumption studies applied to the Nexus Plan and Taiwan Plan only.asset allocation of the Plans.
The Company bases its determination of pension expense or benefit on a market-related valuation of assets, which reduces year-to-year volatility. This market-related valuation recognizes investment gains or losses over a five-yearfive-year period from the year in which they occur. Investment gains or losses for this purpose are the difference between the expected return calculated using the market-related value of assets and the actual return on assets. Since the market-related value of assets recognizes gains or losses over a five-year period, the future value of assets will be impacted as previously deferred gains or


65

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

losses are recognized. As of September 30, 2011,2014, under the plans,Plans, the Company had cumulative investment losses of approximately $0.2$0.8 million, which remain to be recognized in the calculation of the market-related value of assets. The Company also had cumulative other actuarial lossesgains of $9.2$0.3 million at September 30, 2011,2014, which are amortized into net periodic benefit costs over the average remaining service period of active participants in the plans.Plans.
The discount rate utilized for determining future pension obligations for the Helix Plan is based on the Citigroup Pension Index adjusted for the Plan’s expected cash flows and was 4.38% at September 30, 2011, down from 4.75% at September 30, 2010.
The discount rate utilized for determining the future pension obligations for the Nexus Plan is based on corporate bonds yields for bonds denominated in Swiss francs. This discount rate was 2.30% at September 30, 2011.


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BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The expected long term rate of return on Plan assets used to determine future pension obligations was 4.68% and 6.50% as of September 30, 2011 and 2010, respectively. In developing the expected return on plan assets assumption, the Company evaluated fixed income yield curve data and equity return assumption studies, and applied this data to the expected asset allocation to develop an appropriate projected return on Plan assets.
Helix Plan Assets
The fair value of the Helix Plan assets was $11.6 million, or 58% of total pension plan assets at September 30, 2011. The assets of this plan are invested primarily in debt and equity securities. The investments of this plan are managed by a third party investment manager. The performance of the investment manager is reviewed regularly by an Investment Committee that is comprised of members of senior management. Results for the total portfolio and for each major category of assets are evaluated in comparison with appropriate market indices. The investment portfolio does not, at any time, have a direct investment in Company stock. It may have indirect investment in Company stock, if one of the funds selected by the investment manager invests in Company stock. The investment manager periodically recommends asset allocation changes to the Investment Committee. Due to the frozen status of the plan, the investment return objectives for that plan are to match the investment returns with the timing of future pension liability payments, which recently has led to increased investments in debt securities.
The Helix Plan asset allocation at September 30, 2011 and target allocation at September 30, 2012, by asset category is as follows:
       
  Percentage of
  Target
  Plan Assets at
  Allocation at
  September 30,
  September 30,
  2011  2012
 
Equity securities  17% 15% - 30%
Debt securities  67  50% - 70%
Other  4  0% - 10%
Cash  12  0% - 20%
       
   100%  
       
Plan Assets ofNon-U.S. Plans
The fair value of plan assets for the NexusSwitzerland Plan and Taiwan Plan were $8.1$5.6 million and $0.5$0.5 million, respectively, at September 30, 2011.2014. As is customary with Swiss pension plans, the assets of the Nexus Plan are invested in a collective fund with multiple employers through a Swiss insurance company. The Company does not have any rights to the assets of this Plan. Investment holdings are primarily in highly rated debt securities. The assets of the Taiwan Plan are invested with a trustee that has been selected by the Taiwan government. The Company has no investment authority over the assets of either the NexusSwitzerland Plan or the Taiwan Plan. The asset allocation of the plan assets of thenon-U.S. plansat September 30, 20112014 was as follows:
Percentage of
Debt securities73Plan Assets at
September 30,
2011
%
Equity securities65%
Debt securitiesCash279
Other1915
Cash1
 100%


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BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The fair value of pension assets by asset category and by level at September 30, 20112014 were as follows (in thousands):
 
                 
  As of September 30, 2011 
  Level 1  Level 2  Level 3  Total 
 
Fixed income securities:                
Short duration bond mutual funds $468        $468 
Intermediate duration bond mutual funds  1,761         1,761 
Long-term duration bond mutual funds  5,414         5,414 
Other investments:                
Global allocation mutual funds  2,929         2,929 
Swiss Life collective foundation     8,046      8,046 
Taiwan collective trust     483      483 
Cash and cash equivalents  1,072         1,072 
                 
Total $11,644  $8,529  $  $20,173 
                 
 As of September 30, 2014
 Total Level 1 Level 2 Level 3
Swiss Life collective foundation$5,608
 $
 $5,608
 $
Taiwan collective trust523
 
 523
 
Total$6,131
 $
 $6,131
 $
See Note 5"Note 6. Fair Value Measurements" for a description of the levels of inputs used to determine fair value measurements.
During the fourth quarter of fiscal year 2011, the Company made a voluntary contribution of $0.2 million to the Helix Plan, which was in addition to the $0.6 million of required minimum contributions made to this plan throughout fiscal year 2011. The Company made required minimum contributions throughout fiscal year 2011 to all of its plans of $0.6 million. The Company expects to contribute $0.7 million to its plans in fiscal 2012 to meet minimum funding targets.
Expected benefit payments over the next ten fiscal years are anticipated to be paid as follows (in thousands):
     
2012 $1,193 
2013  403 
2014  797 
2015  815 
2016  877 
2017-2021  6,481 
2015$231
201654
201755
201856
201957
2020-2024664
The Company expects to contribute $0.3 million to its plans in fiscal year 2015 in order to meet the minimum funding targets.
Defined Contribution Plans
The Company sponsors defined contribution plans that meet the requirements of Section 401(k) of the Internal Revenue Code. All United States employees of the Company who meet minimum age and service requirements are eligible to participate in the plan. The plan allows employees to invest, on a pre-tax basis, a percentage of their annual salary subject to statutory limitations.
The Company’s contribution expense for worldwidethis United States defined contribution plansplan was $2.9$3.5 million, $2.6$3.2 million and $2.7$3.1 million for the fiscal years ended September 30, 2011, 20102014, 2013 and 2009,2012, respectively.
15.    Stockholders’ Equity
The Company has a Supplemental Key Executive Retirement Plan (acquired with Helix) which is designed to supplement benefits paid to participants under Company-funded, tax-qualified retirement plans. The Company did not record additional retirement costs for the years ended September 30, 2011, 2010 and 2009, in connection with this plan. At September 30, 2011 and 2010, the Company had $0.1 million accrued for benefits payable under the Supplemental Key Executive Retirement Plan.


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BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
12.  Stockholders’ Equity
Preferred Stock
At September 30, 20112014 and 20102013 there were one million shares of preferred stock, $0.01 par value per share authorized; no shares were issued andor outstanding at September 30, 2011 and 2010.2014 or 2013. Preferred stock may be issued at the discretion of the Board of Directors without stockholder approval with such designations, rights and preferences as the Board of Directors may determine.

13.  Stock Plans

66

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Accumulated Other Comprehensive Income
The following is a summary of the components of accumulated other comprehensive income, net of tax, at September 30, 2014, 2013 and 2012 (in thousands):
   Currency Translation Adjustments  Unrealized Gains (Losses) on Available-for-Sale Securities  Unrealized Gains (Losses) on Cash Flow Hedges  Pension Liability Adjustments  Total
Balance at September 30, 2011 $26,917
 $(192) $
 $(9,401) $17,324
Other comprehensive income before reclassifications (2,406) 408
 
 (606) (2,604)
Amounts reclassified from accumulated other comprehensive income 
 (15) 
 8,937
 8,922
Balance at September 30, 2012 24,511
 201
 
 (1,070) 23,642
Other comprehensive income before reclassifications (2,113) (114) 14
 1,109
 (1,104)
Amounts reclassified from accumulated other comprehensive income 
 (21) 
 87
 66
Balance at September 30, 2013 22,398
 66
 14
 126
 22,604
Other comprehensive income before reclassifications (6,296) (78) 79
 (503) (6,798)
Amounts reclassified from accumulated other comprehensive income 
 (26) (93) 
 (119)
Balance at September 30, 2014 $16,102
 $(38) $
 $(377) $15,687
Reclassifications from accumulated other comprehensive income, or AOCI, to net income related to available-for-sale securities result from sale of these securities as described in “Note 5. Marketable Securities.” Reclassifications from AOCI to net income related to cash flow hedges result from the settlement of this instrument as described in “Note 12. Derivative Instruments.” Reclassifications from AOCI to net income related to the Company’s pension plans relate to settlement losses under defined benefit pension plans as described in “Note 14. Postretirement Benefits.”
Noncontrolling Interests
Noncontrolling interests represents the minority shareholders’ proportionate share of the equity in the Company’s majority owned subsidiary, Brooks Automation Asia, Ltd. (“BAA”). The Company has historically consolidated the financial position and results of operations from BAA and presented the portion of the income attributable to the minority shareholders as “Net income attributable to noncontrolling interests” in the Consolidated Statements of Operations. In September 2014, the Company acquired the remaining interest in BAA from the minority shareholders for $3.2 million. Increases in ownership of a consolidated subsidiary are accounted for as equity transactions and as a result, no additional assets or liabilities were recognized related to the additional interest acquired. As of the date of acquisition, 100% of BAA’s pre-tax income has been reflected in the Company’s results of operations. The increase in the Company's proportional share of BAA's results were not material to the Company's results of operations for the fiscal year ended September 30, 2014. In addition, the Company will no longer report a noncontrolling interest in its Consolidated Balance Sheets. The payment to the minority shareholders has been classified as a financing activity on the Consolidated Statements of Cash Flows.
16.    Stock Plans
Amended and Restated 2000 Equity Incentive Plan
The purposes of the Amended and Restated 2000 Equity Incentive Plan (the “2000 Plan”), are to attract and retain employees and to provide an incentive for them to assist the Company to achieve long-range performance goals and to enable them to participate in the long-term growth of the Company. Under the 2000 Plan the Company may grant (i) incentive stock options intended to qualify as incentive stock options under Section 422 of the Internal Revenue Code, and (ii) options that are not qualified as incentive stock options (“nonqualified stock options”) and (iii) stock appreciation rights, performance awards and restricted stock. All employees of the Company or any affiliate of the Company, independent directors, consultants and advisors are eligible to participate in the 2000 Plan. Options under the 2000 Plan generally vest over four years and expire sevenwithin ten years from the date of grant. A total of 9,000,000 shares of common stock werewas reserved for issuance under the 2000 Plan. As of September 30, 2011, 283,3752014, no options are outstanding and 4,816,527 shares remain available for grant.
During the year ended September 30, 2011, the Company issued 754,874 shares of restricted stock or units under the Amended and Restated 2000 Equity Incentive Plan, net of cancellations. These restricted stock awards generally have the following vesting schedules: immediate; three year vesting in which one-half vest at the end of Year 2 and one-half vest at the end of Year 3; and three year vesting in which one-third vest at the end of Year 1, one-third vest at the end of Year 2 and one-third vest at the end of Year 3. Compensation expense related to these awards is being recognized on a straight line basis over the vesting period, based on the difference between the fair market value of the Company’s common stock on the date of grant and the amount received from the employee. In addition, in fiscal 2011, the Company granted 175,500 restricted stock awards net of cancellations to senior management, the number of shares ultimately issued will be measured at the end of fiscal year 2013 and is dependent upon the achievement of certain financial performance goals. These awards are expensed over the related service period when attainment of the performance condition is considered probable. The total amount of compensation recorded will depend on the Company’s achievement of performance targets. Changes to the projected attainment of performance targets during the vesting period may result in an adjustment to the amount of cumulative compensation recorded as of the date the estimate is revised.
1998 Employee Equity Incentive Plan2,486,983
The purposes of the 1998 Employee Equity Incentive Plan (the “1998 Plan”), adopted by the Board of Directors of the Company in April 1998, are to attract and retain employees and provide an incentive for them to assist the Company in achieving long-range performance goals, and to enable them to participate in the long-term growth of the Company. All employees of the Company, other than its officers and directors, (including contractors, consultants, service providers or others) who are in a position to contribute to the long-term success and growth of the Company, are eligible to participate in the 1998 Plan. Options under the 1998 Plan generally vest over a period of four years and generally expire seven years from the date of grant. On February 26, 2003, the Board of Directors voted to cancel and not return to the reserve any 1998 Plan forfeited options. From February 26, 2003 through September 30, 2011, 3,204,320 options were forfeited due to employee terminations. On August 5, 2009, the Board of Directors voted not to issue any further shares out of the 1998 Plan. A total of 8,500 options are outstanding under the 1998 Plan as of September 30, 2011.


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BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
1993 Non-Employee Director Stock Option Plan
The purpose of the 1993 Non-Employee Director Stock Option Plan (the “Directors Plan”) was to attract and retain the services of experienced and knowledgeable independent directors of the Company. Options granted under the Directors Plan generally vested over a period of five years and generally expired ten years from the date of grant. A total of 10,000 options are outstanding and no shares remain available for grant under the Directors Plan as2000 Plan.


67

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Stock Options of Acquired Companies
In connection with the acquisition of Helix Technology Corporation ("Helix") on October 26, 2005, the Company assumed the outstanding options of multiple stock option plans that were adopted by Helix. At acquisition, 689,622 options to purchase shares of Helix common stock were outstanding and converted into 765,480 options to purchase shares of the Company’s Common Stock.common stock. A total of 68,2625,550 options are outstanding and 449,683no shares remain available for grant under the Helix plans as of September 30, 2011. The Company does not intend to issue any additional options under the Helix stock option plan.2014.
Stock Option Activity
AggregateThe following table summarizes stock option activity for all the above plans for the fiscal year ended September 30, 2011 is as follows:2014:
                 
  2011 
     Weighted-
       
     Average
     Aggregate
 
     Remaining
  Weighted
  Intrinsic
 
     Contractual
  Average
  Value (In
 
  Shares  Term  Price  Thousands) 
 
Options outstanding at beginning of year  764,621      $18.94     
Exercised  (1,554)     $3.62     
Forfeited/expired  (392,930)     $23.12     
                 
Options outstanding at end of year  370,137   0.9 years  $14.57  $10 
                 
Vested and unvested expected to vest at end of year  370,137   0.9 years  $14.57  $10 
                 
Options exercisable at end of year  370,137   0.9 years  $14.57  $10 
                 
Options available for future grant  5,266,210             
                 
The aggregate intrinsic value in the table above represents the total intrinsic value, based
 2014
 Shares Weighted-
Average
Remaining
Contractual Term
 Weighted
Average Price
 Aggregate
Intrinsic Value
(In Thousands)
Options outstanding at September 30, 201315,540
   $15.86
  
Forfeited/expired(9,990)   $17.34
  
Options outstanding at September 30, 20145,550
 0.3 years $13.20
 $
Vested at September 30, 20145,550
 0.3 years $13.20
 $
Options exercisable at September 30, 20145,550
 0.3 years $13.20
 $
Shares available for future grant2,486,983
      
Based on the Company’s closing stock price of $8.15$10.51 as of September 30, 2011, which would have been received by2014, there was no intrinsic value to the option holders had all option holders exercised their options as of that date.
holders.
No stock options were granted in fiscal 2011, 2010years 2014, 2013 or 2009.2012. The total intrinsic value of options exercised during fiscal 2011, 2010years 2014, 2013 or 2012 was $0, $19,000 and 2009 was $15,000, $3,000 and $0,$56,000, respectively. The total cash received from employeesparticipants as a result of employee stock option exercises during fiscal 2011, 2010years 2014, 2013 or 2012 was $0, $67,000 and 2009 was $6,000, $19,000 and $0,$103,000, respectively.
As of September 30, 20112014, there was no future compensation cost related to stock options as all outstanding stock options have vested.
The Company settles employee stock option exercises with newly issued common shares.


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BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Based on information currently available, the Company believes that, although certain options may have been granted in violation of its applicable option plans, those options are valid and enforceable obligations of the Company.
Restricted Stock Activity
Restricted stock for the year ended September 30, 2011 was determined using the fair value method. A summary of the status of the Company’s restricted stock as of September 30, 20112014 and changes during the fiscal year is as follows:
         
  2011 
     Weighted
 
     Average
 
     Grant-Date
 
  Shares  Fair Value 
 
Outstanding at beginning of year  1,313,203  $9.40 
Awards granted  1,046,000   11.27 
Awards vested  (652,588)  11.41 
Awards canceled  (115,626)  8.65 
         
Outstanding at end of year  1,590,989  $10.15 
         
In November 2009, the Company’s Board of Directors (“the Board”) approved the payment of performance based variable compensation awards to certain executive management employees related to fiscal year 2009 performance. The Board chose to pay these awards in fully vested shares of the Company’s common stock rather than cash. The Company granted 178,346 shares based on the closing share price as of November 13, 2009. The $1.4 million of compensation expense related to these awards was recorded during fiscal year 2009 as selling, general and administrative expense.
 2014
 Shares Weighted
Average
Grant-Date
Fair Value
Outstanding at September 30, 20132,915,413
 $11.25
Awards granted1,517,057
 $9.49
Awards vested(592,857) $9.48
Awards canceled(1,113,128) $10.28
Outstanding at September 30, 20142,726,485
 $11.05
The weighted average grant date fair value of restricted stock granted during fiscal 2010years 2013 and fiscal 20092012 was $8.73$9.33 and $4.28$11.80 per share, respectively. The fair value of restricted stock awardsunits vested during fiscal 2011, 2010years 2014, 2013 and 20092012 was $7.4$5.6 million, $6.8$7.3 million and $4.4$5.6 million, respectively. Included in fiscal 2010 was $1.4 million of compensation expense related to the fiscal year 2009 variable compensation award.
As of September 30, 2011,2014, the unrecognized compensation cost related to nonvested restricted stock units that is $10.9expected to vest is $17.2 million and will be recognized over an estimated weighted average amortization period of 1.81.7 years.


68

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company grants restricted stock units that vest over a required service period and awards where vesting is dependent upon achieving certain operating performance goals. Restricted stock units granted with performance goals also have a required service period. The following table reflects restricted stock units granted, including awards related to the discontinued operation, during the years ended September 30, 2014, 2013 and 2012:
 Total Units Time-Based Units Performance-Based Units
Year ended September 30, 20141,517,057
 678,307
 838,750
Year ended September 30, 20131,471,977
 794,602
 677,375
Year ended September 30, 20121,887,419
 767,169
 1,120,250
Units granted with a required service period typically have three year vesting schedules in which one-third vest at the first anniversary of the date of grant, one-third vest at the second anniversary of the date of grant and one-third vest at the third anniversary of the date of grant, except that time-based awards granted to the Company’s Board of Directors vest immediately. Performance-based units have performance criteria established by the Company’s Human Resources and Compensation Committee and the Board of Directors.
The criteria in performance-based awards are weighted and have minimum performance thresholds, which if not met result in no vesting as to that metric’s weighted percentage. Performance-based awards granted in fiscal year 2014 and 2013 included provisions where participants could achieve up to 200% of the targeted number of performance-based awards if the Company’s performance exceeds the target thresholds. The measurement of achievement against performance-based units granted in fiscal year 2014 and 2013 occurred at the end of the fiscal year in which the units were granted. The performance-based units granted in fiscal year 2012 had performance criteria to be measured over a three year period ending on September 30, 2014. The service requirements of the performance-based units are three years from date of grant. Performance-based units granted in fiscal 2014 and 2013 have three year vesting schedules in which one-half vest at the second anniversary of the date of grant and one-half vest at the third anniversary of the date of grant. The performance-based units granted in fiscal year 2012 had a three year vesting schedule in which all of the awards vested at the third anniversary of the date of grant.
In fiscal year 2014, the Company exceeded the financial objectives associated with the performance-based awards granted in fiscal year 2014. Under the terms of the award, a total of 1,297,546 shares could vest, subject to award holders satisfying the service requirement, which is an increase of 458,796 shares over of the target grant. The Company performed below target levels relative to the criteria outlined in awards granted in fiscal years 2013 and 2012. As a result, 460,615 shares of performance-based awards granted in fiscal year 2013 could vest, subject to award holders satisfying the service requirement, which is a decrease of 216,760 shares under the target grant. None of the performance-based awards granted in fiscal year 2012 will vest.
1995 Employee Stock Purchase Plan
On February 22, 1996, the stockholders approved the 1995 Employee Stock Purchase Plan (the “1995 Plan”) which enables eligible employees to purchase shares of the Company’s common stock. Under the 1995 Plan, eligible employees may purchase up to an aggregate of 3,000,000 shares during six-month offering periods commencing on February 1 and August 1 of each year at a price per share of 85% of the lower of the fair market value price per share on the first or last day of each six-month offering period. On February 8, 2012, the stockholders approved an amendment to the 1995 Plan to increase the number of shares of the Company’s common stock available for issuance by 1,000,000 shares, from 3,000,000 to 4,000,000 shares. Participating employees may elect to have up to 10% of their base pay withheld and applied toward the purchase of such shares. The rights of participating employees under the 1995 Plan terminate upon voluntary withdrawal from the plan at any time or upon termination of employment. As of September 30, 2011, 2,707,9052014, 3,350,645 shares of common stock have been purchased under the 1995 Plan and 292,095649,355 shares remain available for purchase.


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BROOKS AUTOMATION, INC.
17.    Restructuring and Other Charges
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
14.  Restructuring Costs and Accruals
Fiscal 2011Year 2014 Activities
The Company recorded a chargerestructuring charges of $6.3 million for fiscal year 2014. These charges relate primarily to continuing operations of $1.0 million in the year ended September 30, 2011 for restructuring costs. Of this amount, $0.7 million relatedCompany's decision to workforce reductions and $0.3 million related to facility costs. The severance costs are comprised of $0.3 million of severance for the elimination of 19 employees, including 13 employeesdiscontinue certain product lines in the Brooks Life Science Systems segment resultingand Brooks Product Solutions segments, the transition of manufacturing certain of the Company’s line of Polycold cryochillers and compressors to a third party contract manufacturer and other global programs designed to improve the Company’s cost structure.
Total severance charges related to the outsourcing of the Polycold manufacturing operation were $1.2 million, consisting of severance and retention fees. The charge for this program was recorded ratably over the period from notification of the consolidationclosing in October 2012 to the actual service end date in September 2014.


69

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Restructuring costs recorded in fiscal year 2014 consist of RTS and Nexus are combined into one operating segment, and $0.4$5.7 million of adjustments for contingent severance arrangements for corporate management positions eliminatedcosts and $0.6 million of facility related costs. Severance costs incurred in prior periods. The facility costsfiscal year 2014 relate to facilities exited in previous years.workforce reductions of approximately 70 positions. The Company has reachedBrooks Product Solutions segment incurred a severance charge of $2.4 million; the endBrooks Global Services segment incurred a severance charge of $0.4 million; the lease period for allBrooks Life Science Systems segment incurred severance charges of its exited leased facilities as of September 30, 2011,$1.6 million and does not expect further restructure costs$1.3 million was related to these facilities. The accruals forthe reduction of positions in corporate and sales. Facility-related costs of $0.6 million consist of lease payments and fixed asset write-offs associated with our efforts to reduce the space used in our operations.
In addition to the workforce reductionsand facility-related charges described above, the Company recorded $0.3 million of inventory write-offs associated with discontinuing certain product lines. Inventory write-offs are expected to be paid overincluded in cost of revenue in the next twelve months.Consolidated Statements of Operations.
Fiscal 2010Year 2013 Activities
The Company recorded a restructuring charge of $6.4 million for fiscal year 2013. These charges related primarily to continuingworkforce reductions implemented to consolidate the operations of Crossing and the Company, to transition internal manufacturing of the Polycold product line to a third party contract manufacturer and other programs designed to improve the Company’s cost structure. Restructuring charges also included facility related costs incurred in connection with the consolidation of Crossing facilities with the Company’s facilities.
Restructuring costs recorded in fiscal year 2013 consisted of $5.5 million of severance costs and $0.8 million of facility related costs. Severance costs incurred in fiscal year 2013 related to the workforce reduction of approximately 200 positions. The Brooks Product Solutions segment incurred a severance charge of $2.5 million inmillion; the year ended September 30, 2010 for restructuring costs. Of this amount, $0.9Brooks Global Services segment incurred a severance charge of $1.1 million; and the Company incurred $1.5 million related to workforce reductionsthe reduction of corporate positions. The Brooks Life Science Systems segment incurred severance charges of $0.4 million, mainly due to the consolidation of administrative functions. Restructuring and $1.6other charges recorded in fiscal year 2013 also included $0.1 million related to facility costs. The severance costs primarily included adjustments for contingent severance arrangements for corporate management positions eliminated in prior periods. The facility costs included $0.4 million to amortizea partial settlement of a defined benefit pension plan that covered substantially all of the deferred discount on multi-year facility restructuring liabilities. In addition, the Company revised the present value discounting of multi-year facility related restructuring liabilities during the first quarter of fiscal year 2010 when certain accounting errors were identified in its prior period financial statements that, individually and in aggregate, are not material to its financial statements taken as a whole for any related prior periods, and recorded a charge of $1.2 million. These facility charges are primarily related to a facility exited in fiscal year 2002, for which the lease ended in July 2011.Company’s Swiss employees.
Fiscal 2009Year 2012 Activities
The Company recorded a restructuring charge of $3.2 million for fiscal year 2012. These charges were related primarily to continuing operationsa series of $12.8 million in the year ended September 30, 2009 for restructuring costs. Of this amount, $11.1 million related to workforce reductions and $0.6 million relatedimplemented to costs to vacate a manufacturing facility inimprove the United States, and other restructuring costs of $1.1 million.Company’s cost structure by eliminating 118 employees. The workforce reductions consisted of $11.1 million of severance costs associated with workforce reductions of 450 employees in operations, service and administrative functions across all the main geographies in which the Company operates. The restructuring charges by segment for fiscal 2009 were: Brooks Product Solutions — $5.6 million,segment incurred a severance charge of $1.2 million; the Brooks Global Services — $3.3 millionsegment incurred a severance charge of $1.0 million; and Contract Manufacturing — $1.4 million. In addition, the Company incurred $2.5$0.7 million to reduce corporate support positions. The Brooks Life Science Systems segment incurred severance charges of restructuring charges in fiscal 2009 that were related$0.3 million to general corporate functions that support alleliminate 14 positions, mainly due to the consolidation of its segments.administrative functions.


70

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The activity related to the Company’s restructuring accruals isand other charges, excluding amounts related to the discontinued operations, for the fiscal years ended September 30, 2014, 2013 and 2012 are summarized below (in thousands):
                 
  Fiscal 2011 Activity 
  Balance
        Balance
 
  September 30,
        September 30,
 
  2010  Expense  Utilization  2011 
 
Facilities and other $3,509  $310  $(3,819) $ 
Workforce-related     726   (433)  293 
                 
  $3,509  $1,036  $(4,252) $293 
                 


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BROOKS AUTOMATION, INC.
 Fiscal Year 2014 Activity
 Balance
September 30,
2013
 Expense Utilization Balance
September 30,
2014
Facility and other contract termination costs$155
 $583
 $(667) $71
Workforce-related termination benefits1,257
 5,706
 (3,559) 3,404
 $1,412
 $6,289
 $(4,226) $3,475
        
 Fiscal Year 2013 Activity
 Balance
September 30,
2012
 Expense Utilization Balance
September 30,
2013
Facility and other contract termination costs$
 $818
 $(663) $155
Workforce-related termination benefits2,098
 5,475
 (6,316) 1,257
 $2,098
 $6,293
 $(6,979) $1,412
        
 Fiscal Year 2012 Activity
 Balance
September 30,
2011
 Expense Utilization Balance
September 30,
2012
Workforce-related termination benefits$293
 $3,153
 $(1,348) $2,098
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
                 
  Fiscal 2010 Activity 
  Balance
        Balance
 
  September 30,
        September 30,
 
  2009  Expense  Utilization  2010 
 
Facilities $6,289  $1,584  $(4,364) $3,509 
Workforce-related  1,372   945   (2,317)   
                 
  $7,661  $2,529  $(6,681) $3,509 
                 
                 
  Fiscal 2009 Activity 
  Balance
        Balance
 
  September 30,
        September 30,
 
  2008  Expense  Utilization  2009 
 
Facilities $9,658  $1,769  $(5,138) $6,289 
Workforce-related  3,005   11,037   (12,670)  1,372 
                 
  $12,663  $12,806  $(17,808) $7,661 
                 
15.  Segment and Geographic Information
EffectiveAccrued restructuring costs of $3.5 million as of the beginning of the third quarter ofSeptember 30, 2014 are expected to be paid during fiscal year 2011, the2015.
18.    Segment and Geographic Information
The Company implemented areports financial reporting structure that included results in three segments: Brooks Product Solutions, Brooks Global Services and Contract Manufacturing. This structure was implemented in response to changes in the Company’s management structure and in anticipation of the sale of its Contract Manufacturing segment. Effective as of the beginning of the fourth quarter of fiscal year 2011, the Company added a fourth segment, Brooks Life Science Systems, which includes the operations of the businesses acquired from RTS and Nexus, which have been consolidated into one operating segment. The Company has reclassified prior year data due to the changes made in its reportable segments.
Systems.
The Brooks Product Solutions segment provides a variety of products critical to technology equipment productivity and availability.solutions that enable improved throughput and yield in controlled operating environments. Those products include atmospheric and vacuum robots, robotic modules, and tool automation systems atmosphericthat provide precision handling and vacuum robots and robotic modules and cryogenicclean wafer environments as well as vacuum pumping and thermal management and vacuum measurement solutions used to create measure and control critical process vacuum applications.
The Brooks Global Services segment provides an extensive range of support services, including on and off-site repair services, on and off-site diagnostic support services, and installation services toin support of the base equipment installed by the Company's Brooks Product Solutions segment, which enable ourits customers to maximize process tool uptime and productivity. This segment also provides end-user customers with spare part support servicesparts to maximize customer tool productivity.
The Brooks Life Science Systems segment provides automated cold sample management systems including automatedfor compound and bio sample storage, automated blood fractionation equipment for sample preparation and handling, equipment, consumables, and parts and support services to a wide range of Life Sciencelife science customers including pharmaceutical companies, biotechnology companies, biobanks, national laboratories, research institutes and research universities.
The Contract Manufacturing segment provided services to build equipment front-end modules and other subassemblies which enable the Company’s customers to effectively develop and source high quality and high reliability process tools for semiconductor and adjacent market applications. The Company sold this segment in the Asset Sale which closed on June 28, 2011.
The Company evaluates the performance of, and allocates resources to, each of its segments based on their revenues, operating income (loss) and returns on invested assets. Operating income (loss) for each segment includes selling, general and administrative expenses directly attributable to the segment. Other unallocated corporate expenses, (primarily certain legal costs associated with the Company’s past equity incentive-related practices and costs to indemnify a former executive in connection with these matters), amortization of acquired intangible assets (excluding completed technology) and

75


BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
restructuring goodwill, and long-lived asset impairmentother charges, pension settlement and in-process research and development are excluded from the segments’ operating income (loss). The Company’s non-allocableindirect overhead costs, which include various general and administrative expenses, are allocated among the segments based upon variousmultiple cost drivers associated with the respective administrative function, including segment revenues,revenue, segment headcount, or an analysis of the segments that benefit from a specific administrative function. Segment assets exclude investments in joint ventures,cash, cash equivalents, restricted cash, marketable securities, deferred tax assets, assets held for sale and cash equivalents.equity method investments.


71

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Financial information for the Company’s business segments, is as follows (in thousands):
                     
  Brooks
  Brooks
  Brooks
       
  Product
  Global
  Life Science
  Contract
    
  Solutions  Services  Systems  Manufacturing  Total 
 
Year ended September 30, 2011                    
Revenues                    
Product $451,287  $14,786  $7,715  $137,329  $611,117 
Services     74,058   2,930      76,988 
                     
  $451,287  $88,844  $10,645  $137,329  $688,105 
                     
Gross profit $171,801  $31,750  $2,260  $17,210  $223,021 
Segment operating income (loss) $64,921  $13,293  $(4,684) $10,649  $84,179 
Depreciation $8,597  $2,481  $543  $1,000  $12,621 
Assets $235,322  $52,354  $101,331  $  $389,007 
Year ended September 30, 2010                    
Revenues                    
Product $362,524  $13,740  $  $155,543  $531,807 
Services     61,165         61,165 
                     
  $362,524  $74,905  $  $155,543  $592,972 
                     
Gross profit $128,479  $20,354  $  $17,462  $166,295 
Segment operating income $40,143  $3,805  $  $8,335  $52,283 
Depreciation $9,465  $2,843  $  $2,255  $14,563 
Assets $227,408  $53,564  $  $57,024  $337,996 
Year ended September 30, 2009                    
Revenues                    
Product $132,337  $7,557  $  $27,365  $167,259 
Services     51,447         51,447 
                     
  $132,337  $59,004  $  $27,365  $218,706 
                     
Gross profit (loss) $15,140  $6,478  $  $(6,690) $14,928 
Segment operating loss $(70,326) $(10,227) $  $(16,128) $(96,681)
Depreciation $8,979  $3,841  $  $2,822  $15,642 
Assets $183,861  $57,151  $  $24,462  $265,474 
Revenues fromexcluding amounts related to the Brooks Product Solutions segmentdiscontinued operations, for the fiscal years ended September 30, 2011, 20102014, 2013 and 2009 include intercompany sales2012 are as follows (in thousands):
 Brooks
Product
Solutions
 Brooks
Global
Services
 Brooks
Life Science
Systems
 Total
Year ended September 30, 2014       
Revenue       
Product$325,639
 $14,978
 $46,415
 $387,032
Services
 79,083
 16,733
 95,816
 $325,639
 $94,061
 $63,148
 $482,848
Gross profit$111,746
 $32,168
 $23,423
 $167,337
Segment operating income (loss)$10,836
 $12,451
 $(8,431) $14,856
       Depreciation expense$8,316
 $2,361
 $2,022
 $12,699
       Assets$252,944
 $58,678
 $103,498
 $415,120
Year ended September 30, 2013       
Revenue       
Product$290,523
 $13,152
 $31,336
 $335,011
Services
 75,477
 11,952
 87,429
 $290,523
 $88,629
 $43,288
 $422,440
Gross profit$91,255
 $26,912
 $14,140
 $132,307
Segment operating income (loss)$1,116
 $9,592
 $(12,380) $(1,672)
       Depreciation expense$8,698
 $2,746
 $2,256
 $13,700
       Assets$226,759
 $59,762
 $105,221
 $391,742
Year ended September 30, 2012       
Revenue       
Product$351,432
 $11,324
 $39,749
 $402,505
Services
 73,616
 12,862
 86,478
 $351,432
 $84,940
 $52,611
 $488,983
Gross profit$113,945
 $25,093
 $20,415
 $159,453
Segment operating income (loss)$13,330
 $8,898
 $(3,139) $19,089
       Depreciation expense$8,600
 $2,344
 $2,111
 $13,055




72


NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — - (Continued)
Revenues for the Contract Manufacturing segment for the fiscal years ended September 30, 2011, 2010 and 2009 exclude intercompany sales of $10.7 million, $12.5 million and $1.6 million, respectively, from this segment to the Brooks Product Solutions segment.
A reconciliation of the Company’s reportable segment gross profit to the corresponding consolidated amounts for the years ended September 30, 2011, 2010 and 2009 is as follows (in thousands):
             
  2011  2010  2009 
 
Segment gross profit $223,021  $166,295  $14,928 
Impairment of long-lived assets        (20,924)
             
Total gross profit (loss) from continuing operations $223,021  $166,295  $(5,996)
             

A reconciliation of the Company’s reportable segment operating income (loss) and segment assets to the corresponding consolidated amounts as of and for the fiscal years ended September 30, 2011, 20102014, 2013 and 20092012 is as follows (in thousands):
 As of and for the Year Ended
September 30,
 2014 2013 2012
Segment operating income (loss)$14,856
 $(1,672) $19,089
Other unallocated corporate expenses (1)5,096
 3,002
 (1,833)
Amortization of acquired intangible assets6,170
 5,694
 4,164
Impairment of acquired intangible assets
 50
 
Restructuring and other charges6,289
 6,380
 3,153
Pension settlement
 
 8,937
In-process research and development
 
 3,026
Total operating income (loss)$(2,699) $(16,798) $1,642
             
  As of and for the Year Ended
 
  September 30, 
  2011  2010  2009 
 
Segment operating income (loss) $84,179  $52,283  $(96,681)
Other unallocated corporate expenses  1,135   778   6,592 
Amortization of acquired intangible assets  2,411   1,969   4,637 
Impairment of goodwill        71,800 
Impairment of long-lived assets        35,512 
Restructuring charges  1,036   2,529   12,806 
             
Total operating income (loss) $79,597  $47,007  $(228,028)
             
Segment assets $389,007  $337,996     
Investments in cash equivalents, marketable securities, joint ventures and other unallocated corporate net assets  247,613   180,228     
             
Total assets $636,620  $518,224     
             
Segment assets$415,120
 $391,742
  
Cash, cash equivalents, restricted cash and marketable securities245,456
 173,539
  
Deferred tax assets86,572
 115,985
  
Assets held for sale
 27,778
  
Equity method investments28,944
 25,687
  
Other unallocated corporate net assets1,946
 2,032
  
Total assets$778,038
 $736,763
  
 ______________
(1)
Other unallocated corporate expenses for the fiscal year ended September 30, 2012 includes a credit of $3.3 million related to insurance proceeds received as reimbursement of litigation costs previously incurred.
Net revenuesrevenue based upon the source of the order by geographic area for the fiscal years ended September 30, 2014, 2013 and 2012 are as follows (in thousands):
 
             
  Year Ended September 30, 
  2011  2010  2009 
 
North America $349,456  $322,542  $115,734 
Asia/Pacific  244,524   203,172   68,393 
Europe  94,125   67,258   34,579 
             
  $688,105  $592,972  $218,706 
             


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BROOKS AUTOMATION, INC.
 Year Ended September 30,
 2014 2013 2012
North America$174,343
 $177,779
 $214,060
Asia/Pacific198,695
 154,358
 183,406
Europe109,810
 90,303
 91,517
 $482,848
 $422,440
 $488,983
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Long-lived assets, consisting of property,Property, plant and equipment by geographic area as of September 30, 2014 and 2013 are as follows (in thousands):
         
  Year Ended September 30, 
  2011  2010 
 
North America $55,295  $60,263 
Asia/Pacific  1,920   3,076 
Europe  11,381   330 
         
  $68,596  $63,669 
         
16.  Significant Customers
The Company had two customers that each accounted for more than 10% of revenues, at 15% and 13%, respectively, in the year ended September 30, 2011. The Company had three customers that each accounted for more than 10% of revenues, at 21%, 15% and 10%, respectively, in the year ended September 30, 2010.
 September 30,  
 2014 2013  
North America$40,232
 $38,505
  
Asia/Pacific870
 1,646
  
Europe9,081
 7,355
  
 $50,183
 $47,506
  
19.    Significant Customers
The Company had one customer that accounted for more than 10% of revenues,revenue, at 14%11%, 11%, and 13%, in the yearfiscal years ended September 30, 2009.2014, 2013 and 2012, respectively. The Company did not have any customers that accounted for more than 10% of its accounts receivable balance at September 30, 2011. 2014 or 2013.
For purposes of determining the percentage of revenue from any original equipment manufacturer ("OEM") customer, the Company does not include revenue from products sold to a contract manufacturer customer which in turn sells to the OEM. If the Company included revenue from products sold to contract manufacturer customers supporting the Company's OEM customers, the percentage of the Company's total revenue derived from certain OEM customers would be higher.


73

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

20.    Other Balance Sheet Information
The Company had one customer that accounted for more than 10%following is a summary of its accounts receivable balance at September 30, 2010.
17.  Other Balance Sheet Information
Components of other selected captions in the Consolidated Balance Sheets are as follows2014 and 2013 (in thousands):
         
  September 30, 
  2011  2010 
 
Accounts receivable $77,318  $92,764 
Less allowance for doubtful accounts  617   491 
         
  $76,701  $92,273 
         
 September 30,
 2014 2013
Accounts receivable$81,270
 $78,460
Less allowance for doubtful accounts(1,031) (863)
Less allowance for sales returns(133) (114)
 $80,106
 $77,483
The allowance for doubtful accounts activity for the fiscal years ended September 30, 2011, 20102014, 2013 and 2009 were2012 was as follows (in thousands):
                     
  Balance at
     Reversals of
     Balance at
 
  Beginning of
     Bad Debt
  Write-offs and
  End of
 
Description
 Period  Provisions  Expense  Adjustments  Period 
 
2011 Allowance for doubtful accounts $491  $  $  $126  $617 
2010 Allowance for doubtful accounts  719   125   (192)  (161)  491 
2009 Allowance for doubtful accounts  1,366   419      (1,066)  719 
Description Balance at
Beginning  of
Period
 Provisions Reversals of
Bad Debt
Expense
 Write-offs and
Adjustments
 Balance at
End of
Period
2014 Allowance for doubtful accounts $863
 $438
 $(315) $45
 $1,031
2013 Allowance for doubtful accounts 851
 48
 (143) 107
 863
2012 Allowance for doubtful accounts 617
 367
 (130) (3) 851
         
  September 30, 
  2011  2010 
 
Inventories, net (in thousands)        
Raw materials and purchased parts $65,770  $79,972 
Work-in-process  29,460   22,392 
Finished goods  12,424   13,423 
         
  $107,654  $115,787 
         
As part of the acquisition of Crossing in fiscal year 2013, the Company acquired a contract in which a certain customer has a right of return on the purchase of spare parts. The allowance for returns activity for the fiscal years ended September 30, 2014 and 2013 was as follows (in thousands):
DescriptionBalance at
Beginning  of
Period
 Provisions Write-offs and
Adjustments
 Balance at
End of
Period
2014 Allowance for sales returns$114
 $19
 $
 $133
2013 Allowance for sales returns
 72
 42
 114
The following is a summary of inventories at September 30, 2014 and 2013, excluding amounts related to discontinued operations (in thousands):
 September 30,
 2014 2013
Inventories   
Raw materials and purchased parts$57,250
 $57,678
Work-in-process20,068
 19,991
Finished goods16,249
 16,742
 $93,567
 $94,411
Reserves for excess and obsolete inventory were $24.7$26.0 million $23.8 and $24.2 million and $27.7 million, excluding amounts related to discontinued operations, at September 30, 2011, 20102014 and 2009,2013, respectively. The Company recorded charges/creditscharges to reserves for excess and


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BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
obsolete inventory of $2.2$6.9 million, $(1.9)$5.4 million and $12.8$4.3 million in fiscal 2011, 2010years 2014, 2013 and 2009,2012, respectively. The net credits recorded for fiscal 2010 are related to the sales of previously reserved items. The Company reduced the reserves for excess and obsolete inventory by $3.5$5.1 million, $1.5$4.3 million and $1.4$5.8 million, in fiscal 2011, 2010years 2014, 2013 and 2009,2012, respectively, for disposals of inventory. For fiscal 2011, the reserves for excess and obsolete inventory were increased by $2.5 million for acquisitions, net


74

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The Company provides for the estimated cost of product warranties, primarily from historical information, at the time product revenue is recognized and retrofit accruals at the time retrofit programs are established. The Company’s warranty obligation is affected by product failure rates, utilization levels, material usage, service delivery costs incurred in correcting a product failure, and supplier warranties on parts delivered to the Company. Product warranty and retrofit activity on a gross basis for the fiscal years ended September 30, 2011, 20102014, 2013 and 20092012, excluding amounts related to discontinued operations, is as follows (in thousands):
     
Balance at September 30, 2008 $8,174 
Accruals for warranties during the year  8,534 
Settlements made during the year  (11,010)
     
Balance at September 30, 2009  5,698 
Accruals for warranties during the year  17,948 
Settlements made during the year  (15,451)
     
Balance at September 30, 2010  8,195 
Adjustments for acquisitions and divestitures  698 
Accruals for warranties during the year  11,299 
Settlements made during the year  (12,754)
     
Balance at September 30, 2011 $7,438 
     
18.  Commitments and Contingencies
Balance at September 30, 2011$7,438
Adjustments for acquisitions and divestitures7
Accruals for warranties during the year13,551
Costs incurred during the year(13,750)
Balance at September 30, 20127,246
Adjustments for acquisitions and divestitures1,187
Accruals for warranties during the year9,968
Costs incurred during the year(11,141)
Balance at September 30, 20137,260
Adjustments for acquisitions and divestitures364
Accruals for warranties during the year9,969
Costs incurred during the year(11,094)
Balance at September 30, 2014$6,499
21.    Sale of Building and Land
On September 27, 2013, the Company completed a Purchase and Sale Agreement ("Agreement") to sell a portion of its Chelmsford, Massachusetts campus to a real estate investment trust for $11.3 million. The property sold was an underutilized building and the related land. The components of the gain on the sale is as follows (in thousands):
Sale proceeds$11,275
Net book value of building and land(6,095)
Deferred leasing costs and other(3,718)
Direct transaction costs(437)
Gain on the sale of building and land$1,025
In December 2012, the Company entered into an agreement to lease this property to an unrelated third party. Unamortized deferred costs of $3.7 million, consisting primarily of commissions and tenant allowances, were written off and included in the determination of the gain on the sale. Direct transaction costs, consisting of broker commissions and legal fees were also included in the determination of the gain on the sale.
In addition, in fiscal year 2013, the Company sold certain buildings in Oberdiessbach, Switzerland for total proceeds of $3.2 million. The sale of these assets resulted in a gain of $0.2 million.
Gains related to the sale of these buildings are recorded in the Company's Consolidated Statements of Operations as a component of other income, net.
22.    Commitments and Contingencies
Capital Lease CommitmentsObligation
In March 2014, the Company exercised an option to renew the lease of a building and the related land on the Company's Chelmsford, Massachusetts campus. The Company has leased this building since 2002. By exercising this option, the Company has also contracted to purchase the building at the end of the lease period. The assets acquired under the lease were recorded at the net present value of the minimum lease payments which was then allocated to the building and the land based on their relative fair values. The cost of the building and the land under the capital lease are included in the Consolidated Balance Sheets as property, plant and equipment at $6.4 million and $2.1 million, respectively. Depreciation expense related to the building is computed using the straight-line method over the estimated useful life of the asset. Accumulated amortization related to the lease was $0.1 million at September 30, 2014.


75

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The obligation related to the capital lease is recorded as a short-term or long-term obligation in the Consolidated Balance Sheets depending on when payments are due. The future minimum lease payments required under the capital lease and the present value of the net minimum lease payments, as of September 30, 2014, are as follows (in thousands):
Year ended September 30, 
2015$881
2016881
2017881
20186,901
Total minimum lease payments9,544
Less amounts representing interest1,246
Total capital lease obligation8,298
Less current portion of capital lease obligation881
Long-term capital lease obligation$7,417
Operating Leases Commitments
The Company leases manufacturing and office facilities and certain equipment under operating leases that expire through 2021.2019. Rental expense under operating leases, excluding expense recorded as a component of restructuring, for the fiscal years ended September 30, 2011, 20102014, 2013 and 20092012 was $4.9$8.2 million, $4.7$8.4 million and $4.8$4.8 million, respectively. Future minimum lease commitments on non-cancelable operating leases lease income and sublease incomeas of September 30, 2014 are as follows (in thousands):
 
         
  Operating
  Sublease
 
  Leases  Income 
 
Year ended September 30, 2012 $6,575  $60 
2013  6,348    
2014  4,695    
2015  2,861    
2016  1,286    
Thereafter  2,863    
         
  $24,628  $60 
         
Year ended September 30, 2015$5,140
20163,384
20171,748
20181,401
2019706
Thereafter93
 $12,472
The Company is a guarantor on a lease in Mexico that expires in January 2013.2018. As of September 30, 2011,2014, the remaining payments under this lease are approximately $0.5 million.$1.4 million.
Letters of Credit
At September 30, 2011,2014, the Company had $1.8$21.1 million of outstanding letters of credit.


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BROOKS AUTOMATION, INC.
credit outstanding related primarily to customer advances and other performance obligations. These arrangements guarantee the refund of advance payments received from customers in the event that the product is not delivered or warranty obligations are not fulfilled in compliance with the terms of the contract. While the Company does not anticipate that these obligations will be called, they could be called by the beneficiaries at any time before the expiration date of the particular letter of credit should the Company fail to meet certain contractual requirements.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Purchase Commitments
The Company has non-cancelable contracts and purchase orders for inventory of $47.9$71.0 million at September 30, 2011.2014.
Contingencies
On August 22, 2006, an action captioned asMark Levy v. Robert J. Therrien and Brooks Automation, Inc., was filed in the United States District Court for the District of Delaware, seeking recovery, on behalf of Brooks, from Mr. Therrien (the Company’s former Chairman and CEO) under Section 16(b) of the Exchange Act for alleged “short-swing” profits earned by Mr. Therrien due to the loan and stock option exercise in November 1999, and a sale by Mr. Therrien of Brooks stock in March 2000. The complaint sought disgorgement of all profits earned by Mr. Therrien on the transactions, attorneys’ fees and other expenses. On February 20, 2007, a second Section 16(b) action, concerning the same loan and stock option exercise in November 1999 discussed above and seeking the same remedy, was filed in the United States District Court of the District of Delaware, captionedAron Rosenberg v. Robert J. Therrien and Brooks Automation, Inc. On April 4, 2007, the court issued an order consolidating theLevyandRosenbergactions (the “Section 16(b) Action”).
On February 24, 2011, the parties executed a settlement agreement which, upon court approval, would resolve the Section 16(b) Action. Pursuant to this agreement, Mr. Therrien sold 150,000 shares of Brooks stock, the proceeds of which form the settlement fund and totaled approximately $1.9 million. The plaintiffs agreed to seek a fee not exceeding 30 percent of this settlement fund, the remainder of which would be delivered to the Company following court approval. Notice of the proposed settlement, which described the proposed settlement in further detail, was mailed to shareholders of record as of March 31, 2011.
In connection with the agreement to settle the Section 16(b) Action, the Company reached an agreement with Mr. Therrien and the Company’s former Directors and Officers Liability Insurance Carriers (the “Global Settlement Agreement”) to resolve (1) Mr. Therrien’s civil litigation with the United States Securities and Exchange Commission (“SEC”), (2) any of the Company’s advancement or indemnification obligations to Mr. Therrien in connection with that matter, and (3) the Company’s claim against these insurance carriers for reimbursement of certain defense costs which the Company paid to Mr. Therrien pursuant to his indemnification agreement with the Company. Pursuant to the Global Settlement Agreement, Mr. Therrien agreed to enter into a settlement with the SEC. If approved by the SEC and the court in that matter, in addition to delivering to the Company the net proceeds of the sale of 150,000 shares of Brooks stock in connection with the Section 16(b) matter, Mr. Therrien would pay the SEC approximately $728,000 in disgorgement and $100,000 in fines. To resolve any indemnification claim by Mr. Therrien against the Company in connection with this matter, the Company has agreed to reimburse him $500,000 towards his disgorgement payment. Finally, upon resolution of both the Section 16(b) matter and the SEC matter, the Company’s insurers have agreed to pay Brooks a net sum of approximately $3.4 million. This payment would resolve any claim the Company may have against its former insurers for certain defense costs paid to Mr. Therrien.
On May 17, 2011, the court in the Section 16(b) Action held a hearing to determine the fairness of the proposed settlement in that action. Following the hearing, the court approved that settlement, finding that the settlement in the Section 16(b) Action and the Global Settlement Agreement were both in the best interest of the parties and the Company’s shareholders. On June 16, 2011, the settlement of the Section 16(b) Action became final and the Company received $1.3 million in settlement proceeds of which 50% will be paid to the Company’s insurance company and the remaining 50% has been recorded as income. Mr. Therrien has agreed to and submitted a proposed settlement to the SEC for approval by the Commission, which must also be approved by the court before it becomes final. If this settlement becomes final, then the contingencies within the Global Settlement Agreement will be satisfied, which will have the effect of resolving all pending litigation related to the Company’s past stock option granting practices, and the Company would expect to record income of approximately $4 million upon final resolution, inclusive of the $0.7 million previously recognized.


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BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The Company is subject to various legal proceedings, both asserted and unasserted, that arise in the ordinary course of business. The Company cannot predict the ultimate outcome of such legal proceedings or in certain instances provide reasonable ranges of potential losses. However, as of the date of this report, the Company believes that none of these claims will have a material adverse effect on its consolidated financial condition or results of operations. In the event of unexpected subsequent developments and given the inherent unpredictability of these legal proceedings, there can be no assurance that the Company's assessment of any claim will reflect the ultimate outcome and an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company's consolidated financial condition or results of operations in particular quarterly or annual periods.
23.    Subsequent Events
On October 1, 2014, the Company acquired all of the outstanding stock of FluidX Ltd. (“FluidX”), a UK based provider of biological sample storage tubes and complementary bench-top instruments. The Company agreed to a purchase price of approximately $16.0 million of cash, subject to a working capital adjustment. The acquisition of FluidX provides the Company
19.  Subsequent Events


76

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

with the opportunity to enhance its existing capabilities with respect to biobanking solutions in the Life Science Systems segment.
On November 8, 2011,5, 2014, the Company’s Board of Directors declared a cash dividend of $0.08$0.10 per share payable on December 30, 201126, 2014 to common stockholders of record on December 9, 2011.5, 2014. Dividends are declared at the discretion of the Company’s Board of Directors and depend on actual cash from operations, the Company’s financial condition and capital requirements and any other factors the Company’s Board of Directors may consider relevant. Future dividend declarations, as well as the record and payment dates for such dividends, will be determined by the Company’s Board of Directors on a quarterly basis.


81


77


Item 9.
Changes In and Disagreements With Accountants on Financial Accounting and Financial Disclosure
As previously reported, effective November 20, 2012, the Audit Committee of the Company’s Board of Directors elected not to retain PricewaterhouseCoopers LLP as its independent registered public accounting firm and engaged BDO USA, LLP as the Company’s independent registered public accounting firm for fiscal year 2013. This change in accounting firms was reported in the Company’s Form 8-K filed with the United States Securities and Exchange Commission on November 27, 2012.
Not applicable.
Item 9A.
Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined underRule 13a-15(e) promulgated under the Exchange Act. Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported on a timely basis and that such information is accumulated and communicated to management, including the chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon this evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined inRules 13a-15(f) and15d-15(f) under the Exchange Act, as a process designed by, or under the supervision of our chief executive and chief financial officers and effected by our board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that:
pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of our assets;
• pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and disposition of our assets;
• provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and
• 
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorization of our management and directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Under the supervision and with the participation of our management, including our chief executive officer and chief financial officer, we conducted an assessment of the effectiveness of our internal control over financial reporting as of September 30, 2011.2014. In making this assessment, we used the criteria set forth in the 1992 framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) anin Internal Control-Integrated Framework.Based on our assessment, we concluded that, as of September 30, 2011,2014, our internal control over financial reporting was effective.
Our audited consolidated financial statements include the results of Dynamic Micro Systems Semiconductor Equipment GmbH, or DMS, which we acquired in April 2014. The scope of our assessment of the effectiveness of our internal control over financial reporting as of September 30, 2014 does not include the internal controls of DMS as management determined that it would not be practical to conduct a sufficiently comprehensive assessment of the internal controls of DMS based on the date of the acquisition and managements’ other time commitments. Guidance issued by the Securities and Exchange Commission permits companies to exclude acquisitions from their assessment of internal control over financial reporting for the first fiscal year in which the acquisition occurred. Our consolidated revenue for the fiscal year ended September 30, 2014 was $482.8 million, of which DMS represented $5.5 million. Our total assets as of September 30, 2014 were $778.0 million, of which DMS tangible assets represented $22.3 million. Our net assets as of September 30, 2014 were $642.9 million, of which DMS represented $16.6 million.
The effectiveness of our internal control over financial reporting as of September 30, 20112014 has been audited by PricewaterhouseCoopersBDO USA LLP, an independent registered public accounting firm, as stated in theirthe following report:



78


Report of Independent Registered Public Accounting Firm

Board of Directors and Stockholders
Brooks Automation, Inc.
Chelmsford, Massachusetts
We have audited Brooks Automation Inc.’s internal control over financial reporting as of September 30, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Brooks Automation, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
As indicated in the accompanying Item 9A, Management's Report on Internal Control Over Financial Reporting, management's assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Dynamic Micro Systems Semiconductor Equipment GmbH (“DMS”), which was acquired on April 30, 2014, and which is included in the consolidated balance sheet of Brooks Automation, Inc. as of September 30, 2014, and the related consolidated statement of operations, comprehensive income (loss), changes in equity, and cash flows for the year then ended.  DMS constituted 3% and 3% of total assets and net assets, respectively, as of September 30, 2014, and 1% of revenues for the year then ended. Management did not assess the effectiveness of internal control over financial reporting of DMS because of the timing of the acquisition which was completed on April 30, 2014. Our audit of internal control over financial reporting of Brooks Automation, Inc. also did not include an evaluation of the internal control over financial reporting of DMS.
In our opinion, Brooks Automation, Inc. maintained, in all material respects, effective internal control over financial reporting as of September 30, 2014, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Brooks Automation, Inc. as of September 30, 2014 and the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for the year then ended and our report which appears herein.dated November 13, 2014 expressed an unqualified opinion thereon.

/s/ BDO USA, LLP
Boston, Massachusetts
November 13, 2014

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Changes in Internal Control Over Financial Reporting
There were no changes in internal control over financial reporting during the fiscal fourth quarter ended September 30, 2011,2014, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


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Item 9B.
Other Information
None.
PART III
Item 10.
Directors, Executive Officers and Corporate Governance
The information required by this Item 10 is hereby incorporated by reference tocontained in our definitive proxy statement for our 2015 annual meeting of shareholders to be filed by us within 120 days after the close of our fiscal year.year (the "2015 Proxy Statement") under the caption "Proposal No. 1-Election of Directors," "Other Matters-Section 16(a) Beneficial Ownership Compliance," "Other Matters-Standards of Conduct," "Other Matters-Stockholder Proposals and Recommendations for Directors" and "Corporate Governance" and is incorporated herein by reference.
Item 11.
Executive Compensation
The information required by this Item 11 is hereby incorporated by reference to our definitive proxy statementcontained under the caption "Corporate Governance and Director Compensation" and "Executive Officers" in the 2015 Proxy Statement to be filed by us within 120 days after the close of our fiscal year.year and is incorporated herein by reference.
Item 12.
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The information required by this Item 12 is hereby incorporated by reference to our definitive proxy statementcontained under the caption "General Information-Security Ownership of Certain Beneficial Owners" and "Equity Compensation Plan Information" in the 2015 Proxy Statement to be filed by us within 120 days after the close of our fiscal year.year and is incorporated herein by reference.
Item 13.
Certain Relationships and Related Transactions, and Director Independence
The information required by this Item 13 is hereby incorporated by reference to our definitive proxy statementcontained under the caption "Related Party Transactions" and "Corporate Governance and Director Compensation" in the 2015 Proxy Statement to be filed by us within 120 days after the close of our fiscal year.year and is incorporated herein by reference.
Item 14.Principal Accountant Fees and Services
The information required by this Item 14 is hereby incorporated by reference to our definitive proxy statementcontained under the caption "Independent Auditor Fees and Other Matters" in the 2015 Proxy Statement to be filed by us within 120 days after the close of our fiscal year.year and is incorporated herein by reference.
PART IV
Item 15.Exhibits and Financial Statement Schedules
(a)   Financial Statements and Financial Statement Schedules
The consolidated financial statements of the Company are listed in the index under Part II, Item 8, in thisForm 10-K.
Other financial statement schedules are omitted because of the absence of conditions under which they are required or because the required information is given in the supplementary consolidated financial statements or notes thereto.


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(b)  Exhibits
 
     
Exhibit
  
No.
 Description
 
 3.01 Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 of the Company’s registration statement onForm S-4 (Reg.No. 333-127945), filed on August 30, 2005 (the “HelixS-4”), as amended on September 22, 2005).
 3.02 Certificate of Designations of the Company’s Series A Junior Participating Preferred Stock (incorporated herein by reference to Exhibit 3.03 of the Company’s registration statement onForm S-3(Reg. No. 333-34487), filed on August 27, 1997).
 3.03 Certificate of Amendment of the Company’s Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 of the HelixS-4, as amended on September 22, 2005).
 3.04 Certificate of Amendment of the Company’s Certificate of Incorporation (incorporated herein by reference to Exhibit 3.4 of the HelixS-4).
 3.05 Certificate of Increase of Shares Designated as the Company’s Series A Junior Participating Preferred Stock (incorporated herein by reference to Exhibit 3.5 of the HelixS-4).
 3.06 Certificate of Ownership and Merger of PRI Automation, Inc. into the Company (incorporated herein by reference to Exhibit 3.6 of the HelixS-4).
 3.07 Certificate of Change of Registered Agent and Registered Office of the Company (incorporated herein by reference to Exhibit 3.8 of the HelixS-4).
 3.08 Certificate of Amendment of Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.9 to the Company’s annual report onForm 10-K for the fiscal year ended September 30, 2010, as filed on November 23, 2010 (“201010-K”)).
 3.09 Certificate of Amendment of Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.10 to the Company’s 201010-K).
 3.10 Certificate of Increase of Shares Designated as Series A Junior Participating Preferred Stock (incorporated herein by reference to Exhibit 3.12 to the Company’s 201010-K).
 3.11 Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.01 of the Company’s current report onForm 8-K, filed on February 11, 2008).
 4.01 Specimen Certificate for shares of the Company’s common stock (incorporated herein by reference to the Company’s registration statement onForm S-3 (Reg.No. 333-88320), filed on May 15, 2002).
 10.01 Shareholders’ Agreement, dated as of June 30, 2006, among Yaskawa Electric Corporation, Brooks Automation, Inc. and Yaskawa Brooks Automation, Inc. (incorporated herein by reference to Exhibit 10.01 to the Company’s 201010-K).
 10.02 U.S. Robot Supply Agreement, made as of June 30, 2006, by and between Brooks Automation, Inc. and Yaskawa Electric Corporation (incorporated herein by reference to Exhibit 10.02 to the 201010-K).
 10.03 Brooks Japan Robot Supply Agreement, made as of June 30, 2006, by and between Yaskawa Brooks Automation, Inc. and Brooks Automation, Inc. (incorporated herein by reference to Exhibit 10.03 to the Company’s 201010-K).
 10.04 Basic agreement between the Company and Ulvac Corporation dated August 17, 1981 (incorporated by reference to Exhibit 10.13 of the registration statement onForm S-2 (Reg.No. 2-84880) filed by Helix Technology Corporation)).
 10.05 Form of Indemnification Agreement for directors and officers of the Company (incorporated herein by reference to the Company’s registration statement onForm S-1 (Reg.No. 333-87296), filed on December 13, 1994 (the “BrooksS-1”)).
 10.06 Employment Agreement, effective as of January 28, 2008, by and between Brooks Automation, Inc. and Martin S. Headley (incorporated herein by reference to Exhibit 10.1 to the Company’s current report onForm 8-K filed on January 31, 2008).
 10.07 Employment Agreement, effective as of October 26, 2005, by and between Brooks Automation, Inc. and Steven A. Michaud (incorporated herein by reference to Exhibit 10.09 to the Company’s annual report onForm 10-K for the fiscal year ended September 30, 2008, filed on November 26, 2008 (the “200810-K”)).


84


     
Exhibit
  
No.
 Description
 
 10.08 Employment Agreement, effective as of April 5, 2010, by and between Brooks Automation, Inc. and Stephen S. Schwartz (incorporated herein by reference to Exhibit 10.01 to the Company’s quarterly report onForm 10-Q for the fiscal quarter ended March 31, 2010, filed on May 6, 2010).
 10.09 1993 Nonemployee Director Stock Option Plan (incorporated herein by reference to Exhibit 99.1 to the Company’s registration statement onForm S-8 (Reg.No. 333-22717), filed on March 4, 1997).
 10.10 1995 Employee Stock Purchase Plan, as amended (incorporated herein by reference to Exhibit 10.13 to the Company’s 201010-K).
 10.11 Amended and Restated 2000 Equity Incentive Plan, restated as of December 29, 2008 (incorporated herein by reference to Exhibit 10.01 to the Company’s quarterly report onForm 10-Q for the fiscal quarter ended December 31, 2008, filed on February 9, 2009).
 10.12 Helix Technology Corporation 1996 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.1 of the Company’s registration statement onForm S-8 (Reg.No. 333-129724), filed on November 16, 2005).
 10.13 Helix Technology Corporation Amended and Restated Stock Option Plan for Non-Employee Directors (incorporated herein by reference to Exhibit 4.2 of the Company’s registration statement onForm S-8 (Reg.No. 333-129724), filed on November 16, 2005).
 10.14 Form of 2000 Equity Incentive Plan New Employee Nonqualified Stock Option Agreement (incorporated herein by reference to Exhibit 10.18 to the Company’s 201010-K).
 10.15 Form of 2000 Equity Incentive Plan Existing Employee Nonqualified Stock Option Agreement (incorporated herein by reference to Exhibit 10.19 to the Company’s 201010-K).
 10.16 Form of 2000 Equity Incentive Plan Director Stock Option Agreement (incorporated herein by reference to Exhibit 10.20 to the Company’s 201010-K).
 10.17 Form of Restricted Stock Agreement (incorporated herein by reference to Exhibit 10.21 to the Company’s 201010-K).
 10.18 Form of Restricted Stock Unit Award Notice.
 10.19 Non-Employee Directors Stock Grant/Restricted Stock Unit Election Form (incorporated herein by reference to Exhibit 10.40 to the Company’s 201010-K).
 10.20 Brooks Automation, Inc. Deferred Compensation Plan, as amended (incorporated herein by reference to Exhibit 10.25 to the Company’s 201010-K).
 10.21 AmendmentNo. 2008-01 to the Brooks Automation, Inc. Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.01 to the Company’s quarterly report onForm 10-Q for the quarter ended June 30, 2008, filed on August 8, 2008).
 10.22 Helix Technology Corporation Employees’ Pension Plan, as amended and restated including amendments effective through December 31, 2010.
 10.23 Lease between the Company and BerCar II, LLC for 12 Elizabeth Drive, Chelmsford, Massachusetts dated October 23, 2002 (incorporated herein by reference to Exhibit 10.28 to the Company’s 200810-K).
 10.24 First Amendment to Lease between the Company and BerCar II, LLC for 12 Elizabeth Drive, Chelmsford, Massachusetts dated November 1, 2002 (incorporated herein by reference to Exhibit 10.29 to the Company’s 200810-K).
 10.25 Lease, dated May 14, 1999, between MUM IV, LLC as Lessor and the Company as Lessee (incorporated herein by reference to Exhibit 10.30 to the 201010-K).
 10.26 Factory Lease Advanced Agreement among Sang Chul Park, Young Ja Kim, Joon Ho Park, Brooks Automation Asia, Ltd. and Brooks Automation Korea, Inc. (incorporated herein by reference to Exhibit 10.36 to the Company’s 201010-K).
 10.27 Lease dated September 6, 2001 between The Harry Friedman and Edith B. Friedman Revocable Living Trust Dated May 15, 1986 et al as Lessor and the Company (IGC — Polycold Systems Inc.) as Lessee (incorporated herein by reference to Exhibit 10.37 to the Company’s 201010-K).
 10.28 Lease dated August 8, 2008 between the Company and Koll/Intereal Bay Area for 4051 Burton Drive, Santa Clara, CA (incorporated herein by reference to Exhibit 10.38 to the Company’s 200810-K).

85


     
Exhibit
  
No.
 Description
 
 10.29 Standard Industrial lease dated May 31, 2010 by and between Brooks Automation, Inc. (formerly Nexus Biosystems, Inc.) and Crest Partners-Poway One Danielson for 14100 Danielson Street, Building 100, Poway, California.
 10.30 Agreement and Plan of Merger among Nexus Biosystems, Inc. and Spurs Acquisition, Inc., a wholly-owned subsidiary of Brooks Automation, Inc., and Telegraph Hill Partners Management Company LLC, dated as of July 25, 2011 (incorporated herein by reference to Exhibit 2.1 to the Company’s current report onForm 8-K, filed on July 29, 2011).
 10.31 Master Purchase and Sale Agreement by and among Brooks Automation, Inc., Celestica Oregon LLC, 2281392 Ontario Inc., and, for the limited purposes set forth therein, Celestica, Inc., dated as of April 20, 2011 (incorporated herein by reference to Exhibit 2.1 to the Company’s current report onForm 8-K, filed on April 26, 2011).
 21.01 Subsidiaries of the Company.
 23.01 Consent of PricewaterhouseCoopers LLP (Independent registered public accounting firm for the Company).
 31.01 Rule 13a-14(a), 15d-14(a) Certification.
 31.02 Rule 13a-14(a), 15d-14(a) Certification.
 32  Section 1350 Certification.
 101  The following material from the Company’s Annual Report onForm 10-K, for the year ended September 30, 2011, formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Cash Flows; and (iv) the Notes to Consolidated Financial Statements.

86

Exhibit
No. 
Description 
3.01Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.01 to the Company’s registration statement on Form S-3 (Reg. No. 333-189582), filed on June 25, 2013).
3.02Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.01 of the Company's current report on Form 8-K, filed on February 11, 2008).
4.01Specimen Certificate for shares of the Company's common stock (incorporated herein by reference to the Company's registration statement on Form S-3 (Reg. No. 333-88320), filed on May 15, 2002).
10.01Shareholders’ Agreement, dated as of June 30, 2006, among Yaskawa Electric Corporation, Brooks Automation, Inc. and Yaskawa Brooks Automation, Inc. (incorporated herein by reference to Exhibit 10.01 to the Company's 2010 10-K, filed on November 23, 2010 (the "2010 10-K")).



10.02U.S. Robot Supply Agreement, made as of June 30, 2006, by and between Brooks Automation, Inc. and Yaskawa Electric Corporation (incorporated herein by reference to Exhibit 10.02 to the 2010 10-K).
10.03Brooks Japan Robot Supply Agreement, made as of June 30, 2006, by and between Yaskawa Brooks Automation, Inc. and Brooks Automation, Inc. (incorporated herein by reference to Exhibit 10.03 to the 2010 10-K).
10.04Basic agreement between the Company and Ulvac Corporation dated August 17, 1981 (incorporated herein by reference to Exhibit 10.13 of the registration statement on Form S-2 (Reg. No. 2-84880) filed by Helix Technology Corporation).
10.05Form of Indemnification Agreement for directors and officers of the Company (incorporated herein by reference to the Company's registration statement on Form S-1 (Reg. No. 333-87296), filed on December 13, 1994 (the “Brooks S-1”)).
10.06Employment Agreement, effective as of April 5, 2010, by and between Brooks Automation, Inc. and Stephen S. Schwartz (incorporated herein by reference to Exhibit 10.01 to the Company's quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2010, filed on May 6, 2010).
10.07Offer letter dated December 1, 2011 between the Company and Mark D. Morelli (incorporated herein by reference to Exhibit 10.08 to the Company's annual report on Form 10-K for the fiscal year ended September 30, 2012, as filed on November 21, 2012 (the “2012 10-K”)).
10.08Offer letter dated September 5, 2013 between the Company and Lindon G. Robertson (incorporated herein by reference to Exhibit 10.11 to the Company's 2013 10-K, filed on November 22, 2013).
10.091995 Employee Stock Purchase Plan, as amended (incorporated herein by reference to Exhibit 10.13 to the 2010 10-K).
10.10Second Amended and Restated 2000 Equity Incentive Plan, restated as of May 7, 2013 (incorporated herein by reference to Exhibit 10.01 to the Company's current report on Form 8-K, filed on May 9, 2013).
10.11Helix Technology Corporation 1996 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.1 of the Company's registration statement on Form S-8 (Reg. No. 333-129724), filed on November 16, 2005).
10.12Form of 2000 Equity Incentive Plan New Employee Nonqualified Stock Option Agreement (incorporated herein by reference to Exhibit 10.18 to the 2010 10-K).
10.13Form of 2000 Equity Incentive Plan Existing Employee Nonqualified Stock Option Agreement (incorporated herein by reference to Exhibit 10.19 to the 2010 10-K).
10.14Form of 2000 Equity Incentive Plan Director Stock Option Agreement (incorporated herein by reference to Exhibit 10.20 to the 2010 10-K).
10.15Form of Restricted Stock Agreement (incorporated herein by reference to Exhibit 10.21 to the 2010 10-K).
10.16Form of Restricted Stock Unit Award Notice (incorporated herein by reference to Exhibit 10.18 to the Company's annual report on Form 10-K for the fiscal year ended September 30, 2011, as filed on November 28, 2011 (the “2011 10-K”)) .
10.17Non-Employee Directors Stock Grant/Restricted Stock Unit Election Form (incorporated herein by reference to Exhibit 10.40 to the 2010 10-K).
10.18Brooks Automation, Inc. Deferred Compensation Plan, as amended (incorporated herein by reference to Exhibit 10.25 to the 2010 10-K).
10.19Amendment No. 2008-01 to the Brooks Automation, Inc. Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.01 to the Company's quarterly report on Form 10-Q for the quarter ended June 30, 2008, filed on August 8, 2008).
10.20Lease between the Company and BerCar II, LLC for 12 Elizabeth Drive, Chelmsford, Massachusetts dated October 23, 2002 (incorporated herein by reference to Exhibit 10.28 to the Company's 2008 10-K filed on November 26, 2008 (the "2008 10-K")).
10.21First Amendment to Lease between the Company and BerCar II, LLC for 12 Elizabeth Drive, Chelmsford, Massachusetts dated November 1, 2002 (incorporated herein by reference to Exhibit 10.29 to the 2008 10-K).


81


10.21.1Amendment to Lease between the Company and BerCar II, LLC for 12 Elizabeth Drive, Chelmsford, Massachusetts dated September 30, 2013 (incorporated herein by reference to Exhibit 10 to the Company's quarterly report on Form 10-Q for the quarter ended March 30, 2014, filed on May 8, 2014).
10.22Lease, dated May 14, 1999, between MUM IV, LLC as Lessor and the Company as Lessee (incorporated herein by reference to Exhibit 10.30 to the 2010 10-K).
10.23Lease dated September 6, 2001 between The Harry Friedman and Edith B. Friedman Revocable Living Trust Dated May 15, 1986 et al as Lessor and the Company (IGC - Polycold Systems Inc.) as Lessee (incorporated herein by reference to Exhibit 10.37 to the 2010 10-K).
10.24Lease dated August 8, 2008 between the Company and Koll/Intereal Bay Area for 4051 Burton Drive, Santa Clara, CA (incorporated herein by reference to Exhibit 10.38 to the 2008 10-K).
10.25Standard Industrial lease dated May 31, 2010 by and between Brooks Automation, Inc. (formerly Nexus Biosystems, Inc.) and Crest Partners-Poway One Danielson for 14100 Danielson Street, Building 100, Poway, California (incorporated herein by reference to Exhibit 10.29 to the 2011 10-K).
10.26Purchase Agreement dated July 31, 2013 between Brooks Automation, Inc. and Ram Management Co., Inc. (incorporated herein by reference to Exhibit 10.01 to the Company's current report on Form 8-K filed on August 5, 2013).
10.27Asset Purchase Agreement dated March 17, 2014 by and between Brooks Automation, Inc. and MKS Instruments, Inc., as amended (incorporated herein by reference to Exhibit 10.1 to the Company's current report on Form 8-K, filed on May 30, 2014).
10.28Share Purchase and Transfer Agreement, effective as of April 29, 2014, by and among Brooks Automation, Inc., Brooks Automation (Germany) GmbH, DMS Beteiligungs GmbH, and HSH Nordbank AG (incorporated herein by reference to Exhibit 2.1 to the Company's current report on Form 8-K, filed on May 5, 2014).
16.1Letter of PricewaterhouseCoopers LLP dated November 27, 2012 (incorporated herein by reference to Exhibit 16.1 to the Company's current report on Form 8-K filed on November 27, 2012).
21.01Subsidiaries of the Company.
23.01Consent of BDO (Independent registered public accounting firm for the Company).
23.02Consent of PricewaterhouseCoopers LLP (Independent registered public accounting firm for the Company).
31.01Certification of the Company's Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.02Certification of the Company's Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32Certification of the Company's Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101The following material from the Company's Annual Report on Form 10-K, for the year ended September 30, 2014, formatted in XBRL (Xtensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Income (Loss) (iv) the Consolidated Statements of Cash Flows; (v) the Consolidated Statements of Changes in Equity; and (vi) the Notes to Consolidated Financial Statements.



82


SIGNATURES
Pursuant to the requirements of 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.
 
BROOKS AUTOMATION, INC.
BROOKS AUTOMATION, INC.
 
By:
/s/  S/    STEPHEN S. SCHWARTZ
Stephen S. Schwartz
Chief Executive Officer
Stephen S. Schwartz
Chief Executive Officer
Date: November 28, 2011
13, 2014
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
 
SignatureTitleDate
   
Signature/S/ STEPHEN S. SCHWARTZ
Director and Chief Executive Officer
Title
Date
November 13, 2014
Stephen S. Schwartz(Principal Executive Officer) 
   
/S/LINDONG. ROBERTSON
Executive Vice President andNovember 13, 2014
Lindon G. RobertsonChief Financial Officer 
/s/  Stephen S. Schwartz

Stephen S. Schwartz
Director and Chief Executive Officer (Principal Executive(Principal Financial Officer) November 28, 2011
   
/s/  S/Martin S. Headley DAVID PIETRANTONI

Martin S. Headley
Executive Vice President - Finance and
Chief Financial Officer
(Principal Financial Officer)
November 28, 201113, 2014
David PietrantoniCorporate Controller
 (Principal Accounting Officer)
   
/s/  Timothy S. MathewsS/ A. CLINTON ALLEN

Timothy S. Mathews
Vice President and
Corporate Controller
(Principal Accounting Officer)
DirectorNovember 28, 201113, 2014
A. Clinton Allen  
   
/s/  S/ A. Clinton AllenROBYN C.DAVIS

A. Clinton Allen
DirectorNovember 28, 201113, 2014
Robyn C. Davis  
   
/s/  JosephS/ JOSEPH R. MartinMARTIN

DirectorNovember 13, 2014
Joseph R. Martin DirectorNovember 28, 2011
   
/s/  JohnS/ JOHN K. McGillicuddyMCGILLICUDDY

DirectorNovember 13, 2014
John K. McGillicuddy DirectorNovember 28, 2011
   
/s/  KrishnaS/ KRISHNA G. PalepuPALEPU

DirectorNovember 13, 2014
Krishna G. Palepu DirectorNovember 28, 2011
   
/s/  Chong Sup ParkS/ KIRK P. POND

Chong Sup Park
DirectorNovember 28, 201113, 2014
Kirk P. Pond  
   
/s/  Kirk P. PondS/ ALFRED WOOLLACOTT III

Kirk P. Pond
DirectorNovember 28, 201113, 2014
Alfred Woollacott III  
   
/s/  Alfred Woollacott IIIS/ MARK S. WRIGHTON

Alfred Woollacott III
DirectorNovember 28, 201113, 2014
Mark S. Wrighton  
   
/s/  Mark S. WrightonS/ ELLEN M. ZANE

Mark S. Wrighton
DirectorNovember 13, 2014
Ellen M. Zane DirectorNovember 28, 2011



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