UNITED STATES SECURITIES AND EXCHANGE COMMISSION

~~WASHINGTON,~~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, ~~2006~~2008
or
o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
		For the transition period from to .

Commission FileNumber: 0-25434

Brooks Automation, Inc.

(Exact name of Registrant as Specified in Its Charter)


Delaware		~~04-3040660~~
(State or Other Jurisdiction of Incorporation or Organization)		04-3040660 (I.R.S. Employer Identification No.)

15 Elizabeth Drive Chelmsford, Massachusetts (Address of Principal Executive Offices)		01824 (Zip Code)

978-262-2400

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

None

Securities registered pursuant to Section 12(g) of the Act:

Common Stock, $0.01 par value

~~Rights to Purchase Common Stock~~

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 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’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. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a ~~non-accelerated filer.~~smaller reporting company. See ~~definition~~the definitions of “large accelerated filer,” “accelerated ~~filer~~filer” and ~~large accelerated filer”~~“smaller reporting company” in Rule~~Rule~~ 12b-2 of the Exchange Act. (Check one):


Large accelerated filer þ	Accelerated filero	Non-accelerated filer o	Smaller reporting company o

(Do not check if a smaller reporting company)

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’s Common Stock, $0.01 par value, held by nonaffiliates of the registrant as of March 31, ~~2006,~~2008, was approximately ~~$1,061,248,600~~$605,483,000 based on the closing price per share of ~~$14.24~~$9.72 on that date on the Nasdaq Stock Market. As of March 31, ~~2006, 75,365,813~~2008, 63,505,047 shares of the registrant’s Common Stock, $0.01 par value, were outstanding. As of November ~~30, 2006, 75,563,054~~14, 2008, 63,574,290 shares of the registrant’s Common Stock, $0.01, par value, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant’s Proxy Statement involving the election of directors, which is expected to be filed within 120 days after the end of the registrant’s fiscal year, are incorporated by reference in Part III of this Report.

PART I


Item 1.	*Business*

Brooks Automation, Inc. (“Brooks”, “we”, “us”, or “our”), a Delaware Corporation, is a leading ~~supplier~~provider of ~~technology products~~automation, vacuum and instrumentation solutions ~~primarily serving the worldwide semiconductor market. We supply hardware, software~~ and ~~services~~is a highly valued business partner to ~~both chip manufacturers and~~ original equipment manufacturers ~~or OEMs, who make~~(OEM) and equipment users throughout the world. We serve markets where equipment productivity and availability is a critical factor for our customers’ success. Our largest served market is the semiconductor ~~device~~ manufacturing ~~equipment.~~industry. We are a technology and market leader with offerings ranging from individual hardware and software modules to fully integrated systems as well as services to install and support our products world-wide. Although our core business addresses the increasingly complex automation and integrated subsystems requirements of the global semiconductor industry, we also provide unique solutions ~~for a number of related industries, including the flat panel display manufacturing,~~to customers in data storage, advanced display, analytical instruments and ~~certain other industries which have complex~~solar markets. We develop and deliver differentiated solutions that range from proprietary products to highly respected manufacturing ~~environments.~~services.

~~We were~~Our company was founded in 1978 initially to develop and market automated substrate handling equipment for semiconductor manufacturing and became a publicly traded company in February 1995. WeSince that time, we have grown significantly from ~~being~~ a niche supplier of ~~wafer-handling~~wafer handling robot modules for vacuum-based processes ~~to become the largest merchant~~into a broader based supplier of ~~hardware~~products and ~~software automation products for~~services most notably through the ~~semiconductor industry~~consolidation with Helix Technology Corporation in consecutive calendar years from 2001 through 2005, and the world’s thirteenth largest semiconductor front-end capital equipment company in 2005, according to the independent market research firm Gartner Dataquest.2005.

Markets

Our ~~business~~primary served market is ~~significantly dependent on capital expenditures by~~the global semiconductor ~~manufacturers,~~industry, which in turn are dependent on the current and anticipated market demand for integrated circuit (“IC”) chips and electronics equipment. To maintain manufacturing leadership and growth in the semiconductor industry, companies make significant capital expenditures in manufacturing equipment and investments in research and development. For example, investments in the production of chips that use advanced 90-nanometer (“nm”) and 65nm process technology are the enablers (increased chip performance, decreased power consumption and reduced cost) for a broad range of new products that are expected to help drive growth in the chip industry. Further advances in IC designs utilizing 45nm and smaller sizes continue to enable innovation and are driving the need for new manufacturing facilities and new generation processing equipment.

The demand for semiconductors is cyclical and has historically experienced periodic expansions and contractions, which are called upturns and downturns. The semiconductor industry experienced a prolonged downturn from fiscal 2001 to the end of fiscal 2003. The industry economics improved significantly in fiscal 2004 and we were able to return to profitability in fiscal 2004, benefiting from improved market demand and from some of the cost reduction initiatives that we implemented during the downturn. The industry conditions weakened again in our fiscal 2005 leading to a decline in revenues and profitability for Brooks during 2005, but rebounded in 2006 to help drive growth and profitability for Brooks in fiscal 2006. We expect industry conditions to continue to fluctuate unpredictably.

On October 26, 2005, we acquired all the issued and outstanding stock of Helix Technology Corporation (“Helix”). Helix develops and manufactures vacuum technology solutions for the semiconductor, data storage, and flat panel display markets. We believe that the acquisition of Helix enables us to better serve our current market, increase our addressable market, reduce the volatility that both businesses have historically faced and position us to enhance our financial performance. The aggregate purchase price, net of cash acquired, was approximately $458.1 million, consisting of 29.0 million shares of common stock valued at $444.6 million, the fair value of assumed Helix options of $3.3 million and transaction costs of $10.2 million. The market price used to value the Brooks’ shares issued as consideration for Helix was $15.32, which represents the average of the closing market price of Brooks common stock for the period beginning two trading days before and ending two trading days after the merger agreement was announced. The actual number of shares of Brooks common stock issued was determined based on the actual number of shares of Helix common stock outstanding immediately prior to the completion of the merger, based on an exchange ratio of 1.11 shares of Brooks common stock for each outstanding share of Helix common stock. The Helix business operates in our hardware segment. This transaction qualified as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended.

On May 8, 2006, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Synetics Solutions Inc. (“Synetics”). We completed our acquisition of Synetics from Yaskawa Electric Corporation (“Yaskawa”), a corporation duly organized and existing under the laws of Japan, through a merger that became effective as of June 30, 2006. Synetics provides customized manufactured solutions for the North American semiconductor equipment industry. Pursuant to the Merger Agreement, Synetics became a wholly owned subsidiary of Brooks. The aggregate purchase price of Synetics, net of cash acquired, was approximately $50.2 million consisting of a $28.6 million cash payment to Yaskawa, repayment of outstanding debt of $19.9 million and transaction costs of $1.7 million.

Also on May 8, 2006, we entered into a Joint Venture Agreement (the “Agreement”) with Yaskawa to form a 50/50 joint venture called Yaskawa Brooks Automation, Inc. (“YBA”) to exclusively market and sell Yaskawa’s semiconductor robotics products and Brooks’ automation hardware products to semiconductor customers in Japan. This Agreement was executed on June 30, 2006. YBA began operations on September 21, 2006.

On November 3, 2006, our Board of Directors committed to a formal plan of disposal of our software division, Brooks Software and entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Applied Materials, Inc. (“Applied”), a Delaware corporation. Under the terms of the Purchase Agreement, we will divest and sell our software division, Brooks Software, to Applied for $125 million in cash consideration. We will transfer to Applied substantially all of our assets primarily related to Brooks Software, including the stock of several subsidiaries engaged only in the business of Brooks Software, and Applied will assume certain liabilities related to Brooks Software. We are selling our software division in order to focus on our core semiconductor-related hardware businesses. We expect to recognize a gain on disposal of the software division and to reclassify this division as discontinued operations in fiscal 2007.

~~Completion of the transaction is subject to several conditions, including expiration or termination of applicable waiting periods under theHart-Scott-Rodino~~ Antitrust Improvements Act of 1976 and clearance under any applicable foreign antitrust laws, and other customary closing conditions. We expect to close the transaction during the second fiscal quarter of 2007.

~~Industry Background~~

In recent years ~~the semiconductor industry~~ has experienced significant growth in both the ~~volume~~unit volumes and ~~complexity of integrated circuit devices manufactured.~~device complexity. This growth ~~has been~~is being driven by the ~~increased~~increasing demand for high performance electronic products that require semiconductors, ~~such as~~which are increasingly fabricated in Asia. The products include computers, telecommunications equipment, consumer electronics ~~data storage media~~ and wireless communications devices. In addition to this primary market, we have been increasing our presence in global markets outside of the semiconductor industry, primarily for our vacuum related technologies and services. Much like semiconductors, markets such as data storage; advanced flat panel displays; industrial instruments and solar have begun to experience an increasing need for the technologies and services we provide.

To meet these demands, semiconductor manufacturers have sought volume and efficiency improvements through increased equipment utilization, higher manufacturing yields, capacity expansion of existing facilities and the construction of new facilities. Automation and vacuum-based processes perform critical functions in the manufacturing of semiconductors. The majority of modern semiconductor fabrication facilities, or fabs, manufacture semiconductor chips on circular silicon wafers with diameters of 150mm, or 6 inches, and 200mm, or 8 inches. More recently the industry has begun to adopt wafers with diameter sizes of 300mm, or 12 inches. The wafers are typically processed in production lots of 25 wafers, with 150mm and 200mm wafers contained in either an open cassette or a fully enclosed pod called SMIF, or standard mechanical interface. Production lots for 300mm manufacturing typically consist of 25 wafers contained in a FOUP, or front-opening unified pod. Both SMIF and FOUP technologies isolate the wafers from their surroundingsOur fiscal 2008 revenues by creating an ultra-clean “mini-environment” within the pod. One wafer may yield hundreds of chips, and each chip may contain tens or hundreds of millions of microscopic transistors in leading-edge devices.end market were as follows:


Semiconductor	77	%
Industrial	10	%
Other	13	%

	100	%

The production of advanced semiconductor chips is an extremely complex and logistically challenging manufacturing activity. To create the tens of millions of microscopic transistors and connect them ~~together~~both horizontally and in vertical layers ~~into~~in order to produce a functioning integrated circuit, or IC chip, the silicon wafers must go through hundreds of process steps that require complex processing equipment, or tools, to create the integrated circuits. A large production fab may have more than 70 different types of process and metrology tools, totaling as many as 500 tools or more. Up to ~~40 percent~~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 ~~completion.~~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 also increases, resulting in a greater need for both automation and vacuum technology solutions due to ~~more~~the sensitive handling ~~and tracking~~ requirements and ~~higher~~increased number of tools. ~~Upon completing~~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 ~~front-end processing,~~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), and vacuum systems technology to create and sustain the environment necessary to fabricate various products.

Products

In the semiconductor industry, wafer handling robotics have emerged as a critical technology in determining the efficacy and productivity of the complex tools which process 300mm wafers in the world’s most advanced wafer fabs. A tool is ~~cut~~built around a process chamber using automation technology provided by a company such as Brooks, to move wafers into and out of the chamber. Today, OEMs build their tools using a cluster architecture, whereby several process chambers are mounted to one central frame that processes wafers. We specialize in developing and building the handling system, as well as the vacuum technology used in these tools. Our products can be provided as an individual ~~devices,~~component or ~~chips, which then undergo additional assembly~~as a complete handling system. Automation products are provided to support both atmospheric and ~~testing steps before being packaged~~vacuum based processes.

In order to facilitate the handling and transportation of wafers into a ~~device~~process tool, an equipment front-end module, or EFEM, is utilized. An EFEM serves as an atmospheric interface for wafers being fabricated by tools that ~~is used in~~use either atmospheric or vacuum processes. In addition to proprietary products, we also provide “Extended Factory” services to build EFEMs and other sub-systems which are based on an ~~electronic product.~~OEM specified design. We believe that we are the largest worldwide manufacturer of EFEMs through our Gresham, Oregon and Wuxi, China facilities.

~~Vacuum-based~~We provide the products and technology to create the required vacuum as well as automate these processes. For vacuum-based processes, ~~are fundamental steps integral~~our automation systems use vacuum robots to ~~chip manufacturing. High~~transfer wafers into the OEM’s process modules. In addition, high vacuum pumps, which we also provide, are required in certain process steps to remove all potentially contaminating gases and impurities from the processing ~~environment.~~environment and to optimize that environment by maintaining pressure consistency of the known process gas. In ~~order to achieve~~achieving optimal production yields, semiconductor manufacturers must also 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 ~~usable~~useable semiconductor 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~~include: dry etching and dry stripping; chemical vapor deposition, or CVD; physical vapor deposition, or PVD; and ion implantation.

Current Trends

Our primary served market is the global semiconductor industry. The demand for semiconductors and semiconductor manufacturing equipment is highly cyclical. We believe it is both reasonable and prudent to expect that the global semiconductor industry will experience market conditions that fluctuate unpredictably and at times, severely. During ~~manufacturing,~~fiscal 2006 and continuing into fiscal 2007, Brooks benefited from a cyclical upturn in demand for its products and services, which helped drive revenues and earnings to record levels. During the ~~wafers need~~fourth quarter of fiscal 2007, the Company began to ~~be physically transported between different process tools, repeatedly identified, tracked, loaded~~observe a slowdown in the demand for semiconductor capital equipment, the duration of which carried through all of fiscal 2008. During fiscal 2008, we continued to see growth in demand for our products in the other markets we serve. Based on discussions with our customer base, and external market forecasts, we previously had expected an improvement in demand for semiconductor capital equipment during 2009. Our outlook changed dramatically near the end of our fourth quarter of fiscal 2008 based on the impact of major economies moving into recession and the collateral effects of the recent financial crisis which will likely result in an extended and deep downturn into fiscal 2009. It is difficult to accurately predict the length of such downturns. Further, the short lead times for semiconductor capital equipment result in limited visibility to future demand trends. Although thenon-semiconductor markets we serve did not reflect weakness during 2008, the recent global economic contraction could impact these markets. The decline of market valuations for public companies in the semiconductor capital equipment industry, and ~~processed, unloaded, verified and inspected, and dispatched~~the deterioration in demand within the industry resulted in an impairment to the ~~next process step or storage area. All these actions can be automated. Automation enables the right material~~carrying value of our goodwill, intangible assets and certain buildings and leasehold improvements. We recorded an impairment charge of $200.1 million to ~~be delivered at the right time to the right equipment with the right process recipe. Similarly, non-production wafers~~our goodwill and ~~durable goods, such~~intangible assets, and an impairment charge of $3.5 million for certain buildings and leasehold improvements as wafer carriers and photolithography masks or reticles used in production, must also be handled, tracked and managed. Consequently, the automation systems physically touch and handle nearly every wafer in the fab, while the software systems manage the tracking and recording of ~~data for virtually every manufacturing lot, piece of equipment and resource in the fab.~~September 30, 2008.

The major tool manufacturers in the semiconductor capital ~~expenditure~~equipment market have been changing their business models to outsource the manufacturing of key subsystems including wafer handling systems. This

trend of outsourcing has accelerated through the semiconductor industry’s transition to cluster tools, which have increased the need for reliability and performance. Furthermore, our OEM customers believe they generate more value for their customers by ~~a semiconductor company to create a modern 200mm fab can be as much as $2 billion while~~leveraging their expertise in process technology, rather than electro-mechanical technology. Since the cost for a 300mm fab can exceed $3 billion. While most 200mm fabs were only partially automated, virtually all 300mm production fabs are fully automated due to the heavier weight and value of a production lot. The investment in automation hardware, software and services has grown from approximately $50 million in a 200mm fab to $180 million in a 300mm fab. Typically 75 to 80 percentearly 2000s, many of the ~~capital investment for~~major OEMs have begun to look outside their captive capabilities to suppliers, like us, who could provide them with fully integrated and tested systems. We continue to benefit from these trends.

Our customers serving the global semiconductor industry continue to experience a ~~fab~~material shift in the fabrication of wafers from North American and European based facilities to wafer fabs and foundries located in Asia. We have positioned our Extended Factory business in Wuxi, China to become a critical partner of major OEMs as they execute supply chain strategies within this region. In addition to this regional shift, the global semiconductor industry is ~~for~~one that is continuously focused on cost reduction. As such, companies that are a part of, or a supplier to, this industry are expected to support their customers’ focus on reducing the costs of operating and maintaining their manufacturing ~~equipment, while~~network. In addition to innovative technology solutions that increase device yields at the ~~remainder is dedicated to the land, the physical building, the clean room production floor~~wafer and ~~automation, network and facilities infrastructure. The served available market for semiconductor automation approximated $1.8 billion in 2005, according to Dataquest. We believe~~wafer throughput per tool, we are aggressively looking to access markets and resources that enable us to leverage the ~~only company with a portfolio~~benefits of ~~hardware~~lower cost materials and ~~software products and system integration services that can address the majority of the automation needs for semiconductor manufacturing.~~production facilities located in Asia.

~~Today, almost every aspect of processing includes automation, from material handling, tracking~~~~work-in-process,~~Segments ~~process control and scheduling. Factory and equipment automation directly impact factory performance. Factory performance, in turn, drives semiconductor manufacturers’ ability to:~~


	•	~~reduce manufacturing costs;~~

	•	~~reduce cycle time, making the throughput more predictable;~~

	•	~~deliver products to market first when product profitability is greatest; and~~

	•	~~reduce defects and improve yield.~~

~~The Company has two reportable segments: hardware and software.~~ In the fourth quarter of fiscal ~~year 2005,~~2007, following the ~~Company’s equipment automation~~divestiture of our software division, we made changes to our internal reporting structure and ~~factory automation segments~~began reporting results in three segments: Automation Systems; Critical Components; and Global Customer Operations. In the second quarter of fiscal 2008 these segment disclosures were ~~combined into~~refined to reflect the ~~hardware segment, which reflects how management now evaluates its business. The hardware segment also includes the acquired~~results of a comprehensive review of operations of Helix from the date of acquisition. Also included in this segment are the acquired operations of Synetics Solutions from the date of acquisition. Prior year amounts have been reclassified to conformconducted subsequent to the ~~current year.~~appointment of a new CEO and CFO. These refinements resulted in minor changes to the previously disclosed split of revenues and gross margins among segments and between products and services.

The ~~hardware~~Automation Systems segment ~~provides~~consists of a ~~wide~~ range of wafer handling products and systems that support both atmospheric and vacuum ~~subsystems~~process technology used by our customers.

The Critical Components segment includes cryogenic vacuum pumping, thermal management and vacuum measurement solutions used to create, measure and control critical process vacuum applications. The pump, gauge and chiller products serve various markets that use vacuum as a critical enabler to overall system performance.

The Global Customer Operations segment consists of our after market activities including an extensive range of service support to our customers to address theiron-site needs, spare parts and repair services, and support of legacy product lines.

Our fiscal 2008 segment revenues by end market were as follows:


	Automation			Critical			Global Customer
	Systems			Components			Operations

Semiconductor		87	%		53	%		77	%
Industrial		—			30	%		16	%
Other		13	%		17	%		7	%

		100	%		100	%		100	%

The Automation Systems segment provides automation products for vacuum and atmospheric equipment, as well as mini-environment products, calibration and alignment products and high-precision airflow controls primarily for the semiconductor industry and high performance electronics industries. These products include wafer transport robots and platforms sold to semiconductor equipment manufacturers, as well as products for ~~use within the semiconductor~~lithography that automate storage, inspection and transport of photomasks or reticles sold directly to chip manufacturers. We offer hardware for process and metrology ~~equipment. Within the hardware segment, there~~equipment as either modules or systems. The products sold as modules are ~~four businesses consisting of automation hardware products, vacuum products~~discrete components such as robots, load ports, and ~~subsystems, customer-designed automation and the global customer service organization. The automation hardware products,~~aligners, while those

~~historically the core~~ products of Brooks, include wafer transfer robots and platforms, or systems that operate in either vacuum or atmospheric environments that are sold to equipment manufacturers. The Company also provides hardware directly to fabs including equipment for lithography that automate the storage, inspection and transport of photomasks, or reticles. Another line of business includes the vacuum products and subsystems acquired from Helix that include vacuum technology solutions such as cryogenic pumps for creating vacuum, products for measuring vacuum, and thermal management products that are used in manufacturing equipment for the semiconductor, data storage and flat panel display industries. Additionally, the Company leverages its domain knowledge and manufacturing expertise to build customer-designed automation systems, or contract automation systems, in a program designed to help customers outsource their automation. This assembly and manufacturing capability was a core competency of Synetics Solutions, and these offerings have been combined under the line of business managed by the former Synetics enterprise. The primary customers for these solutions are manufacturers of process equipment. Finally, the global customer service offerings provide customers with support for all our hardware offerings.

The software segment addresses the need for production management systems driven by the extensive tracking and tracing requirements of the semiconductor industry. At the core of these production systems is the manufacturing execution system (“MES”) that is primarily responsible for tracking the movement of production wafers in a fab, and managing the data and actions for every wafer, equipment, operator and other resources in the fab. These mission-critical systems provide real time information primarily to production operators, supervisors and fab managers. We provide other important software applications to meet the critical requirements of the fab, such as real time dispatching and scheduling, equipment communications, advanced process control, material control for the automated material handling systems, or AMHS, activity execution and control, automated maintenance management of equipment, and other applications. Customers often purchase more than one of these software products from Brooks for a single fab, often driving the need for consulting and integration services. Our software products enable semiconductor manufacturers to increase their return on investment by maximizing production efficiency, and may be sold as part of an integrated solution or on a stand-alone basis. These software products and services are also used in many similar manufacturing industries as semiconductor, including flat panel display, data storage, and electronic assembly.

~~Hardware~~

Modern semiconductor process tools demand fast, error-free handling of the silicon wafers on which the integrated circuits are produced. In the late 1980’s and early 1990’s, many processes done in vacuum, such as CVD, PVD, dry etching and other processes, changed from batch processing to single wafer processing, driving the need for equipment that could process individual wafers simultaneously in multiple chambers. The single wafer tool configuration is often referred to as a cluster tool because of the typically radial layout, or cluster, of process chambers surrounding one or more central wafer handling robot. The transition to cluster tools greatly increased the demands on the automation system, forcing it to become as much as four to eight times more reliable than previous generations. The result was a market need for highly reliable and fast vacuum robots, as well as vacuum cluster tool platforms, both of which were the genesis of our business model.

Vacuum cluster tools consist of three primary sections: the equipment front-end module or EFEM, the cluster tool platform, and the process modules or chambers that are attached to the tool platform. An intermediate chamber, called a load-lock, separates the vacuum environment used in processing from the EFEM, which operates at standard atmosphere. A vacuum robot performs the task of transferring wafers from the load-lock to the process chambers that are mounted on the cluster tool platform. Wafers are placed in the load-lock by atmospheric robots that are housed in the EFEM. Vacuum tool automation includes load-locks, robots and other modules as well as the cluster tool platform. Brooks vacuum subsystems, acquired in the Helix transaction, create and manage the vacuum environment needed for several key process steps within semiconductor manufacturing, including ion implant, PVD and metrology.

The introduction and adoption of new materials and technology in semiconductor processing drove the emergence of important non-vacuum processes such as chemical mechanical planarization, or CMP, and electro-chemical deposition, or ECD, as well as increased dependence on other atmospheric processes such as metrology,

~~all requiring automation. The growth in atmospheric tool automation has been further driven by the transition to 300mm technology and smaller feature sizes on ICs.~~

The front end of most 300mm and 200mm process equipment require an atmospheric system called an EFEM. EFEMs have modules called loadports on which wafer carriers are placed. Loadports have mechanisms that open the door or lid on the carriers so that the atmospheric robots can gain access to the wafers in the carriers. The individual atmospheric modules can be sold separately or as an integrated atmospheric system which includes the loadports, the atmospheric robots, and other necessary modules such as aligners, fan filter units and control software.

Many modern fabs are laid out in a series of processing rooms or bays that contain similar equipment. Process engineers recognized early in the history of semiconductor manufacturing that human handling of wafer carriers or wafers was a significant source of defects and errors. Automating the transport and handling of wafers to reduce or eliminate human handling created a market for factory automation. For 200mm fabs, AMHS was widely adopted for inter-bay transport only. AMHS consists of rails that are attached to the ceilings in the main aisles between bays on which cars transport the wafer carriers to a stocker at the head of a bay. These stockers automated the storage and retrieval of the carriers. Virtually all the movement of materials within a bay, or intra-bay transport, is done manually in 200mm fabs — operators carry the cassette or SMIF pod from the stocker to a process tool. As wafer sizes have become larger, carriers have become heavier and the value per wafer has increased significantly, resulting in the need for intra-bay automation systems for transporting wafers directly to and from a tool or stocker. These fully automated systems have become the standard method of transport for 300mm manufacturing. Having the capability of~~tool-to-tool~~ or~~tool-to-stocker~~ ~~delivery versus thestocker-to-stocker~~ ~~approach used in 200mm manufacturing eliminates the manual handling of carriers by operators.~~

The evolution of the wafer carrier technology enabled semiconductor manufacturers to reduce both fab construction costs and production defects. Historically, wafer processing has been performed in clean rooms in order to reduce or eliminate particulates in the atmosphere that could create defects on wafers during processing. As the feature sizes on an integrated circuit became exponentially smaller, the need for cleaner air became more critical, and more expensive. In the late 1990’s the semiconductor industry adopted SMIF technology to protect and isolate wafers from the environment. The air in a SMIF pod is 1,000 times cleaner than a typical surgical operating room; it essentially has its own ultra-pure mini-environment. The SMIF technology gained acceptance in many modern 200mm fabs, although open cassettes are still used widely. In the transition to 300mm wafer sizes, the industry adopted the FOUP technology as its new standard. While SMIF was essentially an after-market modification to 200mm equipment, virtually all 300mm tools since the time of their original design have integrated the FOUP technology. Automation enabled the transition from open cassette carriers to mini-environment pods by providing the loadport modules and robotics to transfer the wafers into and out of process tools as well as the means to track and identify the wafers. As a result, the need for automation has increased for both 300mm and 200mm SMIF fabs.

~~Software~~

~~We are a leading provider of software for:~~


	•	~~manufacturing execution systems, or MES, used within one factory or to manage multiple sites, for manufacturers of discrete products;~~

	•	~~factory logistics applications such as simulation, scheduling and dispatching;~~

	•	~~connecting and integrating equipment with factory management systems;~~

	•	~~advanced process control; and~~

	•	~~data analysis and management for factory and enterprise performance monitoring.~~

~~In addition, we provide the necessary training, consulting and other services required by customers to successfully implement and use our software.~~

The production of semiconductors is arguably one of the most complex manufacturing environments in the world. Factory automation software has played an important role in semiconductor manufacturing since the 1970’s. Computer integrated manufacturing was conceived to control the work flow of a process, gather data and track product in a fab, and to measure and analyze fab performance in order to assist in production and business decisions.

Similar to the MES applications, other software packages were developed by various companies to meet fab requirements, ranging from communicating with and controlling process equipment to factory modeling, scheduling, automated dispatching, planning and data analysis. Industry standards that established protocols for equipment to communicate with a host computer system, and other protocols, paved the way for equipment to be connected online to fab management systems such as the MES, enabling full automation when further integrated with the material handling systems, automated dispatching applications and other software. We entered the factory automation software market through an acquisition strategy aimed at consolidating a number of applications into an integrated software suite.

As semiconductor manufacturing moves towards full automation, factory automation software takes on even more importance. The MES software is required to model and store in its database nearly every resource in the fab — production lots, wafers, non-production wafers, equipment, recipes, process plans, operators, engineers, durable goods such as carriers, reticles, and so forth. The MES contains the real-time status of every item so that, as an example, fab managers can track the location of virtually any production lot or the state of virtually any process tool such as running, idle, down, etc. More importantly, this information is available to other software applications so that dispatching decisions, reports, alarms, data analysis and machine commands can be executed automatically.

We believe it is critical that the major software applications are integrated together to provide an overall solution that meets the increasingly complex demands of automation. These solutions help increase throughput, improve utilization of resources and factory performance, and reduce in-process inventory. Although many of the software applications already have the ability to integrate to other applications or systems, the implementation of individual pieces require services and consulting expertise from the software providers. Services can range from training and best practices consulting to full integration services that essentially deliver a turnkey solution to the customer.

~~The functionality of semiconductor MES software allowed it to be applied to other complex industries that require tracking and control ofwork-in-process,~~ such as in the manufacture of liquid crystal displays or LCD, storage devices such as magnetic thin film heads, medical devices, and telecommunications fiber optics. New markets are being opened for Brooks outside of the semiconductor industry as track and trace capabilities become more in demand in various industries, driven in part by new government regulations and compliance standards. Likewise, simulation and modeling software can be used in a number of different industries where logistics and planning are important, ranging from airport traffic control to theme park scheduling. Finally, many engineering data analysis and statistical process control products are being used in complex manufacturing environments in addition to the semiconductor industry, such as LCD, precision electronics, automotive, aerospace, and life sciences industries.

~~Products~~

~~Hardware Products~~

Our hardware for process and metrology equipment is offered as either modules or systems. Modules are discrete components such as robots and aligners, cryogenic pumps, chillers and vacuum gauges, while systems are pre-integrated assemblies such as the cluster tool platform that may consist of a number of modules provided by us or other suppliers. ~~We provide automation modules~~

The Critical Components segment provides products and ~~systems~~subsystems designed to create, measure and control vacuum technology solutions such as cryogenic pumps for creating vacuum, product for measuring vacuum, and ~~atmospheric~~thermal management products that are used in manufacturing equipment ~~as well as tool control software, mini-environment products, calibration and alignment products, and high-precision airflow controls primarily~~ for the semiconductor, ~~industry. Other industries that we serve in this segment of the market include LCD~~data storage, flat panel display and data storage. We use a common architecture in the design and production of systems and modules. Shared technologies and common software controls enable us to respond to changing industry demands, such as processing larger 300mm semiconductor wafers. Our Original Equipment Manufacturer (“OEM”) customers have the option of either buying individual modules from us and assembling their own systems in-house, or buying the entire automation system from us, pre-assembled, tested and certified from our factory. Also included in this

~~segment is the assembly and manufacturing of customer designed automation systems, known as contract automation systems.~~solar industries.

The ~~major modules~~Global Customer Operations segment provides customers worldwide with crucial and timely support of all our hardware offerings. We assist with the installation of hardware products, product training, consulting and sustainingon-site support. Our extensive range of global support and system monitoring services are designed to lower the total cost of ownership for our customers. The objective is to increase our customers’ system uptime through rapid response to potential operating problems. We also develop and deliver enhancements to our customers’ installed base of production tools through upgrades and other services, including the support of legacy product lines. In addition, we ~~offer for equipment are vacuum robotics, atmospheric robotics, wet robotics~~maintain spare parts inventories in regional hubs to enable our personnel to serve our customers and ~~loadport modules.~~to service our products more efficiently.

~~Vacuum modules include:~~


	•	~~MagnaTran 7, a family of robots used in vacuum processes such as CVD, PVD and etch;~~

	•	~~VacuTran, the legacy vacuum robot product line; and~~

	•	~~MagnaTran 8, a new family of robots that addresses the needs of specific customers.~~

~~Vacuum pumping components and systems include:~~


	•	~~CTI-Cryogenics cryopumps and systems;~~

	•	~~On-Board monitoring and control systems; and~~

	•	~~Turbo Plus~~^® ~~waterpumps and Turbopumps~~

~~Vacuum measurement components and systems include:~~


	•	~~STABL-ION~~^®~~, CONVECTRON~~^® ~~and MICRO-ION components and systems; and~~

	•	~~Vacuum gauging products that are integrated into analytical instruments such as mass spectrometers~~

~~Our atmospheric robot modules include:~~


	•	~~Razor, a new 2- and 3-FOUP trackless robot;~~

	•	~~Reliance, a family of 3-, 4-, and5-axis~~ ~~robots; and~~

	•	~~407, a legacy atmospheric robot with a large installed base of customers.~~

We ~~have introduced a~~continuously direct resources to introduce new ~~generation~~generations of ~~atmospheric automation~~ products and services to replace the current ~~atmospheric product offerings,~~offerings. These products and services are the culmination of an extensive R&D program and extensive customer interactions over the past 2few years. ~~These new~~New products ~~were~~and services are developed using a product life cycle management process designed to meet goals for performance, manufacturability, cost, reliability and support.

We also offer modules for wet processing, i.e., processes that utilize liquid chemicals such as acid baths for removing material from wafer surfaces, developers for photoresist and cleaning stations. The products we offer include:


	•	~~AquaTran 7 wet robot; and~~

	•	~~Reliance 8, a new family of wet robots for CMP.~~

~~Modules for LCD process tools include:~~


	•	~~MagnaTran 70 series vacuum robots for Gen3, Gen4 and Gen5 glass technologies; and~~

	•	~~DLX and SLX vacuum robots for Gen6 and Gen7 technologies.~~

~~Also within the category of modules sold to OEMs are 300mm FOUP loadports. Our loadport modules include:~~


	•	~~Vision, a new software-configurable 300mm loadport with touch-screen LCD;~~

	•	~~FixLoad 6M, a 300mm loadport; and~~

	•	~~SMIFLoad, a 200mm SMIF loadport.~~

~~Vacuum systems for semiconductor manufacturing that we offer include:~~


	•	~~Gemini Express, a platform for vacuum cluster tools;~~


	•	~~InLine Express, a platform for linear, or in-line, tool configurations;~~

	•	~~Marathon Express, our legacy cluster tool platform; and~~

	•	~~We have also introduced our next generation of vacuum systems, including the Marathon Express 2, or M2, line of products.~~

~~Atmospheric systems we offer include:~~


	•	~~Jet, a new EFEM designed for fast setup and easy integration;~~

	•	~~Fab Express, an EFEM for 300mm and 200mm wafer sizes;~~

	•	~~Atmospheric Express, a controlled environment atmospheric cluster tool for 200mm and smaller wafers; and~~

	•	~~Custom systems, typically a customer-designed system with our modules.~~

~~For the LCD market, our systems offerings include:~~


	•	~~Hercules Express, a cluster tool platform; and~~

	•	~~Bali 400, an EFEM for LCD process tools.~~

~~Lithography automation solutions for reticle inspection, storage and management include:~~


	•	~~Guardian Bare Reticle Stocker for storing reticles; and~~

	•	~~Zaris, our reticle sorting, cleaning and macro-inspection tool.~~

~~We provide 200mm SMIF products directly to factory customers, including:~~


	•	~~ErgoSpeed II loadport for 200mm SMIF that complements a number of other SMIF products that we provide to our customers;~~

	•	~~Hermos RF readers for RFID applications;~~

	•	~~IRIDnet, a tracking system utilizing infra-red technology; and~~

	•	~~Custom mini-environments and tool enclosures.~~

~~Automated ID and tracking of carriers in a 300mm fab is provided by our RFID readers.~~

~~Software Products~~

We offer a range of products, from MES that manage the operations of an entire fab, to logistics software for scheduling and coordinating work flow, to individual software packages designed to meet specific requirements such as preventive maintenance systems for equipment. We also offer integrated systems that incorporate our software on an open architecture to deliver factory automation solutions tailored specifically for customers within the context of their industry.

Our software also provides the capabilities to tie fab software systems into the enterprise and supply chain with planning and logistics software applications. We provide business system integration modules to provide integration between our manufacturing applications and business systems from SAP and Oracle. Real-time dispatching and factory scheduling applications can be used to drive manufacturing according to a customer’s best practices. Automation and job management functions help to control manufacturing workflow and automate decision-making across multiple computer integrated manufacturing systems. Simulation software allows manufacturers to model and analyze the use and performance of their tools, systems and overall manufacturing environment.

~~Our MES products span a wide spectrum of factory requirements. Our offerings include:~~


	•	~~FACTORYworks, a high-end MES that is flexible and highly configurable and can be tailored to meet the advanced requirements of complex operations such as 300mm manufacturing; and~~

	•	~~Promis Systems, with its matureoff-the-shelf~~ ~~functionality and large installed base, more suitable for customers who do not require extensive customization of functionality.~~

~~We have built our software suite of applications by acquiring and developing products that complement our MES offerings. Products for equipment integration utilizing the SECS protocol include:~~


	•	~~CELLworks-Grapheq, a UNIX-based cell controller;~~

	•	~~WinSECS, a Windows-based equipment integration package;~~

	•	~~STATIONworks, a Windows-based station control system; and~~

	•	~~FAbuilder, a Windows-based cell controller.~~

~~Real-time execution systems and logistics software include:~~


	•	~~RTD, real-time dispatcher;~~

	•	~~APF Reporter for factory performance reporting and analysis;~~

	•	~~Activity Manager, an adaptive workflow manager that integrates workflow between multiple plant and enterprise applications workflow between the transport system and MES;~~

	•	~~AutoSched for simulation and planning of workflow; and~~

	•	~~CLASS-MCS~~ for transport control that provides an equipment-neutral software system to manage and control material handling equipment including AMHS systems, conveyors, wafer and reticle stockers, and inter-floor lift devices in clean room environments.

~~Composite applications designed to simplify and lower the cost of integration between enterprise and plant floor systems and aid demand-driven manufacturing include:~~


	•	~~RealView Manufacturing Intelligence, an enterprise manufacturing application to enhance overall plant performance;~~

	•	~~Demand Execution, integrating Brooks’ Real-Time dispatcher with SAPs APO product;~~

	•	~~Enterprise Quality Management, a framework for quality management that captures and analyzes data from multiple sources;~~

	•	~~Asset Management, providing detailed production planning capabilities; and~~

	•	Enterprise Integration Hub, which is designed to connect and integrate the capabilities of the four products listed immediately above and is certified for us with the products of SAP, AG, with whom Brooks software is collaborating on joint development activities.

~~We have recognized the growing need for process optimization and advanced process control, APC, in modern fabs. Our offerings for these requirements include:~~


	•	~~Patterns for fault detection and classification;~~

	•	~~BAP for advance process control andrun-to-run~~ ~~control applications; and~~

	•	~~iProcess for factory-wide process and tool health monitoring.~~

~~Engineering data analysis is another important requirement for managing a fab. We offer products that provide extensive data analysis and statistical process control, or SPC, including:~~


	•	~~SPACE, a module for real-time SPC; and~~

	•	~~RS Series and Cornerstone for design of experiments and statistical analysis.~~

~~We offer unique industry-specific systems that address the comprehensive needs of the customers who prefer a total solutions approach from one supplier, including:~~


	•	~~300works for 300mm manufacturers; and~~

	•	~~LCDworks for LCD manufacturers.~~

~~These offerings provide applications built around our products.~~

Our software supports a wide range of manufacturing environments, from manual and semi-automated to fully automated operations. In deploying our solutions, manufacturers worldwide have seen improvements in their cycle times, yields,~~work-in-process~~ ~~levels, customer responsiveness and fulfillment, plant utilization, and theirreturn-on-manufacturing-assets.~~

In addition to software packages, we offer comprehensive solutions delivery, training, consulting and post-implementation services designed to empower our customers to realize the capabilities of our products and solutions.

Customers

WeWithin the semiconductor industry, we sell our products and services to nearly every major semiconductor chip manufacturer and OEM in the world, including all of the top ten chip companies and nine of the top ten equipment companies. Our customers ~~also include companies who~~outside the semiconductor industry are ~~in the LCD, data storage and other similar industries. As a result of the Helix acquisition, certain products are sold to non-semiconductor customers in imaging and coating and analytic instruments.~~broadly diversified. We have major customers in ~~the United States,~~North America, Europe and Asia. We expect international revenues to continue to represent a significant percentage of total ~~revenues. Our~~revenues, as our industry is seeing an increasing business shift to Asia. See Note 16, “Segment and Geographic Information” of Notes to the Consolidated Financial Statements for further discussion of our sales by geographic region and revenue, income and assets by ~~financial reporting~~reportable segment. See Part I, Item 1A, “Risk Factors” for a discussion of the risks related to foreign operations.

Relatively few customers account for a substantial portion of our revenues, with the top ~~twenty~~10 customers accounting for approximately ~~55%~~52% of our business in fiscal ~~2006.~~2008. We ~~do not~~ have ~~any single customer who makes up~~two customers, Applied Materials, Inc. and Lam Research Corporation, that each accounted for more than ~~ten percent~~10% of our overall ~~revenue~~revenues for the year.

Sales, Marketing and Customer Support

We market and sell our ~~equipment~~products and ~~factory automation hardware~~services in Asia, Europe and ~~software in the United States, Asia and Europe~~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 a customer is assigned a team that engages the customer at different levels of its organization to facilitate planning, provide product customization ~~where~~when required, and to ~~assure~~ensure open communication and support. Some of our Critical Components products and services for certain international markets are sold through local country distributors. Additionally, we serve the Japanese market for our Automation Systems products and services through our Yasakawa Brooks Automation (YBA) joint venture with Yasakawa Electric Corporation of Japan.

Our marketing activities include participation in trade shows, delivery of seminars, participation in industry forums, distribution of sales literature, ~~and~~ 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 ~~the United States, China, Japan, South Korea, Taiwan, Singapore, Malaysia, the United Kingdom, France~~Asian, European and ~~Germany.~~North American locations. These facilities, together with our headquarters, maintain local support capability and demonstration equipment for customers to evaluate. Customers are encouraged to discuss ~~the~~ features and applications of our demonstration equipment with our engineers located at these facilities.

We provide services to assist customers through our global customer support organization, including the installation of hardware products, software implementation, product training, consulting and sustaining~~on-site~~ ~~support. We strive to provide world-class support to our customers to help make them successful users of our products through:~~


	•	~~Service contracts, including multi-year agreements;~~

	•	~~Fixed price repair programs;~~

	•	~~Diagnostic and predictive maintenance support;~~

	•	~~Telephone technical support;~~

	•	~~Direct training programs;~~

	•	~~User symposia and seminars; and~~

	•	~~Operating manuals and other technical support information for our products.~~

104

~~We maintain spare parts inventories in regional hubs to enable our personnel to serve our customers and to service our products more efficiently.~~

We provide an extensive range of global support and system monitoring services that are designed to lower the total costs of ownership for our customers. We increase our customers’ system uptime through rapid response to potential operating problems. We also develop and deliver enhancements to our customers’ installed base of production tools through upgrades and other services. Our service offerings include TrueBlue Service Agreements, GUTS^® ~~(Guaranteed Up Time Support) customer response system and GOLDLink~~^® ~~(Global On-Line Diagnostics) support system, which provides a remotee-diagnostics~~ solution that allows us to monitor, in real time, the system performance of our customers’ production tools. The GOLDLink capability has made us a leading total solution provider in the emerging market for Internet-based, proactive~~e-diagnostics~~ ~~for the semiconductor and semiconductor capital equipment industries.~~

Competition

~~Hardware~~

The semiconductor ~~fabs~~fab and process equipment manufacturing industries are highly competitive and characterized by continual changes and improvements in technology. The majority of equipment automation is still done in-house by OEMs. As a result, we believe that our primary opportunity in this area is from the larger semiconductor OEMs that currently satisfy their substrate handling needs in-house rather than by purchasing them from an external supplier such as us. For example, Applied Materials, the leading process equipment OEM, develops and manufactures a majority of its own central vacuum wafer handling systems and vacuum modules. Our competitors among external vacuum automation suppliers are primarily Japanese companies such as ~~Daihen,~~Daihan, Daikin and Rorze. Also, contract manufacturing companies such as Sanmina, FoxSemicon and Flextronics are ~~beginning to offer~~offering limited assembly and manufacturing services to ~~the OEM companies.~~OEMs. Our competitors among vacuum subsystems suppliers include Sumitomo Heavy Industries (SHI), Genesis, MKS ~~instruments~~Instruments and Inficon.

Atmospheric tool automation is ~~more~~ outsourced ~~with~~to a ~~number~~larger degree and has a larger field of competitors due to the ~~low~~lower barriers to entry. We compete directly with other equipment automation suppliers of atmospheric modules and systems such as Asyst, Hirata, Kawasaki, Rorze, Sankyo, TDK and Shinko. Contract manufacturers are also providing assembly and manufacturing services for atmospheric ~~systems, mainly Flextronics.~~systems.

~~Brooks has~~We have a significant share of the market for vacuum cryogenic pumps and ~~faces only a~~face few competitors. These competitors ~~such as~~include SHI ~~(Sumitomo Heavy Industries)~~ and Genesis. The vacuum measurement ~~gauge~~ market for gauges is more fragmented with a variety of competitors that include MKS ~~Instruments.~~Instruments and Inficon.

We believe our customers will purchase our equipment automation products and vacuum subsystems as long as we continue to provide the necessary throughput, reliability, contamination control and accuracy for their advanced processing tools at an acceptable price point. We believe that we have competitive offerings with respect to all of these factors; however, we cannot guarantee that we will be successful in selling our products to OEMs who currently satisfy their automation needs in-house or from other independent suppliers, regardless of the performance or ~~the~~ price of our products.

In addressing the Asian markets, we may be at a competitive disadvantage to local suppliers. We are seeking to improve our competitive position by establishing stronger local capabilities, such as the YBA joint venture in Japan and more material sourcing in China.

We believe that the competitive factors when selling hardware directly to fabs are technical capabilities, reliability, price/performance, ease of integration and global sales and support resources. We believe that our solutions compete favorably with respect to all these factors.

~~Software~~

We believe that the primary competitive factors in the end-user market for factory automation software are product functionality, degree of integration with other applications, compatibility of hardware and software architecture, price/performance, ease of implementation, cost of ownership, vendor reputation and financial

stability. We believe our products compete favorably with other systems with regards to the factors listed above due to the unique nature of the software segment. We also believe that the relative importance of these competitive factors may change over time.

We experience direct competition in the factory automation software market from various companies, including Applied Materials, Camstar, IBM and numerous small independent software companies. In some cases, we are able to sell our software products to our direct competitors. For example, Daifuku uses our software to control the operations of their AMHS hardware.

Many customers purchase software products from more than one supplier. Even in cases where a competitor is selected over us for a particular application, we may still gain substantial business with that customer since our product offerings cover a wide range of requirements and are considered~~best-in-class~~ ~~for many applications.~~

In advanced fabs, a greater burden is placed on software and implementation of increasingly complex automation applications, resulting in a critical need for integration of many different software and hardware components. We cooperate with large organizations such as IBM, SAP and Hewlett Packard to deliver complete solutions for customers. When we subcontract our products and services to another company, our ability to win business may be highly dependent on the success of the prime contractor with whom we have partnered.

Research and Development

Our ~~research and development~~R&D efforts are principally focused on developing new products and ~~services as well as further enhancing~~services. Additionally, we invest in the enhancement of the functionality, degree of integration, reliability and performance of our existing products. Our engineering, marketing, operations and management personnel ~~have developed~~leverage their close collaborative relationships with many of their counterparts in customer organizations ~~and have used these relationships~~in an effort to proactively identify market demands ~~and focus~~with an ability to refocus our research and development investment to meet those ~~demands.~~demands as our customers require. With the rapid pace of change that characterizes semiconductor technology it is essential for us to provide high-performance and reliable products in order for us to maintain our leadership position. ~~Software in particular represents a business that relies heavily on research and development resources to develop, enhance and support our products.~~

Manufacturing

~~Manufacturing is one of our core competencies.~~ Our manufacturing operations are used for product assembly, integration and testing. We have adopted quality assurance procedures that include standard design practices, component selection procedures, vendor control procedures and comprehensive reliability testing and analysis to ~~assure~~ensure the performance of our products. Our ~~two~~ major manufacturing facilities are located in Chelmsford, ~~Massachusetts~~Massachusetts; Gresham, Oregon; Petaluma, California; and ~~Kiheung, Korea are ISO 9001 certified.~~Longmont, Colorado. As part of the Company’s long-term strategy to source products from lower cost Asian regions, we commenced utilizing our recently acquired manufacturing site in Wuxi, China to expand the reach of our Extended Factory strategy. The Wuxi facility conducts final assembly operations and the integration of products using sub-components being sourced from suppliers within a variety of lower cost Asian regions. Additionally, we ~~have~~manufacture certain sub-components for our vacuum products utilizing a third party manufacturing facility in Jena, Germany whose purpose is to perform integration and final testing of our products for the European market. We acquired additional manufacturing facilities in Mansfield, Massachusetts, Longmont, Colorado and Petaluma, California in connection with the acquisition of Helix. We also acquired additional manufacturing facilities in Gresham, Oregon in connection with the acquisition of Synetics.Monterrey, Mexico.

We utilize ajust-in-time manufacturing strategy, based on the concepts of demand flow technology, for a large portion of our manufacturing process. We believe that this strategy coupled with the outsourcing of non-critical components such as machined parts, wire harnesses and PC boards ~~etc.~~ reduces our fixed operating costs, improves our working capital efficiency, reduces our manufacturing cycle times and improves our flexibility to rapidly adjust ~~our~~ 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. We ~~are currently focusing~~will continue to broaden the sourcing of our ~~efforts in implementing global low-cost sourcing and manufacturing strategies, specifically in Asia.~~

~~We have established a subsidiary in India~~components to ~~provide~~ low cost off-shore engineering resources primarily for sustaining mature software products. As a result, our core staff of software engineers should be better enabled to focus on research and development of new technology and enriching the functions of currently active products.regions, more specifically Asia.

125

Patents and Proprietary Rights

We rely upon patents, trade secret laws, confidentiality procedures, copyrights, trademarks and licensing agreements to protect our technology. Due to the rapid technological change that characterizes the semiconductor, ~~and~~ flat panel display 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 competitive advantage. To protect trade secrets and know-how, it is our policy to require all technical and management personnel to enter into proprietary information and nondisclosure agreements. We cannot guarantee that these efforts will meaningfully protect our trade secrets.

We have obtained patents and will continue to make efforts to obtain patents, when available, in connection with our product development ~~program.~~programs. We cannot guarantee that any patent obtained will provide protection or be of commercial benefit to us. Despite these efforts, others may independently develop substantially equivalent proprietary information and techniques. As of September 30, ~~2006,~~2008, we have ~~obtained 338~~368 United States patents and had ~~108~~130 United States patent applications pending on our behalf. In addition, we have ~~obtained 374~~392 foreign patents and had ~~388~~439 foreign patent applications pending on our behalf. Our United States patents expire at various times through ~~April 2022.~~March 2027. We cannot guarantee that our pending patent applications or any future applications will be approved, or that any patents will not be challenged by third parties. Others may have filed and in the future may file patent applications that are similar or identical to ours. These patent applications may have priority over patent applications filed by us.

We have successfully licensed our FOUP (front-opening unified pod) load port technology to several companies and continue to pursue the licensing of this technology to more companies that we believe are utilizing our intellectual property.

There has been substantial litigation regarding patent and other intellectual property rights in the semiconductor and related industries. We have in the past been, and may in the future be, notified that we may be infringing intellectual property rights possessed by other third parties. We cannot guarantee that infringement claims by third parties or other claims for indemnification by customers or end users of our products resulting from infringement claims will not be asserted in the future or that such assertions, if proven to be true, will not materially and adversely affect our business, financial condition and results of operations. If any such claims are asserted against our intellectual property rights, we may seek to enter into a royalty or licensing arrangement. We cannot guarantee, however, that a license will be available on reasonable terms or at all. We could decide in the alternative to resort to litigation to challenge such claims or to attempt to design around the patented technology. Litigation or an attempted design around could be costly and would divert our management’s attention and resources. In addition, if we do not prevail in such litigation or succeed in an attempted design around, we could be forced to pay significant damages or amounts in settlement. Even if a design around is effective, the functional value of the product in question could be greatly diminished.

We acquired certain assets, including a transport system known as IridNet, from the Infab division of Jenoptik AG on September 30, 1999. Asyst Technologies, Inc. had previously filed suit against Jenoptik AG and other defendants, or collectively, the defendants, in the Northern District of California charging that products of the defendants, including IridNet, infringe Asyst’s U.S. Patent Nos. 4,974,166, or the ~~’166~~‘166 patent, and 5,097,421, or the ~~’421~~‘421 patent. Asyst later withdrew its claims related to the ~~’166~~‘166 patent from the case. Summary judgment of noninfringement was granted in that case by the District Court and judgment was issued in favor of Jenoptik on the ground that the product at issue did not infringe the asserted claims of the ’421 patent. ~~However,~~Following certain rulings and findings adverse to Jenoptik, on August 3, 2007 the District Court issued final judgment in favor of Jenoptik. Asyst appealed, and on October 10, 2008, the ~~adverse judgment and the~~United States Court of Appeals for the Federal ~~Circuit. In its decision on that appeal the Court of Appeals affirmed a portion of~~Circuit entered an order affirming the District Court’s ~~grant of summary~~final judgment in favor of Jenoptik but also reversed another portion of that judgment and reinstated one of Asyst’s other claims. On the basis of that order and the claim construction guidance furnished by the Court of Appeals, the District Court issued an order granting summary judgment in favor of Asyst on one of its infringement claims against Jenoptik. Jenoptik has appealed that order, and that appeal is currently pending before the Court of Appeals for the Federal Circuit. In addition, the District Court has set a January 2007 trial date on the question of the validity of the Asyst claim upon which summary judgment was granted in Asyst’s favor.

believe we are infringing any claims of Asyst’s patents. We intend to continue to support Jenoptik to argue vigorously, among other things, the position that the IridNet system does not infringe the Asyst patent. If Asyst prevails in its appeal and ultimately in its case against Jenoptik, Asyst may decide to seek to prohibit us from developing, marketing and using the IridNet product without a license. We cannot guarantee

that a license would be available to us on reasonable terms, if at all. ~~If a license from Asyst were not available, we could be forced to incur substantial costs to reengineer the IridNet product, which could diminish its value.~~ In any case, we could face litigation with Asyst. Jenoptik has agreed to indemnify us for any loss we may incur in this action.

In addition, Asyst made assertions in approximately 1995 that certain technology employed in products manufactured and sold by Hermos Informatik GmbH infringed one or more of Asyst’s patents. We acquired Hermos in July 2002. To date Asyst has taken no steps to assert or enforce any such rights against us, and to our knowledge, Asyst never commenced enforcement proceedings against Hermos prior to its acquisition by us. Should Asyst seek to pursue any such claims against Hermos or us, we would be subject to all of the business and litigation risks identified in the preceding paragraph.

On August 29, 2006, we acquired a portfolio of semiconductor-related patents from Newport Corporation, consisting of 16 registered United States patents, one United States pending patent application, three registered~~non-U.S. patents,~~ ~~and 11non-U.S. pending~~ patent applications. The transferred patents are subject to certain non-exclusive licenses previously granted by Newport Corporation. In consideration for this portfolio, we paid Newport Corporation the sum of $3 million.

Backlog

Backlog for our products as of September 30, ~~2006,~~2008, totaled ~~$181.4~~$63.8 million as compared to ~~$87.2~~$111.2 million at September 30, ~~2005.~~2007. This decrease is due to the cyclical semiconductor downturn and the current global economic contraction. Backlog consists of purchase orders for which a customer has scheduled delivery within the next 12 months. Backlog consists of orders principally for ~~our~~ hardware ~~segment~~ and ~~software segment was $152.6 million and $28.8 million, respectively, at September 30, 2006.~~service agreements. Orders included in the backlog may be cancelled or rescheduled by customers without significant penalty. Backlog as of any particular date should not be relied upon as indicative of our revenues 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.

Employees

At September 30, ~~2006,~~2008, we had ~~approximately 2,400~~1,658 full time employees. In addition, the Company utilized 208 part time employees ~~as compared to 1,800 employees at September 30, 2005. The net increase is reflective of the Company’s acquisition of Helix Technology Corporation in October 2005~~ and ~~Synetics Solutions Inc. in June 2006.~~contractors. We believe our future success will depend in ~~large~~larger part on our ability to attract and retain highly skilled employees.

Approximately 8055 employees in our facility in Jena, Germany ~~facility~~ are covered by a collective bargaining agreement. We consider our relationships with ~~our~~these and all employees to be good.

Available Information

Our ~~Internet~~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 ~~reasonable~~reasonably practicable after wesuch materials are electronically ~~file such material with,~~filed, or ~~furnish it~~furnished to, the ~~SEC.~~Securities & Exchange Commission (“SEC”). These SEC reports can be accessed through the investor relations 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.

~~Gartner Information~~

~~Information contained in this annual report onForm 10-K~~ attributable to Gartner, Gartner Dataquest or Dataquest as reflected in their 2005 Semiconductor Manufacturing Equipment Market Share Analysis published in April 2006 represents Gartner’s estimates and we make no representation as to the accuracy or completeness of this information.

~~Item 1A.~~ ~~Risk Factors~~


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 recently incurred ~~substantial~~ 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. The semiconductor manufacturing industry in turn depends on current and anticipated demand for integrated circuits and the products that use them. In recent years and at present, these businesses have experienced unpredictable and volatile business cycles due in large part to rapid changes in demand and manufacturing capacity for ~~semiconductors. The semiconductor industry experienced~~semiconductors, and these cycles have had a ~~prolonged downturn, which negatively impacted us from the third quarter of fiscal 2001 until well into 2003. Although~~negative impact on our business, ~~became profitable during 2004,~~sometimes causing declining revenues and operation losses. Ongoing volatility in worldwide capital and equity markets is likely to have a ~~downward trend again developed during fiscal 2005~~similarly negative impact on our

business. Recent economic developments on an international scale could lead to substantially diminished demand for our products and those of our customers which incorporate our products, especially in the semiconductor ~~industry, and our revenues in fiscal 2005 declined from the prior year.~~manufacturing industry. We could continue to experience future operating losses during an industry downturn and any period of uncertain demand. If an industry downturn continues for an extended period of time, our business could be materially harmed. Conversely, if demand improves rapidly, we could have insufficient inventory and manufacturing capacity to meet our customer 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 substantial competition which may lead to price pressure and otherwise adversely affect our sales.

We face substantial competition throughout the world in each of our product areas. Our primary competitors are Asyst, ~~Camstar,~~ Genesis, ~~IBM,~~ Inficon, Kawasaki, MKS Instruments, Rorze, Sankyo, SHI, Shinko and TDK and other smaller, regional companies. Also, contract manufacturing companies such as Sanmina and Flextronics are offering limited assembly and manufacturing services to the OEMs. We also endeavor to sell products to ~~OEM manufacturers,~~OEMs, such as Applied Materials, Novellus, KLA-Tencor and TEL, that also satisfy some or all of their semiconductor and flat panel display handling needs internally rather than by purchasing systems or modules from a supplier like us. ~~Some~~Many of our competitors have ~~substantially greater financial resources and more extensive~~substantial engineering, manufacturing, marketing and customer support ~~capabilities than we do.~~capabilities. We expect our competitors to continue to improve the performance of their current products and to introduce new products and technologies that could adversely affect sales of our current and future products and services. New products and technologies developed by our competitors or more efficient production of their products could require us to make significant price reductions or decide not to ~~avoid losing~~compete for certain orders. If we fail to respond adequately to pricing pressures or fail to develop products with improved performance or developments 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 Brooks

Our operating results could fluctuate significantly, which could negatively impact our business.

Our revenues, 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 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;

	•	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;

	•	our competitors’ announcements of new products, services or technological innovations, 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 ~~due~~ 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

	•	competitive pricing pressures.

As a result of these risks, we believe that quarter 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.

Delays and technical difficulties in our products and operations may result in lost revenue, lost profit, delayed or limited market acceptance or product liability claims.

As the technology in our systems and manufacturing operations has become more complex and customized, it has become increasingly difficult to design and integrate these technologies into our newly-introduced systems, procure adequate supplies of specialized components, train technical and manufacturing personnel and make timely transitions to volume manufacturing. Due to the complexity of our manufacturing processes, we have on occasion failed to meet our customers’ delivery or performance criteria, and as a result we have deferred revenue recognition, incurred late delivery penalties and had higher warranty and service costs. We may experience these problems again in the future. We may be unable to recover expenses we incur due to changes or cancellations of customized orders. There are also substantial unanticipated costs associated with ensuring that new products function properly and reliably in the early stages of their life cycle. These costs have been and could in the future be greater than expected as a result of these complexities. Our failure to control these costs could materially harm our business and profitability.

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

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 will become obsolete and our operating results will suffer.

Our success is dependent on our ability to respond to the ~~rapid rate of~~ technological change present in the ~~semiconductor manufacturing industry.~~markets we serve. The success of our product development and introduction depends on our ability to:


	•	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;~~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 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 that we introduce do not achieve market acceptance, we could lose our competitive position which could materially harm our business and our prospects.

Restructuring activities could adversely affect our ability to execute our business strategy.

Should it become necessary for us to restructure our business, including reducing our work force, due to worldwide market conditions or other factors that reduce the demand for our products and services, our ability to execute our business strategy could be adversely affected in a number of ways, including the loss of key employees; diversion of management’s attention from normal daily operations of the business; diminished

ability to respond to customer requirements, both as to products and services; disruption of our engineering and manufacturing processes, which could adversely affect our ability to introduce new products and to deliver products both on a timely basis and in accordance with the highest quality standards; and a reduced ability to execute effectively internal administrative processes, including the implementation of key information technology programs.

We face risks associated with the implementation of our new Enterprise Resource Planning System.

We are in the process of installing a third party enterprise resource planning system, or ERP System, across our facilities, which will enable the sharing of customer, supplier and other data across our company. The installation and integration of the ERP System may divert the attention of our information technology professionals and certain members of management from the management of daily operations to the integration of the ERP System. Further, we may experience unanticipated delays in the implementation of the ERP System, increased costs from what we had anticipated to implement the ERP System, difficulties in the integration of the ERP System across our facilities or interruptions in service due to failures of the ERP System. Continuing and uninterrupted performance of our ERP System is critical to the success of our business strategy. Any damage or failure that interrupts or delays operations may dissatisfy customers and could have a material adverse effect on our business, financial condition, results of operations and cash flow.

The global nature of our business exposes us to multiple risks.

For the fiscal ~~year~~years ended September 30, ~~2006,~~2008 and 2007, approximately ~~41%~~36% and 33%, respectively, of our revenues ~~were derived from sales outside North America, while approximately 48% of our revenues in fiscal 2005~~ were 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. As a result of our international operations, we are exposed to many risks and uncertainties, including:


	•	difficulties in staffing, managing and supporting operations in multiple countries;

	•	longer sales-cycles and time to collection;

	•	tariff and international trade barriers;

	•	fewer 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; and

	•	political and economic 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 acquired Helix effective October 26, 2005 and Synetics effective June 30, 2006.~~ In ~~addition~~the future, 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~~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;

	•	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~~company’s intellectual property by a target ~~Company’s~~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 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 could materially harm our business and financial results.

~~The planned divestiture of the Brooks Software Division could adversely affect our business or our financial results.~~

On November 3, 2006, we entered into an agreement to sell the assets of the Brooks software Division (the “Division”) to Applied Materials, Inc. (“Applied”) pending the completion of necessary regulatory approvals. If those approvals are not obtained and the transaction is not completed, the business of the Division could be adversely affected by a loss of customer confidence, a reduction in employee morale and a reduction in revenue. If the sale of the Division is completed, the removal of the Division from Brooks could have an adverse effect on our relationship with customers to whom we have sold both hardware and software products, and the loss of the revenue associated with the Division and the associated profits could adversely affect both our financial results and our ability to diminish the impact on our business of the cyclical nature of the semiconductor manufacturing industry.

Failure to retain 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 face risks related to the restatement of our financial statements and the pending SEC and US Attorney investigations regarding our past practices with respect to equity incentives.~~

On May 16, 2006, the Securities and Exchange Commission notified us that it had commenced an informal inquiry into certain stock option grants and accounting practices. Subsequently, we have been informed that the informal inquiry has been converted into a formal inquiry, and we have received a subpoena from the SEC requesting, among other things, all documents relating to stock options available for exercise after January 1, 1999. We are cooperating fully with the SEC and will continue to do so as the inquiry moves forward. At this point we are unable to predict what, if any, consequences the SEC investigation may have on us. However, the investigation could result in considerable legal expenses, divert management’s attention from other business concerns and harm our business. If the SEC were to commence legal action, we could be required to pay significant penalties~~and/or~~ ~~fines and could become subject to an administrative orderand/or~~ a cease and desist order. The filing of our restated financial statements to correct the discovered accounting errors has not resolved the pending SEC investigation into our past practices with respect to equity incentives. The resolution of the SEC investigation could require the filing of additional restatements of our prior financial statements,~~and/or~~ ~~our restated financial statements, or require that we take other actions not presently contemplated.~~

On May 19, 2006, we received a grand jury subpoena from the United States Attorney for the Eastern District of New York (the “US Attorney”) requesting all documents relating to stock option grants between 1995 and the present and documents concerning the restatement of our financial statements. Responsibility for this investigation was subsequently assumed by the United States Attorney for the District of Massachusetts, and we have received a subpoena from that office requesting, among other things, similar documents relating to option grants. The investigation remains ongoing and we are fully cooperating with the US Attorney. We cannot predict when this inquiry will conclude or its eventual outcome. The uncertainty associated with this investigation into our accounting practices and the restatement of our financial statements could seriously harm our business, financial condition and reputation.

We face litigation risks relating to our past practices with respect to equity incentives that could have a material adverse effect on ~~the Company.~~our business.

Several lawsuits, including both putative securities class actions and shareholder derivative actions, have been filed against us, our directors and officers and certain of our former directors and officers relating to our past practices with respect to equity incentives.SeePart I, Item 3, “Legal Proceedings” for a more detailed description of these proceedings. ~~We are and may in the~~Although all matters brought against us have been resolved or withdrawn, future actions could be subject to other litigation arising in the normal course of our business. These actions are in the preliminary stages, and their ultimate outcome may have a material adverse effect on our business, financial condition and results of operations.taken. Litigation may be time-consuming, expensive and disruptive to normal business operations, and the outcome of litigation is difficult to predict. The defense of ~~these~~such lawsuits ~~will~~would result in significant expense and the continued diversion of our management’s time and attention from the operation of our business, which could impede our ability to achieve our business objectives. Some or all of the amount we may be required to pay to satisfy a judgment or settlement of any or all of these claims may not be covered by insurance.

Under indemnification agreements we have entered into with our officers and directors, we are required to indemnify them, and advance expenses to them, in connection with their participation in proceedings arising out of their service to us. These payments may be material, in particular ~~if any~~since one of ~~these individuals become targets of regulatory investigations~~our former officers has been charged in connection with the United States Attorney’s investigation into our past practices with respect to equity incentives.

Risks Relating to Our Customers

Because we rely on a limited number of customers for a large portion of our revenues, the loss of one or more of these customers could materially harm our business.

We receive a significant portion of our revenues 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 ~~43%~~52%, ~~44%~~54% and ~~39%~~50% of our total revenues in the fiscal years ended September 30, ~~2006, 2005~~2008, 2007 and ~~2004,~~2006, respectively. As

the semiconductor manufacturing industry continues to consolidate and ~~further shifts to foundries which manufacture semiconductors designed by others,~~a difficult cyclical downturn takes hold, the number of our potential customers could decrease, which would increase our

dependence on our limited number of customers. The loss of one or more of these major customers, or a 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.

Because of the lengthy sales cycles of many of our products, we may incur significant expenses before we generate any revenues 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 or change 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 ~~was~~has been the case during fiscal ~~2005,~~2007 and ~~will continue in fiscal 2006.~~2008. 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 revenues for these products, and we may never generate the anticipated revenues if our customer cancels 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. As a result, we rely on OEMs ~~of our products~~ to select our products from among alternative offerings to be incorporated into their equipment at the design stage; so-called design-ins. The ~~OEM’s~~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 ~~OEMs,~~an OEM, we would have difficulty selling our products to that OEM because changing suppliers 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.

Other Risks

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.

We rely upon patents, trade secret laws, confidentiality procedures, copyrights, trademarks and licensing agreements to protect our technology. Due to the rapid technological change that characterizes the semiconductor- and flat panel display 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 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 efforts will meaningfully protect our trade secrets.

There has been substantial litigation regarding patent and other intellectual property rights in the semiconductor related industries. We have in the past been, and may in the future be, notified that we may be infringing intellectual property rights possessed by other third parties. We cannot guarantee that infringement claims by third parties or other claims for indemnification by customers or end users of our products resulting from infringement claims will not be asserted in the future or that such assertions, if proven to be true, will not materially and adversely affect our business, financial condition and results of operations.

2012

Particular elements of our technology could be found to infringe on the intellectual property rights or patents of others. Other companies may hold or obtain patents on inventions or otherwise claim proprietary rights to technology necessary to our business. For example, twice in 1992 and once in 1994 we received notice from General Signal Corporation that it believed that certain of our tool automation products infringed General Signal’s patent rights. We believe the matters identified in the notice from General Signal were also the subject of a dispute between General Signal and Applied Materials, Inc., which was settled in November 1997. There are also claims that have been made by Asyst Technologies Inc. that certain products we acquired through acquisition embody intellectual property owned by Asyst. To date no action has been instituted against us directly by General Signal, Applied Materials or Asyst.

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, and certain of our patents could be invalidated or circumvented. 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 the site of the majority of our manufacturing operations were to experience a significant disruption in operations, our business could be materially harmed.

~~Most~~The majority of our manufacturing facilities are concentrated in one location. If the operations 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.

Our business could be materially harmed if one or more key suppliers fail to deliver key components.

We currently obtain many of our key components on an as-needed, purchase order basis from numerous suppliers. 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 have undertaken cost-containment measures in light of the recent downturn in the semiconductor industry. In the event of an industry upturn, these suppliers could face significant challenges in delivering components on a timely basis. Our inability to obtain components in required quantities or of acceptable quality could result in delays or reductions in product shipments to our customers. In addition, if a supplier orsub-supplier alters their manufacturing processes and suffers a production stoppage for any reason or modifies or discontinues their products, this could result in a delay or reduction in product shipments to our customers. Any of ~~the~~these contingencies could cause us to lose customers, result in delayed or lost revenue and otherwise materially harm our business.

2113

We are exposed to potential risks and we will continue to incur increased costs as a result of the internal control testing and evaluation process mandated by Section 404 of the Sarbanes-Oxley Act of 2002.

We assessed the effectiveness of our internal control over financial reporting as of September 30, 2006 and assessed all deficiencies on both an individual basis and in combination to determine if, when aggregated, they constitute more than a significant deficiency. As a result of this evaluation, no material weaknesses were identified. Although we have completed the documentation and testing of the effectiveness of our internal control over financial reporting for fiscal 2006, as required by Section 404 of the Sarbanes-Oxley Act of 2002, we expect to continue to incur costs in order to maintain compliance with that section of the Sarbanes-Oxley Act. We continue to monitor controls on an ongoing basis in fiscal 2007 for any deficiencies. No evaluation can provide complete assurance that our internal controls will detect or uncover all failures of persons within our company to disclose material information otherwise required to be reported. The effectiveness of our controls and procedures could also be limited by simple errors or faulty judgments. In addition, if we continue to expand globally, the challenges involved in implementing appropriate internal controls will increase and will require that we continue to improve our internal controls.

In the future, if we fail to complete the Sarbanes-Oxley 404 evaluation in a timely manner, we could be subject to regulatory scrutiny and a loss of public confidence in our internal controls. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations.

Recently completed and future acquisitions of companies, some of which may have operations outside the United States, may provide us with challenges in implementing the required processes, procedures and controls in our acquired operations. Acquired companies may not have disclosure controls and procedures or internal control over financial reporting that are as thorough or effective as those required by securities laws in the United States. Although we intend to devote substantial time and incur substantial costs, as necessary, to ensure ongoing compliance, we cannot be certain that we will be successful in complying with Section 404.

Our stock price is volatile.

The market price of our common stock has fluctuated widely. From the beginning of fiscal year ~~2005~~2007 through the end of fiscal year ~~2006,~~2008, our stock price fluctuated between a high of ~~$18.73~~$19.96 per share and a low of ~~$10.61~~$7.68 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 industry or the industries upon which it depends;

	•	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 recently 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.

A material amount of our assets represents goodwill and intangible assets, and our net income will be reduced if our goodwill or intangible assets become impaired.

As of September 30, 2008, our goodwill and intangible assets, net, represented approximately $178.4 million, or 26.9%, of our total assets. Goodwill is generated in our acquisitions when the cost of an acquisition exceeds the fair value of the net tangible and identifiable intangible assets we acquire. Goodwill is subject to an impairment analysis at least annually based on the fair value of the reporting unit. Intangible assets, which relate primarily to the customer relationships and technologies acquired by us as part of our acquisitions of other companies, are subject to an impairment analysis whenever events or changes in circumstances exist that indicate that the carrying value of the intangible asset might not be recoverable. During the year ended September 30, 2008, we recorded non-cash impairment charges of $200.1 million related to goodwill and intangible assets. We could be required to recognize additional reductions in our net income caused by the write-down of goodwill or intangible assets, which if significantly impaired, could materially and adversely affect our results of operations. See Note 6, “Goodwill and Intangible Assets” of Notes to the Consolidated Financial Statements for further discussion of goodwill and intangible assets.

Provisions in our organizational documents and contracts may make it difficult for someone to acquire control of us.

Our certificate of incorporation, bylaws and contracts contain provisions that would make more difficult an acquisition of control of us and could limit the price that investors might be willing to pay for our securities, including:


	•	~~the ability of our board of directors to issue shares of preferred stock in one or more series without further authorization of stockholders;~~

	��	a prohibition on stockholder action by written consent;

	•	the elimination of the right of stockholders to call a special meeting of stockholders;

	•	a requirement that stockholders provide advance notice of any stockholder nominations of directors to be considered at any meeting of stockholders; and

	•	a requirement that the affirmative vote of at least 80 percent of our shares be obtained for certain actions requiring the vote of our ~~stockholders; and~~

	•	a requirement under our shareholder rights plan that, in many potential takeover situations, rights issued under the plan become exercisable to purchase our common stock at a price substantially discounted from the then applicable market price of our common stock.stockholders.

~~We will incur significant stock-based compensation charges related to certain stock options and restricted stock in future periods.~~

The Financial Accounting Standards Board (FASB) issued in December 2004 Statement of Financial Accounting Standards (SFAS) No. 123R, “Share-Based Payment”, an amendment of FASB Statements Nos. 123 and 95, that addresses the accounting treatment for employee stock options and other share-based payment transactions. The statement eliminates the ability to account for share-based compensation transactions using Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees,” and requires that such transactions be accounted for using a fair-value-based method and recognized as expenses. These expenses have been incorporated into our financial statements beginning in the quarter ending December 31, 2005. Our stock-based compensation cost, which reflects the adoption of Statement 123R, was $8.3 million in fiscal 2006. In future periods, stock-based compensation cost could have a material effect on our net income as a result of Statement 123R, and could adversely affect the market price of our common stock.


Item 1B.	*Unresolved Staff Comments*

We have not received written comments from the Securities and Exchange Commission regarding ~~its~~our periodic or current reports under the Securities Exchange Act of 1934, as amended, that were received 180 days or more before September 30, ~~2006~~2008 and remain unresolved.


Item 2.	*Properties*

Our corporate headquarters and primary manufacturing/research and development facilities are currently located in three buildings in Chelmsford, Massachusetts, which we purchased in January 2001. We have a lease on a

fourth building in Chelmsford adjacent to the three that we own. In summary, we maintain the following active principal facilities:


		Square Footage		Ownership Status/Lease
Location	Functions	~~(approx.~~ (Approx.)		Expiration

Chelmsford, Massachusetts	Corporate headquarters, training, manufacturing and R&D ~~hardware and software~~		~~295,000~~293,800	Owned
Chelmsford, Massachusetts	Manufacturing, training and warehouse		~~93,000~~95,000	October 2014
~~Jena, Germany~~Gresham, Oregon	Manufacturing and R&D		176,900	December 2010
Wuxi, China	Manufacturing		81,800	August 2010
Petaluma, California	Manufacturing and R&D		72,300	September 2011
Longmont, Colorado	Manufacturing and R&D		60,900	February 2015
Yongin-City, South Korea	Manufacturing, R&D ~~hardware,~~and sales & support ~~and training (4 buildings)~~		~~38,700~~35,200	November 2015
Jena, Germany	R&D, sales & support		31,300	Several leases with terms that end through July 2009
~~Salt Lake City, Utah~~	~~R&D software and training~~		~~33,500~~	~~September 2011~~
~~San Jose, California~~	~~Sales & support and R&D hardware~~		~~55,600~~	~~January 2010~~
~~Gresham, Oregon~~	~~Manufacturing and R&D hardware~~		~~154,800~~	~~December 2010~~
~~Petaluma, California~~	~~Manufacturing and R&D hardware~~		~~77,300~~	~~December 2007~~
~~Kiheung, South Korea~~	~~Manufacturing, R&D hardware and sales & support~~		~~63,000~~	~~November 2015~~
~~Phoenix, Arizona~~	~~R&D software~~		~~19,500~~	~~Owned~~
~~Mansfield, Massachusetts~~	~~Manufacturing and R&D hardware~~		~~80,000~~	~~December 2006~~
~~Longmont, Colorado~~	~~Engineering, manufacturing and R&D hardware~~		~~60,900~~	~~February 2015~~

Our ~~hardware~~Automation Systems segment utilizes the facilities in Massachusetts, Oregon, South Korea and China. Our Critical Components segment utilizes the facilities in Massachusetts, California ~~Colorado, Oregon, South Korea,~~ and ~~Germany.~~Colorado. Our ~~software~~Global Customer Operations segment utilizes the facilities in Massachusetts, ~~Utah~~Germany and ~~Arizona.~~South Korea.

We maintain additional sales & support ~~service,~~ and training offices in ~~the United States (Florida, North Carolina, Pennsylvania~~California and ~~Texas), in Toronto, Canada~~Texas and overseas in Europe (France ~~Germany~~ and ~~UK)~~Germany), as well as in Asia (Japan, China, ~~Malaysia,~~ Singapore ~~South Korea, India~~ and Taiwan) and the Middle East (Israel).

We currently sublease a total of ~~188,700~~236,500 square feet of space previously exited as a result of our various restructuring activities. Another ~~122,300 of~~141,800 square feet of mixed office and manufacturing/research and development space located in Massachusetts and Arizona is not in use and unoccupied at this time. We are actively exploring options to sublease, sell or negotiate an early termination agreement on this vacant property.


Item 3.	*Legal Proceedings*

There has been substantial litigation regarding patent and other intellectual property rights in the semiconductor and related industries. ~~Brooks has~~We have in the past been, and may in the future be, notified that itwe may be infringing intellectual property rights possessed by other third parties. ~~Brooks~~We cannot guarantee that infringement claims by third parties or other claims for indemnification by customers or end users of ~~its~~our products resulting from infringement claims will not be asserted in the future or that such assertions, if proven to be true, will not materially and adversely affect ~~Brooks’~~our business, financial condition and results of operations. If any such claims are asserted against ~~Brooks’~~our intellectual property rights, we may seek to enter into a royalty or licensing arrangement. ~~Brooks~~We cannot guarantee, however, that a license will be available on reasonable terms or at all. ~~Brooks~~We could decide in the alternative to resort to litigation to challenge such claims or to attempt to design around the patented technology. Litigation or an attempted design around could be costly and would divert our management’s attention and resources. In addition, if ~~Brooks does~~we do not prevail in such litigation or succeed in an

2415

an attempted design around, ~~Brooks~~we could be forced to pay significant damages or amounts in settlement. Even if a design around is effective, the functional value of the product in question could be greatly diminished.

In addition to the material set forth below, please see “Patents and Proprietary Rights” in Part 1, Item 1, “Business” for a description of certain potential patent disputes.

~~ITI Lawsuit~~Regulatory Proceedings Relating to Equity Incentive Practices and the Restatement

On or about April 21, 2005, we were served with a third-party complaint seeking to join us as a party to a patent lawsuit brought by an entity named Information Technology Innovation, LLC based in Northbrook, Illinois (“ITI”) against Motorola, Inc. (“Motorola”)All pending inquiries and Freescale Semiconductor, Inc. (“Freescale”). In the lawsuit (the “ITI Lawsuit”), ITI claimed that Motorola and Freescale had infringed a U.S. patent that ITI asserted covers processes used to model a semiconductor manufacturing plant. ITI asserted that we had induced and contributed to the infringementinvestigations of the patent. Subsequently Intel Corporation (“Intel”) filed a lawsuit against ITI seeking a declaratory judgment that Intel had not infringed and was not infringing the patent (the “Intel Lawsuit”) and notified us that Intel believed that we had an indemnification obligation to Intel, but that, at that time, Intel was not seeking to have those obligations determined and enforced in the Intel Lawsuit.

~~Freescale alleged that we had a duty to indemnify Freescale and Motorola from any infringement claims asserted against them based on their use of our AutoSched software program~~Company by ~~paying all costs and expenses and all or part of any damages that either of them might incur as a result~~agencies of the ~~ITI Lawsuit brought by ITI.~~

~~Pursuant~~United States Government pertaining to ~~an agreement executed on April 28, 2006, we settled and~~our past equity incentive-related practices have now been concluded, with ITI and the other parties all of the matters that were or might have been raised in this litigation. In exchange for a cash payment, the settlement affords a license, releases and covenants from ITI not to sue us, the other parties named above, and all users of certain of our factory modeling software products such as the “Autosched” product. The Intel Lawsuit was also dismissed as a result of this settlement. In addition, we settled the claim for indemnification brought against us by Freescale by the payment to Freescale of $400,000 to defray a portion of the legal expenses borne by Freescale in the defense of the ITI litigation.

~~Other Commercial Litigation Matters~~

In January 2006 a ruling was issued against us by a Massachusetts state court in a commercial litigation matter involving us and BlueShift Technologies, Inc. Awards of damages and costs were assessed against us in January and April 2006 in the amount of approximately $1.6 million, which had been accrued for at December 31, 2005. We have filed a notice of appeal in the case with the Massachusetts Appeals Court and that appeal is now pending.

~~Regulatory Proceedings~~described more fully below.

On May 12, 2006, we announced that ~~the Company~~Brooks had received notice that the Boston Office of the United States Securities and Exchange Commission (the “SEC”) was conducting an informal inquiry concerning stock option grant practices to determine whether violations of the securities laws had occurred. On June 2, 2006, the SEC issued a voluntary request for information to us in connection with an informal inquiry by that office regarding a loan we previously reported had been made to former Chairman and CEO Robert Therrien in connection with the exercise by him of stock options in 1999. On June 23, 2006, we were informed that the SEC had opened a formal investigation into this matter and on the general topic of the timing of stock option grants. On June 28, 2006, the SEC issued subpoenas to ~~the Company~~Brooks and to the Special Committee of the Board of Directors, which had previously been formed on March 8, 2006, requesting documents related to ~~the Company’s~~Brooks’ stock option grant practices and to the loan to Mr. Therrien.

On May 19, 2006, we received a grand jury subpoena from the United States Attorney (the “DOJ”) for the Eastern District of New York requesting documents relating to stock option grants. Responsibility for the DOJ’s investigation was subsequently assumed by the United States Attorney for the District of Massachusetts. On June 22, 2006 the United States Attorney’s Office for the District of Massachusetts issued a grand jury subpoena to us in connection with an investigation by that office into the timing of stock option grants by us and the loan to Mr. Therrien mentioned above.

~~The Company is cooperating fully~~ On May 9, 2007, we received afollow-up grand jury subpoena from the United States Attorney’s Office for the District of Massachusetts in connection with the ~~investigations being conducted~~same matters.

On July 25, 2007, a criminal indictment was filed in the United States District Court for the District of Massachusetts charging Robert J. Therrien, our former Chief Executive Officer and Chairman, with income tax evasion. A separate civil complaint was filed by the SEC on July 25, 2007 against Mr. Therrien in the United States District Court for the District of Massachusetts charging him with violations of federal securities laws.

On May 19, 2008, we entered into a settlement with the SEC relating to our historical stock option granting processes. We agreed to settle with the SEC, without admitting or denying the allegations in the Commission’s complaint, by consenting to the entry of a judgment enjoining future violations of the reporting, books and records, and internal controls provisions of the federal securities laws. We were not charged by the SEC with fraud nor were we required to pay any civil penalty or other money damages as part of the settlement. The option grants to which the SEC refers in its complaint were made between 1999 and 2001. The settlement completely resolves the previously disclosed SEC investigation into our historical stock option granting practices. As we disclosed previously, we were not charged in the criminal indictment against Mr. Therrien, and the ~~DOJ.~~United States Attorney’s Office has informed us that it has closed this matter as it relates to Brooks.

Private Litigation

All private class action and derivative action matters commenced against the Company relating to past equity incentive-related practices have been concluded or dismissed, as described more fully below.

On May 22, 2006, a derivative action was filed nominally on our behalf in the Superior Court for Middlesex County, Massachusetts, captioned as Mollie Gedell, Derivatively on Behalf of Nominal Defendant Brooks Automation, Inc. v. A. Clinton Allen,et al. The Defendants named in the complaint are: A. Clinton Allen, Director of the Company; Roger D. Emerick, former Director of the Company; Edward C. Grady, Director, President and CEO of the Company; Amin J. Khoury, former Director of the Company; Joseph R. Martin, Director of the Company; John K. McGillicuddy, Director of the Company; and Robert J. Therrien, former Director, President and CEO of the Company.

On May 26, 2006, aanother derivative action was filed in the Superior Court for Middlesex County, Massachusetts nominally on our behalf, captioned as Ralph Gorgone, Derivatively on Behalf of Nominal Defendant Brooks Automation, Inc. v. Edward C. Grady,et al. The Defendants named in the complaint are: Mr. Grady; Mr. Allen; Mr. Emerick; Mr. Khoury; Robert J. Lepofsky, Director of the Company; Mr. Martin; Mr. McGillicuddy; Krishna G. Palepu, Director of the Company; Alfred Woollacott, III, Director of the Company; Mark S. Wrighton, Director of the Company; and Marvin Schorr, Director Emeritus of the Company.

On August 4, 2006 the Superior Court for Middlesex County, Massachusetts, entered an order consolidating the above state derivative actions under docket number06-1808 and the captionIn re Brooks Automation, Inc. Derivative Litigation.On September 5, 2006, the ~~Plaintiffs~~plaintiffs filed a Consolidated Shareholder Derivative ~~Complaint; the Defendants~~Complaint, which named ~~therein are: Mr. Allen, Mr. Martin, Mr. Grady, Mr. McGillicuddy, Mr. Therrien, Mr. Emerick,~~several of our current and Mr. Khoury; Robert W. Woodbury, Jr., the Company’s Chief Financial Officer; Joseph Bellini, and Thomas S. Grilk, Secretary and General Counsel of the Company, current Officers of the Company; Stanley D. Piekos and Ellen B. Richstone, the Company’s former Chief Financial Officers; and David R. Beaulieu, Jeffrey A. Cassis, Santo DiNaro, Peter Frasso, Robert A. McEachern, Dr. Charles M. McKenna, James A. Pelusi, Michael W. Pippins and Michael F. Werner, former Officersdirectors, officers, and employees ~~of the Company.~~as defendants. The Consolidated Shareholder Derivative Complaint ~~alleges~~alleged that certain current and former directors and officers breached fiduciary duties owed to Brooks by backdating stock option grants, issuing inaccurate financial results and false or misleading public filings, and that Messrs. Therrien, Emerick and Khoury breached their fiduciary duties, and Mr. Therrien was unjustly enriched, as a result of the loan to and stock option exercise by Mr. Therrien mentioned above, and ~~seeks,~~sought, on our behalf, damages for breaches of fiduciary duty and unjust enrichment, disgorgement to ~~the Company~~Brooks of all profits from allegedly backdated stock option grants, equitable relief, and ~~Plaintiffs’~~plaintiffs’ costs and disbursements, including attorneys’ fees, accountants’ and experts’ fees, costs, and expenses. The ~~Defendants have~~defendants served motions to dismiss and, in response, plaintiffs moved for leave to amend their complaint. The Proposed Amended Complaint made allegations substantially similar to those in the Consolidated Shareholder Derivative ~~Complaint.~~Complaint, and named additional directors and officers as defendants. On May 4, 2007, the court granted plaintiffs leave to file an amended complaint. On June 22, 2007, the defendants served plaintiffs with motions to dismiss the amended complaint. The parties completed briefing the motions to dismiss on September 27, 2007, and oral argument was heard on December 4, 2007. On August 1, 2008, the court granted our motion to dismiss the case, and entered an order dismissing the amended consolidated shareholder derivative complaint in its entirety.

On May 30, 2006, a derivative action was filed in the United States District Court for the District of Massachusetts, captioned as Mark Collins, Derivatively on Behalf of Nominal Defendant Brooks Automation, Inc. v. Robert J. Therrien,et al. ~~The defendants in the action are: Mr. Therrien; Mr. Allen; Mr. Emerick; Mr. Grady; Mr. Khoury; Mr. Martin; and Mr. McGillicuddy.~~

On June 7, 2006, a derivative action was filed in the United States District Court for the District of Massachusetts, captioned as City of Pontiac General Employees’ Retirement System, Derivatively on Behalf of Brooks Automation, Inc. v. Robert J. Therrien,et al. The Defendants in this action are: Mr. Therrien; Mr. Emerick; Mr. Khoury; Mr. Allen; Mr. Grady; Mr. Lepofsky; Mr. Martin; Mr. McGillicuddy; Mr. Palepu; Mr. Woollacott, III; Mr. Wrighton; and Mr. Schorr.

The District Court issued an ~~Order~~order consolidating the above federal derivative actions on August 15, 2006, and a Consolidated Verified Shareholder Derivative Complaint was filed on October 6, ~~2006; the Defendants~~2006, which named ~~therein are: Mr. Allen, Mr. Grady, Mr. Lepofsky, Mr. Martin, Mr. McGillicuddy, Mr. Palepu, Mr. Schorr, Mr. Woollacott, Mr. Wrighton, Mr. Woodbury, Mr. Therrien, Mr. Emerick, Mr. Khoury,~~several of our current and ~~Mr. Werner.~~former directors, officers, and employees as defendants. The Consolidated Verified Shareholder Derivative Complaint ~~alleges~~alleged violations of Section 10(b) andRule 10b-5 of the Exchange act; Section 14(a) of the Exchange Act; Section 20(a) of the Exchange Act; breach of fiduciary duty; corporate waste; and unjust enrichment, and ~~seeks,~~sought, on behalf of Brooks, damages, extraordinary equitable relief including disgorgement and a constructive trust for improvidently granted stock options or proceeds from alleged

insider trading by certain defendants, ~~Plaintiffs’~~plaintiffs’ costs and disbursements including attorneys’ fees, accountants’ and experts’ fees, costs and expenses. The ~~Defendants have filed~~court held a hearing on defendants’ motions to dismiss on August 6, 2008. On September 26, 2008, the ~~Consolidated Verified Shareholder Derivative Complaint and to Stay this~~court entered an order approving the plaintiffs’ voluntary dismissal of the action ~~pending the outcome of motions to dismiss in the state derivative action described above.~~without prejudice.

On June 19, 2006, a putative class action was filed in the United States District Court, District of Massachusetts, captioned asCharles E. G. Leech Sr. v. Brooks Automation, Inc.,et al. The defendants in this action are: the Company; Mr. Therrien; Ellen Richstone, the Company’s former Chief Financial Officer; Mr. Emerick; Mr. Khoury; Robert W. Woodbury, Jr., the Company’s Chief Financial Officer; and Mr. Grady. The complaint alleges violations of Section 10(b) of the Exchange Act and~~Rule 10b-5~~ against us and the individual defendants; Section 20(a) of the Exchange Act against the individual defendants; Section 11 of the Securities Act against us and Messrs. Grady, Woodbury, Emerick, Khoury and Therrien; Section 12 of the Securities Act against us and Messrs. Grady, Woodbury, Emerick, Khoury and Therrien; and Section 15 of the Securities Act against Messrs. Grady, Woodbury, Emerick, Khoury and Therrien. The complaint seeks,~~inter alia~~~~, damages, including interest, and plaintiff’s costs. The Defendants have filed motions to dismiss the~~~~Leech~~~~complaint.~~

On July 19, 2006, a second putative class action was filed in the United States District Court for the District of Massachusetts, captioned asJames R. Shaw v. Brooks Automation, Inc. et ~~al.~~al.,No. 06-11239-RWZ. ~~The Defendants in~~On December 13, 2006, the ~~case are~~court issued an order consolidating the ~~Company, Mr. Therrien, Ms Richstone, Mr. Emerick, Mr. Khoury, Mr. Woodbury, and Mr. Grady. As of this date, the Company has not been served~~Shawaction with the ~~complaint.~~Leechaction described above and appointing a lead plaintiff and lead counsel. The ~~complaint alleges~~lead plaintiff filed a Consolidated Amended Complaint, which named as defendants current and former directors and officers of Brooks, as well as PricewaterhouseCoopers LLP, our auditor. The Consolidated Amended Complaint alleged violations of ~~Section~~Sections 10(b) and 20(a) of the Exchange Act andRule 10b-5 ~~against~~and Sections 11, 12(a)(2), and 15 of the Securities Act.

motions to dismiss and ~~violations~~lead plaintiff’s motion to amend the complaint. On November 6, 2007, the court granted in part and denied in part defendants’ motions to dismiss, and allowed lead plaintiff’s motion to add a named plaintiff. The claims against PricewaterhouseCoopers LLP were dismissed. On June 24, 2008, a Stipulation and Agreement of ~~Section 20(a)~~Settlement Between All Parties was filed, pursuant to which the parties proposed a final settlement. The terms of the ~~Exchange Act~~settlement, which includes no admission of liability or wrong doing by Brooks, provide for a full and complete release of all claims in the litigation, a bar order against ~~all individual defendants. The complaint seeks,~~~~inter alia~~~~, damages, including interest,~~claims in the nature of contribution, and ~~plaintiff’s costs. Competing plaintiffs~~a payment of $7.75 million to be paid directly by our insurance carrier into a settlement fund, pending final documentation and ~~their counsel have moved~~approval by the court of a plan of distribution. As of September 30, 2008, we recorded a receivable from our liability insurers of $8.8 million within current assets on our audited consolidated balance sheets which includes the settlement fund obligation of $7.75 million and a reimbursement of professional fees of $1.0 million. On October 3, 2008, the court entered orders granting the parties’ motion for ~~consolidation with~~settlement and closed the~~Leechaction described above, and for appointment as lead counsel.~~ case.

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 ~~the Company,~~Brooks, from Mr. Therrien under Section 16(b) of the Securities Exchange Act of 1934 for alleged “short-swing” profits earned by Mr. Therrien due to the loan and stock option exercise in November 1999 referenced above, and a sale by Mr. Therrien of Brooks stock in March 2000. The ~~Complaint~~complaint seeks disgorgement of all profits earned by Mr. Therrien on the transactions, attorneys’ fees and other expenses. ~~Defendants have~~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 ~~motions~~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. Brooks is a nominal defendant in the consolidated action and any recovery in this action, less attorneys’ fees, would go to ~~dismiss.~~the Company. On July 14, 2008, the court denied Mr. Therrien’s motion to dismiss this action.

On August 15, 2007, two actions were filed in Massachusetts Superior Court for Middlesex County, nominally on Brooks’ behalf, captionedDarr v. Grady et al.andMilton v. Grady et al.The two plaintiffs in these actions purported to be shareholders who had previously demanded that Brooks take action against individuals who allegedly had involvement with backdated stock options, and to which Brooks had responded. The defendants in these actions were several of our current and former officers, directors, and employees. These actions alleged several claims against the defendants based on granting or receiving backdated stock options, including breach of fiduciary duties, corporate waste, and unjust enrichment. The complaint sought on our behalf,inter alia, damages, extraordinary equitableand/or injunctive relief, an accounting, a constructive trust, disgorgement, and plaintiff’s costs and disbursements, including attorneys’ fees, accountants’ and experts’ fees, costs, and expenses. On September 20, 2007, the court granted defendants’ motion to consolidate the two matters. On June 5, 2008, the court granted plaintiffs’ motion for appointment as lead counsel, and on July 3, 2008, plaintiffs filed a consolidated amended complaint. On September 9, 2008, plaintiffs moved for voluntary dismissal, and on September 16, 2008, the court entered an order approving the plaintiffs’ motion for voluntary dismissal.

Matter to which the Company is Not a Party

Jenoptik-Asyst Litigation

We ~~are aware~~acquired certain assets, including a transport system known as IridNet, from the Infab division of ~~additional proposed class actions, posted~~Jenoptik AG on September 30, 1999. Asyst Technologies, Inc. had previously filed suit against Jenoptik AG and other defendants, or collectively, the defendants, in the Northern District of California charging that products of the defendants, including IridNet, infringe Asyst’s U.S. Patent Nos. 4,974,166, or the ’166 patent, and 5,097,421, or the ’421 patent. Asyst later withdrew its claims related to the ’166 patent from the case. Summary judgment of noninfringement was granted in that case by the District Court and judgment was issued in favor of Jenoptik on the ~~websites of various law firms. We are~~ground that the product at issue did not ~~yet aware~~infringe the asserted claims of the ~~filing~~’421 patent. Following certain rulings and findings adverse to Jenoptik, on August 3, 2007 the District Court issued final judgment in favor of Jenoptik. Asyst appealed, and on October 10, 2008, the United States Court

of Appeals for the Federal Circuit entered an order affirming the District Court’s final judgment in favor of Jenoptik.

We had received notice that Asyst might amend its complaint in this Jenoptik litigation to name Brooks as an additional defendant, but no such action was ever taken. Based on our investigation of Asyst’s allegations, we do not believe we are infringing any ~~such actions~~claims of Asyst’s patents. Asyst may decide to seek to prohibit us from developing, marketing and using the IridNet product without a license. We cannot guarantee that a license would be available to us on reasonable terms, if at all. In any case, we could face litigation with Asyst. Jenoptik has agreed to indemnify us for any loss we may incur in this action.

Litigation is inherently unpredictable and we cannot predict the outcome of the legal proceedings described above with any certainty. Should there be an adverse judgment against us, it may have a material adverse impact on our financial statements. Because of uncertainties related to both the amount and range of losses in the event of an unfavorable outcome in the lawsuits listed above or in certain other pending proceedings for which loss estimates have not been ~~served with~~recorded, we are unable to make a ~~complaint or any other process~~reasonable estimate of the losses that could result from these matters and hence have recorded no accrual in ~~any~~our financial statements as of ~~these matters.~~September 30, 2008.


Item 4.	*Submission of Matters to a Vote of Security Holders*

During the quarter ended September 30, ~~2006,~~2008, no matters were submitted to a vote of security holders through the solicitation of proxies or otherwise.

PART II


Item 5.	*Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities*

Our common stock is traded on the Nasdaq ~~National~~Global Market under the symbol “BRKS”. The following table sets forth, for the periods indicated, the high and low close prices per share of our common stock, as reported by the Nasdaq ~~National~~Global Market:


	High		Low		High		Low

Fiscal year ended September 30, 2006
Fiscal year ended September 30, 2008
First quarter	$	13.74	$	11.70	$	15.01	$	12.07
Second quarter		17.65		12.72		13.07		9.40
Third quarter		14.85		11.00		11.16		8.27
Fourth quarter		14.14		10.61		11.25		7.68
Fiscal year ended September 30, 2005
Fiscal year ended September 30, 2007
First quarter	$	18.26	$	13.48	$	15.26	$	12.79
Second quarter		18.73		14.38		17.53		13.74
Third quarter		16.21		12.86		18.66		16.38
Fourth quarter		16.60		13.00		19.96		13.52

Number of Holders

As of ~~November 30, 2006,~~October 31, 2008, there were ~~1,262~~1,211 holders onof record of our common stock.

Dividend Policy

We have never declared or paid ~~any~~a cash ~~dividends~~dividend on our capital stock. ~~Our current policy is to retain all~~The Board of ~~our earnings to finance future growth. In addition, we have never declared or issued any stock dividends on our capital stock and do not plan to issue any stock dividends~~Directors periodically reviews the strategic use of cash in ~~the foreseeable future.~~excess of business needs.

Issuance of Unregistered Common Stock

Not applicable.

Issuer’s Purchases of Equity Securities

On November 9, 2007, we announced that our Board of Directors authorized a stock repurchase plan to buy up to $200.0 million of our outstanding common stock. We did not repurchase any of our ~~equity securities~~stock pursuant to this plan during the ~~fourth quarter~~three months ended September 30, 2008. At each of ~~fiscal 2006.~~July 31, August 31 and September 30, 2008, approximately $109.8 million of our common stock remained available for repurchase under the plan. There is no expiration date for the plan.

The following table provides information concerning shares of the Company’s Common Stock $0.01 par value purchased in connection with the forfeiture of shares to satisfy the 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, 2008. 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				Part of Publicly		be Purchased Under
	of Shares		Average Price Paid		Announced Plans		the Plans or
Period	Purchased		per Share		or Programs		Programs

July 1 — 31, 2008		396	$	8.11		396	$	—
August 1 — 31, 2008		2,899		9.25		2,899		—
September 1 — 30, 2008		515		8.82		515		—

Total		3,810	$	9.07		3,810	$	—


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,
2006(4)(7) 2005(4) 2004(4) 2003(1)(2)(4)(5) 2002(3)(4)(6)
(In thousands, except per share data)

Revenues $ 692,870 $ 463,746 $ 535,053 $ 340,092 $ 300,538
Gross profit $ 244,784 $ 160,136 $ 199,666 $ 95,211 $ 63,681
Income (loss) from continuing operations before income taxes and minority interests $ 29,907 $ (2,751 ) $ 32,398 $ (194,806 ) $ (637,491 )
Income (loss) from continuing operations $ 25,841 $ (8,096 ) $ 24,134 $ (199,926 ) $ (732,222 )
Net income (loss) $ 25,930 $ (11,612 ) $ 14,659 $ (203,024 ) $ (738,637 )
Basic earnings (loss) from continuing operations per share $ 0.36 $ (0.18 ) $ 0.56 $ (5.44 ) $ (28.37 )
Diluted earnings (loss) from continuing operations per share $ 0.36 $ (0.18 ) $ 0.55 $ (5.44 ) $ (28.37 )
Shares used in computing basic earnings (loss) per share 72,323 44,919 43,006 36,774 25,807
Shares used in computing diluted earnings (loss) per share 72,533 44,919 43,573 36,774 25,807

As of September 30,
2006 2005 2004 2003 2002
(In thousands)

Total assets $ 992,577 $ 624,080 $ 671,039 $ 493,245 $ 657,497
Working capital $ 252,633 $ 168,231 $ 294,137 $ 135,156 $ 176,338
Current portion of long-term debt and other obligations $ 11 $ 12 $ 11 $ 98 $ 8
Subordinated notes due 2008 $ — $ 175,000 $ 175,000 $ 175,000 $ 175,000
Other long-term debt (less current portion) $ 2 $ 2 $ 14 $ 25 $ 177
Stockholders’ equity $ 799,134 $ 309,835 $ 312,895 $ 162,830 $ 308,235


	Year Ended September 30, 2006
	First			Second		Third		Fourth		Year Ended September 30,
	Quarter			Quarter		Quarter		Quarter		2008(4)			2007(1)(3)		2006(1)(2)		2005(1)			2004(1)
	(In thousands, except per share data)									(In thousands, except per share data)

Revenues	$	127,175		$	169,177	$	186,195	$	210,323	$	526,366		$	743,258	$	607,494	$	369,778		$	415,474
Gross profit	$	36,934		$	59,740	$	71,483	$	76,627	$	126,828		$	219,595	$	186,650	$	99,786		$	130,124
Income (loss) from continuing operations before income taxes, minority interests and equity in earnings of joint ventures										$	(236,152	)	$	55,636	$	24,067	$	(5,054	)	$	15,889
Income (loss) from continuing operations	$	(11,752	)	$	4,354	$	17,158	$	16,081	$	(236,625	)	$	54,301	$	22,346	$	(5,953	)	$	19,318
Net income (loss)										$	(235,946	)	$	151,472	$	25,930	$	(11,612	)	$	14,659
Basic earnings (loss) from continuing operations per share	$	(0.18	)	$	0.06	$	0.23	$	0.22	$	(3.67	)	$	0.74	$	0.31	$	(0.13	)	$	0.45
Diluted earnings (loss) from continuing operations per share	$	(0.18	)	$	0.06	$	0.23	$	0.22	$	(3.67	)	$	0.73	$	0.31	$	(0.13	)	$	0.44
Shares used in computing basic earnings (loss) per share											64,542			73,492		72,323		44,919			43,006
Shares used in computing diluted earnings (loss) per share											64,542			74,074		72,533		44,919			43,573

2920

Year Ended September 30, 2005
First
Second
Third
Fourth

Quarter Quarter Quarter Quarter
(In thousands, except per share data)

Revenues $ 117,233 $ 129,454 $ 113,760 $ 103,299
Gross profit $ 41,086 $ 43,297 $ 39,523 $ 36,230
Income (loss) from continuing operations $ (1,404 ) $ (274 ) $ 1,260 $ (7,678 )
Basic earnings (loss) from continuing operations per share $ (0.03 ) $ (0.01 ) $ 0.03 $ (0.17 )
Diluted earnings (loss) from continuing operations per share $ (0.03 ) $ (0.01 ) $ 0.03 $ (0.17 )


	As of September 30,
	2008		2007		2006		2005		2004
	(In thousands)

Total assets	$	663,638	$	1,014,838	$	992,577	$	624,080	$	671,039
Working capital	$	235,795	$	346,883	$	252,633	$	168,231	$	294,137
Current portion of long-term debt and other obligations	$	—	$	—	$	—	$	12	$	11
Subordinated notes due 2008	$	—	$	—	$	—	$	175,000	$	175,000
Other long-term debt (less current portion)	$	—	$	—	$	—	$	2	$	14
Stockholders’ equity	$	541,995	$	859,779	$	799,134	$	309,835	$	312,895


	Year Ended September 30, 2008
	First			Second			Third			Fourth
	Quarter			Quarter			Quarter			Quarter
	(In thousands, except per share data)

Revenues	$	147,833		$	147,647		$	124,016		$	106,870
Gross profit	$	38,449		$	36,439		$	28,857		$	23,083
Loss from continuing operations	$	(1,419	)	$	(8,664	)	$	(10,326	)	$	(216,216	)
Basic and diluted loss from continuing operations per share	$	(0.02	)	$	(0.14	)	$	(0.17	)	$	(3.45	)


	Year Ended September 30, 2007
	First		Second		Third		Fourth
	Quarter		Quarter		Quarter		Quarter
	(In thousands, except per share data)

Revenues	$	191,368	$	194,926	$	190,461	$	166,503
Gross profit	$	59,682	$	62,490	$	57,436	$	39,987
Income (loss) from continuing operations	$	16,979	$	15,751	$	22,864	$	(1,293	)
Basic earnings (loss) from continuing operations per share	$	0.23	$	0.21	$	0.30	$	(0.02	)
Diluted earnings (loss) from continuing operations per share	$	0.23	$	0.21	$	0.30	$	(0.02	)


(1)		~~Amounts include results of operations of Microtool, Inc. (acquired October 9, 2002) for the periods subsequent to its acquisition.~~

~~(2)~~		~~Amounts include our share of the results of operations of Brooks Switzerland in accordance with the equity method of accounting.~~

~~(3)~~		Amounts include results of operations of Hermos Informatik GmbH (acquired July 3, 2002); PRI Automation, Inc. (acquired May 14, 2002); Intelligent Automation Systems, Inc. and IAS Products, Inc. (acquired February 15, 2002); Fab Air Control (acquired December 15, 2001); the Automation Systems Group of Zygo Corporation (acquired December 13, 2001); Tec-Sem A.G. (acquired October 9, 2001) and General Precision, Inc. (acquired October 5, 2001) for the periods subsequent to their respective acquisitions.

~~(4)~~		Amounts from continuing operations exclude results of operations of the Specialty Equipment and Life Sciences division ~~previously reported as~~and the ~~Company’s “Other” reportable segment,~~Software division which ~~was~~were reclassified as a discontinued operation in June ~~2005.~~2005 and October 2006, respectively.

~~(5)~~		~~Amounts include $40.0 million for asset impairments.~~

~~(6)~~		~~Amounts include $474.4 million for asset impairments and $106.7 million for deferred tax write-offs.~~

~~(7)~~(2)		Amounts include results of operations of Helix Technology Corporation (acquired October 26, 2005) and Synetics Solutions Inc. (acquired June 30, 2006) for the periods subsequent to their respective acquisitions.

(3)		Amounts include results of operations of Keystone Electronics (Wuxi) Co., Ltd. (acquired effective July 1, 2007) for the periods subsequent to its acquisition.

(4)		Income (loss) from continuing operations before income taxes, minority interests and equity in earnings of joint ventures, income (loss) from continuing operations and net income (loss) includes a non-cash $200.1 million charge for the impairment of goodwill and intangible assets and a $3.5 million charge for the impairment of certain buildings and leasehold improvements.

Certain statements in thisForm 10-K constitute “forward-looking statements” which involve known risks, uncertainties and other factors which may cause the actual results, our performance or our achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements such as estimates of future revenue, gross margin, and expense levels as well as the performance of the semiconductor industry as a whole. Such factors include the “Risk Factors” set forth in Part I, Item 1A. Precautionary statements made herein should be read as being applicable to all related forward-looking statements whenever they appear in this report.

We are a leading ~~supplier~~provider of automation, ~~products~~vacuum and instrumentation solutions ~~primarily serving the worldwide semiconductor market. We supply hardware, software~~ and ~~services~~are a highly valued business partner to ~~both chip manufacturers and~~ original equipment manufacturers ~~or OEMs, who make~~(OEM) and equipment users throughout the world. We serve markets where equipment productivity and availability is a critical factor for our customers’ success. Our largest served market is the semiconductor ~~device~~ manufacturing ~~equipment.~~industry. We ~~are a technology~~also provide unique solutions to customers in data storage, advanced display, analytical instruments and ~~market leader with offerings ranging~~solar markets. We develop and deliver differentiated solutions that range from ~~individual hardware~~proprietary products to highly respected manufacturing services.

On March 30, 2007, we completed the sale of our software division, Brooks Software, to Applied Materials, Inc. (“Applied”) for cash consideration and the assumption of certain liabilities related to Brooks Software. Brooks Software provided real-time applications for greater efficiency and productivity in collaborative, complex manufacturing environments. We transferred to Applied substantially all of our assets primarily related to Brooks Software, including the stock of several subsidiaries engaged only in the business of Brooks Software, and Applied assumed certain liabilities related to Brooks Software. We sold our software ~~modules~~division in order to ~~fully integrated systems as well as services to install and support our products world-wide. Although~~focus on our core ~~business addresses the increasingly complex automation requirements~~semiconductor-related hardware businesses. We recognized a gain on disposal of the ~~global semiconductor industry, we also provide automation solutions~~software division. Effective October 1, 2006, our consolidated financial statements and notes have been reclassified to reflect this business as a discontinued operation in accordance with SFAS No. 144, “Accounting for ~~a number~~the Impairment or Disposal of ~~related industries, including flat panel display manufacturing, data storage and other complex manufacturing.~~Long-Lived Assets.”

~~We operate~~In the fourth quarter of fiscal 2007, we made changes to our internal reporting structure and began reporting results in ~~two~~three segments: ~~hardware~~Automation Systems, Critical Components and ~~software.~~

~~The hardware~~Global Customer Operations. In the second quarter of fiscal 2008 these segment disclosures were refined to reflect the results of a comprehensive review of operations conducted subsequent to the appointment of a new CEO and CFO. These refinements resulted in minor changes to the previously disclosed split of revenues and gross margins among segments and between products and services. Our Automation Systems segment provides a ~~wide~~ range of wafer handling products ~~vacuum subsystems~~ and ~~wafer transport platforms for use within the semiconductor process and metrology equipment. Within the hardware~~

segment, there are four businesses consisting of automation hardware products, vacuum products and subsystems, customer-designed automation and the global customer service organization. The automation hardware products, historically the core products of Brooks, include wafer transfer robots and platforms, or systems that ~~operate in either~~support both atmospheric and vacuum or atmospheric environments that are sold to equipment manufacturers. The Company also provides hardware directly to fabs including equipment for lithography that automate the storage, inspection and transport of photomasks, or reticles. Another line of businessprocess technology used by our customers. Our Critical Components Operations segment includes ~~the~~cryogenic vacuum ~~products and subsystems acquired from Helix that include vacuum technology solutions such as cryogenic pumps for creating vacuum, products for measuring vacuum, and~~pumping, thermal management and vacuum measurement products ~~that are~~ used ~~in manufacturing equipment for the semiconductor, data storage~~to create, measure and ~~flat panel display industries. Additionally, the Company leverages its domain knowledge~~control critical process vacuum applications. Our Global Customer Operations segment consists of our after market activities including an extensive range of service support to our customers to address theiron-site needs, spare parts and ~~manufacturing expertise to build customer-designed automation systems, or contract automation systems, in a program designed to help customers outsource their automation. This assembly~~repair services, and ~~manufacturing capability was a core competency~~support of ~~Synetics Solutions, and these offerings~~legacy product lines. Certain reclassifications have been ~~combined under~~made in the ~~line of business managed by~~2007 and 2006 consolidated financial statements to conform to the former Synetics enterprise. The primary customers for these solutions are manufacturers of process equipment. Finally, the global customer service offerings provide customers with support for all our hardware offerings.2008 presentation.

The ~~software segment addresses the need~~demand for ~~production management systems driven~~semiconductors and semiconductor manufacturing equipment is cyclical, resulting in periodic expansions and contractions. Demand for our products has been impacted by ~~the extensive tracking and tracing requirements of the semiconductor industry. At the core of~~ these production systems is the manufacturing execution system (“MES”) that is primarily responsible for tracking the movement of production wafers in a fab, and managing the data and actions for every wafer, equipment, operator and other resources in the fab. These mission-critical systems provide real time information primarily to production operators, supervisors and fab managers. We provide other important software applications to meet the critical requirements of the fab, such as real time dispatching and scheduling, equipment communications, advanced process control, material control for the AMHS, activity execution and control, automated maintenance management of equipment, and other applications. Customers often purchase more than one of these software products from Brooks for a single fab, often driving the need for consulting and integration services. Our software products enable semiconductor manufacturers to increase their return on investment by maximizing production efficiency, and may be sold as part of an integrated solution or on a stand-alone basis. These software products and services are also used in many similar manufacturing industries as semiconductor, including flat panel display, data storage, and electronic assembly.

~~We are currently focusing our major efforts in the following aspects of our business:~~


	•	~~Implementing global low-cost sourcing and manufacturing strategies, specifically in Mexico and Asia;~~

	•	~~Expanding our global customer service business;~~

	•	~~Sustaining our ability to meet our customers’ requirements on a timely basis;~~

	•	~~Successfully operating our newly-formed joint venture in Japan with Yaskawa;~~

	•	~~Continuing to integrate Helix and Synetics into our operations, systems, processes and controls;~~

	•	~~Expanding our sales of equipment automation products to process tool manufacturers that currently produce automation equipment internally;~~

	•	~~Continuing to develop our customer designed automation (“CDA”) business with process tool manufacturers;~~

	•	~~Greater expansion of our hardware products into the China market;~~

	•	~~Improving the efficiency of our internal information and business systems, which could result in the upgrade or replacement of certain applications; and~~

	•	~~Continuing to evaluate on an opportunistic basis whether new acquisitions of or alliances with other companies would be beneficial to our business and shareholders.~~

Incyclical industry conditions. During fiscal 2006 ~~our total revenues increased 49.4%~~and throughout most of fiscal 2007, we benefited from an industry expansion. During the fourth quarter of fiscal 2007, we began to ~~$692.9 million from~~observe a contraction in the prior year compared to a 13.3% decline in fiscal 2005. This increase is primarily due to the additional revenues related to our acquisitions of Helix Technology Corporation and Synetics Solutions Inc., along with higher industry demand for semiconductor ~~capital equipment in fiscal 2006. Our revenue by segment for fiscal 2006~~manufacturing equipment. The length and ~~2005 is as follows (in thousands):~~

For the Year Ended September 30,
2006 2005

Hardware $ 607,494 87.7 % $ 369,778 79.7 %
Software 85,376 12.3 % 93,968 20.3 %

$ 692.870 100.0 % $ 463,746 100.0 %

severity of these downturns can be difficult to predict.

Our hardware segment revenues increased 64.3% from the prior year to $607.5 million. This increase is primarily attributable to the additional revenues related to our Helix and Synetics acquisitions along with higher demand for semiconductor capital equipment during fiscal year 2006. Our software segment revenues decreased 9.1% from the prior year to $85.4 million. The decrease is primarily attributable to lower market demand for our software products. We expect fiscal 2007 total hardware revenues to increase over 2006 due to the inclusion of Helix and Synetics for a full year, although there are indications that demand for semiconductor capital equipment may soften in the later half of fiscal 2007.

Gross margins increased to 35.3% for fiscal 2006 from 34.5% in the prior year. The increase is primarily attributable to higher overhead absorption due to higher sales volumes, improved product mix and the result of various cost reduction measures. We expect our gross margins to continue to increase in the near term as a result of new product introductions and material cost reduction initiatives.

We recorded income from continuing operations of $25.8 million or $0.36 per diluted share in fiscal 2006 compared to a loss from continuing operations of $8.1 million or $0.18 per diluted share in fiscal 2005. This improvement is the result of higher revenues and gross margins, lower restructuring charges and higher interest income. We generated $65.2 million of cash from operations in fiscal year 2006, compared to a cash flow from operations of $31.1 million in fiscal 2005. At September 30, 2006, we had cash, cash equivalents and marketable securities aggregating $191.4 million.

Recent Developments

~~On July 11, 2005, we entered into an Agreement~~We have experienced changes in our senior management team during fiscal year 2008 including the appointment of a new President and Plan of Merger (the “Merger Agreement”) with Helix Technology Corporation (“Helix”), a Delaware corporation and Mt. Hood Corporation (“Mt. Hood”), a newly-formed Delaware corporation and a direct wholly-owned subsidiary of the Company. This acquisition closedChief Executive Officer, Robert J. Lepofsky, on October ~~26, 2005. Under~~1, 2007, and the ~~terms~~appointment of the Merger Agreement, Mt. Hood merged (the “Merger”) with and into Helix, with Helix continuing as the surviving corporation. Each share of Helix common stock, par value $1.00 per share, other than shares held by Helix as treasury stock and shares held by the Company or Mt. Hood, was cancelled and extinguished and automatically converted into 1.11 (“Exchange Ratio”) shares of the Company’s common stock. In addition, we assumed all options then outstanding under Helix’s existing equity incentive plans, each of which is now exercisable into a number of shares of the Company’s common stock (and at an exercise price) adjusted to reflect the Exchange Ratio. The Helix acquisition is valued at approximately $458.1 million, consisting of 29.0 million shares of common stock valued at $444.6 million, the fair value of assumed Helix options of $3.3 million, and cash of $10.2 million. This transaction qualified as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986. Helix was a leader in the development, manufacture, and application of innovative vacuum technology solutions for the semiconductor, data storage, and flat panel display markets. The acquisition of Helix enables us to better serve our current market, increase our addressable market, reduce the volatility that both businesses have historically faced and position us to enhance our financial performance.

On May 8, 2006 we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Synetics Solutions Inc. (“Synetics”). We completed our acquisition of Synetics from Yaskawa Electric Corporation (“Yaskawa”), a corporation duly organized and existing under the laws of Japan, through a merger that became effective as of June 30, 2006. Synetics provides customized manufacturing solutions for the North Americannew Chief Financial Officer, Martin S. Headley, on January 28, 2008. Our new management

3222

~~semiconductor equipment industry. The Synetics acquisition is valued at $50.2 million consisting~~team embarked on a review of ~~a $28.6 million cash payment to Yaskawa, repayment of outstanding debt of $19.9 million~~our organizational structure and ~~transaction costs of $1.7 million.~~resource requirements, which resulted in restructuring charges during fiscal year 2008.

~~Also~~In fiscal 2008, our total revenues decreased from fiscal 2007 by 29.2% to $526.4 million. Our revenue by segment for fiscal 2008 and 2007 is as follows (in thousands):


	For the Year Ended September 30,
	2008				2007

Automation Systems	$	273,294	51.9	%	$	443,501	59.7	%
Critical Components		127,035	24.1	%		165,225	22.2	%
Global Customer Operations		126,037	24.0	%		134,532	18.1	%

	$	526,366	100.0	%	$	743,258	100.0	%

During the fourth quarter of fiscal 2007, we began to observe a slowdown in the demand for semiconductor capital equipment. This slowdown continued throughout fiscal year 2008. Based on ~~May 8, 2006,~~discussions with our customer base, and external market forecasts, we ~~entered into Joint Venture Agreement (the “Agreement”)~~had expected a material improvement in demand for semiconductor capital equipment during 2009. Based on recent communications with Yaskawa to form a 50/50 joint venture called Yaskawa Brooks Automation, Inc.( “YBA”) to exclusively market and sell Yaskawa’s semiconductor robotics products and Brooks’ automation hardware products toour semiconductor customers, and revised external market forecasts, we now believe that demand for our products will decline further as a result of the global economic slowdown. This abrupt change in ~~Japan. This Agreement was executed on June~~our outlook has resulted in an expectation of lower cash flows from all three of our operating segments, which has led to an impairment of our goodwill and intangible assets of $200.1 million as of September 30, ~~2006. YBA began operations on~~2008. In addition, we recorded an impairment charge of $3.5 million to write-down certain buildings and leasehold improvements to fair value as of September ~~21, 2006.~~30, 2008.

~~On November 3, 2006,~~In response to the weakness in demand, we ~~entered into a definitive agreement to sell~~have begun an analysis of our ~~Software Division to Applied Materials for $125 million. We~~cost structure and expect to ~~close~~make further significant cost reductions during 2009. Due to the preliminary stage of this ~~transaction during~~analysis, we cannot yet predict the ~~second fiscal quarter~~cost or benefit of 2007. We are selling our software division in order to focus on our core semiconductor-related hardware businesses. We expect to operate in one segment, hardware, in fiscal 2007. We expect to recognize a gain on disposal of the software division and to reclassify this ~~division as discontinued operations in fiscal 2007.~~

~~Related Parties~~

On June 11, 2001, we appointed Joseph R. Martin to our Board of Directors. Mr. Martin served as a director of Fairchild Semiconductor International, Inc. (“Fairchild”), one of our customers, until May 3, 2006. Accordingly, Fairchild is considered a related party for the period from June 11, 2001 through May 3, 2006. Revenues from Fairchild from October 1, 2005 to March 31, 2006 were approximately $205,000 and for the years ended September 30, 2005 and 2004 were approximately $319,000, and $409,000, respectively. The amounts due from Fairchild included in accounts receivable at March 31, 2006 and September 30, 2005 were $40,000 and $33,000, respectively.

Related party transactions and amounts included in accounts receivable and revenue are on standard pricing and contractual terms and manner of settlement for products and services of similar types and at comparable volumes.restructuring effort.

Critical Accounting Policies and Estimates

The preparation of the Consolidated Financial Statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an ongoing basis, we evaluate our estimates, including those related to bad debts, inventories, intangible assets, goodwill, income taxes, warranty obligations ~~the adequacy of restructuring reserves~~ and contingencies. 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, 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, actual results may differ from these estimates under different assumptions or conditions.

We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our Consolidated Financial Statements.

Revenues

Product revenues are associated with the sale of hardware systems, components and ~~components~~spare parts as well as ~~software licenses.~~product license revenue. Service revenues are associated with ~~hardware-related~~service contracts, repairs, upgrades and field ~~service, training, software maintenance and software-related consulting and integration services.~~service.

situations where the arrangement contains extended payment terms, revenue is recognized as the payments become due. ~~Shipping terms are customarily FCA~~

~~shipping point. Amounts charged to customers for costs incurred for shipping and handling are credited to cost of revenues where the associated costs are charged.~~ When significant on site customer acceptance provisions are present in the arrangement, revenue is recognized upon completion of customer acceptance testing.

Revenue ~~from the sale ofoff-the-shelf~~ ~~software licenses~~associated with service agreements is recognized upon delivery to the customer provided there is evidence of an arrangement, fees are fixed or determinable, collection of the related receivable is probable, and there are no unusual acceptance criteria or extended payment terms. If the arrangement contains acceptance criteria or testing, then revenue is recognized upon acceptance or the successful completion of the testing. If the arrangement contains extended payment terms, revenue is recognized as the payments become due. Revenue related to post-contract support is deferred and recognized ratably over the contract period.

For tailored software contracts, we provide significant consulting services to tailor the software to the customer’s environment. If we are able to reasonably estimate the level of effort and related costs to complete the contract, we recognize revenue using the~~percentage-of-completion~~ method, which compares costs incurred to total estimated project cost. Revisions in revenue and cost estimates are recorded in the period in which the facts that require such revisions become known. If our ability to complete the tailored software is uncertain or if we cannot reasonably estimate the level of effort and related costs, completed contract accounting is applied. Losses, if any, are provided for in the period in which such losses are first identified by management. Generally, the terms of long-term contracts provide for progress billing based on completion of certain phases of work. For maintenance contracts, service revenue is deferred based on vendor specific objective evidence of its fair value and isgenerally recognized ratably over the term of the ~~maintenance~~ contract. ~~Deferred revenue primarily relates to~~Revenue from repair services ~~and maintenance agreements and billings in excess~~or upgrades of ~~revenue~~customer-owned equipment is recognized ~~on long term contracts accounted for using thepercentage-of-completion~~ ~~method and contracts awaiting final customer acceptance.~~

~~In transactions that include multiple productsand/or~~ ~~services, such as tailored software arrangements, described above, or software sales with post-contract support, we allocate the sales value among each~~upon completion of the ~~elements based on their relative fair values~~repair effort and ~~recognize such revenue when each element is delivered. If these relative fair values are not known,~~upon the ~~Company uses the residual method to recognize revenue from arrangements with one or more elements to be delivered at a future date, when evidence~~shipment of the ~~fair value of all undelivered elements exists. Under~~repaired item back to the ~~residual method,~~customer. In instances where the ~~fair value of any the undelivered elements at the date of delivery, such as post-contract support, are deferred and the remaining portion of the total arrangement fee~~repair or upgrade includes installation, revenue is recognized ~~as revenue. The Company determines fair value of undelivered services based on the prices that are charged~~ when the ~~same element~~installation is ~~sold separately to customers.~~completed.

Intangible Assets, Goodwill and ~~Goodwill~~Other Long-Lived Assets

~~We have made a number of acquisitions in previous years, and as~~As a result of our acquisitions, we have identified ~~significant~~ intangible assets and generated significant goodwill. Intangible assets 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. Intangible assets and other long-lived assets are subject to an impairment test if there is an indicator of impairment. The carrying value and ultimate realization of these assets is dependent upon estimates of future earnings and benefits that we expect to generate from their use. If our expectations of future results and cash flows are significantly diminished, intangible assets and goodwill may be impaired and the resulting charge to operations may be material. When we determine that the carrying value of intangibles or other long-lived assets may not be recoverable based upon the existence of one or more indicators of impairment, we use the projected undiscounted cash flow method to determine whether an impairment exists, and then measure the impairment using discounted cash flows. For goodwill, we compare the fair value of our reporting units by measuring discounted cash flows to the book value of the reporting units and measure impairment, if any, as the difference between the resulting implied fair value of goodwill and the recorded book value of the goodwill.

The estimation of useful lives and expected cash flows require us to make significant judgments regarding future periods that are subject to some factors outside of our control. Changes in these estimates can result in significant revisions to the carrying value of these assets and may result in material charges to the results of operations.

We have elected to perform our annual goodwill impairment testing as required under FAS 142 on September 30 of each fiscal year. During this process, estimates of revenue and expense were developed for each of our ~~segments and as a whole~~reporting units based on internal as well as external market forecasts. Our analyses indicated no impairment of the goodwill in fiscal 2006 orand 2007. Although we experienced a cyclical slowdown in demand during fiscal ~~2005. In~~2008, external market forecasts available to us throughout this period indicated that demand would improve in 2009. These external market forecasts changed abruptly toward the end of fiscal ~~2004, we determined that~~2008 and again into early fiscal 2009. The downturn experienced in the ~~implied fair value~~semiconductor capital equipment market during 2008 has been worsened by the global economic slowdown. We do not expect a recovery in demand for semiconductor capital equipment in the near term. This abrupt change in our outlook has resulted in an expectation of lower cash flows from all three of our operating segments, which has led to an impairment of our goodwill and intangible assets of $200.1 million as of September 30, 2008. The determination of the ~~goodwill associated with~~amount of an impairment includes a number of judgments including the ~~SELS division was $7.4 million less than its book~~determination of peer companies, which are used to determine discount rates and terminal value ~~and recorded a charge~~factors. We also construct multi-year cash flow forecasts for each segment, which are discounted to ~~write-down~~present value using the ~~value of this goodwill in the fourth quarter. This charge has been recorded as a component of the loss from discontinued operations of $9.5 million for fiscal year 2004.~~predetermined discount rate.

Accounts Receivable

We record trade accounts receivable at the invoiced amount. Trade accounts receivables do not bear interest. The allowance for doubtful accounts is ~~the Company’s~~our best estimate of the amount of probable credit losses in ~~its~~our existing accounts receivable. ~~The Company determines~~We determine the allowance based on historical write-off experience by customer. ~~The Company reviews its~~We review our allowance for doubtful accounts quarterly. Past due balances over 90 days and over a specified amount are reviewed individually for collectibility. All other balances are reviewed on a pooled basis by type of receivable. Account balances are charged off against the allowance when ~~the Company feels~~we feel it is probable the receivable will not be recovered. ~~The Company does~~We do not have any off-balance-sheet credit exposure related to ~~its~~our customers.

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 estimated by assessing product failure rates, ~~and~~ 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.

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 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 considered future taxable income and ongoing ~~prudent and feasible~~ 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 net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to income in the period such determination was made.

In accordance with SFAS 109, management has considered the weight of all available evidence in determining whether a valuation allowance remains to be required against its deferred tax assets at September 30, 2008. Given the losses incurred in fiscal 2008 combined with the near term uncertainty with regard to the outlook of the semiconductor sector, we have determined that it is more likely than not that the net deferred tax assets will not be realized. The amount of the deferred tax asset considered realizable is subject to change based on future events, including generating taxable income in future periods. We continue to assess the need for the valuation allowance at each balance sheet date based on all available evidence.

Stock-Based Compensation

Prior to October 1, 2005, our employee stock compensation plans were accounted for in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) and related interpretations. Under this method, no compensation expense was recognized as long as the exercise price equaled or exceeded the market price of the underlying stock on the measurement date of the grant. The Company elected

the disclosure-only alternative permitted under SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), as amended by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure” (SFAS 148”), for fixed stock-based awards to employees.

On December 23, 2004, the Company accelerated the vesting of certain unvested stock options awarded to employees, officers and other eligible participants under the Company’s various stock option plans, other than its 1993 Non-Employee Director Stock Option Plan. As such, the Company fully vested options to purchase 1,229,239 shares of the Company’s common stock with exercise prices greater than or equal to $24.00 per share. The acceleration of the vesting of these options resulted in a charge based on generally accepted accounting principles of approximately $1.0 million. We took this action because it produced a more favorable impact on our results from operations in light of the effective date of SFAS 123R, which took place in our first fiscal quarter of 2006.

As of October 1, 2005, ~~the Company~~we adopted SFAS 123R using the modified prospective method, which requires measurement of compensation cost for all stock awards at fair value on date of grant and recognition of compensation 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 quoted price of ~~the Company’s~~our common stock over the exercise price of the restricted stock on the date of grant, and the fair value of stock options is determined using the Black-Scholes valuation model, which is consistent with our valuation techniques previously utilized for options in footnote disclosures required under SFAS 123, as amended by SFAS 148. Such value is 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. Actual results, and future changes in estimates, may differ substantially from our current estimates. ~~Prior periods have not been restated to incorporate the stock-based compensation charge.~~Restricted stock with market-based vesting criteria is valued using a lattice model.

Year Ended September 30, ~~2006,~~2008, Compared to Year Ended September 30, ~~2005~~2007

We reported revenues of ~~$692.9~~$526.4 million for the year ended September 30, ~~2006,~~2008, compared to ~~$463.7~~$743.3 million in the previous year, a ~~49.4% increase.~~29.2% decrease. The ~~increase reflects the additional~~total decrease in revenues of ~~$183.3~~$216.9 million impacted all of our operating segments. Our Automation Systems segment revenues decreased by $170.2 million, our Critical Components segment revenues decreased by $38.2 million and ~~$23.7 million related~~our Global Customer Operations segment revenues decreased by $8.5 million. These decreases were the result of lower volume shipments in response to ~~the Helix and Synetics acquisitions respectively, along with higher revenues related to our legacy Brooks hardware segment of $30.8 million due to higher~~declining demand for semiconductor capital ~~equipment experienced~~equipment. We expect the volume of shipments to further decline in ~~fiscal 2006, offset by lower revenues from our software segment of $8.6 million. The decrease~~the near term in ~~our software revenues is reflective of reduced demand for software products and tailored software projects from~~response to the ~~prior year.~~global economic slowdown.

Our ~~hardware~~Automation Systems segment reported revenues of ~~$607.5~~$273.3 million in the year ended September 30, ~~2006, an increase~~2008, a decrease of ~~64.3%~~38.4% from $443.5 million in the prior year. This ~~increase reflects the additional revenues of $183.3 million and $23.7 million related~~decrease is attributable to ~~the Helix and Synetics acquisitions respectively, along with higher revenues related to our legacy Brooks hardware segment of $30.8 million due to higher~~weaker demand for semiconductor capital equipment ~~experienced in fiscal 2006.~~and impacted all product lines within this segment.

Our ~~software~~Critical Components segment reported revenues of ~~$85.4~~$127.0 million, a ~~9.1%~~23.1% decrease from ~~$94.0~~$165.2 million in the prior year. ~~The~~This decrease principally reflects lower revenues of $30.7 million for cryogenic vacuum pumping, including a one-time royalty license of $8.5 million recorded in the prior year. These decreases were partially offset by $4.9 million of increased revenue from non-semiconductor industry related customers.

Our Global Customer Operations segment reported revenues of $126.0 million, a 6.3% decrease from $134.5 million in the prior year. This decrease is ~~primarily~~ attributable to lower ~~software license sales~~legacy product revenue of ~~$2.6~~$5.3 million, ~~driven by reduced market demand, along with~~ lower ~~revenues from tailored software services project of $6.7 million, offset by higher~~service contract and repair revenues of ~~$0.7~~$2.5 million and lower spare part revenue of $0.6 million. Service contract and repair revenues, which include spare parts, were $114.7 million, a 2.7% decrease from ~~software maintenance contracts.~~

~~Product revenues increased $176.2 million, or 52.1%, to $514.3~~$117.9 million in the ~~year ended September 30, 2006, from $338.1 million in the previous~~prior year. ~~This increase is attributable to additional~~All service revenues ~~of $133.1 million and $22.7 million~~are related to the Helix and Synetics acquisitions respectively, along with higher revenues of legacy Brooks hardware of $23.0 million due to increased demand for semiconductor capital equipment in fiscal 2006, offset by lower software license revenues of $2.6 million reflective of industry trends of decreased demand for software products in fiscal 2006. Product revenues associated with our ~~hardware segment increased by 57.7% from fiscal 2005 levels, while product revenues from our software segment decreased by 9.2%. Service revenues~~

increased $52.9 million, or 42.1%, to $178.6 million. This increase is attributable to additional revenues of $50.2 million and $1.0 million related to the Helix and Synetics acquisitions respectively, along with higher revenues of legacy Brooks hardware services of $7.7 million due to higher demand for spares and additional revenues from new service contracts, offset by lower software services revenues of $6.0 million primarily due to reduced activity on tailored software projects.Global Customer Operations segment.

Revenues outside the United States were ~~$283.3~~$189.5 million, or ~~40.9%~~36.0% of total revenues, and ~~$223.1~~$248.8 million, or ~~48.1%~~33.5% of total revenues, in the years ended September 30, ~~2006~~2008 and ~~2005,~~2007, respectively. We expect that foreign revenues will continue to account for a significant portion of total revenues.

~~Deferred revenue of $26.1 million at September 30, 2006 consisted of $13.2 million related to deferred maintenance contracts and $12.9 million related to revenues deferred forpercentage-of-completion~~ ~~method arrangements and contracts awaiting final customer acceptance.~~

Gross Margin

Gross margin ~~increased~~dollars decreased to ~~$244.8~~$126.8 million ~~or 35.3%~~ for the year ended September 30, ~~2006, compared to $160.1~~2008, a decrease of 42.3% from $219.6 million ~~or 34.5%~~ for the ~~previous year. This overall increase in gross~~year ended September 30, 2007. Gross margin ~~reflects the additional gross margin from the Helix acquisition of $55.8~~for both periods included $9.3 million plus the additional gross margin from the Synetics acquisition of $4.2 million, plus higher gross margin of $26.9 million associated with the legacy Brooks hardware segment from higher revenues, better overhead absorption and improved product mix, offset by reduced gross margin of $2.2 million associated with the legacy Brooks software segment from lower revenues. The overall increase in the gross margin percentage reflects the impact of cost reduction initiatives, favorable product mix, and greater overhead absorption associated with the legacy Brooks hardware and software businesses along with slightly higher margins associated with the Helix business, offset by the lower margins associated with Synetics business as well as the write-off of the inventory~~step-up~~ ~~totaling $11.6 million associated with Helix and Synetics acquisition and the amortization~~ of completed technology ~~associated with these~~amortization related to the acquisitions ~~totaling $8.1 million~~of Helix Technology Corporation in ~~fiscal~~October 2005 and Synetics Solutions Inc. in June 2006. Gross margin percentage decreased to 24.1% for the year ended September 30, 2008, compared to 29.5% for the prior year, primarily due to the lower absorption of indirect factory overhead on lower revenues.

~~Our hardware~~Gross margin of our Automation Systems segment ~~gross margin increased~~decreased to ~~$186.7~~$54.7 million ~~or 30.7%~~ in the year ended September 30, ~~2006,~~2008, a decrease of 54.2% from ~~$99.8~~$119.5 million or 27.0% in the prior year. This increase reflects the additional gross margin of $55.8 million related to the Helix acquisition, $4.2 million of additional gross margin related to the Synetics acquisition, along with higher margin on higher revenues from legacy Brooks hardware. The additional gross margin related to the Helix acquisition is net of a $11.2 million charge to write-off the~~step-up~~ in inventory associated with the acquisition, a charge of $8.0 million for the amortization of completed technology acquired in the Helix transaction, and $1.3 million of additional costs incurred to bring our new Mexico manufacturing operations on line. The additional gross margin related to the Synetics acquisition is net of a $0.4 million charge to write-off the~~step-up~~ ~~in inventory associated with the acquisition, and a charge of $0.2 million for the amortization of completed technology acquired in the Synetics transaction. Our software segment’s gross margin~~ for the year ended September 30, ~~2006,~~2007. Gross margin included $0.6 million in both years for completed technology amortization related to the Synetics acquisition. Gross margin percentage decreased to ~~$58.1 million or 68.1%,~~20.0% for the year ended September 30, 2008 as compared to ~~$60.4~~26.9% in the prior year, primarily due to lower absorption of indirect factory overhead on lower revenues.

Gross margin of our Critical Components segment decreased to $47.9 million ~~or 64.2%~~in the year ended September 30, 2008, a decrease of 27.6% from $66.2 million in the prior year. Gross margin for both periods included $3.9 million of completed technology amortization related to the Helix acquisition. Gross margin for the prior year includes an $8.5 million one-time royalty license. Gross margin percentage was 37.7% for the year ended September 30, 2008 as compared to 40.1% in the prior year. This decrease is the result of the one-time royalty license in the prior year which increased the prior year gross margin percentage by 3.2%. Effective cost containment efforts for this segment offset the impact of lower absorption of factory overhead on lower revenues.

Gross margin of our Global Customer Operations segment decreased to $24.2 million in the year ended September 30, 2008, a decrease of 28.6% from the $33.9 million in the prior year. Gross margin for both periods included $4.8 million of completed technology amortization related to the Helix acquisition. Gross

margin percentage was 19.2% for the year ended September 30, 2008 as compared to 25.2% in the prior year. The decrease in gross margin ~~is primarily~~percentage was attributable to ~~lower software license~~reduced margin on legacy product sales ~~offset~~caused primarily by charges to write-down legacy product inventory to net realizable value, and an under utilization of our service infrastructure. In response to these declining gross margins, we have reduced ~~costs realized by~~the size of our service infrastructure, and expect to make additional cost ~~reduction program.~~reductions.

Gross margin on product revenues was $168.7 million or 32.8% for the year ended September 30, 2006, compared to $99.0 million or 29.3% for the prior year. The increase in product margins is primarily attributable to additional margin of $36.8 million related to the Helix acquisition, and $3.9 million of additional margin associated with the Synetics acquisition, along with higher margin from the legacy Brooks hardware products of $30.6 million, offset by lower margin from software products of $1.6 million.

Gross margin on service revenues was $76.1 million or 42.6% for the year ended September 30, 2006, compared to $61.1 million or 48.6% in the previous year. The increase is primarily attributable to incremental gross profit of $19.0 million, or 37.8%, from Helix customer support services, additional gross margin of $0.3 million from Synetics customer support services, offset by lower margin from legacy Brooks hardware-related services of $3.7 million and lower profit of $0.6 million on software-related services.

Research and Development

Research and development expenses for the year ended September 30, ~~2006,~~2008, were ~~$70.7~~$42.9 million, ~~an increase~~a decrease of ~~$7.6~~$8.8 million, compared to ~~$63.1~~$51.7 million in the previous year. ~~Research~~While there is continued support for high priority projects, we did experience lower spending of $6.6 million associated with automation systems product development with certain development cycles coming to completion.

Selling, General and ~~development~~Administrative

Selling, general and administrative expenses ~~decreased~~were $110.5 million for the year ended September 30, 2008, a decrease of $9.9 million compared to $120.4 million in the prior year. The decrease is primarily attributable to a $6.2 million decrease in management incentive costs, a $2.5 million decrease in legal fees primarily as a result of the settlement of stockholder litigation and a $1.3 million reduction in stock-based compensation expense mainly due to the departure of certain executives. In connection with our implementation of the Oracle ERP system, we treat certain internal labor costs as part of the cost to implement this system. These costs, along with third party consulting fees and software licenses are treated as capital expenditures, and will be depreciated over the useful life of this system. During fiscal 2008, we increased the amount of labor costs capitalized for our Oracle project by $1.2 million, with an offsetting reduction to our selling, general and administrative expenses. These decreases were partially offset by $1.1 million of higher intangible asset amortization.

Impairment Charges

We recorded a non-cash impairment charge of $203.6 million in the year ended September 30, 2008. We experienced a cyclical slowdown in demand during fiscal 2008. Throughout most of fiscal 2008, external market forecasts indicated that demand would improve in 2009. These external market forecasts changed abruptly at the end of fiscal 2008 and into early fiscal 2009. The downturn experienced in the semiconductor capital equipment market during 2008 has been worsened by the global economic slowdown. We do not expect a recovery in demand for semiconductor capital equipment in the near term. This abrupt change in our outlook has resulted in an expectation of lower cash flows from all three of our operating segments, which has led to a non-cash impairment of our goodwill and intangible assets of $200.1 million as of September 30, 2008. In addition, we recorded a non-cash impairment charge of $3.5 million to write-down certain buildings and leasehold improvements to fair value as of September 30, 2008.

Restructuring Charges

We recorded a charge to continuing operations of $7.3 million in the year ended September 30, 2008. This charge consists of $6.8 million of severance costs associated with workforce reductions of 230 employees in operations, service and administrative functions across all the main geographies in which we operate. We also incurred $0.5 million of costs to vacate excess facilities in San Jose, California and South Korea. Our restructuring charges by segment for fiscal 2008 were: Global Customer Operations — $2.7 million, Automated Systems — $2.2 million and Critical Components - $0.4 million. In addition, we incurred $2.0 million of restructuring charges in fiscal 2008 that were related to general corporate functions that support all of our segments. The accruals for workforce reductions are expected to be paid over the next twelve months. We expect the annual salary and benefit savings as a result of these actions will be approximately $14.0 million. The cost savings resulting from these restructuring actions are expected to yield actual cash savings, net of the related costs, within twelve months. We are expanding our cost reduction efforts in response to the global economic slowdown and expect to take further restructuring charges during fiscal 2009.

We recorded a restructuring charge to continuing operations of $7.1 million in the year ended September 30, 2007. This charge consists of $3.1 million to fully recognize our remaining obligation on the lease associated with our vacant facility in Billerica, Massachusetts, along with $4.0 million of severance costs associated with workforce reductions of approximately 90 employees in operations, service and administrative functions principally in the U.S., Germany and Korea.

Interest Income and Expense

Interest income decreased by $4.5 million, to $7.4 million, in the year ended September 30, 2008, from $11.9 million for the prior year. Approximately $2.6 million of this decrease is due to lower investment balances as a result of repurchases of our common stock during the first and second quarters of fiscal 2008, with the balance of the decrease attributable to lower interest rates on our investments. Interest expense decreased to $0.4 million for the year ended September 30, 2008 as compared to $0.6 million in the prior year. Interest expense relates primarily to discounting of multi-year restructuring costs.

Gain (Loss) on Investment

During the three months ended June 30, 2007, a company in which Brooks held a minority equity interest was acquired by a closely-held Swiss public company. Our minority equity investment had been previously written down to zero in 2003. As a result, we received shares of common stock from the acquirer in exchange for our minority equity interest and recorded a gain of $5.1 million.

During the year ended September 30, 2008, we recorded a charge of $3.9 million to write-down our minority equity investment in the Swiss public company to its fair value based on our determination that the decline in fair value was other than temporary. The remaining balance of this investment at September 30, 2008 after giving effect to foreign exchange was $1.7 million.

Other (Income) Expense

Other expense, net of $1.7 million for the year ended September 30, 2008 consists of foreign exchange losses of $3.5 million, which was partially offset by royalty income of $0.9 million, the receipt of $0.8 million of principal repayments on notes that had been previously written off and other income of $0.1 million. Other expense, net of $1.1 million for the year ended September 30, 2007 consisted of foreign exchanges losses of $3.2 million, offset by the receipt of $2.1 million of principal repayment on two notes that had been previously written off.

Income Tax Provision

We recorded an income tax provision of $1.2 million in the year ended September 30, 2008 and an income tax provision of $2.3 million in the year ended September 30, 2007. The tax provision recorded in fiscal 2008 and 2007 is principally attributable to alternative minimum tax and taxes on foreign income. We continued to provide a full valuation allowance for our net deferred tax assets at September 30, 2008 and 2007, 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.

We adopted the provisions of FIN No. 48 on October 1, 2007. The implementation of FIN No. 48 did not materially affect our financial position or results of operations. Of the unrecognized tax benefits of $11.9 million at September 30, 2008, we currently anticipate that approximately $1.0 million will be paid in settlement during the next twelve months as a result of finalizing certainnon-U.S. audits.

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 $0.2 million in the year ended September 30, 2008, compared to $0.9 million in the prior year. Income associated with our 50% interest in Yaskawa Brooks Automation, Inc., a joint venture with

Yaskawa Electric Corporation of Japan was $0.5 million for the year ended September 30, 2008 as compared to $0.1 million in the prior year.

Discontinued Operations

We completed the sale of our software division to Applied Materials on March 30, 2007. During the year ended September 30, 2008, we settled all remaining escrow items resulting in an additional gain of $0.7 million. We recorded income from the operation of our discontinued software business of $13.3 million for the year ended September 30, 2007. We recorded a gain of $83.9 million in the second quarter of fiscal year 2007 on the sale of our discontinued software business. This gain reflects the proceeds of $132.5 million of cash consideration, offset by expenses of $7.7 million, a tax provision of $1.9 million, and the write-off of net assets totaling $39.0 million.

Year Ended September 30, 2007, Compared to Year Ended September 30, 2006

Revenues

We reported revenues of $743.3 million for the year ended September 30, 2007, compared to $607.5 million in the previous year, a 22.4% increase. The increase reflects higher revenues related to our Automation Systems segment of $106.6 million, higher revenues associated with our Critical Components segment of $21.7 million, and higher revenues associated with our Global Customer Operations segment of $7.5 million due primarily to higher demand for semiconductor capital equipment experienced in fiscal 2007.

Our Automation Systems segment reported revenues of $443.5 million in the year ended September 30, 2007, an increase of 31.6% from $336.9 million in the prior year. This increase reflects the additional revenues of $75.5 million related to the Synetics acquisition, along with higher revenues related to our legacy Brooks automation products due to higher demand for semiconductor capital equipment experienced in fiscal 2007.

Our Critical Components segment reported revenues of $165.2 million, a 15.1% increase from $143.5 million in the prior year. This increase reflects higher revenues of $17.0 million for cryogenic vacuum pumping including incremental product license revenues of $8.5 million experienced in the third quarter of fiscal 2007, higher revenues of $3.4 million associated with thermal measurement products, and $1.3 million of additional revenues for vacuum measurement and air flow control products.

Our Global Customer Operations segment reported revenues of $134.5 million, a 5.9% increase from $127.0 million in the prior year. This increase is primarily attributed to higher revenues of $4.6 million related to repairs, higher revenues of $3.2 million for hardware maintenance and field services, offset by lower revenues for hardware spares of $0.3 million. The increase in hardware maintenance and field services revenue is due in part to the Synetics acquisition, which increased service revenue by $2.7 million.

Revenues outside the United States were $248.8 million, or 33.5% of total revenues, and $230.7 million, or 38.0% of total revenues, in the years ended September 30, 2007 and 2006, respectively.

Gross Margin

Gross margin dollars increased to $219.6 million for the year ended September 30, 2007, compared to $186.7 million for the prior year. Gross margin for the year ended September 30, 2007 includes $9.3 million of completed technology amortization related to the Helix and Synetics acquisitions. The prior year gross margin includes $11.7 million of charges to write-off thestep-up in inventory related to the Helix and Synetics acquisitions and $8.1 million of completed technology amortization. Gross margin percentage decreased to 29.5% for the year ended September 30, 2007, compared to 30.7% for the year ended September 30, 2006, primarily due to the lower margin on the additional Synetics revenues. Excluding the $11.7 million inventory write-off taken in fiscal year 2006 and the amortization of completed technology, the overall increase in gross margin primarily reflects the additional margin associated with our Automation Systems segment of $14.9 million, higher margin associated with our Critical Components segment of $7.3 million, and higher margin associated with our Global Customer Operations segment of $0.3 million due primarily to higher demand for semiconductor capital equipment experienced in fiscal 2007.

Gross margin of our Automation Systems segment increased to $119.5 million in the year ended September 30, 2007, and included $0.6 million of completed technology amortization related to the Synetics acquisition, compared to $104.6 million in the prior year which included $0.4 million of charges to write-off thestep-up in inventory and $0.2 million of completed technology amortization related to the Synetics acquisition. Excluding the inventory write-off taken in fiscal year 2006 and the amortization of completed technology, this increase reflects the additional margin of $9.3 million related to the Synetics acquisition, along with additional margin on higher revenues related to ~~10.2%,~~our legacy Brooks automation products of $5.6 million.

Gross margin of our Critical Components segment increased to $66.2 million in the year ended September 30, 2007, and included $3.9 million of completed technology amortization related to the Helix acquisition, compared to $55.4 million in the prior year, which included $3.8 million of charges to write-off thestep-up in inventory and $3.6 million of completed technology amortization related to the Helix acquisition. Excluding the inventory write-off taken in fiscal year 2006 and the amortization of completed technology, this increase primarily reflects the incremental margin of $8.5 million from ~~13.6%~~product license revenue, additional margin of $2.1 million on higher revenues of thermal measurement and air flow control products, offset by lower margins of $3.3 million on cryogenic pumping and vacuum measurement products.

Gross margin of our Global Customer Operations segment increased to $33.9 million in the year ended September 30, 2007, which included $4.8 million of completed technology amortization related to the Helix acquisition, compared to $26.6 million in the prior year, which included $7.4 million of charges to write-off thestep-up in inventory and $4.4 million of completed technology amortization related to the Helix acquisition. Excluding the inventory write-off taken in fiscal year 2006 and the amortization of completed technology, this increase reflects additional margin on higher revenues of hardware support services.

Gross margin on product revenues increased to $193.8 million for the year ended September 30, 2007, compared to $165.1 million for the prior year. The increase in ~~absolute spending~~product margins is primarily attributable to additional margin of $9.3 million related to the Synetics acquisition, along with higher margin of $5.6 million related to our legacy automation products, higher margin of $10.8 million associated with our critical components products, and higher margin of $3.0 million related to end-user factory hardware products. Gross margin percentage on product revenues decreased to 31.0% for the year ended September 30, 2007, compared to 33.4% for the year ended September 30, 2006, primarily due to the lower margin on the additional Synetics revenues.

Gross margin on service revenues was $25.8 million or 21.9% for the year ended September 30, 2007, compared to $21.5 million or 19.1% in the previous year. The increase in service margins is primarily attributable to incremental margin on higher global customer support service revenue.

Research and Development

Research and development expenses for the year ended September 30, 2007, were $51.7 million, an increase of $6.1 million, compared to $45.6 million in the previous year. The increase is primarily attributable to the additional spending of ~~$9.3 million and $0.9~~$3.5 million related to the ~~Helix~~Synetics acquisition, plus additional spending associated with our critical components and ~~Synetics acquisition~~global customer support segments of $2.2 million and $2.3 million respectively, offset by lower spending in our legacy ~~Brooks hardware and software businesses.~~automation systems business. The decrease in absolute legacy Brooks spending and the overall decrease in R&D spending as a percentage of revenue is the result of our continued efforts to control costs and focus our development activities.

Selling, General and Administrative

Selling, general and administrative expenses were ~~$141.0~~$120.4 million for the year ended September 30, ~~2006,~~2007, an increase of ~~$56.2~~$3.2 million, compared to ~~$84.8~~$117.2 million in the prior year. ~~Selling, general and administrative expenses increased as a percentage of revenues, to 20.4% in the year ended September 30, 2006, from 18.3% in the previous year.~~ The increase ~~in absolute spending~~ is primarily attributable to the additional spending of ~~$30.3 million and $2.0~~$5.3 million related to the ~~Helix and~~ Synetics ~~acquisitions respectively,~~acquisition, additional amortization of various intangible assets of ~~$3.8~~$1.7 million ~~and $0.4 million~~primarily related to the ~~Helix and~~ Synetics ~~acquisitions respectively, higher~~acquisition, offset by lower management incentive costs of ~~$7.4~~$3.0 million. A total of $5.2 million ~~higher~~was incurred in fiscal year 2007 on legal expenses

arising out of ~~$2.6 million mostly associated with~~matters described more fully in Note 19, “Commitments and Contingencies” of Notes to the ~~ITI and Blueshift litigation matters,~~Consolidated Financial Statements, compared to $4.8 million ~~of additional costs incurred to conduct our review of prior years’ stock option compensation, and the $1.3 million write-off of the remaining depreciation of a sales management application recorded~~ in ~~the quarter ended December 31, 2005 which was phased out of use.~~fiscal 2006.

Restructuring ~~and Acquisition-related~~ Charges

We recorded a charge to continuing operations of ~~$5.3~~$7.1 million in the year ended September 30, 2007. This charge consists of $3.1 million to fully recognize our remaining obligation on the lease associated with our vacant facility in Billerica, Massachusetts, along with $4.0 million of severance costs associated with workforce reductions of approximately 90 employees in operations, service and administrative functions principally in the U.S., Germany and Korea.

We recorded a charge to continuing operation of $4.3 million in the year ended September 30, 2006. This charge ~~which consists~~consisted of $2.0 million of excess facilities charges primarily related to a vacant facility in Billerica Massachusetts due to a longer period than initially estimated tosub-lease the facility, ~~$2.4~~$2.5 million ~~of severance~~for costs ~~associated with~~incurred related to the termination of approximately ~~40 legacy Brooks~~30 employees worldwide ~~in sales, service, operations and administrative functions,~~ whose positions were made redundant as a result of the Helix acquisition, ~~and further downsizing in our software segment, and $1.8 million for retention bonuses earned in the period by employees who have been notified of their termination in the current and prior periods,~~ offset by the ~~$0.9~~$0.2 million reversal of previously accrued termination costs to employees who will no longer be terminated or whose termination was settled at a reduced cost. The accruals for workforce reductions are expected to be paid over the next twelve months. We estimate that salary and benefit savings as a result of these actions will be approximately $4.3 million annually. The impact of these cost reductions on our liquidity is not significant, as these cost savings are expected to yield actual cash savings within twelve months.

We recorded a charge to continuing operations of $16.5 million in the year ended September 30, 2005, of which $13.3 million related to workforce reductions of approximately 270 employees worldwide and $3.2 million to excess facilities charges. Workforce reduction charges included $4.3 million for headcount reductions of approximately 100 employees associated with our software segment, $3.6 million for reductions of approximately 65 employees in our Jena, Germany facility and $5.4 million related to various other actions undertaken in fiscal 2005. Excess facilities charges of $3.2 million consisted of excess facilities identified in fiscal 2005 that were recorded to recognize the expected amount of the remaining lease obligations. Of the $3.2 million of facilities charges, $1.5 million represents an additional accrual on a previous vacated facility due to a longer period than initially estimated to~~sub-lease~~ ~~the facility. This revision, including lower estimates of expectedsub-rental~~ income over the remainder of the lease terms, was based on management’s evaluation of the rental space available. The balance of these excess facilities charges primarily related to excess and abandoned facilities in Toronto Canada, Jena Germany, Austin Texas, and Livingston Scotland.

~~We also~~ recorded a charge of $1.0 million in fiscal year ~~2005~~2006 for workforce reductions ~~of approximately 25 employees~~ related to our discontinued ~~SELS~~software division which is included in the loss from discontinued operations.

Interest Income and Expense

Interest income ~~increased~~decreased by ~~$4.4~~$1.8 million, to ~~$13.7~~$11.9 million, in the year ended September 30, ~~2006,~~2007, from ~~$9.3~~$13.7 million the previous year. This ~~increase~~decrease is due primarily to ~~higher average cash~~lower investment balances following the repayment of $175.0 million of the Convertible Subordinated Notes in ~~fiscal~~the quarter ended September 30, 2006, ~~available~~and the purchase of 6,060,000 shares of our common stock in the quarter ended September 30, 2007 for ~~investment.~~a total cost of approximately $110.8 million. We recorded interest expense of ~~$9.4~~$0.6 million in fiscal year ~~2006~~2007 compared to ~~$9.5~~$9.4 million in the previous year. ~~This~~The interest expense incurred in the prior year related primarily ~~relates~~ to the ~~4.75%~~ Convertible Subordinated Notes ~~which~~that were paid off in the quarter ended September 30, 2006. ~~Interest expense of $9.4 million in fiscal year 2006 includes the write-off of the balance of unamortized debt issuance costs of $1.6 million recorded in the fourth quarter.~~

~~Equity in Earnings of Ulvac Cryogenics, Inc~~Gain on Investment

~~We participate~~During the three months ended June 30, 2007, a company in which Brooks held a ~~joint venture, ULVAC Cryogenics, Inc., or UCI, with ULVAC Corporation~~minority equity interest was acquired by a closely-held Swiss public company. Our minority equity investment had been previously written down to zero in 2003. As a result, we received shares of ~~Chigasaki, Japan, which was part~~common stock from the acquirer in exchange for our minority equity interest and recorded a gain of ~~the acquired operations of Helix in October 2005. Income associated with our 50% interest in UCI was $1.0 million in the year ended September 30, 2006.~~$5.1 million.

Other (Income) Expense

Other expense, net of $1.1 million for the year ended September 30, 2007 consisted of foreign exchanges losses of $3.2 million, offset by the receipt of $2.1 million of principal repayment on two notes that had been previously written off. Other income, net of $0.2 million for the year ended September 30, 2006 consisted of ~~the accrual of $5.0 million related to various legal contingencies and foreign exchanges losses of $0.5 million, offset by~~ the receipt of $2.0 million of principal repayment on a note that had been previously written off and a gain of $0.3 million on the sale of other ~~assets. Other income, net~~assets offset by an accrual of ~~$1.8~~$1.6 million ~~for the year ended September 30, 2005 consisted primarily~~related to various legal contingencies and foreign exchanges losses of ~~the receipt of principal repayments on a note that had been previously written off, foreign exchange gains, and gain on the sales of other assets.~~$0.5 million.

Income Tax Provision

We recorded an income tax provision of ~~$4.7~~$2.3 million in the year ended September 30, ~~2006~~2007 and an income tax provision of ~~$5.2~~$3.4 million in the year ended September 30, ~~2005.~~2006. The tax provision recorded in fiscal 2007 and 2006 ~~and 2005~~ is principally attributable to alternative minimum tax and taxes on foreign ~~income and withholding taxes.~~income. We continued to provide a full valuation allowance for our net deferred tax assets at September 30, ~~2006~~2007 and ~~2005,~~2006, 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. ~~However, it is possible that the “more likely than not” criterion could be met~~

Equity in ~~fiscal 2007 or~~Earnings of Joint Ventures

Income associated with our 50% interest in ULVAC Cryogenics, Inc., a ~~future period, which could result~~joint venture with ULVAC Corporation of Japan, was $0.9 million in the ~~reversal of a significant portion or all of the valuation allowance, which, at that time, would be recorded as a tax benefit~~year ended September 30, 2007, compared to $1.0 million in the ~~consolidated statements~~prior year. We also recorded income of ~~operations.~~

~~We are subject to income taxes~~$0.1 million associated with our 50% interest in ~~various jurisdictions. Significant judgment is required in determining the world-wide provision for income taxes. While it is often difficult to predict the final outcome or the timing~~Yaskawa Brooks Automation, Inc., a joint venture with Yaskawa Electric Corporation of ~~resolution of any particular tax matter, we believe~~Japan that the tax reserves reflect the probable outcome of known contingencies. Tax reserves established include, but are not limited to, business combinations, transfer pricing, withholding taxes, and various state and foreign audit matters, some of which may be resolved in the near future resulting in an adjustment to the reserve.began operations on September 21, 2006.

Discontinued Operations

We completed the sale of our software division to Applied Materials on March 30, 2007. We recorded income from the operation of our discontinued software business of $13.3 million for the year ended September 30, 2007, compared to income of $3.5 million associated with this business for the year ended September 30, 2006. This favorable change is primarily the result of reduced research and development and SG&A spending, lower amortization of completed technology and the recognition of a tax benefit resulting from the reversal of tax reserves due to an audit settlement, offset by lower margin on lower revenues for six months of operations in fiscal 2007 vs. twelve months in fiscal 2006.

We recorded a gain of $83.9 million in the second quarter of fiscal year 2007 on the sale of our discontinued software business. This gain reflects the proceeds of $132.5 million of cash consideration, offset by expenses of $7.7 million, a tax provision of $1.9 million, and the write-off of net assets totaling $39.0 million.

We recorded income from operations for our discontinued ~~SELS~~Specialty Equipment and Life Sciences (“SELS”) business of $0.1 million for the year ended September 30, ~~2006, compared to a loss of $3.5 million in the previous year.~~2006. The income in fiscal year 2006 relates to maintenance revenues earned during the year that had previously been ~~deferred, while the loss in fiscal year 2005 reflects the winding down of this business.~~

~~Year Ended September 30, 2005, Compared to Year Ended September 30, 2004~~

~~Revenues~~

We reported revenues of $463.7 million for the year ended September 30, 2005, compared to $535.1 million in the previous year, a 13.3% decrease. The decrease is consistent with and reflective of the lower demand for semiconductor capital equipment experienced in fiscal 2005.

Our hardware segment reported revenues of $369.8 million in the year ended September 30, 2005, a decrease of 11.0% from the prior year. This decrease reflects the lower demand for semiconductor capital equipment during fiscal year 2005.

Our software segment reported revenues of $94.0 million, a 21.4% decrease from $119.6 million in the prior year. The decrease is primarily attributable to lower software license sales driven by reduced market demand. Included in the March 31, 2004 quarter we recognized $17.3 million of revenue on a European software services project which had been accounted for on the completed contract basis. Excluding the impact of this contract for fiscal year 2004, software revenues decreased by $8.3 million or 8.1%. A significant portion of revenue for the software segment relates to maintenance contracts. Maintenance revenues are only slightly affected by an economic downturn, as customers typically continue to use previously purchased software products and renew related maintenance arrangements.

Product revenues decreased $64.2 million, or 16.0%, to $338.1 million, in the year ended September 30, 2005, from $402.3 million in the previous year. This decrease is attributable to reduced demand for our hardware products and software license revenues reflective of industry trends of decreased demand for semiconductor capital equipment in fiscal 2005. Product revenuesdeferred. There was no activity associated with our hardware segment decreased by 13.2% from fiscal 2004 levels, while product revenues from our software segment decreased by 37.6%. Service revenues decreased $7.1 million, or 5.4%, to $125.7 million. This decrease is primarily attributable to the completion and acceptance by the customer of a major European software project for approximately $17.3 million in the second quarter of fiscal 2004.

~~Revenues outside the United States were $223.1 million, or 48.1% of total revenues, and $262.4 million, or 49.0% of total revenues, in the years ended September 30, 2005 and 2004, respectively.~~

~~Deferred revenue of $22.1 million at September 30, 2005 consisted of $11.9 million related to deferred maintenance contracts and $10.2 million related to revenues deferred forpercentage-of-completion~~ ~~method arrangements and contracts awaiting final customer acceptance.~~

~~Gross Margin~~

Gross margin decreased to $160.1 million or 34.5% for the year ended September 30, 2005, compared to $199.7 million or 37.3% for the previous year. Our hardware segment gross margin decreased to $99.8 million or 27.0% in the year ended September 30, 2005, from $130.1 million or 31.3% in the prior year. The decrease is primarily attributable to reduced overhead absorption due to reduced sales volumes. Our software segment’s gross margin for the year ended September 30, 2005, decreased to $60.4 million or 64.2%, compared to $69.5 million or 58.2% in the prior year. The decrease in gross margin is primarily attributable to lower software license sales. The increase in the gross margin as a percentage of revenue primarily reflects the impact of lower gross margins realized on the $17.3 million of software project revenue recognized upon completion and acceptance by the customer in the second quarter of fiscal 2004.

Gross margin on product revenues was $99.0 million or 29.3% for the year ended September 30, 2005, compared to $157.4 million or 39.1% for the prior year. The decrease in product margins is primarily attributable to reduced overhead absorption due to reduced sales volumes.

Gross margin on service revenues was $61.1 million or 48.6% for the year ended September 30, 2005, compared to $42.3 million or 31.9% in the previous year. The increase is primarily the result of the higher margins on hardware segment services coupled with the impact of lower gross margins realized on the $17.3 million software project revenue discussed above.

~~Research and Development~~

Research and development expenses for the year ended September 30, 2005, were $63.1 million, a decrease of $3.2 million, compared to $66.3 million in the previous year. Research and development expenses increased as a percentage of revenues, to 13.6%, from 12.4% in the prior year. The decrease in absolute spending is primarily the result of our cost reduction actions, while the increase as a percentage of revenue reflects the lower revenue levels against which these costs were measured.

~~Selling, General and Administrative~~

Selling, general and administrative expenses were $84.8 million for the year ended September 30, 2005, a decrease of $5.4 million, compared to $90.2 million in the prior year. Selling, general and administrative expenses increased as a percentage of revenues, to 18.3% in the year ended September 30, 2005, from 16.9% in the previous year. The decrease in absolute spending is primarily due to lower expenses for incentive compensation plans of approximately $5.2 million, while the increase as a percentage of revenue reflects the lower revenue levels against which these costs were measured.

~~Restructuring and Acquisition-related Charges~~

We recorded a charge to continuing operations of $16.5 million in the year ended September 30, 2005, of which $13.3 million related to workforce reductions of approximately 270 employees worldwide and $3.2 million to excess facilities charges. Workforce reduction charges included $4.3 million for headcount reductions of approximately 100 employees associated with our software segment, $3.6 million for reductions of approximately 65 employees in our Jena, Germany facility and $5.4 million related to various other actions undertaken in fiscal 2005. Excess facilities charges of $3.2 million consisted of excess facilities identified in fiscal 2005 that were recorded to recognize the expected amount of the remaining lease obligations. These costs were estimated from the time when the space is vacant; costs incurred prior to vacating the facilities were charged to operations. Of the $3.2 million of facilities charges, $1.5 million represents an additional accrual on a previous vacated facility due to a longer period than initially estimated to~~sub-lease~~ ~~the facility. This revision, including lower estimates of expectedsub-rental~~ income over the remainder of the lease terms, are based on management’s evaluation of the rental space available. The balance of these excess facilities charges primarily relates to excess and abandoned facilities in Toronto Canada, Jena Germany, Austin Texas, and Livingston Scotland.

~~We also recorded a charge of $1.0 million in fiscal year 2005 for workforce reductions of approximately 25 employees related to our~~this discontinued ~~SELS division, which is included in the loss from discontinued operations.~~

We recorded a charge to continuing operations of $5.4 million in the year ended September 30, 2004, of which $0.1 million related to acquisitions and $5.3 million to restructuring costs. The $0.1 million related to acquisitions is comprised of $0.1 million of legal and consulting costs to integrate and consolidate acquired entities into our existing entities. The $5.3 million of restructuring costs consisted of $3.9 million related to workforce reductions of approximately 60 employees world wide, across all functions of the business and $1.4 million related to excess facilities. Excess facilities charges of $1.4 million consisted of $0.2 million for excess facilities identified in fiscal 2004 that we recorded to recognize the amount of remaining lease obligations. These costs have been estimated from the time when the space is vacant, and there are no plans to utilize the facility. Costs incurred prior to vacating the facilities were charged to operations. Final exit costs for facilities abandoned in previous restructurings amounted to $0.7 million. The remaining $0.5 million represents a reevaluation of the assumptions used in determining the fair value of certain lease obligations related to facilities abandoned in a previous restructuring.

~~Interest Income and Expense~~

Interest income increased by $4.3 million, to $9.3 million, in the year ended September 30, 2005, from $5.0 million the previous year. This increase is due primarily to higher cash balances available for investment. Interest expense of $9.5 million in each of the years ended September 30, 2005 and 2004 relates primarily to the 4.75% Convertible Subordinated Notes.

~~Other (Income) Expense~~

Other income, net of $1.8 million for the year ended September 30, 2005 consisted of the receipt of principal repayments on a note that had been previously written off, foreign exchange gains, and gains on the sales of other assets. Other expense, net of $0.9 million for the year ended September 30, 2004 consisted primarily of the settlement of an arbitration proceeding in Israel of $0.7 million and realized losses on foreign currency transactions during the year.

~~Income Tax Provision~~

We recorded an income tax provision of $5.2 million in the year ended September 30, 2005 and an income tax provision of $8.1 million in the year ended September 30, 2004. The tax provision recorded in fiscal 2005 and 2004 is attributable to foreign income and withholding taxes. We continued to provide a full valuation allowance for our net deferred tax assets at September 30, 2005 and 2004, 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. If we generate future taxable income against which these tax attributes may be applied, some portion or all of the valuation allowance would be reversed and a corresponding increase in net income would be reported in future periods.

~~Discontinued Operations~~

We recorded a loss from operations for our discontinued SELS business of $3.5 million for the year ended September 30, 2005, compared to a loss of $9.5 million in the previous year. The reduced loss reflects the winding down of this business in fiscal year ~~2005, and the $7.4 million goodwill impairment charge recorded in fiscal year 2004 as previously discussed in “Intangible Assets and Goodwill.”~~2007.

Liquidity and Capital Resources

Our business is significantly dependent on capital expenditures by semiconductor manufacturers and ~~OEM’s~~OEMs that are, in turn, dependent on the current and anticipated market demand for semiconductors. Demand for semiconductors is cyclical and has historically experienced periodic downturns. In response to these downturns, we have ~~implemented~~and are continuing to implement cost reduction programs aimed at aligning our ongoing operating costs with our currently expected revenues over the near term. These cost management initiatives ~~have included~~include consolidating facilities, reductions to headcount ~~salary and wage reductions~~ and reduced spending. The cyclical nature of the industry make estimates of future revenues, results of ~~revenues, results of~~ operations and net cash flows inherently uncertain.

On May 23, 2001, we completed the private placement of $175.0 million aggregate principal amount of 4.75% Convertible Subordinated Notes due in 2008. Interest on the notes was paid on June 1 and December 1 of each year. The notes were scheduled to mature on June 1, 2008. We did not file our quarterly report on~~Form 10-Q~~ for the period ended March 31, 2006 by the prescribed due date. As a result of this delay, we were not in compliance with our obligation under Section 6.2 of the indenture with respect to our 4.75% Convertible Subordinated Notes due 2008 to file with the SEC all reports and other information and documents which we are required to file with the SEC pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934. On May 15, 2006, we received a notice from holders of more than 25% in aggregate principal amount of notes outstanding that we were in default of Section 6.2 of the indenture based on our failure to file our~~Form 10-Q.~~ On Friday July 14, 2006, we received a further notice from holders of more than 25% of the aggregate outstanding principal amount of the notes accelerating our obligation to repay the unpaid principal on the notes because our Report on~~Form 10-Q~~ for the quarter ended March 31, 2006 had not yet been filed. On Monday, July 17, 2006, we paid the outstanding $175.0 million principal balance to the trustee and subsequently paid all accrued interest. The notes are now retired, having been paid in full.

At September 30, ~~2006,~~2008, we had cash, cash equivalents and marketable securities aggregating ~~$191.4~~$177.3 million. This amount was comprised of ~~$115.8~~$110.3 million of cash and cash equivalents, ~~$68.3~~$33.1 million of investments in short-term marketable securities and ~~$7.3 million of investments in long-term marketable securities.~~

At September 30, 2005, we had cash, cash equivalents and marketable securities aggregating $357.0 million. This amount was comprised of $202.5 million of cash and cash equivalents, $121.6 million of investments in short-term marketable securities and $32.9$33.9 million of investments in long-term marketable securities.

Cash and cash equivalents were ~~$115.8~~$110.3 million at September 30, ~~2006,~~2008, a decrease of ~~$86.7~~$57.9 million from the prior year. This decrease was primarily due to $90.2 million for treasury share purchases and $23.4 million of capital equipment expenditures, which were partially offset by $13.7 million in cash provided by operations and $39.4 million of net sales and maturities of marketable securities.

Cash provided by operations was $13.7 million for the year ended September 30, 2008, and was primarily attributable to $11.8 million of income after adjusting our net loss for non-cash expenses, including depreciation and amortization of $34.5 million, asset impairment of $203.6 million, stock-based compensation of $6.9 million, and other non-cash items of $2.7 million. Cash provided by operations was further increased by $1.8 million of changes in working capital which was primarily due to decreased accounts receivable balances of $38.6 million and lower prepaid expenses of $5.8 million which was partially offset by lower accounts payable levels of $20.6 million and decreased accrued expenses of $19.5 million due to the decreased level of our business. Our change in working capital was partially offset by an increased investment of $4.9 million in field service inventory in order to improve customer response time for service transactions.

Cash provided by investing activities was $16.8 million for the year ended September 30, 2008, and is principally comprised of net sales and maturities of marketable securities of $39.4 million, the final escrow proceeds of $1.9 million from Applied Materials for the sale of our software division, which have been partially offset by $23.4 million in capital expenditures, including $13.4 million in expenditures related to our Oracle ERP implementation, and the final contingent payment of $1.0 million in connection with our Keystone Wuxi acquisition. Our Oracle ERP implementation is expected to cost approximately $26.5 million when fully implemented, of which $20.7 million has been incurred from inception through September 30, 2008. We completed the financial module portion of the Oracle ERP implementation during fiscal 2008, and placed in service $8.0 million of Oracle ERP costs. The remaining $12.7 million of costs incurred to date is included in construction in progress within property, plant and equipment. We will continue to make capital expenditures to support and maintain our operations, and may also use our resources to acquire companies, technologies or products that complement our business.

Cash used in financing activities were $87.8 million for the year ended September 30, 2008, primarily due to $90.2 million for treasury share purchases.

At September 30, 2007, we had cash, cash equivalents and marketable securities aggregating $274.6 million. This amount was comprised of $168.2 million of cash and cash equivalents, $80.1 million of investments in short-term marketable securities and $26.3 million of investments in long-term marketable securities.

Cash and cash equivalents were $168.2 million at September 30, 2007, an increase of $52.4 million from September 30, ~~2005.~~2006. This ~~decrease~~increase in cash and cash equivalents was primarily due to proceeds received from the ~~debt repayment~~sale of ~~$175.0 million,~~ the ~~net acquisitions~~software division of ~~Helix and Synetics of $41.4~~$130.4 million and ~~the $18.0 million used for capital additions, partially offset by~~ cash provided by operations of ~~$65.2~~$72.9 million, ~~the~~partially offset by $110.8 million for treasury share purchases, $28.9 million of net ~~sales/maturities~~purchases of marketable securities ~~of $83.1~~and the $20.6 million ~~and $3.7 million of net proceeds from the issuance of common stock.~~used for capital additions.

Cash provided by operations was ~~$65.2~~$72.9 million for the year ended September 30, ~~2006,~~2007, and was primarily attributable to our net income of ~~$25.9~~$151.5 million, adjustments for non-cash depreciation and amortization of ~~$31.7~~$32.8 million and stock-based compensation ~~expense related to common stock and options~~ of ~~$8.3~~$8.7 million, partially offset by the gain on sale of the software division of $81.8 million, a non-cash gain on investment of $5.1 million and changes in our net working capital of ~~$1.2 million, partially offset by discount of marketable securities of $3.0~~$32.7 million. The ~~$1.2~~$32.7 million ~~increase~~decrease in working capital was primarily the result of ~~increased~~decreased accounts payable levels of ~~$22.5~~$14.8 million primarily as a result of ~~higher~~lower inventory purchases, and ~~increased~~decreased accrued ~~compensation and benefits~~expenses of $9.6 million, primarily associated with variable compensation plans. Offsetting changes in working capital included increased accounts receivable balances of $20.5 million and net cash outlays of $10.4 million of restructuring-related spending. The increase in accounts receivable is a result of our increased level of business.$10.8 million.

Cash provided by investing activities was ~~$19.1~~$81.0 million for the year ended September 30, ~~2006,~~2007, and is principally comprised of proceeds on the sale of the software division of $130.4 million, partially offset by net ~~sales/maturities~~purchases of marketable securities of ~~$83.1 million, offset by the net acquisitions of Helix and Synetics of $41.4~~$28.9 million and ~~$18.0~~$20.6 million used for capital additions.

Cash used in financing activities was ~~$171.4~~$103.2 million for the year ended September 30, ~~2006~~2007 from the ~~debt repayment~~treasury share repurchases of ~~$175.0~~$110.8 million, partially offset by ~~$3.6~~$9.3 million due to proceeds from the issuance of stock under our employee stock purchase plan and the exercise of options to purchase our common stock.

While we have no significant capital commitments, as we expand our product offerings, we anticipate that we will continue to make capital expenditures to support our business and improve our computer systems infrastructure. We may also use our resources to acquire companies, technologies or products that complement our business.

At September 30, ~~2006,~~2008, we had approximately $0.7 million of letters of credit outstanding.

Our contractual obligations consist of the following at September 30, 2008 (in thousands):


			Less than		One to		Four to							Less than		One to		Four to
	Total		One Year		Three Years		Five Years		Thereafter		Total			One Year		Three Years		Five Years		Thereafter

Contractual obligations
Operating leases — continuing	$	36,766	$	7,431	$	15,987	$	6,059	$	7,289	$	23,057		$	5,974	$	11,365	$	4,690	$	1,028
Operating leases — exited facilities		25,330		5,180		15,486		4,664		—		16,042	(1)		5,864		10,178		—		—
Pension funding												1,000			1,000		—		—		—
Purchase commitments		99,427		99,427		—		—		—		44,703			44,703		—		—		—

Total contractual obligations	$	161,523	$	112,038	$	31,473	$	10,723	$	7,289	$	84,802		$	57,541	$	21,543	$	4,690	$	1,028


(1)		Amounts do not reflect approximately $4.9 million of contractual sublease income.

We adopted Financial Accounting Standards Board Interpretation No. 48, Accounting for Uncertainty in Income Taxes, as of October 1, 2007. As of September 30, 2008, the total amount of net unrecognized tax benefits for uncertain tax positions and the accrual for the related interest was $11.9 million. Although we anticipate that we will settle approximately $1.0 million of the $11.9 million within the next twelve months, we are unable to make a reasonably reliable estimate for the remaining $10.9 million as to when cash settlement, if any, will occur with a tax authority as the timing of examinations and ultimate resolution of those examinations is uncertain.

In addition, we are a guarantor on a lease in Mexico that expires in January 2013 for approximately $1.6 million.

On November 9, 2007 we announced that our Board of Directors authorized a stock repurchase plan to buy up to $200.0 million of our outstanding common stock. During the year ended September 30, 2008, we purchased 7,401,869 shares of our common stock for a total of $90.2 million in connection with the stock repurchase plan. Management and the Board of Directors will exercise discretion with respect to the timing and amount of any future shares repurchased, if any, based on their evaluation of a variety of factors, including current market conditions. Repurchases may be commenced or suspended at any time without prior notice. The repurchase program has been funded using our available cash resources. Any future repurchases would come from our available cash resources.

We believe that ~~our existing~~we have adequate resources ~~will be adequate~~ to fund our currently planned working capital and capital expenditure requirements for both the short and long-term. ~~In addition, we expect to receive $125 million from the sale of the software division during the second fiscal quarter of 2007.~~ However, the cyclical nature of the semiconductor industry and the current global economic downturn makes it difficult for us to predict future liquidity requirements with certainty. During the current capital market crisis, some companies have experienced difficulties accessing their cash equivalents and marketable securities. We invest our cash in highly rated marketable securities, and to date, we have not experienced any material issues accessing our funds. Further deterioration in the capital markets could impact our ability to access some of our cash resources. 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 ~~fund our expansion,~~ 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. In addition, we are subject to ~~litigation related to~~indemnification obligations in connection with our stock-based compensation restatement with certain former executives which could have an adverse affect on our existing resources.

Recently Enacted Accounting Pronouncements

In ~~May 2005,~~July 2006, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards (“SFAS”) No. 154, “Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20, Accounting Changes and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements” (“SFAS 154”). SFAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to the newly adopted accounting principle. SFAS 154 also provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective application is impracticable. The provisions of this Statement are effective for accounting changes and corrections of errors made in fiscal periods beginning after December 15, 2005.

~~In June 2006, the FASB~~ issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (“FIN No. 48”). FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with ~~FAS~~FASB Statement No. 109, “Accounting for Income ~~Taxes.”~~Taxes”. FIN No. 48 prescribes a ~~two-step process to determine~~recognition threshold and measurement attribute for the ~~amount~~financial statement recognition and measurement of a tax ~~benefit~~position taken or expected to be ~~recognized. First, the~~taken in a tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, the tax position is then assessed to determine the amount of benefit to recognizereturn. FIN No. 48 also provides guidance on de-recognition, classification, interest and penalties, accounting in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50 percent likelihood of being realized upon ultimate settlement. The guidance will become effective as of the beginning of our fiscal year beginning after December 15, 2006.interim periods, disclosure, and transition. We ~~are currently evaluating the potential impact of~~adopted FIN No. 48 on October 1, 2007. The effect of the adoption did not materially affect our financial position ~~and~~or results of operations.

In September 2006, the SEC issued Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”) expressing the Staff’s views regarding the process of quantifying financial statement misstatements. There have been two widely-recognized methods for quantifying the effects of financial statement errors: the “roll-over” method and the “iron curtain” method. The roll-over method focuses primarily on the impact of a misstatement on the income statement, including the reversing effect of prior year misstatements, but its use can lead to the accumulation of misstatements in the balance sheet. The iron-curtain method, on the other hand, focuses primarily on the effect of correcting the period-end balance sheet with less emphasis on the reversing effects of prior year errors on the income statement. SAB 108 establishes an approach that requires quantification of financial statement errors based on the effects of the error on each of our financial statements and the related financial statement disclosures. This model is commonly referred to as a “dual approach” because it essentially requires quantification of errors under both the iron-curtain and the roll-over methods. The provisions of SAB 108 should be applied to annual financial statements covering the first fiscal year ending after November 15, 2006. We are currently evaluating the provisions of SAB 108.

our first quarter of fiscal 2010. The measurement and disclosure requirements related to financial assets and financial liabilities are effective for us beginning in the first quarter of fiscal 2009. We do not believe that the adoption of SFAS 157 will have a material impact on our financial position or results of operations.

In February 2007, the FASB ~~having previously concluded in those accounting pronouncements that~~issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an Amendment of FASB Statement No. 115” (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value and is effective as of the ~~relevant measurement attribute. Accordingly,~~beginning of the Company’s fiscal year beginning October 1, 2008. We do not believe that the adoption of SFAS ~~157 does~~159 will have a material impact on our financial position or results of operations.

In December 2007, the FASB issued SFAS No. 141 (revised 2007), “Business Combinations” (“SFAS 141R”). SFAS 141R significantly changes the accounting for business combinations in a number of areas including the treatment of contingent consideration, pre-acquisition contingencies, transaction costs, restructuring costs and income taxes. SFAS 141R applies prospectively to business combinations for which the acquisition date is on or after the beginning of the fiscal year beginning after December 15, 2008. SFAS 141R will be effective for the Company on October 1, 2009, and will be applied to any business combination with an acquisition date, as defined therein, that is subsequent to the effective date.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — An amendment of ARB No. 51” (“SFAS 160”). SFAS 160 amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. The amount of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. Statement 160 clarifies that changes in a parent’s ownership interest in a subsidiary that do not ~~require any new fair value measurements.~~result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this Statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. SFAS ~~157~~160 is effective for fiscal years beginning after ~~November~~December 15, ~~2007, and interim periods within those fiscal years,~~2008. At this point in time, we believe that there will not be a material impact in connection with ~~earlier adoption permitted. The provisions~~SFAS 160 on our financial position or results of ~~SFAS 157 should be applied prospectively as of the beginning of the fiscal year in which it is initially applied, with limited exceptions. We are currently evaluating the provisions of SFAS 157.~~operations.

In ~~September 2006,~~March 2008, the FASB issued SFAS No. ~~158, “Employers’ Accounting for Defined Benefit Pension~~161, “Disclosures about Derivative Instruments and ~~Other Postretirement Plans, an~~Hedging Activities — An amendment of FASB ~~Statements~~Statement No. ~~87, 88, 106, and 132(R)”~~133” (“SFAS ~~158”~~161”). SFAS ~~158 requires~~161 amends and expands the disclosure requirements of SFAS 133 with the intent to provide users of financial statements with an ~~employer~~enhanced understanding of (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. We do not believe that isthe adoption of SFAS 161 will have a ~~business entity and sponsors one~~material impact on our financial position or ~~more single-employer defined benefit plans to:~~results of operations.

~~a. Recognize~~In April 2008, the ~~funded status~~FASB issuedFSP 142-3, “Determination of the Useful Life of Intangible Assets” (“FSPSFAS 142-3”). FSPSFAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a ~~benefit plan, measured as~~recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). FSPSFAS 142-3 improves the ~~difference~~consistency between ~~plan assets at~~the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R and other applicable accounting literature. FSPSFAS 142-3 will be effective for us on October 1, 2009. We do not believe that the ~~benefit obligation, in its statement~~adoption of FSPSFAS 142-3 will have a material impact on our financial position. For a pension plan, the benefit obligation is the projected benefit obligation; for any other postretirement benefit plan, such as a retiree health care plan, the benefit obligation is the accumulated postretirement benefit obligation.

~~b. Recognize as a component~~position or results of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost pursuant to SFAS No. 87, “Employers’ Accounting for Pensions”,~~or SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions”~~. Amounts recognized in accumulated other comprehensive income, including the gains or losses, prior service costs or credits, and the transition asset or obligation remaining from the initial application of SFAS No. 87 and SFAS No. 106, are adjusted as they are subsequently recognized as components of net periodic benefit cost pursuant to the recognition and amortization provisions of those Statements.operations.

4435

~~c. Measure defined benefit plan assets and obligations as of the date of the employer’s fiscal year-end statement of financial position (with limited exceptions).~~

d. Disclose in the notes to financial statements additional information about certain effects on net periodic benefit cost for the next fiscal year that arise from delayed recognition of the gains or losses, prior service costs or credits, and transition asset or obligation.

An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. Retrospective application is not permitted. We are currently evaluating the provisions of SFAS 158.


Item 7A.	*Quantitative and Qualitative ~~Disclosure~~Disclosures About Market Risk*

~~Our primary~~We are exposed to a variety of market ~~risk exposures are to~~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 our 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. Our short-term and long-term investments consist mostly of highly rated corporate debt securities, and as such, market risk to these investments is not significant. During the year ended September 30, 2008, the unrealized loss on marketable securities, excluding our investment in a Swiss public company, was $1.1 million. A ~~portion~~hypothetical 100 basis point change in interest rates would result in an annual change of ~~our business is conducted outside the United States through foreign subsidiaries which maintain accounting records~~approximately $1.9 million in ~~their local currencies. Consequently, some of our assets~~interest income earned.

Currency Rate Exposure

We have transactions and ~~liabilities are~~balances denominated in currencies other than the U.S. dollar. Most of these transactions or balances are denominated in Euros and a variety of Asian currencies. Sales in currencies other than the U.S. dollar were 15.7% of our total sales for year ended September 30, 2008. We also purchase materials from some suppliers outside of the United ~~Stated~~States that is transacted in currencies other than the U.S. dollar. ~~Fluctuations~~In the year ended September 30, 2008, we recorded foreign exchange losses related to receivables of $0.7 million, and foreign exchange losses of $2.8 million related to payables due to the general weakening of the U.S. dollar in ~~foreign~~this period. If currency exchange rates ~~affect~~had been 10% different throughout the ~~carrying amount~~year ended September 30, 2008 compared to the currency exchange rates actually experienced, the impact on our loss for the year would have been approximately $2.9 million. The changes in currency exchange rates relative to the U.S. dollar during the year ended September 30, 2008 compared to the currency exchange rates at September 30, 2007 resulted in a decrease in net assets of ~~these assets and liabilities and our operating results. We do~~$0.1 million that we reported as a separate component of comprehensive income. The impact of a hypothetical 10% change in foreign exchange rates at September 30, 2008 is not ~~enter into market risk sensitive instruments to hedge these exposures.~~considered material.

4536


Item 8.	*Financial Statements and Supplementary Data*


Report of Independent Registered Public Accounting Firm			4738
Consolidated Balance Sheets as of September 30, ~~2006~~2008 and ~~2005~~2007			4939
Consolidated Statements of Operations for the three years ended September 30, ~~2006, 2005~~2008, 2007 and ~~2004~~2006			5040
Consolidated Statements of Cash Flows for the three years ended September 30, ~~2006, 2005~~2008, 2007 and ~~2004~~2006			5141
Consolidated Statements of Changes in Stockholders’ Equity for the three years ended September 30, ~~2006, 2005~~2008, 2007 and ~~2004~~2006			5242
Notes to Consolidated Financial Statements			5343

4637

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders

of Brooks Automation, Inc.:

We have completed integrated audits of Brooks Automation, Inc.’s 2006 and 2005 consolidated financial statements and of its internal control over financial reporting as of September 30, 2006 and an audit of its 2004 consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Our opinions, based on our audits, are presented below.

~~Consolidated financial statements~~

In our opinion, the consolidated financial statements listed in the accompanying index present fairly, in all material respects, the financial position of Brooks Automation, Inc. and its subsidiaries at September 30, ~~2006~~2008 and ~~2005,~~2007, and the results of their operations and their cash flows for each of the three years in the period ended September 30, ~~2006~~2008 in conformity with accounting principles generally accepted in the United States of America. ~~These~~Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2008, based on criteria established inInternal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, ~~are the responsibility~~for maintaining effective internal control over financial reporting and for its assessment of the ~~Company’s management.~~effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express ~~an opinion~~opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits ~~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~~audits to obtain reasonable assurance about whether the financial statements are free of material ~~misstatement. An audit~~misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements ~~includes~~included 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 provide a reasonable basis for our ~~opinion.~~opinions.

As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for share-based compensation in fiscal 2006.

~~Internal control over financial reporting~~

Also, in our opinion, management’s assessment, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A, that the Company maintained effective internal control over financial reporting as of September 30, 2006 based on criteria established in~~Internal Control — Integrated Framework~~issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), is fairly stated, in all material respects, based on those criteria. Furthermore, in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of September 30, 2006, based on criteria established in~~Internal Control — Integrated Framework~~issued by the COSO. The Company’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. Our responsibility is to express opinions on management’s assessment and on the effectiveness of the Company’s internal control over financial reporting based on our audit. We conducted our audit of internal control over financial reporting 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. An audit of internal control over financial reporting includes obtaining an understanding of internal control over financial reporting, evaluating management’s assessment, testing and evaluating the design and operating effectiveness of internal control, and performing such other procedures as we consider necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinions.

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.

As described in Management’s Report on Internal Control Over Financial Reporting, management has excluded Helix Technology Corporation (“Helix”) and Synetics Solutions Inc. (“Synetics”) from its assessment of internal control over financial reporting as of September 30, 2006 because those entities were acquired by the Company in purchase business combinations during fiscal 2006. We have also excluded Helix and Synetics from our audit of internal control over financial reporting. The total assets and total revenues of the acquired businesses of Helix and Synetics represent 18% and 30%, respectively, of the related consolidated financial statement amounts as of and for the year ended September 30, 2006.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Boston, Massachusetts

~~December 13, 2006~~November 26, 2008

4838

BROOKS AUTOMATION, INC.

CONSOLIDATED BALANCE SHEETS


		September 30,			September 30,				September 30,			September 30,
		2006			2005				2008			2007
		(In thousands, except share and per share data)							(In thousands, except share and per share data)

ASSETS	ASSETS							ASSETS
Current assets
Cash and cash equivalents		$	115,773		$	202,462			$	110,269		$	168,232
Marketable securities			68,280			121,561				33,077			80,102
Accounts receivable, net			127,195			77,555				66,844			105,904
Insurance receivable for litigation										8,772			—
Inventories, net			99,854			48,434				105,901			104,794
Current assets from discontinued operations			—			55
Prepaid expenses and other current assets			21,710			18,259				13,783			20,489

Total current assets			432,812			468,326				338,646			479,521
Property, plant and equipment, net			78,833			54,165				81,604			80,747
Long-term marketable securities			7,307			32,935				33,935			26,283
Goodwill			351,444			62,094				119,979			319,302
Intangible assets, net			94,067			3,828				58,452			76,964
Equity investment in Ulvac Cryogenics, Inc.			21,489			—
Equity investment in joint ventures										26,309			24,007
Other assets			6,625			2,732				4,713			8,014

Total assets		$	992,577		$	624,080			$	663,638		$	1,014,838


LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS’ EQUITY	LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS’ EQUITY							LIABILITIES, MINORITY INTERESTS AND STOCKHOLDERS’ EQUITY
Current liabilities
Current portion of long-term debt		$	11		$	12
Short-term debt			—			175,000
Accounts payable			69,392			30,820			$	37,248		$	57,758
Deferred revenue			26,119			22,143				3,553			5,424
Accrued warranty and retrofit costs			11,608			9,782				8,174			10,986
Accrued compensation and benefits			27,712			15,886				18,174			23,850
Accrued restructuring costs			7,254			12,171				7,167			6,778
Accrued income taxes payable			17,773			17,331				3,151			5,934
Current liabilities from discontinued operations			—			399
Accrual for litigation settlement										7,750			—
Accrued expenses and other current liabilities			20,310			16,551				17,634			21,908

Total current liabilities			180,179			300,095				102,851			132,638
Long-term debt			2			2
Accrued long-term restructuring			9,289			10,959				5,496			8,933
Income taxes payable										10,649			10,159
Other long-term liabilities			3,579			2,129				2,238			2,866

Total liabilities			193,049			313,185				121,234			154,596

Commitments and contingencies (Note 19)
Minority interests			394			1,060				409			463

Stockholders’ equity
Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued and outstanding at September 30, 2006 and 2005, respectively			—			—
Common stock, $0.01 par value, 125,000,000 shares authorized, 75,431,592 and 45,434,709 shares issued and outstanding at September 30, 2006 and 2005, respectively			754			454
Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued and outstanding at September 30, 2008 and 2007										—			—
Common stock, $0.01 par value, 125,000,000 shares authorized, 77,044,737 shares issued and 63,582,868 shares outstanding at September 30, 2008, 76,483,603 shares issued and 70,423,603 shares outstanding at September 30, 2007										770			765
Additional paid-in capital			1,763,247			1,307,145				1,788,891			1,780,401
Deferred compensation			—			(3,493	)
Accumulated other comprehensive income			15,432			11,958				18,063			18,202
Treasury stock at cost, 13,461,869 shares and 6,060,000 shares at September 30, 2008 and 2007, respectively										(200,956	)		(110,762	)
Accumulated deficit			(980,299	)		(1,006,229	)			(1,064,773	)		(828,827	)

Total stockholders’ equity			799,134			309,835				541,995			859,779

Total liabilities, minority interests and stockholders’ equity		$	992,577		$	624,080			$	663,638		$	1,014,838

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

4939

BROOKS AUTOMATION, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS


	Year Ended September 30,									Year Ended September 30,
	2006			2005			2004			2008			2007		2006
	(In thousands, except per share data)									(In thousands, except per share data)

Revenues
Product	$	514,294		$	338,072		$	402,252		$	411,653		$	625,405	$	494,797
Services		178,576			125,674			132,801			114,713			117,853		112,697

Total revenues		692,870			463,746			535,053			526,366			743,258		607,494

Cost of revenues
Product		345,592			239,024			244,894			304,961			431,586		329,658
Services		102,494			64,586			90,493			94,577			92,077		91,186

Total cost of revenues		448,086			303,610			335,387			399,538			523,663		420,844

Gross profit		244,784			160,136			199,666			126,828			219,595		186,650

Operating expenses
Research and development		70,671			63,115			66,266			42,924			51,715		45,643
Selling, general and administrative		141,032			84,797			90,227			110,516			120,421		117,221
Impairment charges											203,570			—		—
Restructuring charges		5,297			16,542			5,356			7,287			7,108		4,257

Total operating expenses		217,000			164,454			161,849			364,297			179,244		167,121

Income (loss) from continuing operations		27,784			(4,318	)		37,817
Operating income (loss) from continuing operations											(237,469	)		40,351		19,529
Interest income		13,715			9,284			4,984			7,403			11,897		13,715
Interest expense		9,384			9,469			9,492			407			583		9,384
Equity in earnings of Ulvac Cryogenics, Inc.		985			—			—
Gain (loss) on investment											(3,940	)		5,110		—
Other (income) expense, net		3,193			(1,752	)		911			1,739			1,139		(207	)

Income (loss) from continuing operations before income taxes and minority interests		29,907			(2,751	)		32,398
Income (loss) from continuing operations before income taxes, minority interests and equity in earnings of joint ventures											(236,152	)		55,636		24,067
Income tax provision		4,732			5,204			8,053			1,233			2,287		3,372

Income (loss) from continuing operations before minority interests		25,175			(7,955	)		24,345
Minority interests in income (loss) of consolidated subsidiary		(666	)		141			211
Income (loss) from continuing operations before minority interests and equity in earnings of joint ventures											(237,385	)		53,349		20,695
Minority interests in income (loss) of consolidated subsidiaries											(53	)		68		(666	)
Equity in earnings of joint ventures											707			1,020		985

Income (loss) from continuing operations		25,841			(8,096	)		24,134			(236,625	)		54,301		22,346
Discontinued operations:
Income (loss) from operations		89			(3,492	)		(9,475	)
Loss on disposal		—			(24	)		—
Income from discontinued operations, net of income taxes											—			13,273		3,584
Gain on sale of discontinued operations, net of income taxes											679			83,898		—

Income (loss) from discontinued operations, net of income taxes		89			(3,516	)		(9,475	)
Income from discontinued operations, net of income taxes											679			97,171		3,584

Net income (loss)	$	25,930		$	(11,612	)	$	14,659		$	(235,946	)	$	151,472	$	25,930

Basic income (loss) per share from continuing operations	$	0.36		$	(0.18	)	$	0.56		$	(3.67	)	$	0.74	$	0.31
Basic income (loss) per share from discontinued operations		0.00			(0.08	)		(0.22	)
Basic income per share from discontinued operations											0.01			1.32		0.05

Basic net income (loss) per share	$	0.36		$	(0.26	)	$	0.34		$	(3.66	)	$	2.06	$	0.36

Diluted income (loss) per share from continuing operations	$	0.36		$	(0.18	)	$	0.55		$	(3.67	)	$	0.73	$	0.31
Diluted income (loss) per share from discontinued operations		0.00			(0.08	)		(0.22	)
Diluted income per share from discontinued operations											0.01			1.31		0.05

Diluted net income (loss) per share	$	0.36		$	(0.26	)	$	0.34		$	(3.66	)	$	2.04	$	0.36

Shares used in computing earnings (loss) per share
Basic		72,323			44,919			43,006			64,542			73,492		72,323
Diluted		72,533			44,919			43,573			64,542			74,074		72,533

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

5040

BROOKS AUTOMATION, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Year ended September 30,									Year Ended September 30,
	2006			2005			2004			2008			2007			2006
	(In thousands)									(In thousands)

Cash flows from operating activities
Net income (loss)	$	25,930		$	(11,612	)	$	14,659		$	(235,946	)	$	151,472		$	25,930
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		31,664			16,351			17,541			34,538			32,801			31,664
Impairment of assets		—			—			7,421			203,570			—			—
Stock-based compensation		8,287			3,640			4,824			6,909			8,743			8,287
Discount on marketable securities		(3,012	)		(1,936	)		—
Amortization of discount on marketable securities											(830	)		(1,531	)		(3,012	)
Amortization of debt issuance costs		2,237			839			839			—			—			2,237
Undistributed earnings of joint venture		(985	)		—			—
Undistributed earnings of joint ventures											(707	)		(1,020	)		(985	)
Dividends from equity investment											—			286			—
Minority interests		(666	)		141			211			(53	)		68			(666	)
Loss on disposal of long-lived assets		534			178			505			1,070			1,672			534
Changes in operating assets and liabilities, net of acquired assets and liabilities:
Gain on sale of software division, net											(679	)		(81,813	)		—
(Gain) loss on investment											3,940			(5,110	)		—
Changes in operating assets and liabilities, net of acquisitions and disposals:
Accounts receivable		(20,466	)		47,922			(53,960	)		38,612			(841	)		(20,466	)
Inventories		(1,459	)		23,933			(17,744	)		(610	)		(4,473	)		(1,459	)
Prepaid expenses and other assets		2,575			(3,048	)		8,376
Prepaid expenses and other current assets											5,790			(4,096	)		2,575
Accounts payable		22,513			(14,202	)		17,967			(20,601	)		(14,759	)		22,513
Deferred revenue		3,705			(12,718	)		(91	)		(1,892	)		2,295			3,705
Accrued warranty and retrofit costs		540			(2,104	)		231			(2,772	)		(646	)		540
Accrued compensation and benefits		9,553			(9,847	)		10,621			(5,839	)		(2,724	)		9,553
Accrued restructuring costs		(10,364	)		3,300			(9,123	)		(3,089	)		(882	)		(10,364	)
Accrued expenses and other liabilities		(5,394	)		(9,723	)		6,578
Accrued expenses and other current liabilities											(7,755	)		(6,569	)		(5,394	)

Net cash provided by operating activities		65,192			31,114			8,855			13,656			72,873			65,192

Cash flows from investing activities
Purchases of property, plant and equipment		(17,954	)		(11,704	)		(8,203	)		(23,439	)		(20,618	)		(17,954	)
Purchases of intangible assets		(3,000	)		—			—			(75	)		(15	)		(3,000	)
Proceeds from the sale of software division											1,918			130,393			—
Acquisition of Helix Technology Corporation, cash acquired net of expenses		8,805			—			—			—			—			8,805
Acquisition of Synetics Solutions Inc., net of cash acquired		(50,182	)		—			—			—			(38	)		(50,182	)
Acquisition of Keystone Electronics (Wuxi) Co., cash acquired net of expenses											(1,000	)		162			—
Investment in Yaskawa Brooks Automation, Inc. joint venture		(1,955	)		—			—			—			—			(1,955	)
Purchases of marketable securities		(851,884	)		(635,683	)		(231,687	)		(151,231	)		(391,748	)		(851,884	)
Sale/maturity of marketable securities		934,961			618,453			169,141			190,592			362,833			934,961
Dividends from equity investment		281			—			—
Proceeds from sale of long-lived assets		—			1,294			—
Other											—			—			281

Net cash provided by (used in) investing activities		19,072			(27,640	)		(70,749	)
Net cash provided by investing activities											16,765			80,969			19,072

Cash flows from financing activities
Treasury stock purchases											(90,194	)		(110,762	)		—
Payments of short- and long-term debt and capital lease obligations		(175,015	)		(11	)		(98	)		—			(1,740	)		(175,015	)
Proceeds from issuance of common stock, net of issuance costs		3,659			5,313			130,203
Issuance of common stock under stock option and stock purchase plans											2,391			9,303			3,659

Net cash provided by (used in) financing activities		(171,356	)		5,302			130,105
Net cash used in financing activities											(87,803	)		(103,199	)		(171,356	)

Effects of exchange rate changes on cash and cash equivalents		403			405			71			(581	)		1,816			403

Net increase (decrease) in cash and cash equivalents		(86,689	)		9,181			68,282			(57,963	)		52,459			(86,689	)
Cash and cash equivalents, beginning of year		202,462			193,281			124,999			168,232			115,773			202,462

Cash and cash equivalents, end of year	$	115,773		$	202,462		$	193,281		$	110,269		$	168,232		$	115,773

Supplemental disclosures:
Cash paid during the year for interest	$	9,932		$	8,603		$	8,653		$	407		$	724		$	9,932
Cash paid during the year for income taxes, net of refunds	$	6,280		$	3,696		$	2,237		$	2,167		$	5,760		$	6,280
Non-cash transactions:
Acquisition of Helix Technology, net of transaction costs	$	447,949		$	—		$	—		$	—		$	—		$	447,949

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

5141

BROOKS AUTOMATION, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY


														Accumulated																						Accumulated
														Other																						Other
	Common		Common		Additional									Comprehensive						Total			Common		Common		Additional									Comprehensive									Total
	Stock		Stock at		Paid-In			Deferred			Comprehensive			Income			Accumulated			Stockholders’			Stock		Stock at		Paid-In			Deferred			Comprehensive			Income			Accumulated			Treasury			Stockholders’
	Shares		par Value		Capital			Compensation			Income (Loss)			(Loss)			Deficit			Equity			Shares		par Value		Capital			Compensation			Income (Loss)			(Loss)			Deficit			Stock			Equity
	(In thousands, except share data)																						(In thousands, except share data)

Balance September 30, 2003		37,266,181	$	373	$	1,165,427		$	(6,084	)				$	12,390		$	(1,009,276	)	$	162,830
Shares issued under stock option and purchase plans		487,161		5		5,917															5,922
Common stock offering		6,900,000		69		124,213															124,282
Common stock issued in acquisitions		38,502		—		1,181															1,181
Deferred compensation, net of forfeitures						(188	)		188												—
Amortization of deferred compensation									4,052												4,052
Comprehensive income (loss):
Net income											$	14,659						14,659			14,659
Currency translation adjustments												928			928						928
Unrealized loss on marketable securities												(959	)		(959	)					(959	)

Comprehensive income											$	14,628

Balance September 30, 2004		44,691,844		447		1,296,550			(1,844	)					12,359			(994,617	)		312,895
Shares issued under stock option and purchase plans		708,432		7		5,306															5,313
Common stock issued in acquisitions		34,433		—		628															628
Deferred compensation, net of forfeitures						4,661			(4,661	)											—
Amortization of deferred compensation									3,012												3,012
Comprehensive income (loss):
Net loss											$	(11,612	)					(11,612	)		(11,612	)
Currency translation adjustments												353			353						353
Unrealized loss on marketable securities												(754	)		(754	)					(754	)

Comprehensive loss											$	(12,013	)

Balance September 30, 2005		45,434,709		454		1,307,145			(3,493	)					11,958			(1,006,229	)		309,835			45,434,709	$	454	$	1,307,145		$	(3,493	)				$	11,958		$	(1,006,229	)	$	—		$	309,835
Shares issued under stock option and purchase plans		975,519		10		3,649															3,659
Shares issued under stock option and purchase plans, net																								975,519		10		3,649																		3,659
Common stock issued in acquisitions		29,021,364		290		447,659															447,949			29,021,364		290		447,659																		447,949
Reclassification of deferred compensation upon adoption of SFAS 123R						(3,493	)		3,493												—							(3,493	)		3,493															—
Stock-based compensation						8,287															8,287							8,287																		8,287
Comprehensive income (loss):
Net income											$	25,930						25,930			25,930												$	25,930						25,930						25,930
Currency translation adjustments												2,626			2,626						2,626													2,626			2,626									2,626
Unrealized gain on marketable securities												848			848						848
Changes in unrealized gain on marketable securities																																		848			848									848

Comprehensive income											$	29,404																					$	29,404

Balance September 30, 2006		75,431,592	$	754	$	1,763,247		$	—					$	15,432		$	(980,299	)	$	799,134			75,431,592		754		1,763,247			—						15,432			(980,299	)		—			799,134
Shares issued under stock option, restricted stock and purchase plans, net																								1,052,011		11		8,411																		8,422
Stock-based compensation																												8,743																		8,743
Repurchase of stock																																											(110,762	)		(110,762	)
Comprehensive income (loss):
Net income																																	$	151,472						151,472						151,472
Currency translation adjustments																																		3,482			3,482									3,482
Changes in unrealized loss on marketable securities																																		(824	)		(824	)								(824	)
Adjustment to adopt SFAS No. 158																																					112									112

Comprehensive income																																	$	154,130

Balance September 30, 2007																								76,483,603		765		1,780,401			—						18,202			(828,827	)		(110,762	)		859,779
Shares issued under stock option, restricted stock and purchase plans, net																								561,134		5		1,581																		1,586
Stock-based compensation																												6,909																		6,909
Repurchase of stock																																											(90,194	)		(90,194	)
Comprehensive income (loss):
Net loss																																	$	(235,946	)					(235,946	)					(235,946	)
Currency translation adjustments																																		(125	)		(125	)								(125	)
Changes in unrealized gain on marketable securities																																		962			962									962
Actuarial loss arising in the year																																					(976	)								(976	)

Comprehensive loss																																	$	(235,109	)

Balance September 30, 2008																								77,044,737	$	770	$	1,788,891		$	—					$	18,063		$	(1,064,773	)	$	(200,956	)	$	541,995

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

5242

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.	Nature of the Business

Brooks Automation, Inc. (“Brooks” or the “Company”) is a leading ~~supplier~~provider of ~~technology products~~automation, vacuum and instrumentation solutions ~~primarily serving the worldwide semiconductor market. Brooks supplies hardware, software~~ and ~~services~~is a highly valued business partner to ~~both chip manufacturers and~~ original equipment manufacturers ~~or OEMs, who make~~(OEM) and equipment users throughout the world. The Company serves markets where equipment productivity and availability is a critical factor for its customers’ success. The Company’s largest served market is the semiconductor ~~device~~ manufacturing ~~equipment. Brooks has offerings ranging from individual hardware and software modules~~industry. The Company also provides unique solutions to fully integrated systems as well as services to install and support our products world-wide. Although Brooks’ core business addresses the increasingly complex automation and integrated subsystems requirements of the global semiconductor industry, Brooks provides solutions for a number of related industries, including the flat panel display manufacturing,customers in data storage, advanced display, analytical instruments and ~~certain other industries which have complex~~solar markets. The Company develops and delivers differentiated solutions that range from proprietary products to highly respected manufacturing ~~environments.~~services.


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 ~~we exercise~~the Company exercises significant influence but dodoes not control and ~~are~~is not the primary beneficiary are accounted for using the equity method.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles 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 revenues and expenses during the reporting period. Significant estimates are associated with accounts receivable, inventories, intangible assets, goodwill, deferred income taxes and warranty obligations. 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, net” when incurred. Net foreign currency transaction ~~gains (losses)~~losses included in income (loss) before income taxes and minority interest totaled ~~$(0.5)~~$3.5 million, ~~$0.4~~$3.2 million and ~~$(0.4)~~$0.5 million for the years ended September 30, ~~2006, 2005~~2008, 2007 and ~~2004,~~2006, respectively. Fornon-U.S. subsidiaries, assets and liabilities are translated at period-end exchange rates, and income statement items are translated at the average exchange rates for the period. The local currency for all foreign subsidiaries is considered to be the functional currency and, accordingly, translation adjustments are reported in “Accumulated other comprehensive income”. Foreign currency translation adjustments are one of the components ~~added to the Company’s net income (loss)~~ in the calculation of comprehensive net income (loss).

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, ~~2006~~2008 and ~~2005,~~2007, cash equivalents were ~~$16.5~~$37.3 million and ~~$111.3~~$58.7 million, respectively. Cash equivalents are held at cost which approximates fair ~~value.~~value due to their short-term maturities and varying interest rates.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of trade receivables and temporary and long-term cash investments in treasury bills and commercial ~~paper. The~~

5343

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

paper. The Company restricts its investments to repurchase agreements with major banks, U.S. government and corporate securities, and mutual funds that invest in U.S. government ~~securities, which are subject to minimal credit and market risk.~~securities. 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 ~~twenty~~ten largest customers account for approximately ~~55%~~52% of ~~revenues.~~revenues for the year ended September 30, 2008. The Company regularly monitors the creditworthiness of its customers and believes that it has adequately provided for exposure to potential credit losses.

Accounts Receivable and Allowance for Doubtful Accounts

Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in its existing accounts receivable. The Company determines the allowance based on historical write-off experience by customer. The Company reviews its allowance for doubtful accounts quarterly. Past due balances over 90 days and over a specified amount are reviewed individually for collectibility. All other balances are reviewed on a pooled basis by type of receivable. Account balances are charged off against the allowance when the Company feels it is probable the receivable will not be recovered. The Company does not have any off-balance-sheet credit exposure related to its customers.

Inventories

Inventories are stated at the lower of cost or market, cost being determined using ~~the~~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 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:


Buildings			20 - 40 years
Computer equipment and software			2 - 67 years
Machinery and equipment			2 - 10 years
Furniture and fixtures			3 - 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 periodically evaluates the recoverability of long-lived assets, including its intangible assets, whenever events and changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. This periodic review may result in an adjustment of estimated depreciable lives or an asset impairment. When indicators of impairment are present, the carrying values of the asset are evaluated in relation to their operating performance and future undiscounted cash flows of the underlying business. If the future undiscounted cash flows are less than their book value, an impairment exists. The impairment is measured as the difference between the book value and the fair value of the underlying asset. Fair values are based on estimates of market prices and assumptions concerning the amount and timing of estimated future cash flows and assumed discount rates, reflecting varying degrees of perceived risk. See Note 5.

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

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 profit (loss).

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Intangible Assets and Goodwill

Patents include capitalized direct costs associated with obtaining patents as well as assets that were acquired as a part of purchase business combinations. Capitalized patent costs are amortized using the straight-line method over the estimated economic life of the patents. As of September 30, ~~2006~~2008 and ~~2005,~~2007, the net book value of the Company’s patents was ~~$3.1~~$0.1 million and ~~$0.2~~$2.7 million, respectively.

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 as required under the provisions of FAS 142 on September 30 of each fiscal year unless interim indicators of impairment exist (see Note 6).

The amortizable lives of intangible assets, including those identified as a result of purchase accounting, are summarized as follows:


Patents			3 - 8 years
Completed technology			2 - 10 years
License agreements			5 years
Trademarks and trade names			3 - 6 years
Non-competition agreements			3 - 5 years
Customer relationships			4 - 11 years

Revenue Recognition

Revenue from product sales that do not include significant customization is recorded upon delivery and transfer of risk of loss to the customer provided there is evidence of an arrangement, fees are fixed or determinable, collection of the related receivable is reasonably assured and, if applicable, customer acceptance criteria have been successfully demonstrated. Customer acceptance provisions include final testing and acceptance carried out prior to shipment. These pre-shipment testing and acceptance procedures ensure that the product meets the published specification requirements before the product is shipped. In the limited situations where the arrangement contains extended payment terms, revenue is recognized as the payments become due. ~~Shipping terms are customarily FCA shipping point. Amounts charged to customers for costs incurred for shipping and handling are credited to cost of revenues where the associated costs are charged.~~ When significant on site customer acceptance provisions are present in the arrangement, revenue is recognized upon completion of customer acceptance testing.

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

contracts provide for progress billing based on completion of certain phases of work. For maintenance contracts, service revenue is deferred based on vendor specific objective evidence of its fair value and isgenerally recognized ratably over the term of the ~~maintenance~~ contract. ~~Deferred revenue primarily relates to~~Revenue from repair services ~~and maintenance agreements and billings in excess~~or upgrades of ~~revenue~~customer-owned equipment is recognized ~~on long term contracts accounted for using thepercentage-of-completion~~ ~~method and contracts awaiting final customer acceptance.~~

~~In transactions that include multiple productsand/or~~ ~~services, such as tailored software arrangements, described above, or software sales with post-contract support, we allocate the sales value among each~~upon completion of the ~~elements based on their relative fair values~~repair effort and ~~recognize such revenue when each element is delivered. If these relative fair values are not known,~~upon the ~~Company uses the residual method to recognize revenue from arrangements with one or more elements to be delivered at a future date, when evidence~~shipment of the ~~fair value of all undelivered elements exist. Under~~repaired item back to the ~~residual method,~~customer. In instances where the ~~fair value of any the undelivered elements at the date of delivery, such as post-contract support, are deferred and the remaining portion of the total arrangement fee~~repair or upgrade includes installation, revenue is recognized ~~as revenue. The Company determines fair value of undelivered services based on the prices that are charged~~ when the ~~same element~~installation is ~~sold separately to customers.~~completed.

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’s estimate of the level of future claims.

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Research and Development Expenses

Research and development costs are charged to expense when incurred, except for certain software development costs. Software development costs are expensed prior to establishing technological feasibility and capitalized thereafter until the product is available for general release to customers. Capitalized software development costs are amortized to cost of sales on a~~product-by-product~~ ~~basis over the estimated lives of the related products, typically three years. The Company did not capitalize any such costs during fiscal 2006, 2005 or 2004.~~incurred.

Stock-Based Compensation

Effect of Adoption of SFAS 123R, Share-Based Payment

Prior to October 1, 2005, the Company’s employee stock compensation plans were accounted for in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees” (“APB 25”) and related interpretations. Under this method, no compensation expense was recognized as long as the exercise price equaled or exceeded the market price of the underlying stock on the measurement date of the grant. The Company elected the disclosure-only alternative permitted under SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS 123”), as amended by SFAS No. 148, “Accounting for Stock-Based Compensation — Transition and Disclosure” (SFAS 148”), for fixed stock-based awards to employees.

On December 23, 2004, the Company accelerated the vesting of certain unvested stock options awarded to employees, officers and other eligible participants under the Company’s various stock option plans, other than its 1993 Non-Employee Director Stock Option Plan. As such, the Company fully vested options to purchase 1,229,239 shares of the Company’s common stock with exercise prices greater than or equal to $24.00 per share. The acceleration of the vesting of these options resulted in a charge based on generally accepted accounting principles of approximately $1.0 million. The Company took this action because it produced a more favorable impact on the Company’s results from operations in light of the effective date of SFAS 123R, which took place in the Company’s first fiscal quarter of 2006.

As of October 1, 2005, the Company adopted Statement of Financial Accounting Standards No. 123 (revised 2004), “Share-Based Payment” (“SFAS ~~123R~~123R”) using the modified prospective method, which requires measurement of compensation cost for all stock awards at fair value on date of grant and recognition of

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

compensation 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 quoted price of the Company’s common stock over the exercise price of the restricted stock on the date of grant, and the fair value of stock options is determined using the Black-Scholes valuation model, which is consistent with our valuation techniques previously utilized for options in footnote disclosures required under SFAS 123, as amended by SFAS 148. Such value is 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~~The Company considers many factors when estimating expected forfeitures, including types of awards, employee class, and historical experience. Actual results, and future changes in estimates, may differ substantially from our current estimates. ~~Prior periods have not been restated to incorporate the stock-based compensation charge.~~Restricted stock with market-based vesting criteria is valued using a lattice model.

The following table reflects compensation expense recorded during the ~~year~~years ended September 30, 2008, 2007 and 2006 in accordance with SFAS 123R, which includes activity related to the discontinued software and SELS divisions (in thousands):


	Year Ended		Year Ended September 30,
	September 30, 2006		2008		2007		2006

Stock options	$	4,769	$	837	$	2,266	$	4,769
Restricted stock		2,714		5,443		5,763		2,714
Employee stock purchase plan		804		629		714		804

	$	8,287	$	6,909	$	8,743	$	8,287

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Valuation Assumptions for Stock Options and Employee Stock Purchase Plans

~~For~~No stock options were granted for the years ended September 30, 2008 and 2007. For the year ended September 30, 2006, ~~2005 and 2004,~~ 217,000 ~~652,250 and 2,486,159~~ stock options were ~~granted, respectively.~~granted. The fair value of each option was estimated on the date of grant using the Black-Scholes option-pricing model with the following assumptions:

Year Ended September 30,
2006 2005 2004

Risk-free interest rate 4.4 % 3.3% - 4.0% 2.6% - 3.3%
Volatility 55 % 65 % 60 %
Expected life (years) 4.9 4.0 4.0
Dividend yield 0 % 0 % 0 %


	Year Ended
	September 30,
	2006

Risk-free interest rate		4.4	%
Volatility		55	%
Expected life (years)		4.9
Dividend yield		0	%

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:


	Year Ended September 30,									Year Ended September 30,
	2006			2005			2004			2008			2007			2006

Risk-free interest rate		4.5	%		3.2	%		1.6	%		2.8	%		5.1	%		4.5	%
Volatility		39	%		39	%		55	%		46	%		34	%		39	%
Expected life		6 months			6 months			6 months			6 months			6 months			6 months
Dividend yield		0	%		0	%		0	%		0	%		0	%		0	%

Expected volatilities are based on historical volatilities of our 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 our historical exercise patterns; and the 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.

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~Fair Value Disclosures — Prior to SFAS 123R Adoption~~

The following table provides supplemental information for the years ended September 30, 2005 and 2004 as if stock-based compensation had been computed under SFAS 123 (in thousands, except per share data):

Year Ended September 30,
2005 2004

Net income (loss), as reported $ (11,612 ) $ 14,659
Add stock-based employee compensation expense included in reported net income (loss) 3,012 4,052
Deduct pro forma stock-based compensation expense 24,319 21,889

Pro forma net loss $ (32,919 ) $ (3,178 )

Earnings (loss) per share
Basic earnings (loss) per share, as reported $ (0.26 ) $ 0.34

Diluted earnings (loss) per share, as reported $ (0.26 ) $ 0.34

Basic loss per share, pro forma $ (0.73 ) $ (0.07 )

Diluted loss per share, pro forma $ (0.73 ) $ (0.07 )

Equity Incentive Plans

The Company’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’s stock, restricted stock and other equity incentives. Stock options generally have a vesting period of 4four years and are exercisable for a period not to exceed 7seven years from the date of issuance. Restricted stock awards generally vest over ~~one~~two to four ~~years.~~years, with certain restricted stock awards vesting immediately. At September 30, ~~2006,~~2008, a total of ~~5,972,077~~6,708,594 shares were reserved and available for the issuance of ~~stock and restricted stock, which reflects an increase of 3,000,000 shares approved by~~awards under the ~~shareholders in March 2006.~~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’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. Statement of Financial Accounting Standards No. 109 “Accounting for Income Taxes,” requires the Company to establish a valuation allowance if the likelihood of realization of the deferred tax assets is reduced based on an evaluation of objective verifiable evidence. Significant management judgment is required in determining the Company’s provision for income taxes, the

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Company’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.

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

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

of common shares and dilutive common equivalent shares assumed outstanding during the period. Shares used to compute diluted earnings (loss) per share exclude common share equivalents if their inclusion would have an anti-dilutive effect.

Fair Value of Financial Instruments

The Company’s financial instruments ~~consist of~~include cash and cash equivalents, ~~investments in long- and short-term debt 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, ~~2006~~2008 and ~~2005. The Company’s financial instruments~~2007. Investments in marketable securities are carried at ~~September 30, 2005 also included its convertible notes, which were paid in full in July 2006. At September 30, 2005, the estimated~~ fair value ~~of the Company’s convertible notes was approximately $169.3 million compared to the carrying value of $175.0 million. The estimated fair value of the convertible notes is~~and are measured based on ~~the~~ quoted market ~~price of the convertible notes on September 30, 2005.~~prices.

Reclassifications

Certain reclassifications have been made in the ~~2005~~2007 and ~~2004 Consolidated Financial Statements~~2006 consolidated financial statements to conform to the ~~2006~~2008 presentation.

Recent Accounting Pronouncements

~~In June 2006, the FASB issued FASB Interpretation~~FIN No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (“FIN No. 48”). FIN No. 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with ~~FAS~~FASB Statement No. 109, “Accounting for Income ~~Taxes.”~~Taxes”. FIN No. 48 prescribes a ~~two-step process to determine~~recognition threshold and measurement attribute for the ~~amount~~financial statement recognition and measurement of a tax ~~benefit~~position taken or expected to be ~~recognized. First, the~~taken in a tax position must be evaluated to determine the likelihood that it will be sustained upon external examination. If the tax position is deemed “more-likely-than-not” to be sustained, the tax position is then assessed to determine the amount of benefit to recognizereturn. FIN No. 48 also provides guidance on de-recognition, classification, interest and penalties, accounting in the financial statements. The amount of the benefit that may be recognized is the largest amount that has a greater than 50 percent likelihood of being realized upon ultimate settlement. The guidance will become effective as of the beginning of the Company’s fiscal year beginning after December 15, 2006.interim periods, disclosure, and transition. The Company ~~is currently evaluating the potential impact of~~adopted FIN No. 48 on ~~its financial position and results of operations.~~

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~SAB 108 establishes an approach that requires quantification of financial statement errors based on the effects of the error on each of~~adoption did not materially affect the Company’s financial ~~statements and the related financial statement disclosures. This model is commonly referred to as a “dual approach” because it essentially requires quantification~~position or results of errors under both the iron-curtain and the roll-over methods. The provisions of SAB 108 should be applied to annual financial statements covering the first fiscal year ending after November 15, 2006. The Company is currently evaluating the provisions of SAB 108.operations.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles ~~(“GAAP”)~~ and expands disclosures about fair value measurements. In February 2008, the FASB issuedFSP 157-1, “Application of FASB Statement No. 157 to FASB Statement No. 13 and Other Accounting Pronouncements That Address Fair Value Measurements for Purposes of Lease Classification or Measurement under Statement 13”(FSP 157-1) andFSP 157-2, “Effective Date of FASB Statement No. 157”(FSP 157-2).FSP 157-1 amends SFAS 157 ~~applies under other accounting pronouncements that require or permit fair value measurements,~~to remove certain leasing transactions from its scope.FSP 157-2 delays the FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, SFAS 157 does not require any new fair value measurements. SFAS 157 is effective ~~for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years, with earlier adoption permitted. The provisions~~date of SFAS 157 ~~should be applied prospectively as of~~for all non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis (at least annually), until the beginning of the Company’s first quarter of fiscal ~~year~~2010. The measurement and disclosure requirements related to financial assets and financial liabilities are effective for the Company beginning in ~~which it is initially applied, with limited exceptions.~~the first quarter of fiscal 2009. The Company ~~is currently evaluating~~does not believe that the ~~provisions~~adoption of SFAS ~~157.~~157 will have a material impact on its financial position or results of operations.

In ~~September 2006,~~February 2007, the FASB issued SFAS No. ~~158, “Employers’ Accounting~~159, “The Fair Value Option for ~~Defined Benefit Pension~~Financial Assets and ~~Other Postretirement Plans,~~Financial Liabilities — Including an ~~amendment~~Amendment of FASB ~~Statements~~Statement No. ~~87, 88, 106, and 132(R)”~~115” (“SFAS ~~158”~~159”). SFAS ~~158 requires an employer that is a business entity~~159 permits entities to choose to measure many financial instruments and ~~sponsors one or more single-employer defined benefit plans to:~~

~~a. Recognize the funded status of a benefit plan, measured as the difference between plan assets~~certain other items at fair value and ~~the benefit obligation, in its statement of financial position. For a pension plan, the benefit obligation~~ is ~~the projected benefit obligation; for any other postretirement benefit plan, such as a retiree health care plan, the benefit obligation is the accumulated postretirement benefit obligation.~~

b. Recognize as a component of other comprehensive income, net of tax, the gains or losses and prior service costs or credits that arise during the period but are not recognized as components of net periodic benefit cost pursuant to SFAS No. 87, “Employers’ Accounting for Pensions”,~~or SFAS No. 106, “Employers’ Accounting for Postretirement Benefits Other Than Pensions”~~. Amounts recognized in accumulated other comprehensive income, including the gains or losses, prior service costs or credits, and the transition asset or obligation remaining from the initial application of SFAS No. 87 and SFAS No. 106, are adjusted as they are subsequently recognized as components of net periodic benefit cost pursuant to the recognition and amortization provisions of those Statements.

~~c. Measure defined benefit plan assets and obligations as of the date of the employer’s fiscal year-end statement of financial position (with limited exceptions).~~

An employer with publicly traded equity securities is required to initially recognize the funded status of a defined benefit postretirement plan and to provide the required disclosures as of the end of the fiscal year ending after December 15, 2006. Retrospective application is not permitted. The Company is currently evaluating the provisions of SFAS 158.

6048

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

effective as of the beginning of the Company’s fiscal year beginning October 1, 2008. The Company does not believe that the adoption of SFAS 159 will have a material impact on its financial position or results of operations.

In December 2007, the FASB issued SFAS No. 160, “Noncontrolling Interests in Consolidated Financial Statements — An amendment of ARB No. 51” (“SFAS 160”). SFAS 160 amends ARB 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial statements. The amount of net income attributable to the noncontrolling interest will be included in consolidated net income on the face of the income statement. Statement 160 clarifies that changes in a parent’s ownership interest in a subsidiary that do not result in deconsolidation are equity transactions if the parent retains its controlling financial interest. In addition, this Statement requires that a parent recognize a gain or loss in net income when a subsidiary is deconsolidated. SFAS 160 is effective for fiscal years beginning after December 15, 2008. At this point in time, the Company believes that there will not be a material impact in connection with SFAS 160 on its financial position or results of operations.

In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities — An amendment of FASB Statement No. 133” (“SFAS 161”). SFAS 161 amends and expands the disclosure requirements of SFAS 133 with the intent to provide users of financial statements with an enhanced understanding of (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance and cash flows. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. The Company does not believe that the adoption of SFAS 161 will have a material impact on its financial position or results of operations.

In April 2008, the FASB issuedFSP 142-3, “Determination of the Useful Life of Intangible Assets” (“FSPSFAS 142-3”). FSPSFAS 142-3 amends the factors that should be considered in developing renewal or extension assumptions used to determine the useful life of a recognized intangible asset under SFAS No. 142, “Goodwill and Other Intangible Assets” (“SFAS 142”). FSPSFAS 142-3 improves the consistency between the useful life of a recognized intangible asset under SFAS 142 and the period of expected cash flows used to measure the fair value of the asset under SFAS 141R and other applicable accounting literature. FSPSFAS 142-3 will be effective for the Company on October 1, 2009. The Company does not believe that the adoption of FSPSFAS 142-3 will have a material impact on its financial position or results of operations.


3.	Business Acquisitions

~~Helix Technology Corporation~~

On October 26, 2005, the Company acquired all the issued and outstanding stock of Helix Technology Corporation (“Helix”). Helix develops and manufactures vacuum technology solutions for the semiconductor, data storage, and flat panel display markets. The Company believes that the acquisition of Helix enables it to better serve its current market, increase its addressable market, reduce the volatility that both businesses have historically faced and positions the Company to enhance its financial performance. The aggregate purchase price, net of cash acquired, was approximately $458.1 million, consisting of 29.0 million shares of common stock valued at $444.6 million, the fair value of assumed Helix options of $3.3 million and transaction costs of $10.2 million. The market price used to value the Brooks’ shares issued as consideration for Helix was $15.32, which represents the average of the closing market price of Brooks common stock for the period beginning two trading days before and ending two trading days after the merger agreement was announced. The actual number of shares of Brooks common stock issued was determined based on the actual number of shares of Helix common stock outstanding immediately prior to the completion of the merger, based on an exchange ratio of 1.11 shares of Brooks common stock for each outstanding share of Helix common stock. The Helix business operates in the Company’s hardware segment. This transaction qualified as a tax-free reorganization under Section 368(a) of the Internal Revenue Code of 1986, as amended.

~~The consolidated financial statements include the results of Helix from the date of acquisition.~~

~~The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition based upon a third-party valuation (in millions):~~

Current assets $ 79.9
Property, plant and equipment 15.4
Intangible assets 84.4
Goodwill 276.8
Other assets 20.8

Total assets acquired 477.3

Current liabilities 18.1
Other liabilities 1.1

Total liabilities assumed 19.2

Total purchase price including acquisition costs $ 458.1

~~Of the $84.4 million of acquired intangible assets, the following table reflects the allocation of the acquired intangible assets and related estimates of useful lives (in millions):~~

Completed and core technology $ 56.4 6.9 years weighted average estimated useful life
Customer and contract relationships 23.3 6.9 years weighted average estimated economic consumption life
Trade names and trademarks 4.7 6 year weighted average estimated useful life

$ 84.4

~~Synetics Solutions Inc.~~Keystone Electronics (Wuxi) Co., Ltd.

~~On May 8, 2006,~~Effective July 1, 2007, the Company entered into an Equity Purchase Agreement ~~and Plan of Merger~~ (the ~~“Merger~~“Equity Purchase Agreement”) with ~~Synetics Solutions Inc. (“Synetics”). Brooks completed its acquisition of Synetics from Yaskawa Electric Corporation (“Yaskawa”),~~Keystone Technology Limited, a corporation ~~duly organized and existing~~incorporated under the ~~laws~~Companies Ordinance of ~~Japan, through a merger that~~Hong Kong (“Keystone HK”), to purchase all of the equity of Keystone Electronics (Wuxi) Co., Ltd.

6149

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~became effective as~~

(“Keystone Wuxi”), an enterprise organized under the laws of ~~June 30, 2006. Synetics provides customized manufactured solutions for~~ the ~~North American semiconductor equipment industry.~~ Peoples Republic of China and engaged in manufacturing services in China.

Pursuant to the ~~merger agreement, Synetics~~Equity Purchase Agreement, the Company became ~~a wholly owned subsidiary~~the owner of ~~Brooks.~~all the equity of Keystone Wuxi. The aggregate purchase price of ~~Synetics, net~~Keystone Wuxi was $1.1 million including a minimum earn-out arrangement and acquisition costs. Goodwill of ~~cash acquired,~~$4.0 million was ~~approximately $50.2 million consisting of a $28.6 million cash payment to Yaskawa, repayment of outstanding debt of $19.9 million and transaction costs of $1.7 million.~~recognized in conjunction with the Keystone Wuxi acquisition. The acquisition of ~~Synetics will provide~~Keystone Wuxi provides the Company with the opportunity to enhance its existing capabilities with respect to manufacturing ~~customer designed~~its automation ~~systems. The Synetics business operates~~systems and components in ~~the Company’s hardware segment.~~

Also on May 8, 2006, the Company agreed to enter into a Joint Venture Agreement (the “Agreement”) with Yaskawa to form a 50/50 joint venture called Yaskawa Brooks Automation, Inc. (“YBA”) to exclusively market and sell Yaskawa’s semiconductor robotics products and Brooks’ automation hardware products to semiconductor customers in Japan. This Agreement was executed on June 30, 2006. YBA began operations on September 21, 2006.

~~The consolidated financial statements include the results of Synetics from the date of acquisition.~~

~~The following table summarizes the estimated fair value of the assets acquired and liabilities assumed at the date of acquisition based upon a third-party valuation (in millions):~~

Current assets $ 19.8
Property, plant and equipment 8.6
Intangible assets 17.4
Goodwill 12.6
Other assets 0.1

Total assets acquired 58.5

Current liabilities 8.3

Total purchase price including acquisition costs $ 50.2

~~Of the $17.4 million of acquired intangible assets, the following table reflects the allocation of the acquired intangible assets and related estimates of useful lives (in millions):~~


~~Core technology~~	~~$4.2~~	~~7 years weighted average estimated useful life~~
~~Customer and contract relationships~~	~~4.8~~	~~7 years weighted average estimated economic consumption life~~
~~Customer supply agreement~~	~~8.4~~	~~10 year weighted average estimated useful life~~

	~~$17.4~~

~~Proforma Information of Acquisitions~~

The following unaudited proforma information gives effect to the acquisition of Helix and Synetics as if the acquisitions occurred at the beginning of the years presented (in thousands, except per share data):

September 30,
2006 2005

Revenues $ 756,325 $ 669,377

Net income (loss) $ 20,576 $ (36,932 )

Basic income (loss) per share $ 0.28 $ (0.50 )

Diluted income (loss) per share $ 0.28 $ (0.50 )

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~Proforma information above includes adjustments to reflect increased amortization expense, the write-off of the entire fair valuestep-up~~ ~~in inventory, and a full valuation allowance for deferred tax assets.~~China.


4.	Marketable Securities

The Company invests its cash in marketable ~~debt~~ securities and classifies them asavailable-for-sale. The Company records these securities at fair value in accordance with Statement of Financial Accounting Standards No. 115, “Accounting for Certain Investments in Debt and Equity Securities” (“FAS 115”). 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 in a separate component of stockholders’ equity until they are ~~sold.~~sold or mature. At the time of sale, any gains or losses, calculated by the specific identification method, will be recognized as a component of operating results.

The following is a summary of marketable securities (included in short and long-term marketable securities in the consolidated balance sheets), including accrued interest receivable, as of September 30, ~~2006~~2008 and ~~2005~~2007 (in thousands):


			Gross		Gross							Gross		Gross
	Amortized		Unrealized		Unrealized					Amortized		Unrealized		Unrealized
	Cost		Gains		Losses			Fair Value		Cost		Gains		Losses			Fair Value

September 30, 2006:
September 30, 2008:
U.S. Treasury securities and obligations of U.S. government agencies	$	62,220	$	1	$	(80	)	$	62,141	$	44,371	$	18	$	(71	)	$	44,318
U.S. corporate securities		5,871		—		(54	)		5,817		7,276		—		(102	)		7,174
Mortgage-backed securities		3,640		—		(110	)		3,530
Mortgage-backed securities(1)											3,395		1		(94	)		3,302
Other debt securities		4,167		—		(68	)		4,099		12,152		66		—			12,218

	$	75,898	$	1	$	(312	)	$	75,587	$	67,194	$	85	$	(267	)	$	67,012

September 30, 2005:
September 30, 2007:
U.S. Treasury securities and obligations of U.S. government agencies	$	108,083	$	1	$	(545	)	$	107,539	$	49,788	$	45	$	—		$	49,833
U.S. corporate securities		29,428		12		(240	)		29,200		50,495		39		(12	)		50,522
Mortgage-backed securities		5,004		—		(108	)		4,896
Mortgage-backed securities(2)											2,623		—		(64	)		2,559
Other debt securities		13,140		—		(279	)		12,861		3,526		—		(55	)		3,471

	$	155,655	$	13	$	(1,172	)	$	154,496	$	106,432	$	84	$	(131	)	$	106,385

~~Gross realized gains and losses realized on sales ofavailable-for-sale~~ ~~marketable securities included in “Other (income) expense” in the Consolidated Statements of Operations for the years ended September 30, 2006, 2005 and 2004 are as follows (in thousands):~~

Year Ended September 30,
2006 2005 2004

Gross realized gains $ 226 $ — $ 148
Gross realized losses — — (111 )

Net realized gains $ 226 $ — $ 37


(1)		Fair value amounts include approximately $1.9 million of investments in the Federal Home Loan Mortgage and Federal National Mortgage Association.

(2)		Fair value amounts consist of investments in the Federal Home Loan Mortgage and Federal National Mortgage Association.

6350

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~From April 2004 through September 2005, the Company held its~~

Gross realized gains on sales ofavailable-for-sale marketable securities ~~until maturity and, as such, did not incur any~~included in “Other (income) expense” in the Consolidated Statements of Operations was $21,000 for the year ended September 30, 2008. There were no gross realized gains ~~or losses.~~for the years ended September 30, 2007 and 2006. Gross realized losses on sales ofavailable-for-sale marketable securities included in “Other (income) expense” in the Consolidated Statements of Operations was $226,000 for the year ended September 30, 2006. There were no gross realized losses for the years ended September 30, 2008 and 2007.

The fair value of the marketable securities at September 30, ~~2006,~~2008 by contractual maturity, are shown below. Expected maturities will differ from contractual maturities because the issuers of the securities may have the right to prepay obligations without prepayment penalties (in thousands).


	Fair Value		Fair Value

Due in one year or less	$	68,280	$	33,077
Due after one year through five years		794		28,461
Due after ten years		6,513		5,474

	$	75,587	$	67,012

Gain (Loss) on Investment

During the three months ended June 30, 2007, a company in which Brooks held a minority equity interest was acquired by a closely-held Swiss public company. Brooks’ minority equity investment had been previously written down to zero in 2003. As a result, Brooks received shares of common stock from the acquirer in exchange for its minority equity interest and recorded a gain of $5.1 million.

During fiscal 2008, the Company recorded a charge of $3.9 million to write-down its minority equity investment in this Swiss public company to its fair value as of the balance sheet date. This write-down reflects an other than temporary impairment of this investment. The remaining balance of this investment at September 30, 2008 after giving effect to foreign exchange was $1.7 million.


5.	Property, Plant and Equipment

Property, plant and equipment as of September 30, ~~2006~~2008 and ~~2005~~2007 were as follows (in thousands):


	September 30,						September 30,
	2006			2005			2008			2007

Buildings and land	$	44,961		$	40,019		$	44,161		$	44,678
Computer equipment and software		67,759			62,190			47,397			37,680
Machinery and equipment		40,584			27,572			47,777			45,082
Furniture and fixtures		14,648			12,471			11,015			11,986
Leasehold improvements		24,233			16,093			25,550			28,951
Construction in progress		5,382			2,682			17,977			10,295

		197,567			161,027			193,877			178,672
Less accumulated depreciation and amortization		(118,734	)		(106,862	)		(112,273	)		(97,925	)

Property, plant and equipment, net	$	78,833		$	54,165		$	81,604		$	80,747

Depreciation expense was ~~$17.1~~$18.2 million, ~~$13.3~~$17.5 million and ~~$13.8~~$15.8 million for the years ended September 30, 2008, 2007 and 2006, ~~2005 and 2004,~~ respectively.

BROOKS AUTOMATION, INC.

InNOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company recorded an impairment charge of $3.5 million to write-down certain buildings and leasehold improvements to fair value in the fourth fiscal quarter of ~~fiscal 2005, the Company accelerated the depreciation on its existing Customer Relations Management system which was phased out~~2008 as a result of underlying circumstances discussed in ~~December 31, 2005. The impact of this accelerated depreciation was $1.3 million during the fourth quarter of fiscal 2005.~~Note 6.


6.	Goodwill and Intangible Assets

The Company performs an annual impairment test of its goodwill as required under the provisions of FAS 142 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. In the fourth quarter of fiscal year 2005, the Company’s equipment automation and factory automation segments were combined into the hardware segment, which reflects how management now evaluates its business (see Note 16).

In fiscal ~~2004,~~2007 and 2006, the Company performed its annual impairment test for goodwill at the reporting unit level and determined that no adjustment to goodwill was necessary. Although the Company experienced a cyclical slowdown in ~~connection with~~demand during fiscal 2008, external market forecasts available to the Company throughout this period indicated that demand would improve in 2009. These external market forecasts changed abruptly at the end of fiscal 2008 and into early fiscal 2009. The downturn experienced in the semiconductor capital equipment market during 2008 has been worsened by the global economic slowdown. The Company does not expect a ~~third party letter~~recovery in demand for semiconductor capital equipment in the near term. This abrupt change in Brooks’ outlook has resulted in an expectation of ~~intent to purchase the assets~~lower cash flows from all three of the ~~SELS,~~Company’s operating segments, which ~~made up~~has led to a non-cash impairment of the Company’s ~~“Other” segment,~~goodwill of $197.9 million as of September 30, 2008.

The changes in the ~~Company assessed the potential impairment~~carrying amount of goodwill by reportable segment for ~~this segment (See Note 20). The Company considered~~ the ~~offer in the letter of intent~~years ended September 30, 2008 and 2007 are as ~~an indication of fair value. Based on its analysis, the Company determined that the implied fair value of the then “Other” segment’s goodwill was~~follows (in thousands):


							Global
	Automation			Critical			Customer
	Systems			Components			Operations			Total

Balance at September 30, 2006	$	37,651		$	124,560		$	152,241		$	314,452
Acquisitions:
Keystone Wuxi		4,035			—			—			4,035
Purchase accounting adjustments on prior period acquisitions		1,858			(469	)		(574	)		815

Balance at September 30, 2007		43,544			124,091			151,667			319,302
Adjustments to goodwill:
Resolution of tax contingencies		(661	)		(350	)		(429	)		(1,440	)
Impairment		(42,883	)		(68,000	)		(87,000	)		(197,883	)

Balance at September 30, 2008	$	—		$	55,741		$	64,238		$	119,979

6452

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

$7.4 million less than its book value and therefore recorded a charge to write-down the value of this goodwill in the fourth quarter, which has been recorded as a component of the loss from discontinued operations for fiscal year 2004. As there were no interim indicators of potential impairment of goodwill in the Company’s other segments, the Company performed its annual impairment test under FAS 142 in the fourth quarter of fiscal 2004 using the present value of expected cash flows. The Company’s analysis indicated no impairment of the goodwill in these segments.

~~In fiscal 2005 and 2006, the Company performed its annual impairment test for goodwill and determined that no adjustment to goodwill was necessary.~~

~~The changes in the carrying amount of goodwill by segment for the years ended September 30, 2006 and 2005 are as follows (in thousands):~~

Hardware Software Total

Balance at September 30, 2004
$ 25,020 $ 37,014 $ 62,034
Adjustments to goodwill:
Foreign currency translation — 60 60

Balance at September 30, 2005
25,020 37,074 62,094
Adjustments to goodwill:
Acquisitions:
Helix 276,801 — 276,801
Synetics 12,631 — 12,631
Purchase accounting adjustments on prior period acquisitions — (232 ) (232 )
Foreign currency translation — 150 150

Balance at September 30, 2006
$ 314,452 $ 36,992 $ 351,444

Components of the Company’s identifiable intangible assets are as follows (in thousands):

									��
	September 30, 2006						September 30, 2005							September 30, 2008						September 30, 2007
			Accumulated		Net Book					Accumulated		Net Book				Accumulated		Net Book				Accumulated		Net Book
	Cost		Amortization		Value		Cost			Amortization		Value		Cost		Amortization		Value		Cost		Amortization		Value

Patents	$	10,024	$	6,899	$	3,125	$	7,179		$	6,934	$	245	$	6,877	$	6,753	$	124	$	9,802	$	7,093	$	2,709
Completed technology		90,585		38,386		52,199		30,385			29,120		1,265		64,761		31,357		33,404		64,761		22,033		42,728
License agreements		305		305		—		305			305		—
Trademark and trade names		7,232		3,120		4,112		2,532			2,336		196
Trademarks and trade names															4,925		2,509		2,416		4,925		1,726		3,199
Non-competition agreements		1,726		1,721		5		1,726			1,716		10		—		—		—		50		50		—
Customer relationships		43,017		8,391		34,626		6,517			4,405		2,112		36,500		13,992		22,508		36,500		8,172		28,328

	$	152,889	$	58,822	$	94,067	$	48,644		$	44,816	$	3,828	$	113,063	$	54,611	$	58,452	$	116,038	$	39,074	$	76,964

The Company determined that the adverse business climate experienced during the end of the fiscal year ended September 30, 2008 was a significant event that indicated that the carrying amount of certain long-lived asset groups might not be recoverable. A review of future cash flows identified an asset group within the Automation Systems segment which had carrying values in excess of future cash flows. The Company reviewed the fair value of the long-lived assets for this asset group and determined that an intangible asset related to a patent had a fair value that was $2.2 million above carrying value, and an impairment charge of $2.2 million was recorded. The fair value was based on a relief from royalty approach. Further, certain buildings and leasehold improvements were determined to have fair values that were $3.5 million below their carrying value, resulting in an additional impairment charge of $3.5 million.

Amortization expense for intangible assets was ~~$14.6~~$16.4 million, ~~$3.1~~$15.3 million and ~~$3.7~~$12.4 million for the years ended September 30, 2008, 2007 and 2006, ~~2005 and 2004,~~ respectively.

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Estimated future amortization expense for the intangible assets recorded by the Company as of September 30, ~~2006~~2008 is as follows (in millions):


Year ended September 30,
2007	$	16.0
2008		17.0
2009		18.1	$	17.2
2010		14.9		14.5
2011		9.9		9.5
2012				8.0
2013				3.7
Thereafter		18.2		5.6


7.	Investment in Affiliates

Joint Ventures

The Company participates in a joint venture, ULVAC Cryogenics, Inc., or UCI, with ULVAC Corporation of Chigasaki, Japan, which was part of the acquired operations of Helix in October 2005. The joint venture was formed in 1981 by Helix and ULVAC Corporation. UCI manufactures and sells cryogenic vacuum pumps, principally to ULVAC Corporation, one of the largest semiconductor and flat panel OEM’s in Japan. ~~Each company owns 50% of UCI.~~ The joint venture arrangement includes a ~~license and technology~~management agreement exclusively involving ~~technology previously owned by Helix.~~cryogenic vacuum pumps.

The Company owns 50% of the outstanding common stock of UCI. This investment is accounted for using the equity method. Under this method of accounting, the Company records in income its proportionate share of the earnings of UCI with a corresponding increase in the carrying value of the investment.

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

On May 8, 2006, the Company entered into a Joint Venture Agreement (the “Agreement”) with Yaskawa Electric Corporation (Yaskawa) to form a ~~50/50~~ joint venture called Yaskawa Brooks Automation, Inc. (“YBA”) to exclusively market and sell Yaskawa’s semiconductor robotics products and Brooks’ automation hardware products to semiconductor customers in Japan. This Agreement was executed on June 30, 2006. The Company invested ~~$1,955,000~~$2.0 million into this joint venture. YBA began operations on September 21, 2006.

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company owns 50% of the outstanding common stock of each of its joint ventures and 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.

For the years ended September 30, 2008 and 2007, revenues from YBA were $20.9 million and $10.5 million, respectively. There were no revenues from YBA for the year ended September 30, 2006. The amount due from YBA included in accounts receivable at September 30, 2008 and 2007 was $8.6 million and $4.2 million, respectively. For the years ended September 30, 2008 and 2007, the Company incurred $1.5 million and $0.5 million, respectively, for products and services provided by YBA. At September 30, 2008 the Company owed YBA $0.2 million in connection with accounts payable for unpaid products and services. The Company had no accounts payable with YBA at September 30, 2007.

For the years ended September 30, 2008, 2007 and 2006, royalty payments received from UCI were $0.9 million, $0.7 million and $0.6 million, respectively.


8.	Earnings (Loss) Per Share

Below is a reconciliation of ~~earnings (loss) per share and~~ weighted average common shares outstanding for purposes of calculating basic and diluted earnings (loss) per share (in thousands, except per share data):


	Year Ended September 30,							Year Ended September 30,
	2006		2005			2004		2008			2007		2006

Net income (loss)	$	25,930	$	(11,612	)	$	14,659	$	(235,946	)	$	151,472	$	25,930

Weighted average common shares outstanding used in computing basic earnings (loss) per share		72,323		44,919			43,006		64,542			73,492		72,323
Dilutive common stock options		210		—			567
Dilutive common stock options and restricted stock awards									—			582		210

Weighted average common shares outstanding for purposes of computing diluted earnings (loss) per share		72,533		44,919			43,573		64,542			74,074		72,533

Basic earnings (loss) per share	$	0.36	$	(0.26	)	$	0.34	$	(3.66	)	$	2.06	$	0.36

Diluted earnings (loss) per share	$	0.36	$	(0.26	)	$	0.34	$	(3.66	)	$	2.04	$	0.36

Approximately ~~4,796,000, 5,374,000~~2,092,000, 3,011,000 and ~~4,985,000~~4,796,000 options to purchase common stock and ~~1,000, 21,000~~1,091,000, 89,000 and 01,000 shares of restricted stock were excluded from the computation of diluted earnings (loss) per share attributable to common stockholders for the years ended September 30, ~~2006, 2005~~2008, 2007 and ~~2004,~~2006, respectively, as their effect would be anti-dilutive. The ~~4,796,000~~3,011,000 and ~~4,985,000~~4,796,000 options for the years ended September 30, 2007 and 2006, ~~and 2004~~respectively, had an exercise price greater than the average market price of the common stock. These options and restricted stock ~~awards~~ could, however, become dilutive in future periods. In addition, 1,980,000 ~~2,492,000 and 2,492,000~~ shares of common stock for the assumed conversion of the Company’s convertible debt were excluded from this calculation for the ~~years~~year ended September 30, 2006, ~~2005 and 2004, respectively,~~ as the effect of conversion would be ~~anti-dilutive. On July 17, 2006, the~~anti-dilutive based on a conversion price of $70.23. The Company paid off the convertible debt in ~~full.~~full on July 17, 2006.

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


9.	Income Taxes

The components of the income tax provision are as follows (in thousands):

Year Ended September 30,
2006 2005 2004

Current:
Federal $ 680 $ — $ —
State 6 6 6
Foreign 4,046 5,198 8,047

4,732 5,204 8,053

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~


							Year Ended September 30,
							2008		2007		2006

Current:
Federal							$	197	$	1,312	$	779
State								25		154		5
Foreign								1,011		821		2,588
	Year Ended September 30,
	2006		2004		2003			1,233		2,287		3,372

Deferred:
Federal		—		—		—		—		—		—
State		—		—		—		—		—		—
Foreign		—		—		—		—		—		—

	$	4,732	$	5,204	$	8,053	$	1,233	$	2,287	$	3,372

The components of income (loss) from continuing operations before income taxes, ~~and~~ minority interests and equity in earnings of joint ventures are as follows (in thousands):


	Year Ended September 30,							Year Ended September 30,
	2006		2005			2004		2008			2007		2006

Domestic	$	19,562	$	(7,015	)	$	10,820	$	(222,193	)	$	51,277	$	19,506
Foreign		10,345		4,264			21,578		(13,959	)		4,359		4,561

	$	29,907	$	(2,751	)	$	32,398	$	(236,152	)	$	55,636	$	24,067

The differences between the income tax provision ~~(benefit)~~ and income taxes computed using the applicable U.S. statutory federal tax rate ~~are~~is as follows (in thousands):


	Year Ended September 30,									Year Ended September 30,
	2006			2005			2004			2008			2007			2006

Income tax provision (benefit) computed at federal statutory rate	$	10,467		$	(963	)	$	11,339		$	(82,653	)	$	19,472		$	8,423
State income taxes, net of federal benefit		4			(643	)		286			(766	)		815			(217	)
Research and development tax credits		—			—			(1,079	)		(211	)		(1,003	)		—
ETI tax benefit/Sec. 199 manufacturing deduction		(1,009	)		(357	)		(621	)		—			(632	)		(861	)
Impairments											68,069			—			—
Foreign income taxed at different rates		1,661			2,035			(3,090	)		2,497			(2,351	)		456
Dividends		1,148			3,531			223			1,526			993			1,281
Change in deferred tax asset valuation allowance		(9,289	)		(1,164	)		(4,618	)		13,697			(15,635	)		(6,510	)
Other permanent differences		135			56			45
Deferred compensation		117			636			1,124
Nondeductible meals and entertainment		259			220			254
Withholding taxes		1,540			3,328			3,895
Foreign taxes deducted		(539	)		(1,475	)		—
Other		238			—			295			(926	)		628			800

Income tax provision	$	4,732		$	5,204		$	8,053		$	1,233		$	2,287		$	3,372

The Company does not provide for U.S. income taxes applicable to undistributed earnings of its foreign subsidiaries since these earnings are indefinitely reinvested.

68
55

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The significant components of the net deferred tax assets are as follows (in thousands):


	Year Ended September 30,				Year Ended September 30,
	2006		2005		2008		2007

Reserves not currently deductible	$	30,151	$	25,630	$	28,387	$	25,462
Federal, state and foreign tax credits		14,700		13,546		17,666		15,328
Amortization		—		27,370
Depreciation		8,505		8,399		9,761		5,490
Stock-based compensation		4,866		6,749		6,888		5,566
Net operating loss carryforwards		157,721		166,079		114,076		114,528

Deferred tax assets		215,943		247,773		176,778		166,374

Amortization		7,706		—		10,743		15,885
Other liabilities		2,877		2,054		2,732		883

Deferred tax liabilities		10,583		2,054		13,475		16,768

Valuation allowance		205,360		245,719		163,303		149,606

Net deferred tax assets	$	—	$	—	$	—	$	—

AsIn accordance with SFAS 109, management has considered the weight of all available evidence in determining whether a ~~result of recognizing substantial operating losses in prior years, including the year ended~~valuation allowance remains to be required against its deferred tax assets at September 30, ~~2005, and~~2008. Given the ~~continuing~~losses incurred in fiscal 2008 combined with the near term uncertainty inwith regard to the outlook of the semiconductor sector, the Company has determined that it is more likely than not that the net deferred tax assets will not be ~~realized and has maintained a full valuation allowance against its net deferred tax assets from continuing operations at September 30, 2006 and 2005.~~realized. The amount of the deferred tax asset considered realizable is subject to change based on future events, including generating taxable income in future periods. The Company continues to assess the need for the valuation allowance at each balance sheet date based on all available evidence. However, it is possible that the “more likely than not” criterion could be met in fiscal 2007 or a future period, which could result in the reversal of a significant portion or all of the valuation allowance, which, at that time, would be recorded as a tax benefit in the consolidated statements of operations.

The approximate $40.4 million decrease in the valuation allowance at September 30, 2006 compared to September 30, 2005 is principally due to the recording of deferred tax liabilities due to acquired identified intangibles, utilization of net operating losses, expiring tax credits and changes in state and foreign tax rates.

As of September 30, ~~2006,~~2008, the Company had federal, state and foreign net operating loss carryforwards from continuing and discontinued operations of approximately ~~$721.6~~$445.0 million and federal and state research and development tax credit carryforwards of approximately ~~$14.7~~$17.7 million available to reduce future tax liabilities, which expire at various dates through ~~2026.~~2028. Included in the net operating loss carryforwards are stock option deductions of approximately $19.5 million. 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.

We are subject to income taxes in various jurisdictions. Significant judgment is required in determining the world-wide provision for income taxes. While it is often difficult to predict the final outcome or the timing of resolution of any particular tax matter, we believe that the tax reserves reflect the probable outcome of known contingencies. Tax reserves established include, but are not limited to, business combinations, transfer pricing, withholding taxes, and various state and foreign audit matters, some of which may be resolved in the near future resulting in an adjustment to the reserve.

6956

BROOKS AUTOMATION, INC.

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 year ended September 30, 2008 is as follows (in thousands):


	Unrecognized			Interest and
	Tax Benefit			Penalties			Total

Balance at October 1, 2007	$	13,119		$	1,354		$	14,473
Additions for tax positions of prior years		216			607			823
Additions for tax positions related to current year		291			13			304
Reduction for tax positions related to acquired entities in prior years, offset to goodwill		(1,184	)		(226	)		(1,410	)
Reductions for tax positions of prior years		—			(205	)		(205	)
Reductions from lapses in statutes of limitations		(994	)		—			(994	)
Reductions from settlements with taxing authorities		(1,228	)		(91	)		(1,319	)
Foreign exchange rate adjustment		243			—			243

Balance at September 30, 2008	$	10,463		$	1,452		$	11,915

As of September 30, 2008, the Company had approximately $11.9 million of unrecognized tax benefits, of which approximately $11.6 million, if recognized, would affect the effective tax rate and the remaining $0.3 million, if recognized, would affect goodwill. The Company recognizes interest related to unrecognized benefits as a component of tax expense, of which $0.4 million was recognized in the current year.

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’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 has income tax audits in progress in various state and international jurisdictions in which it operates. In the Company’s U.S. and international jurisdictions, the years that may be examined vary, with the earliest tax year being 2001. 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’s statement of financial position. The Company currently anticipates that several of these audits will be completed during the next twelve months and the unrecognized tax benefit will be reduced by approximately $1.0 million in settlements as a result of the finalization of certainnon-U.S. audits.


10.	Tender Offer of the Company’s Common Stock ~~Offering~~

On ~~December 16, 2003,~~May 31, 2007, the Company ~~completed~~announced that its Board of Directors (the “Board”) had authorized a ~~public offering of 6,900,000~~modified “Dutch Auction” self-tender offer to purchase up to 6,060,000 shares of its common ~~stock.~~stock, representing approximately 8% of its approximately 75.8 million outstanding shares as of April 30, 2007. This transaction closed on July 5, 2007. In the tender offer, shareholders had the opportunity to tender some or all of their shares at a price not less than $16.50 per share or more than $19.00 per share, net to the seller in cash, without interest. The tender offer commenced on June 1, 2007 and expired on June 28, 2007. This action followed the closing of the Company’s recent sale of the Brooks Software Division, which generated proceeds to the Company ~~received proceeds, net of $6.8 million of issuance costs, of $124.3 million on~~that strengthened its cash assets. Following the sale of the Brooks Software Division, the Board determined that the best use for much of the cash generated in that transaction was to invest in Brooks through a share repurchase returning money to its shareholders.

On July 5, 2007, the Company announced the final results of its modified “Dutch Auction” tender offer. In accordance with the terms and conditions of the tender offer, the Company accepted for purchase 6,060,000 shares of its common stock at a purchase price of $18.20 per share, for a total cost of approximately $110.3 million. The total shares tendered before proration was approximately 7,400,000 common shares. Since

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

the offer was oversubscribed, the number of shares that the Company accepted for purchase from each tendering shareholder was prorated, based upon the proration procedures described in the Offer to Purchase mailed to shareholders and certain other limited exceptions. Shareholders who validly tendered shares at a price equal to or below $18.20 per share had approximately 82% of those shares accepted for purchase. The depositary promptly issued payment for the shares accepted for purchase in the tender. Any shares properly tendered and not properly withdrawn, but not purchased, were returned promptly to stockholders by the depositary. Brooks financed the tender offer with available cash on hand.

On November 9, 2007 the Company announced that its Board of Directors authorized a stock repurchase plan to buy up to $200.0 million of the Company’s outstanding common stock. Stock repurchase transactions authorized under the plan will occur from time to time in the open market, through block trades or otherwise. Management and the Board of Directors will exercise discretion with respect to the timing and amount of any shares repurchased, based on their evaluation of a variety of factors, including current market conditions. Repurchases may be commenced or suspended at any time without prior notice. Additionally, Brooks may initiate repurchases under aRule 10b5-1 plan, which would permit shares to be repurchased when Brooks would otherwise be precluded from doing so under insider-trading laws. Any repurchased shares will be available for use in connection with its stock plans and for other corporate purposes. The repurchase program will be funded using the Company’s available cash resources. During the year ended September 30, 2008, the Company purchased 7,401,869 shares of its common stock for a total of $90.2 million in connection with the stock repurchase plan.


11.	Financing Arrangements

On May 23, 2001, the Company completed the private placement of $175.0 million aggregate principal amount of 4.75% Convertible Subordinated Notes due in 2008. The Company received net proceeds of $169.5 million from the sale. Interest on the notes was paid on June 1 and December 1 of each year. The notes were scheduled to mature on June 1, 2008.

The Company did not file its quarterly report onForm 10-Q for the period ended March 31, 2006 by the prescribed due date. As a result of this delay, the Company was not in compliance with its obligation under Section 6.2 of the indenture with respect to its 4.75% Convertible Subordinated Notes due 2008 to timely file with the SEC all reports and other information and documents which the Company is required to file with the SEC pursuant to Sections 13 or 15(d) of the Securities Exchange Act of 1934. On May 15, 2006, the Company received a notice from holders of more than 25% in aggregate principal amount of notes outstanding that the Company was in default of Section 6.2 of the indenture based on its failure to file itsForm 10-Q. On Friday July 14, 2006, the Company received a further notice from holders of more than 25% of the aggregate outstanding principal amount of the notes accelerating the Company’s obligation to repay the unpaid principal on the notes because its Report onForm 10-Q for the quarter ended March 31, 2006 had not yet been filed. On Monday, July 17, 2006, the Company paid the outstanding $175.0 million principal balance to the trustee and subsequently paid all accrued interest. The notes are now retired, having been paid in full.

At September 30, ~~2006,~~2008, the Company had $0.7 million of ~~an uncommitted demand promissory note facility still in use, all of it for~~outstanding letters of credit.

~~Debt consists of the following (in thousands):~~

September 30,
2006 2005

Convertible subordinated notes at 4.75%, due on June 1, 2008 $ — $ 175,000
Other 13 14

13 175,014
Less current portion 11 175,012

Long-term debt $ 2 $ 2

BROOKS AUTOMATION, INC.

~~The Company’s debt repayments are due as follows (in thousands):~~

Year ended September 30, 2007 $ 11
2008 2

$ 13

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


12.	Postretirement Benefits

The Company adopted the funded status recognition provision of SFAS 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106, and 132(R)” (“SFAS 158”), effective September 30, 2007. This standard amends SFAS 87, 88, 106, and 132(R). SFAS 158 requires an employer with defined benefit plans or other postretirement benefit plans to recognize an asset or a liability on its balance sheet for the overfunded or underfunded status of the plans as defined by SFAS 158. The pension asset or liability represents a difference between the fair value of the pension plan’s assets and the projected benefit obligation as of September 30. For other postretirement benefit plans, the liability is the difference between the fair value of the plan’s assets and the accumulated postretirement benefit obligation as of September 30. The following table illustrates the effect on the individual financial statement line items of applying this standard for the year ended September 30, 2007 (in thousands):


	Before		Adjustment for			After
	Application of		Application of			Application of
	SFAS 158		SFAS 158			SFAS 158

Long term pension liabilities	$	132	$	(112	)	$	20
Accumulated other comprehensive income		—		112			112

Defined Benefit Pension Plans

On October 26, 2005, the Company purchased Helix and assumed responsibility for the liabilities and assets of the Helix Employees’ Pension Plan (“Plan”). The Plan is a final average pay pension plan. The Company’s funding policy is to contribute an amount equal to the minimum required employer contribution under the Employee

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Retirement Income Security Act of 1974. 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 uses a September 30th measurement date in the determination of net periodic benefit costs, benefit obligations and the value of plan assets. The following tables set forth the funded status and amounts recognized in the Company’s consolidated balance sheets at September 30, ~~2006~~2008 and 2007 for the Plan (in thousands):

Year Ended

September 30, 2006

Benefit obligation at October 1, 2005 $ —
Benefit obligation assumed at date of acquisition 13,777
Service cost 1,740
Interest cost 821
Actuarial gain (567 )
Disbursements (3,444 )

Benefit obligation at September 30, 2006 $ 12,327


	Year Ended
	September 30,
	2008			2007

Benefit obligation at beginning of year	$	12,397		$	12,327
Service cost		146			252
Interest cost		731			698
Actuarial (gain)/loss		(1,541	)		1,191
Benefits paid		(2,324	)		(2,071	)

Benefit obligation at end of year	$	9,409		$	12,397

Year Ended

September 30, 2006

Fair value of assets at October 1, 2005 $ —
Fair value assumed at date of acquisition 11,865
Actual return on plan assets 1,637
Company contributions 3,000
Disbursements (3,444 )

Fair value of assets at September 30, 2006 $ 13,058


	Year Ended
	September 30,
	2008			2007

Fair value of assets at beginning of year	$	12,377		$	13,058
Actual return (loss) on plan assets		(1,611	)		1,390
Disbursements		(2,324	)		(2,071	)

Fair value of assets at end of year	$	8,442		$	12,377


	~~Year Ended~~
	~~September 30, 2006~~

~~Funded status at September 30, 2006~~	$	~~731~~
~~Unrecognized net actuarial gain~~		~~(915~~	)

~~Accrued benefit liability~~	$	~~(184~~	)

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)


	September 30,
	2008			2007

Funded status/accrued benefit liability	$	(967	)	$	(20	)

The Company’s investment strategy with respect to Plan assets is to maximize return while protecting principal. These investments are primarily in equity and debt securities. The expected long term rate of return on Plan assets was 8.25% for the ~~year~~years ended September 30, ~~2006.~~2008 and 2007, respectively. The expected rate of return was developed through analysis of historical market returns, current market conditions and the Plans’ past experience.

Net periodic ~~benefit~~pension (benefit) cost consisted of the following (in thousands):


	Year Ended			Year Ended September 30,
	September 30, 2006			2008			2007			2006

Service cost	$	1,740		$	146		$	252		$	1,740
Interest cost		821			731			698			821
Expected return on assets		(1,000	)		(906	)		(1,002	)		(1,000	)
Settlement gain		(289	)		—			—			(289	)

Net periodic pension cost	$	1,272
Net periodic pension (benefit) cost				$	(29	)	$	(52	)	$	1,272

Certain information for the Plan with respect to accumulated benefit obligations follows (in thousands):


	September 30,
	2008		2007

Projected benefit obligation	$	9,409	$	12,397
Accumulated benefit obligation		9,409		12,397
Fair value of plan assets		8,442		12,377

Weighted-average assumptions used to determine net cost at September 30, 2008, 2007 and 2006 follows:


	Year Ended September 30,
	2008			2007			2006

Discount rate		6.00	%		6.00	%		5.75	%
Expected return on plan assets		8.25	%		8.25	%		8.25	%
Rate of compensation increase		N/A			N/A			4.00	%

Plan Assets

The Company’s weighted average asset allocation at September 30, 2008 and target allocation at September 30, 2009, by asset category is as follows:


	Percentage of			Target
	Plan Assets at			Allocation at
	September 30,			September 30,
	2008			2009

Equity securities		66	%		40% - 70%
Debt securities		31			35% - 55%
Cash		3			0% - 10%

		100	%

The Company expects to contribute $1.0 million to the Plan in fiscal 2009 to meet certain funding targets.

7160

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~The accumulated benefit obligation for the Plan was $12.3 million at September 30, 2006. Certain information for the Plan with accumulated benefit obligations follows (in thousands):~~

September 30, 2006

Projected benefit obligation $ 12,327
Accumulated benefit obligation 12,327
Fair value of plan assets 13,058

~~Weighted-average assumptions used to determine net cost at September 30, 2006 follows:~~


	~~September 30, 2006~~

~~Discount rate~~		~~5.75~~	%
~~Expected return on plan assets~~		~~8.25~~	%
~~Rate of compensation increase~~		~~4.00~~	%

~~The Company does not expect to make a contribution to the Plan in fiscal 2007.~~

Expected benefit payments over the next ten years are expected to be paid as follows (in thousands):


2007	$	290
2008		1,175
2009		550	$	544
2010		1,153		531
2011		1,135		391
Thereafter		8,633
2012				546
2013				745
2014-2018				4,410

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 worldwide defined contribution plans was ~~$2.8~~$3.5 million, ~~$1.9~~$3.6 million and ~~$0.9~~$2.8 million for the years ended September 30, 2008, 2007 and 2006, ~~2005 and 2004,~~ respectively.

The Company had an accrual of $9.9 million related to the retirement benefit to be paid to its former Chief Executive Officer under the terms of his employment agreement as of September 30, 2004. The amount payable was earned over time and due upon his retirement. In accordance with his employment contract, the full retirement benefit as determined by the employment agreement of $10.1 million was paid in January 2005.

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 ~~recorded~~did not record additional retirement costs ~~of $59,000~~ for the ~~year~~years ended September 30, ~~2006~~2008 and 2007, in connection with this plan. At September 30, ~~2006,~~2008, the Company had ~~$641,000~~$0 accrued for benefits payable under the Supplemental Key Executive Retirement Plan.


13.	Stockholders’ Equity ~~and Convertible Redeemable Preferred Stock~~

Preferred Stock

At September 30, ~~2006~~2008 and ~~2005~~2007 there were one million shares of preferred stock, $0.01 par value per share authorized; no shares were issued and outstanding at September 30, ~~2006~~2008 and ~~2005,~~2007, respectively. 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.

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

~~Rights Distribution~~

Brooks is a party to a rights agreement between itself and EquiServe Trust Company, N.A. Pursuant to this agreement, Brooks declared a dividend to its stockholders as of August 12, 1997 of the right to initially purchase Brooks common stock or 1/1,000 of a share of Series A Junior Participating Preferred Stock. The preferred stock purchase rights are attached to the shares of Brooks common stock until a triggering event occurs. The preferred stock purchase rights are triggered by the acquisition by a person or group, an “acquiring person” as defined in the rights agreement, other than Brooks or any of Brooks’ subsidiaries or employee benefit plans, of 15% or more of the outstanding shares of Brooks common stock. In such event, the holder of a preferred stock purchase right paying the exercise price would be able to purchase, instead of a fraction of a share of Series A Junior Participating Preferred Stock, a number of shares of Brooks common stock having a market value equal to twice the exercise price. In the event of specified mergers and similar transactions involving Brooks, shares of the other party to the transaction or its parent could be purchased at half of the market price of such shares by the holders of the preferred stock purchase rights. The preferred stock purchase rights are redeemable in whole, but not in part, by Brooks for $0.001 per right and expire July 31, 2007. Subject to restrictions, the preferred stock purchase rights may be exchanged for one share of Brooks common stock upon election by Brooks’ board of directors. An “acquiring person” would not be permitted to exercise a preferred stock purchase right. The intended effect of the rights agreement is to deter any person or group from becoming an “acquiring person” without negotiating the acquisition with Brooks’ board of directors.


14.	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 under Section 422 of the Internal Revenue Code of 1986, as amended, 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 seven years from the date of grant. ~~At the Company’s March 2006 Annual Meeting, stockholders approved an amendment to the 2000 Plan to increase the number~~A total of 9,000,000 shares ~~authorized~~of common stock were reserved for issuance under the ~~plan by 3,000,000 shares, for a total of 9,000,000 shares.~~2000 Plan. As of September 30, ~~2006,~~2008, 1,141,658 options ~~to purchase 2,436,029 shares~~ are outstanding and ~~5,527,450~~6,013,665 shares remain available for grant.

During the year ended September 30, ~~2006,~~2008, the Company issued ~~699,500~~52,655 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: two year vesting in which 25% vest immediately, 25% vest in Year 1 and 50% vest in Year 2; two-year cliff vesting; three year vesting in which one-third vest in Year 1, one-third vest in Year 2 and one-third vest in Year 3; and three year vesting in which 25% vest in Year

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

1, 25% vest in Year 2 and 50% vest in Year ~~3; four year vesting in which 50% vest in Year 2, 25% vest in Year 3 and 25% vest in Year 4: and four year cliff vesting.~~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 2008, the Company granted 300,000 restricted stock awards to an executive officer with market and performance-based vesting criteria. Due to the market-based vesting criteria component, the Company has valued these restricted stock awards using a lattice model. These awards have a two-year life and have a grant date fair value of $10.40 per share.

1998 Employee Equity Incentive Plan

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

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

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, ~~2006, 1,780,405~~2008, 2,705,969 options were forfeited due to employee terminations. A total of ~~1,560,039~~509,051 options are outstanding and 291,032 shares remain available for grant under the 1998 Plan as of September 30, ~~2006.~~2008.

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 for the benefit of the Company and its stockholders and to provide additional incentives for such independent directors to continue to work for the best interests of the Company and its stockholders through continuing ownership of its common stock. The Directors Plan expired in 2003, although some options issued under that plan remain outstanding. Under its terms, each director who was not an employee of the Company or any of its subsidiaries was eligible to receive options under the Directors Plan. Under the Directors Plan, each eligible director received an automatic grant of an option to purchase 25,000 shares of common stock upon becoming a director of the Company and an option to purchase 10,000 shares on July 1 each year thereafter. 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 as of September 30, ~~2006.~~2008.

1992 Combination Stock Option Plan

Under the Company’s 1992 Stock Option Plan (the “1992 Plan”), the Company may grant both incentive stock options and nonqualified stock options. Incentive stock options may only be granted to persons who are employees of the Company at the time of grant, which may include officers and directors who are also employees. Nonqualified stock options may be granted to persons who are officers, directors or employees of or consultants or advisors to the Company or persons who are in a position to contribute to the long-term success and growth of the Company at the time of grant. Options granted under the 1992 Plan generally vest over a period of four years and generally expire ten years from the date of grant. A total of ~~115,596~~56,444 options are outstanding and no shares remain available for grant under the 1992 Plan as of September 30, ~~2006.~~2008.

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Stock Options of Acquired Companies

In connection with the acquisition of PRI on May 14, 2002, the Company assumed the outstanding options of multiple stock option plans that were adopted by PRI. At acquisition, 6,382,329 options to purchase PRI common stock were outstanding and converted into 3,319,103 options to purchase the Company’s Common Stock. ~~There were~~A total of 520 options ~~to purchase 120,554~~are outstanding and no shares ~~granted under this plan that were outstanding at September 30, 2006. The Company does not intend to issue any additional options~~remain available for grant under the PRI ~~stock option plan.~~Plans as of September 30, 2008.

In connection with the acquisition of 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 Helix common stock were outstanding and converted into 765,480 options to purchase the Company’s Common Stock. A total of ~~574,977~~114,048 options are outstanding and ~~153,595~~403,897 shares remain available for grant under the Helix plans as of September 30, ~~2006.~~2008. The Company does not intend to issue any additional options under the Helix stock option plan.

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Stock Option Activity

Aggregate stock option activity for all the above plans for the ~~years~~year ended September 30, ~~2006, 2005 and 2004~~2008 is as follows:


																2008
	Year Ended September 30,																		Weighted-
	2006					2005					2004								Average				Aggregate
				Weighted					Weighted					Weighted					Remaining		Weighted		Intrinsic
				Average					Average					Average					Contractual		Average		Value (In
	Shares			Price		Shares			Price		Shares			Price		Shares			Term		Price		Thousands)

Options outstanding at beginning of year		5,205,354		$	23.92		5,709,626		$	25.43		4,639,910		$	28.93		2,512,059				$	20.11
Granted		217,000		$	12.82		652,250		$	16.38		2,486,159		$	23.84
Assumed from Helix Technology acquisition		765,480		$	16.42		—		$	—		—		$	—
Exercised		(108,104	)	$	10.69		(179,694	)	$	12.77		(157,730	)	$	15.51		(42,130	)			$	9.32
Forfeited/expired		(1,289,253	)	$	27.56		(976,828	)	$	29.77		(1,258,713	)	$	36.95		(653,904	)			$	21.35

Options outstanding at end of year		4,790,477		$	21.51		5,205,354		$	23.92		5,709,626		$	25.43		1,816,025			2.1 years	$	19.92	$	23

Vested and unvested expected to vest at end of year																	1,810,101			2.0 years	$	19.94	$	23

Options exercisable at end of year		4,008,600		$	22.82		4,120,400		$	25.83		3,234,428		$	27.75		1,693,549			2.0 years	$	20.38	$	23

Weighted average fair value of options granted at market value during the year				$	6.84				$	7.39				$	10.40
Weighted average fair value of options granted below market value during the year				$	6.81				$	6.20				$	12.37
Options available for future grant		5,972,077															6,708,594

~~The following table summarizes information about stock options outstanding at September 30, 2006:~~

Options Outstanding
Weighted-

Average
Options Exercisable
Remaining
Aggregate
Aggregate

Contractual
Weighted-
Intrinsic
Weighted-
Intrinsic

Life
Average
Value (In
Average
Value (In

Range of Exercise Prices
Shares (Years) Exercise Price Thousands) Shares Exercise Price Thousands)

$3.62 — $13.05 1,028,780 4.44 $ 11.07 $ 2,038 708,468 $ 10.74 $ 1,635
$13.06 — $24.02 1,218,225 4.69 $ 17.95 $ — 766,103 $ 18.62 $ —
$24.30 — $24.30 1,328,279 3.13 $ 24.30 $ — 1,318,836 $ 24.30 $ —
$24.78 — $59.44 1,215,193 1.86 $ 30.89 $ — 1,215,193 $ 30.89 $ —

$3.62 — $59.44 4,790,477 3.49 $ 21.51 $ 2,038 4,008,600 $ 22.82 $ 1,635

~~The weighted average remaining contractual life of options exercisable at September 30, 2006 was 3.1 years.~~

The aggregate intrinsic value in the table above represents the total intrinsic value, based on the Company’s closing stock price of ~~$13.05~~$8.36 as of September 30, ~~2006,~~2008, which would have been received by the option holders had all option holders exercised their options as of that date. ~~The total number ofin-the-money~~ ~~options exercisable as of September 30, 2006 was 708,468.~~

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

The weighted average grant date fair value of stock options, as determined under SFAS No. 123R, granted during fiscal 2006 ~~2005 and 2004~~ was $6.82 ~~$7.30, and $10.81~~ per ~~share, respectively.~~share. No stock options were granted in fiscal 2008 or fiscal 2007. The total intrinsic value of options exercised during fiscal 2008, 2007 and 2006 was $35,000, $2,576,000 and ~~2005 was~~ $371,000, ~~and $718,000,~~ respectively. The total cash received from employees as a result of employee stock option exercises during fiscal 2008, 2007 and 2006 was $392,000, $7,005,000 and ~~2005 was~~ $1,155,000, ~~and $2,294,000,~~ respectively.

As of September 30, ~~2006~~2008 future compensation cost related to nonvested stock options is approximately ~~$6.0~~$0.8 million and will be recognized over an estimated weighted average period of ~~2.3~~1.6 years.

The Company settles employee stock option exercises with newly issued common shares.

Based on information currently available, the Company believes that, although certain options may have been granted in violation of our applicable option plans, those options are valid and enforceable obligations of the Company.

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Restricted Stock Activity

Restricted stock for the year ended September 30, ~~2006~~2008 was determined using the fair value method. A summary of the status of the Company’s restricted stock as of September 30, ~~2006~~2008 and changes during the year ~~ended September 30, 2006~~ is as follows:


	Year Ended
	September 30, 2006					2008
				Weighted					Weighted
				Average					Average
				Grant-Date					Grant-Date
	Shares			Fair Value		Shares			Fair Value

Outstanding at beginning of year		288,000		$	16.40		961,875		$	14.42
Awards granted		828,000			13.15		614,500			12.06
Awards vested		(91,750	)		16.10		(330,030	)		13.37
Awards canceled		(128,500	)		13.94		(261,845	)		14.27

Outstanding at end of year		895,750		$	13.79		984,500		$	13.33

The weighted average grant date fair value of restricted stock, as determined under SFAS No. 123R, granted during fiscal 2007 and fiscal 2006 was $16.11 and $13.15 per share, respectively. The fair value of restricted stock awards vested during fiscal 2008, 2007 and 2006 was $4.4 million, $4.2 million and $1.5 ~~million. No restricted stock awards vested during fiscal 2005.~~million, respectively.

As of September 30, ~~2006,~~2008, the unrecognized compensation cost related to nonvested restricted stock is ~~$8.9~~$8.8 million and will be recognized over an estimated weighted average amortization period of ~~3.0~~1.6 years.

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 ~~2,250,000~~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. 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. ~~At the Company’s March 2006 Annual Meeting, stockholders approved an amendment to the 1995 Plan to increase the number of shares authorized for issuance under the plan by 750,000 shares.~~ As of September 30, ~~2006, 1,551,762~~2008, 1,988,259 shares of common stock have been purchased under the 1995 Plan and ~~1,448,238~~1,011,741 shares remain available for purchase.

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

15. ~~Acquisition-Related and~~ Restructuring Costs and Accruals

Fiscal ~~2006~~2008 Activities

The Company recorded a charge to continuing operations of ~~$5.3~~$7.3 million in the year ended September 30, ~~2006~~2008 for restructuring costs.

Restructuring Costs

Based on estimates of its near term future revenues and operating costs, in fiscal ~~2006,~~2008, the Company took additional cost reduction actions. Accordingly, charges of ~~$5.3~~$7.3 million were recorded for these actions. Of this amount, ~~$3.3~~$6.8 million related to workforce reductions and ~~$2.0~~$0.5 million related to costs to vacate excess facilities ~~primarily related to a vacant facility~~ in ~~Billerica, Massachusetts due to a longer period than initially estimated to sublease the facility.~~San Jose, California and South Korea. The workforce reductions consisted of ~~$2.4~~$6.8 million of severance costs associated with ~~the termination~~workforce reductions of ~~approximately 40 legacy Brooks~~230 employees ~~worldwide~~ in ~~sales,~~operations, service ~~operations~~ and administrative functions ~~whose positions~~across all the main geographies in which the Company operates. The restructuring charges by segment for fiscal 2008 were: Global Customer Operations — $2.7 million, Automated Systems — $2.2 million

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

and Critical Components — $0.4 million. In addition, the Company incurred $2.0 million of restructuring charges in fiscal 2008 that were ~~made redundant as a result~~related to general corporate functions that support all of the Helix acquisition and further downsizing in the Company’s software segment, and $1.8 million for retention bonuses earned in the period by employees who have been notified of their termination in the current and prior periods, offset by the $0.9 million reversal of previously accrued termination costs to employees who will no longer be terminated or whose termination was settled at a reduced cost.our segments. The accruals for workforce reductions are expected to be paid over the next twelve months. The ~~impact~~Company estimates that the annual salary and benefit savings as a result of these actions will be approximately $14.0 million. The cost ~~reductions on the Company’s liquidity is not~~savings resulting from these restructuring actions are expected to ~~be significant, as these cost savings~~ yield actual cash savings, net of the related costs, within twelve months.

The Company is expanding its cost reduction efforts in response to the global economic slowdown and expects to take further restructuring charges during fiscal 2009. The Company continues to review and align its cost structure to attain profitable operations amid the changing semiconductor cycles.

Fiscal ~~2005~~2007 Activities

The Company recorded a charge to continuing operations of ~~$16.5~~$7.1 million in the year ended September 30, ~~2005~~2007 for restructuring costs.

Restructuring Costs

Based on estimates of its near term future revenues and operating costs, in fiscal 2007, the Company took additional cost reduction actions. Accordingly, charges of $7.1 million were recorded for these actions. Of this amount, $4.0 million related to workforce reductions and $3.1 million related to fully recognizing the remaining obligation on the lease associated with the Company’s vacant facility in Billerica, Massachusetts. The workforce reductions consisted of $4.0 million of severance costs associated with the termination of approximately 90 employees in operations, service and administrative functions principally in the U.S., Germany and Korea.

Fiscal 2006 Activities

The Company recorded a charge to continuing operations of $4.3 million in the year ended September 30, 2006 for restructuring costs. The Company also recorded a charge of $1.0 million in the year ended September 30, ~~2005~~2006 related to the discontinued ~~SELS~~software division, which is included in the loss from discontinued operations.

Restructuring Costs

Based on estimates of its near term future revenues and operating costs, the Company announced in fiscal ~~2005~~2006 plans to take additional cost reduction actions. Accordingly, charges of ~~$17.5~~$4.3 million ~~of which $1.0 million related to, and is classified within discontinued operations,~~ were recorded for these actions. ~~Of this amount, $14.3~~This charge consisted of $2.0 million of excess facilities charges primarily related to workforce reductions of approximately 270 employees world wide, across all functions of the business and $3.2 million related to excess facilities. Of the $3.2 million of facilities charges, $1.5 million represents an additional accrual on a ~~previous vacated~~vacant facility in Billerica Massachusetts due to a longer period than initially estimated tosub-lease the ~~facility. Workforce reduction charges included $4.3~~facility, $2.5 million for ~~headcount reduction~~costs incurred related to the termination of approximately ~~100 individuals associated with our software segment, $3.6 million for reductions of approximately 65~~30 employees ~~in our Jena, Germany facility and $6.4 million related to various other actions undertaken in fiscal 2005. Excess facility charges consist~~worldwide whose positions were made redundant as a result of the ~~present value~~Helix acquisition, offset by the $0.2 million reversal of ~~remaining lease obligations on facilities vacated in fiscal 2005. The impact of these cost reductions on the Company’s liquidity is not expected~~previously accrued termination costs to employees who will no longer be ~~significant, as these actions yield equivalent actual cash savings within twelve months.~~

~~Fiscal 2004 Activities~~

terminated or whose termination was settled at a reduced cost. The Company recorded a charge ~~to operations~~ of ~~$5.4~~$1.0 million in ~~the~~fiscal year ~~ended September 30, 2004 of which $0.1 million~~2006 for workforce reductions related to ~~acquisitions and $5.3 million related to restructuring costs.~~its discontinued software division which is included in the loss from discontinued operations.

7765

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

~~Acquisition-Related Costs~~

~~The $0.1 million related to acquisitions is comprised of legal and consulting costs to integrate and consolidate acquired entities into existing Brooks entities.~~

~~Restructuring Costs~~

Based on estimates of its near term future revenues and operating costs, the Company announced in fiscal 2004 several plans to take additional cost reduction actions. Accordingly, charges of $5.3 million were recorded for these actions. Of this amount, $3.9 million related to workforce reductions of approximately 60 employees world wide, across all functions of the business and $1.4 million related to excess facilities. Excess facilities charges of $1.4 million consisted of $0.2 million for excess facilities identified in fiscal 2004 that were recorded to recognize the amount of the remaining lease obligations. These costs have been estimated from the time when the space is vacant and there are no plans to utilize the facility. Costs incurred prior to vacating the facilities were charged to operations. Final exit costs for facilities abandoned in previous restructurings amounted to $0.7 million. The remaining $0.5 million represents a reevaluation of the assumptions used in determining the fair value of certain lease obligations related to facilities abandoned in a previous restructuring. The revised assumptions, including lower estimates of expected~~sub-rental~~ income over the remainder of the lease terms, are based on management’s evaluation of the rental space available. The Company believes that the cost reduction programs implemented will align costs with revenues. In the event the Company is unable to achieve this alignment, additional cost cutting programs may be required in the future. The facilities charges are expected to be paid over the remaining lease periods, expiring in fiscal 2011. These charges helped better align the Company’s cost structure. The impact of these cost reductions on the Company’s liquidity is not expected to be significant, as these actions yield equivalent actual cash savings within twelve months.

The activity related to the Company’s restructuring accruals is below, which includes activity related to ~~our~~the discontinued ~~SELS~~software division (in thousands):


	Fiscal 2006 Activity														Fiscal 2008 Activity
	Balance												Balance		Balance							Balance
	September 30,												September 30,		September 30,							September 30,
	2005		Expense		Helix Acquisition		Reversals			Utilization			2006		2007		Expense		Utilization			2008

Facilities	$	15,045	$	1,966	$	580	$	—		$	(3,894	)	$	13,697	$	12,804	$	540	$	(3,686	)	$	9,658
Workforce-related		8,429		4,321		2,756		(990	)		(11,670	)		2,846		2,907		6,747		(6,649	)		3,005

	$	23,474	$	6,287	$	3,336	$	(990	)	$	(15,564	)	$	16,543	$	15,711	$	7,287	$	(10,335	)	$	12,663


	Fiscal 2005 Activity														Fiscal 2007 Activity
	Balance												Balance		Balance										Balance
	September 30,												September 30,		September 30,										September 30,
	2004		Expense		Adjustments		Reversals			Utilization			2005		2006		Expense		Reversals			Utilization			2007

Facilities	$	17,730	$	1,680	$	1,542	$	—		$	(5,907	)	$	15,045	$	13,697	$	3,131	$	(62	)	$	(3,962	)	$	12,804
Workforce-related		2,460		14,451		—		(184	)		(8,298	)		8,429		2,846		4,039		—			(3,978	)		2,907

	$	20,190	$	16,131	$	1,542	$	(184	)	$	(14,205	)	$	23,474	$	16,543	$	7,170	$	(62	)	$	(7,940	)	$	15,711

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~


	Fiscal 2004 Activity													Fiscal 2006 Activity
	Balance											Balance		Balance												Balance
	September 30,											September 30,		September 30,												September 30,
	2003		Expense		Adjustments		Reversals		Utilization			2004		2005		Expense		Helix Acquisition		Reversals			Utilization			2006

Facilities	$	24,312	$	192	$	1,216	$	—	$	(7,990	)	$	17,730	$	15,045	$	1,966	$	580	$	—		$	(3,894	)	$	13,697
Workforce-related		4,955		3,922		—		—		(6,417	)		2,460		8,429		4,321		2,756		(990	)		(11,670	)		2,846

	$	29,267	$	4,114	$	1,216	$	—	$	(14,407	)	$	20,190	$	23,474	$	6,287	$	3,336	$	(990	)	$	(15,564	)	$	16,543


16.	Segment and Geographic Information

~~The Company has two reportable segments: hardware and software.~~ In the fourth quarter of fiscal ~~year 2005,~~2007 the ~~Company’s equipment automation~~Company made changes to its internal reporting structure and ~~factory automation~~began reporting results in three segments: Automation Systems; Critical Components; and Global Customer Operations. In the second quarter of fiscal 2008 these segment disclosures were refined to reflect the results of a comprehensive review of operations conducted subsequent to the appointment of a new CEO and CFO. These refinements resulted in minor changes to the previously disclosed split of revenues and gross margins among segments ~~were combined into the hardware segment, which reflects how management now evaluates its business.~~and between products and services.

The ~~hardware~~Automation Systems segment ~~provides~~consists of a range of wafer handling products and ~~components for use within semiconductor~~systems that support both atmospheric and vacuum process equipment. These systems automate the movement of wafers into and out of semiconductor manufacturing process chambers and provide an integration point between factory automation systems and process tools. The products offeredtechnology used by the Company include vacuum and atmospheric systems and robots, subsystems, and related components. Also offered are assembly and manufacturing of customer designed automation systems, or contract automation systems. The primary customers for these solutions are manufacturers of process tool equipment. Other hardware products include Brooks’ automated material handling systems, or AMHS, and equipment for lithography automation that manage the storage, inspection and transport of photomasks, or reticles.Company’s customers.

The ~~software~~Critical Components segment ~~addresses the need for production~~includes cryogenic vacuum pumping, thermal management ~~systems driven by the extensive tracking~~ and ~~tracing requirements~~vacuum measurement solutions used to create, measure and control critical process vacuum applications. The pump, gauge and chiller products serve various markets that use vacuum as a critical enabler to overall system performance.

The Global Customer Operations segment consists of the ~~semiconductor industry. At the core~~Company’s after market activities including an extensive range of ~~these production systems is the manufacturing execution system (“MES”) that is primarily responsible for tracking the movement~~service support to its customers to address theiron-site needs, spare parts and repair services, and support of production wafers in a fab, and managing the data and actions for every wafer, equipment, operator and other resources in the fab. These mission-critical systems provide real time information primarily to production operators, supervisors and fab managers. Also provided is other important software applications to meet the critical requirements of the fab, such as real time dispatching and scheduling, equipment communications, advanced process control, material control using the AMHS, activity execution and control, automated maintenance management of equipment, and other applications. Customers often purchase more than one of these software products from Brooks for a single fab, often driving the need for consulting and integration services. These software products enable semiconductor manufacturers to increase their return on investment by maximizing production efficiency, and may be sold as part of an integrated solution or on a stand-alone basis. These software products and services are also used in many similar manufacturing industries as semiconductor, including flat panel display, data storage, and electronic assembly.legacy product lines.

The Company evaluates performance and allocates resources based on revenues, ~~and~~ 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. Amortization of acquired intangible assets including impairment of these assets and of goodwill and acquisition-related and restructuring charges are excluded from the segments’ operating income (loss). The Company’s non-allocable overhead costs, which include corporate general and administrative expenses, are allocated between the segments based upon segment revenues. Segment assets exclude deferred tax assets, acquired intangible assets, goodwill, marketable securities and cash equivalents.

79
66

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

(excluding completed technology) and restructuring charges are excluded from the segments’ operating income (loss). The Company’s non-allocable overhead costs, which include various general and administrative expenses, are allocated among the segments based upon segment revenues. Segment assets exclude acquired intangible assets, goodwill, investments in joint ventures, marketable securities and cash equivalents.

The Company has reclassified prior year data due to the changes made in its reportable segments.

Financial information for the Company’s business segments is as follows (in thousands):


	Hardware		Software		Total							Global
	Automation		Critical		Customer
							Systems			Components		Operations		Total

Year ended September 30, 2008
Revenues
Product							$	273,294		$	127,035	$	11,324	$	411,653
Services								—			—		114,713		114,713

							$	273,294		$	127,035	$	126,037	$	526,366

Gross profit							$	54,714		$	47,871	$	24,243	$	126,828
Segment operating income (loss)							$	(32,052	)	$	11,654	$	830	$	(19,568	)
Depreciation							$	11,192		$	3,359	$	3,625	$	18,176
Assets							$	159,975		$	49,710	$	60,762	$	270,447
Year ended September 30, 2007
Revenues
Product							$	443,501		$	165,225	$	16,679	$	625,405
Services								—			—		117,853		117,853

							$	443,501		$	165,225	$	134,532	$	743,258

Gross profit							$	119,456		$	66,235	$	33,904	$	219,595
Segment operating income							$	15,046		$	29,016	$	9,336	$	53,398
Depreciation							$	10,402		$	4,090	$	2,989	$	17,481
Assets							$	270,401		$	72,771	$	82,020	$	425,192
Year ended September 30, 2006
Revenues
Product	$	488,827	$	25,467	$	514,294	$	336,923		$	143,543	$	14,331	$	494,797
Services		118,667		59,909		178,576		—			—		112,697		112,697

	$	607,494	$	85,376	$	692,870	$	336,923		$	143,543	$	127,028	$	607,494

Gross profit	$	186,650	$	58,134	$	244,784	$	104,642		$	55,390	$	26,618	$	186,650
Segment operating income	$	34,921	$	3,054	$	37,975	$	8,412		$	18,288	$	1,337	$	28,037
Depreciation	$	15,362	$	1,742	$	17,104	$	8,218		$	4,740	$	2,822	$	15,780
Assets	$	418,296	$	36,707	$	455,003	$	243,051		$	82,535	$	87,495	$	413,081
Year ended September 30, 2005
Revenues
Product	$	310,025	$	28,047	$	338,072
Services		59,753		65,921		125,674

	$	369,778	$	93,968	$	463,746

Gross profit	$	99,786	$	60,350	$	160,136
Segment operating income	$	12,481	$	547	$	13,028
Depreciation	$	9,899	$	3,352	$	13,251
Assets	$	237,676	$	54,675	$	292,351
Year ended September 30, 2004
Revenues
Product	$	357,280	$	44,972	$	402,252
Services		58,194		74,607		132,801

	$	415,474	$	119,579	$	535,053

Gross profit	$	130,124	$	69,542	$	199,666
Segment operating income	$	35,231	$	8,995	$	44,226
Depreciation	$	8,817	$	4,940	$	13,757
Assets	$	296,115	$	79,647	$	375,762

8067

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

A reconciliation of the Company’s reportable segment operating income (loss) and segment assets to the corresponding consolidated amounts as of and for the ~~year~~years ended September 30, ~~2006, 2005~~2008, 2007 and ~~2004~~2006 is as follows (in thousands):


	As of and for the Year Ended							As of and for the Year Ended
	September 30,							September 30,
	2006		2005			2004		2008			2007		2006

Segment income (loss) from continuing operations	$	37,975	$	13,028		$	44,226
Segment operating income (loss) from continuing operations								$	(19,568	)	$	53,398	$	28,037
Amortization of acquired intangible assets		4,894		804			1,053		7,044			5,939		4,251
Restructuring and acquisition-related charges		5,297		16,542			5,356
Impairment charges									203,570			—		—
Restructuring charges									7,287			7,108		4,257

Total income (loss) from continuing operations	$	27,784	$	(4,318	)	$	37,817
Total operating income (loss) from continuing operations								$	(237,469	)	$	40,351	$	19,529

Segment assets	$	455,003	$	292,351		$	375,762	$	270,447		$	425,192	$	413,081
Assets from discontinued operations		—		55			1,706		—			—		57,324
Goodwill		351,444		62,094			62,034		119,979			319,302		314,452
Intangible assets		94,067		3,828			6,929		58,452			76,964		92,213
Investments in marketable securities and cash equivalents		92,063		265,752			224,608
Investments in cash equivalents, marketable securities and joint ventures									205,988			193,380		115,507
Insurance receivable									8,772			—		—

Total assets	$	992,577	$	624,080		$	671,039	$	663,638		$	1,014,838	$	992,577

Net revenues based upon the source of the order by geographic area are as follows (in thousands):


	Year Ended September 30,						Year Ended September 30,
	2006		2005		2004		2008		2007		2006

North America	$	412,941	$	241,681	$	272,694	$	340,214	$	496,254	$	379,719
Asia/Pacific		157,379		141,703		141,697		108,786		148,140		126,556
Europe		122,550		80,362		120,662		77,366		98,864		101,219

	$	692,870	$	463,746	$	535,053	$	526,366	$	743,258	$	607,494

Long-lived assets, ~~including~~consisting of property, plant and equipment by geographic area are as follows (in thousands):


	September 30,				September 30,
	2006		2005		2008		2007

North America	$	73,142	$	51,115	$	76,306	$	73,561
Asia/Pacific		5,076		2,357		4,835		6,625
Europe		615		693		463		561

	$	78,833	$	54,165	$	81,604	$	80,747


17.	Significant Customers ~~and Related Party Information~~

~~On June 11, 2001, the~~The Company ~~appointed a new member to its Board~~had two customers that accounted for more than 10% of Directors. This individual served as a director of one of the Company’s customers until May 3, 2006. Accordingly, this customer is considered a related party for the period from June 11, 2001 through May 3, 2006. Revenues from this customer from October 1, 2005 to March 31, 2006 were approximately $205,000 and forrevenues in the years ended September 30, ~~2005~~2008 and ~~2004 were approximately $319,000 and $409,000, respectively.~~2007. The ~~amounts due from this~~Company had one customer ~~included~~that accounted for more than 10% of revenues in the year ended September 30, 2006. The Company had two customers that accounted for more than 10% of its accounts receivable balance at ~~March 31, 2006 and~~ September 30, ~~2005 were $40,000~~2008 and $33,000, respectively. Related party transactions and amounts included in accounts receivable are on standard pricing and contractual terms and manner of settlement for products and services of similar types and at comparable volumes.2007.

8168

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

The Company had no customer that accounted for more than 10% of revenues in the years ended September 30, 2006, 2005 and 2004. The Company had two customers that accounted for more than 10% of its accounts receivable balance at September 30, 2006 and one customer that accounted for 10% of its accounts receivable balance at September 30, 2005.


18.	Other Balance Sheet Information

Components of other selected captions in the Consolidated Balance Sheets are as follows (in thousands):


	September 30,				September 30,
	2006		2005		2008		2007

Accounts receivable	$	128,904	$	80,352	$	68,210	$	107,373
Less allowance for doubtful accounts		1,709		2,797		1,366		1,469

	$	127,195	$	77,555	$	66,844	$	105,904

The allowance for doubtful accounts activity for the years ended September 30, ~~2006, 2005~~2008, 2007 and ~~2004~~2006 were as follows (in thousands):


	Balance at														Balance at
	Beginning of		Acquisition				Reversals of			Write-offs and			Balance at		Beginning of		Acquisition				Reversals of			Write-offs and			Balance at
Description	Period		Reserves		Provisions		Bad Debt Expense			Adjustments			End of Period		Period		Reserves		Provisions		Bad Debt Expense			Adjustments			End of Period

2008 Allowance for doubtful accounts															$	1,469	$	—	$	720	$	(255	)	$	(568	)	$	1,366
2007 Allowance for doubtful accounts																1,709		267		100		(31	)		(576	)		1,469
2006 Allowance for doubtful accounts	$	2,797	$	579	$	—	$	(842	)	$	(825	)	$	1,709		2,648		579		—		(842	)		(676	)		1,709
2005 Allowance for doubtful accounts		3,230		—		—		—			(433	)		2,797
2004 Allowance for doubtful accounts		6,499		—		225		(2,050	)		(1,444	)		3,230


	September 30,				September 30,
	2006		2005		2008		2007

Inventories
Inventories, net
Raw materials and purchased parts	$	48,996	$	24,612	$	64,651	$	50,304
Work-in-process		25,064		12,043		26,789		31,555
Finished goods		25,794		11,779		14,461		22,935

	$	99,854	$	48,434	$	105,901	$	104,794

Reserves for excess and obsolete inventory were ~~$12,707,000, $12,707,000~~$17.4 million, $18.7 million and ~~$14,520,000~~$12.7 million at September 30, ~~2006, 2005~~2008, 2007 and ~~2004,~~2006, respectively. The Company recorded additions to reserves for excess and obsolete inventory of ~~$2,917,000 (including net acquired reserves of $1,686,000), $8,902,000~~$4.9 million, $11.4 million and ~~$9,259,000~~$2.9 million in fiscal 2008, 2007 and 2006, ~~2005~~respectively, including $5.2 million, $8.5 million and ~~2004, respectively, comprised of $1,231,000, $8,752,000 and $7,340,000~~$1.2 million charged to expense in fiscal ~~2006, 2005~~2008, 2007 and ~~2004, respectively, and $8,000, $150,000 and $421,000 of foreign exchange differences charged to other accounts in fiscal~~ 2006, ~~2005 and 2004,~~ respectively. The Company reduced the reserves for excess and obsolete inventory by ~~$2,917,000, $10,715,000~~$6.3 million, $5.4 million and ~~$10,244,000,~~$2.9 million, in fiscal ~~2006, 2005~~2008, 2007 and ~~2004,~~2006, respectively, for ~~write-offs~~disposals of inventory.

8269

BROOKS AUTOMATION, INC.

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. While the Company engages in extensive product quality programs and processes, including actively monitoring and evaluating the quality of its component suppliers, 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 years ended September 30, ~~2006, 2005,~~2008, 2007 and ~~2004~~2006 is as follows (in thousands):


Balance September 30, 2003	$	11,809
Accruals for warranties during the year		3,980
Settlements made during the year		(3,843	)

Balance September 30, 2004		11,946
Accruals for warranties during the year		3,786
Settlements made during the year		(5,950	)

Balance September 30, 2005		9,782
Balance at September 30, 2005				$	9,782
Acquisitions		1,586			1,586
Accruals for warranties during the year		13,040			13,040
Settlements made during the year		(12,800	)		(12,800	)

Balance September 30, 2006	$	11,608
Balance at September 30, 2006					11,608
Accruals for warranties during the year					13,387
Settlements made during the year					(14,009	)

Balance at September 30, 2007					10,986
Accruals for warranties during the year					10,344
Settlements made during the year					(13,156	)

Balance at September 30, 2008				$	8,174


19.	Commitments and Contingencies

Lease Commitments

The Company leases manufacturing and office facilities and certain equipment under operating leases that expire through 2015. Rental expense under operating leases, excluding expense recorded as a component of restructuring, for the years ended September 30, 2008, 2007 and 2006 ~~2005 and 2004~~ was ~~$5.6~~$5.4 million, ~~$4.7~~$4.5 million and ~~$6.5~~$5.1 million, respectively. Future minimum lease commitments on non-cancelable operating leases, lease income and sublease income are as follows (in thousands):


			Lease and				Lease and
	Operating		Sublease		Operating		Sublease
	Leases		Income		Leases		Income

Year ended September 30, 2007	$	12,611	$	1,220
2008		10,787		1,230
2009		10,528		1,245
Year ended September 30, 2009					$	11,838	$	1,797
2010		10,158		1,261		10,845		1,563
2011		8,184		1,277		8,384		1,450
2012						2,314		61
2013						2,407		—
Thereafter		9,828		—		3,311		—

	$	62,096	$	6,233	$	39,099	$	4,871

These future minimum lease commitments include approximately ~~$25.3~~$16.0 million related to facilities the Company has elected to abandon in connection with its restructuring initiatives. In addition, the Company is a guarantor on a ~~7 year~~ lease in Mexico that expires in January 2013 for approximately ~~$2.5~~$1.6 million.

Purchase Commitments

The Company has non-cancelable contracts and purchase orders for inventory of ~~$99.4~~$44.7 million at September 30, ~~2006.~~2008.

8370

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

Contingencies

There has been substantial litigation regarding patent and other intellectual property rights in the semiconductor and related industries. The Company has in the past been, and may in the future be, notified that it may be infringing intellectual property rights possessed by other third parties. The Company cannot guarantee that infringement claims by third parties or other claims for indemnification by customers or end users of its products resulting from infringement claims will not be asserted in the future or that such assertions, if proven to be true, will not materially and adversely affect the ~~Company’s’~~Company’s business, financial condition and results of operations. If any such claims are asserted against the Company’s intellectual property rights, the Company may seek to enter into a royalty or licensing arrangement. The Company cannot guarantee, however, that a license will be available on reasonable terms or at all. The Company could decide in the alternative to resort to litigation to challenge such claims or to attempt to design around the patented technology. Litigation or an attempted design around could be costly and would divert the Company’s management’s attention and resources. In addition, if the Company does not prevail in such litigation or succeed in an attempted design around, the Company could be forced to pay significant damages or amounts in settlement. Even if a design around is effective, the functional value of the product in question could be greatly diminished.

~~ITI Lawsuit~~

On or about April 21, 2005, the Company was served with a third-party complaint seeking to join the Company as a party to a patent lawsuit brought by an entity named Information Technology Innovation, LLC based in Northbrook, Illinois (“ITI”) against Motorola, Inc. (“Motorola”) and Freescale Semiconductor, Inc. (“Freescale”). In the lawsuit (the “ITI Lawsuit”), ITI claimed that Motorola and Freescale had infringed a U.S. patent that ITI asserts covers processes used to model a semiconductor manufacturing plant. ITI asserted that the Company has induced and contributed to the infringement of the patent. Subsequently Intel Corporation (“Intel”) filed a lawsuit against ITI seeking a declaratory judgment that Intel has not infringed and is not infringing the patent (the “Intel Lawsuit”) and notified the Company that Intel believed that the Company had an indemnification obligation to Intel, but that, at that time, Intel was not seeking to have those obligations determined and enforced in the Intel Lawsuit.

Freescale alleged that the Company had a duty to indemnify Freescale and Motorola from any infringement claims asserted against them based on their use of our AutoSched software program by paying all costs and expenses and all or part of any damages that either of them might incur as a result of the ITI Lawsuit brought by ITI.

Pursuant to an agreement executed on April 28, 2006, the Company settled and concluded with ITI and the other parties all of the matters that were or might have been raised in this litigation. In exchange for a cash payment, the settlement affords a license, releases and covenants from ITI not to sue the Company, the other parties named above, and all users of certain of our factory modeling software products such as the “Autosched” product. The Intel Lawsuit was also dismissed as a result of this settlement. In addition, the Company settled the claim for indemnification brought against Brooks by Freescale by the payment to Freescale of $400,000 to defray a portion of the legal expenses borne by Freescale in the defense of the ITI litigation.

~~Other Commercial Litigation Matters~~

In January 2006 a ruling was issued against the Company by a Massachusetts state court in a commercial litigation matter involving the Company and BlueShift Technologies, Inc. Awards of damages and costs were assessed against Brooks in January and April 2006 in the amount of approximately $1.6 million, which had been accrued for at December 31, 2005. Brooks has filed a notice of appeal in the case with the Massachusetts Appeals Court and that appeal is now pending.

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

Regulatory Proceedings Relating to Equity Incentive Practices and the Restatement

All pending inquiries and investigations of the Company by agencies of the United States Government pertaining to the Company’s past equity incentive-related practices have now been concluded, as described more fully below.

On May 12, 2006, wethe Company announced that ~~the Company~~it had received notice that the Boston Office of the United States Securities and Exchange Commission (the “SEC”) was conducting an informal inquiry concerning stock option grant practices to determine whether violations of the securities laws had occurred. On June 2, 2006, the SEC issued a voluntary request for information ~~to us~~ in connection with an informal inquiry by that office regarding a loan wethe Company previously reported had been made to former Chairman and CEO Robert Therrien in connection with the exercise by him of stock options in 1999. On June 23, 2006, ~~we were~~the Company was informed that the SEC had opened a formal investigation into this matter and on the general topic of the timing of stock option grants. On June 28, 2006, the SEC issued subpoenas to the Company and to the Special Committee of the Board of Directors, which had previously been formed on March 8, 2006, requesting documents related to the Company’s stock option grant practices and to the loan to Mr. Therrien.

On May 19, 2006, wethe Company received a grand jury subpoena from the United States Attorney (the “DOJ”) for the Eastern District of New York requesting documents relating to stock option grants. Responsibility for the DOJ’s investigation was subsequently assumed by the United States Attorney for the District of Massachusetts. On June 22, 2006 the United States Attorney’s Office for the District of Massachusetts issued a grand jury subpoena to usthe Company in connection with an investigation by that office into the timing of stock option grants by usthe Company and the loan to Mr. Therrien mentioned above. On May 9, 2007, the Company received afollow-up grand jury subpoena from the United States Attorney’s Office for the District of Massachusetts in connection with the same matters.

~~The~~On July 25, 2007, a criminal indictment was filed in the United States District Court for the District of Massachusetts charging Robert J. Therrien, the former Chief Executive Officer and Chairman of the Company, ~~is cooperating fully~~ with ~~the investigations being conducted~~income tax evasion. A separate civil complaint was filed by the SEC on July 25, 2007 against Mr. Therrien in the United States District Court for the District of Massachusetts charging him with violations of federal securities laws.

On May 19, 2008, the Company entered into a settlement with the SEC relating to its historical stock option granting processes. The Company agreed to settle with the SEC, without admitting or denying the

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

allegations in the Commission’s complaint, by consenting to the entry of a judgment enjoining future violations of the reporting, books and records, and internal controls provisions of the federal securities laws. The Company was not charged by the SEC with fraud nor was the Company required to pay any civil penalty or other money damages as part of the settlement. The option grants to which the SEC refers in its complaint were made between 1999 and 2001. The settlement completely resolves the previously disclosed SEC investigation into the Company’s historical stock option granting practices. As the Company disclosed previously, Brooks was not charged in the criminal indictment against Mr. Therrien, and the ~~DOJ.~~United States Attorney’s Office has informed the Company that it has closed this matter as it relates to the Company.

Private Litigation

On May 22, 2006, a derivative action was filed nominally on ~~our~~the Company’s behalf in the Superior Court for Middlesex County, Massachusetts, captioned asMollie Gedell, Derivatively on Behalf of Nominal Defendant Brooks Automation, Inc. v. A. Clinton Allen,et al. The Defendants named in the complaint are: A. Clinton Allen, Director of the Company; Roger D. Emerick, former Director of the Company; Edward C. Grady, Director, President and CEO of the Company; Amin J. Khoury, former Director of the Company; Joseph R. Martin, Director of the Company; John K. McGillicuddy, Director of the Company; and Robert J. Therrien, former Director, President and CEO of the Company.

On May 26, 2006, aanother derivative action was filed in the Superior Court for Middlesex County, Massachusetts nominally on ~~our~~the Company’s behalf, captioned asRalph Gorgone, Derivatively on Behalf of Nominal Defendant Brooks Automation, Inc. v. Edward C. Grady,et al. The Defendants named in the complaint are: Mr. Grady; Mr. Allen; Mr. Emerick; Mr. Khoury; Robert J. Lepofsky, Director of the Company; Mr. Martin; Mr. McGillicuddy; Krishna G. Palepu, Director of the Company; Alfred Woollacott, III, Director of the Company; Mark S. Wrighton, Director of the Company; and Marvin Schorr, Director Emeritus of the Company.

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

damages for breaches of fiduciary duty and unjust enrichment, disgorgement to the Company of all profits from allegedly backdated stock option grants, equitable relief, and ~~Plaintiffs’~~plaintiffs’ costs and disbursements, including attorneys’ fees, accountants’ and experts’ fees, costs, and expenses. The ~~Defendants have~~defendants served motions to dismiss and, in response, plaintiffs moved for leave to amend their complaint. The Proposed Amended Complaint made allegations substantially similar to those in the Consolidated Shareholder Derivative ~~Complaint.~~Complaint, and named additional directors and officers as defendants. On May 4, 2007, the court granted plaintiffs leave to file an amended complaint. On June 22, 2007, the defendants served plaintiffs with motions to dismiss the amended complaint. The parties completed briefing the motions to dismiss on September 27, 2007, and oral argument was heard on December 4, 2007. On August 1, 2008, the court granted the Company’s motion to dismiss the case, and entered an order dismissing the amended consolidated shareholder derivative complaint in its entirety.

On May 30, 2006, a derivative action was filed in the United States District Court for the District of Massachusetts, captioned asMark Collins, Derivatively on Behalf of Nominal Defendant Brooks Automation, Inc. v. Robert J. Therrien,et al. ~~The defendants in the action are: Mr. Therrien; Mr. Allen; Mr. Emerick; Mr. Grady; Mr. Khoury; Mr. Martin; and Mr. McGillicuddy.~~

On June 7, 2006, a derivative action was filed in the United States District Court for the District of Massachusetts, captioned asCity of Pontiac General Employees’ Retirement System, Derivatively on Behalf of Brooks Automation, Inc. v. Robert J. Therrien,et al. The Defendants in this action are: Mr. Therrien; Mr. Emerick; Mr. Khoury; Mr. Allen; Mr. Grady; Mr. Lepofsky; Mr. Martin; Mr. McGillicuddy; Mr. Palepu; Mr. Woollacott, III; Mr. Wrighton; and Mr. Schorr.

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

act; Section 14(a) of the Exchange Act; Section 20(a) of the Exchange Act; breach of fiduciary duty; corporate waste; and unjust enrichment, and ~~seeks,~~sought, on behalf of Brooks, damages, extraordinary equitable relief including disgorgement and a constructive trust for improvidently granted stock options or proceeds from alleged insider trading by certain defendants, ~~Plaintiffs’~~plaintiffs’ costs and disbursements including attorneys’ fees, accountants’ and experts’ fees, costs and expenses. The ~~Defendants have filed~~court held a hearing on defendants’ motions to dismiss on August 6, 2008. On September 26, 2008, the ~~Consolidated Verified Shareholder Derivative Complaint and to Stay this~~court entered an order approving the plaintiffs’ voluntary dismissal of the action ~~pending the outcome of motions to dismiss in the state derivative action described above.~~without prejudice.

On July 19, 2006, a second putative class action was filed in the United States District Court for the District of Massachusetts, captioned asJames R. Shaw v. Brooks Automation, Inc. et ~~al.~~al.,No. 06-11239-RWZ. On December 13, 2006, the court issued an order consolidating theShawaction with theLeechaction described above and appointing a lead plaintiff and lead counsel. The ~~Defendants in the case are~~lead plaintiff filed a Consolidated Amended Complaint, which named as defendants current and former directors and officers of the Company, ~~Mr. Therrien, Ms Richstone, Mr. Emerick, Mr. Khoury, Mr. Woodbury, and Mr. Grady. As of this date,~~as well as PricewaterhouseCoopers LLP, the ~~Company has not been served with the complaint.~~Company’s auditor. The ~~complaint alleges~~Consolidated Amended Complaint alleged violations of ~~Section~~Sections 10(b) and 20(a) of the Exchange Act andRule 10b-5 ~~against~~and Sections 11, 12(a)(2), and 15 of the Securities Act.

Motions to dismiss were filed by all defendants in the case. In partial response to defendants’ motions to dismiss, the lead plaintiff filed a motion to amend the complaint to add a named plaintiff on May 10, 2007. Defendants filed an opposition to this motion. On June 26, 2007, the court heard argument on defendants’ motions to dismiss and ~~violations~~lead plaintiff’s motion to amend the complaint. On November 6, 2007, the court granted in part and denied in part defendants’ motions to dismiss, and allowed lead plaintiff’s motion to add a named plaintiff. The claims against PricewaterhouseCoopers LLP were dismissed. On June 24, 2008, a Stipulation and Agreement of ~~Section 20(a)~~Settlement Between All Parties was filed, pursuant to which the parties proposed a final settlement. The terms of the ~~Exchange Act~~settlement, which includes no admission of liability or wrong doing by Brooks, provide for a full and complete release of all claims in the litigation, a bar order against ~~all individual defendants. The complaint seeks,~~~~inter alia~~~~, damages, including interest,~~claims in the nature of contribution, and ~~plaintiff’s costs. Competing plaintiffs~~a payment of $7.75 million to be paid directly by the Company’s insurance carrier into a settlement fund, pending final documentation and ~~their counsel have moved~~approval by the court of a plan of distribution. As of September 30, 2008, the Company recorded a receivable from its liability insurers of $8.8 million within current assets on its audited consolidated balance sheets which includes the settlement fund obligation of $7.75 million and a reimbursement of professional fees of $1.0 million. On October 3, 2008, the court entered orders granting the parties’ motion for ~~consolidation with~~settlement and closed the~~Leechaction described above, and for appointment as lead counsel.~~ case.

~~BROOKS AUTOMATION, INC.~~

~~NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)~~

earned by Mr. Therrien due to the loan and stock option exercise in November 1999 referenced above, and a sale by Mr. Therrien of Brooks stock in March 2000. The ~~Complaint~~complaint seeks disgorgement of all profits earned by Mr. Therrien on the transactions, attorneys’ fees and other expenses. ~~Defendants have~~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 ~~motions~~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. Brooks is a nominal defendant in the consolidated action and any recovery in this action, less attorneys’ fees, would go to ~~dismiss.~~the Company. On July 14, 2008, the court denied Mr. Therrien’s motion to dismiss this action.

~~The Company is aware of additional proposed class~~On August 15, 2007, two actions ~~posted~~were filed in Massachusetts Superior Court for Middlesex County, nominally on the ~~websites of various law firms.~~ Company’s behalf, captionedDarr v. Grady et al.andMilton v. Grady et al.The ~~Company is not yet aware of the filing of any such~~two plaintiffs in these actions ~~and have not been served with a complaint or any other process in any of these matters.~~


~~20.~~	~~Discontinued Operations~~

~~In June 2005,~~purported to be shareholders who had previously demanded that the Company signed definitive purchase and sale agreements to sell substantially all the assets of the Company’s Specialty Equipment and Life Sciences division (“SELS”), formerly known as IAS, which provided standard and custom automation technology and products for the semiconductor, photonics, life sciences and certain other industries. This sale was completed and all activities of SELS have ceased during the fourth quarter of fiscal 2005. Effective June 2005, the Company’s consolidated financial statements and notes have been reclassified to reflect this business as a discontinued operation in accordance with Financial Accounting Standards Board Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets.”take

~~The summary of operating results from discontinued operations is as follows (in thousands):~~

Year Ended September 30,
2006 2005 2004

Revenues $ 90 $ 626 $ 4,716

Gross profit $ 89 $ (691 ) $ 1,531

Gain (loss) from discontinued operations, net of tax $ 89 $ (3,516 ) $ (9,475 )

~~The loss from discontinued operations, net of tax of $3.5 million for the year ended September 30, 2005 includes a loss on disposal, net of tax of $24,000.~~
~~Due to the losses incurred since acquisition, no tax benefit is reflected for the losses incurred. The Company recorded impairment charges related to SELS of $7.4 million in 2004.~~
~~Assets and liabilities from discontinued operations are as follows (in thousands):~~

September 30,
2006 2005

Current assets $ 0 $ 55
Non-current assets — —

Assets from discontinued operations $ 0 $ 55

Current liabilities from discontinued operations $ 0 $ 399

~~Current assets include accounts receivable and inventory. Non-current assets include property, plant and equipment. Current liabilities include accounts payable and other current liabilities.~~

8773

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

action against individuals who allegedly had involvement with backdated stock options, and to which the Company had responded. The defendants in these actions were several current and former officers, directors, and employees of Brooks. These actions alleged several claims against the defendants based on granting or receiving backdated stock options, including breach of fiduciary duties, corporate waste, and unjust enrichment. The complaint sought on the Company’s behalf,inter alia, damages, extraordinary equitableand/or injunctive relief, an accounting, a constructive trust, disgorgement, and plaintiff’s costs and disbursements, including attorneys’ fees, accountants’ and experts’ fees, costs, and expenses. On September 20, 2007, the court granted defendants’ motion to consolidate the two matters. On June 5, 2008, the court granted plaintiffs’ motion for appointment as lead counsel, and on July 3, 2008, plaintiffs filed a consolidated amended complaint. On September 9, 2008, plaintiffs moved for voluntary dismissal, and on September 16, 2008, the court entered an order approving the plaintiffs’ motion for voluntary dismissal.

Matter to which the Company is Not a Party

Jenoptik-Asyst Litigation

The Company acquired certain assets, including a transport system known as IridNet, from the Infab division of Jenoptik AG on September 30, 1999. Asyst Technologies, Inc. had previously filed suit against Jenoptik AG and other defendants, or collectively, the defendants, in the Northern District of California charging that products of the defendants, including IridNet, infringe Asyst’s U.S. Patent Nos. 4,974,166, or the ’166 patent, and 5,097,421, or the ’421 patent. Asyst later withdrew its claims related to the ’166 patent from the case. Summary judgment of noninfringement was granted in that case by the District Court and judgment was issued in favor of Jenoptik on the ground that the product at issue did not infringe the asserted claims of the ’421 patent. Following certain rulings and findings adverse to Jenoptik, on August 3, 2007 the District Court issued final judgment in favor of Jenoptik. Asyst appealed, and on October 10, 2008, the United States Court of Appeals for the Federal Circuit entered an order affirming the District Court’s final judgment in favor of Jenoptik.

The Company had received notice that Asyst might amend its complaint in this Jenoptik litigation to name Brooks as an additional defendant, but no such action was ever taken. Based on the Company’s investigation of Asyst’s allegations, the Company does not believe it is infringing any claims of Asyst’s patents. Asyst may decide to seek to prohibit the Company from developing, marketing and using the IridNet product without a license. The Company cannot guarantee that a license would be available to Brooks on reasonable terms, if at all. In any case, the Company could face litigation with Asyst. Jenoptik has agreed to indemnify the Company for any loss Brooks may incur in this action.

Litigation is inherently unpredictable and the Company cannot predict the outcome of the legal proceedings described above with any certainty. Should there be an adverse judgment against the Company, it may have a material adverse impact on its financial statements. Because of uncertainties related to both the amount and range of losses in the event of an unfavorable outcome in the lawsuits listed above or in certain other pending proceedings for which loss estimates have not been recorded, the Company is unable to make a reasonable estimate of the losses that could result from these matters and hence has recorded no accrual in its financial statements as of September 30, 2008.


~~21.~~20.	~~Subsequent Events~~Discontinued Operations

On November 3, 2006, the Company’s Board of Directors committed to a formal plan of disposal of its software division, Brooks Software and entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Applied Materials, Inc. (“Applied”), a Delaware corporation. Under the terms of the Purchase Agreement,March 30, 2007, the Company ~~will divest and sell~~completed the sale of its software division, Brooks Software, to Applied Materials, Inc., a Delaware corporation (“Applied”) for ~~$125 million~~cash consideration and the assumption of certain liabilities related to Brooks Software. Brooks Software provided real-time applications for greater efficiency and productivity in ~~cash consideration.~~collaborative, complex manufacturing environments. The Company ~~will transfer~~transferred to Applied substantially all of its assets primarily related to Brooks Software, including the stock of several

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)

subsidiaries engaged only in the business of Brooks Software, and Applied ~~will assume~~assumed certain liabilities related to Brooks Software.

The Company recorded a gain of $83.9 million in the second quarter of fiscal year 2007 on the sale of its discontinued software business. This gain reflects the proceeds of $132.5 million of cash consideration, offset by expenses of $7.7 million, a tax provision of $1.9 million, and the write-off of net assets totaling $39.0 million. In the second and fourth quarters of fiscal year 2008, the Company resolved certain contingencies which arose from the sale of its software division resulting in an additional gain of $0.7 million, net of tax of $0 during fiscal year 2008, and the receipt of $1.9 million of additional proceeds during fiscal year 2008.

The sale was consummated pursuant to the terms of an Asset Purchase Agreement dated as of November 3, 2006 by and between the Company and Applied. Applied is ~~selling~~among the Company’s largest customers for tool automation products. Following a bidding process in which multiple possible purchasers participated, the purchase price for Brooks Software was determined by arm’s-length negotiations between the Company and Applied. The Company sold its software division in order to focus on its core semiconductor-related hardware businesses.

Effective October 1, 2006, the Company’s consolidated financial statements and notes have been reclassified to reflect this business as a discontinued operation in accordance with SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS 144”).

The ~~Company expects to recognize a gain on disposal~~summary of operating results from discontinued operations of the software division for the years ended September 30, 2008, 2007 and ~~to reclassify this division~~2006 is as ~~discontinued operations in fiscal 2007.~~follows (in thousands):

Year Ended September 30,
2008 2007 2006

Revenues $ — $ 47,712 $ 85,376

Gross profit $ — $ 34,048 $ 58,134

Income from discontinued operations before income taxes $ — $ 12,578 $ 4,855

Income from discontinued operations, net of tax $ — $ 13,273 $ 3,495

~~Completion~~The income of $13.3 million for the ~~transaction is subject to several conditions, including expiration or termination~~year ended September 30, 2007 includes the recognition of ~~applicable waiting periods under theHart-Scott-Rodino~~ Antitrust Improvements Act of 1976 and clearance under any applicable foreign antitrust laws, and other customary closing conditions. The Company expects to close the transaction during the second fiscal quarter of 2007.
~~Applied Materials purchases significant amounts of manufacturing equipment~~a tax benefit resulting from the ~~Company and is among Brooks’ largest customers for such products.~~reversal of tax reserves due to an audit settlement of $2.1 million.

8875

Item 9. Changes In and Disagreements With Accountants on Financial Accounting and Financial Disclosure

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 Securities Exchange Act of 1934, as amended (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 Securities Exchange Act of 1934, as amended, 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;

• 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, ~~2006.~~2008. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) anInternal Control-Integrated Framework.Based on our assessment, we concluded that, as of September 30, ~~2006,~~2008, our internal control over financial reporting was effective.

~~Management has excluded~~The effectiveness of the ~~operations of Helix Technology Corporation (“Helix”) and Synetics Solutions Inc. (“Synetics”) from its assessment of~~Company’s internal control over financial reporting as of September 30, 2006 because those entities were acquired by the Company in purchase business combinations during fiscal 2006. The total assets and total revenues of the acquired businesses of Helix and Synetics represent 18% and 30%, respectively, of the related consolidated financial statement amounts as of and for the year ended September 30, 2006.

89

~~Our management’s assessment of the effectiveness of our internal control over financial reporting as of September 30, 2006,~~2008 has been audited by PricewaterhouseCoopers LLP, an independent registered public accounting firm, as stated in their report which ~~is included in Item 8 of this report.~~appears herein.

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, ~~2006,~~2008, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B.   Other Information

On December 8, 2006, we entered into an employment agreement with Robert W. Woodbury, Jr., our Senior Vice President and Chief Financial Officer, that replaces Mr. Woodbury’s former employment agreement. The agreement provides for, among other things, an annual base salary of $305,000 and an annual management bonus of 0% to 150% of 70% of base salary. The agreement also provides that Mr. Woodbury will be entitled to severance, including one year’s base salary and continued participation in benefit plans, if he is terminated without “cause” or if he resigns for “good reason.” Cause is defined to include willful failure or refusal to perform the duties pertaining to his job, engagement in conduct that is fraudulent, dishonest, unlawful or otherwise in violation of our standards of conduct or a material breach of the employment agreement or related agreements. Good reason is defined to include diminution of Mr. Woodbury’s responsibility or position, our breach of the agreement or relocation of Mr. Woodbury. Payment of base salary and continued participation in benefit plans may be extended for up to one additional year if Mr. Woodbury is engaged in an ongoing search for replacement employment.Not applicable.

PART III

Item 10.   Directors and Executive Officers of the Registrant

The information required by this Item 10 is hereby incorporated by reference to ~~the Company’s~~Brooks’ definitive proxy statement to be filed by the Company within 120 days after the close of its fiscal year.

Item 11.   Executive Compensation

The information required by this Item 11 is hereby incorporated by reference to ~~the Company’s~~Brooks’ definitive proxy statement to be filed by the Company within 120 days after the close of its fiscal year.

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 ~~the Company’s~~Brooks’ definitive proxy statement to be filed by the Company within 120 days after the close of its fiscal year.

Item 13.   Certain Relationships and Related Transactions

The information required by this Item 13 is hereby incorporated by reference to ~~the Company’s~~Brooks’ definitive proxy statement to be filed by the Company within 120 days after the close of its fiscal year.

Item 14.   Principal Accountant Fees and Services

The information required by this Item 14 is hereby incorporated by reference to ~~the Company’s~~Brooks’ definitive proxy statement to be filed by the Company within 120 days after the close of its fiscal year.

90

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) Financial Statements and Financial Statement Schedule

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.
~~(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, as amended on September 26, 2005 (the “HelixS-4”).
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(Registration 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 3.3 of the HelixS-4).
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 Designations, Preferences, Rights and Limitations of the Company’s Special Voting Preferred Stock (incorporated herein by reference to Exhibit 4.13 of the Company’s registration statement onForm S-3 (RegistrationNo. 333-87194), filed on April 29, 2002, as amended May 13, 2002).
3 .08 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 .09 Certificate of Amendment of Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.01 of the Company’s quarterly report for the fiscal quarter ended March 31, 2003, filed on May 13, 2003).
3 .10 Certificate of Amendment of Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 of the Company’s current report onForm 8-K, filed on October 26, 2005).
3 .11 Certificate of Elimination of Special Voting Preferred Stock (incorporated herein by reference to Exhibit 3.2 of the Company’s current report onForm 8-K, filed on October 26, 2005).
3 .12 Certificate of Increase of Shares Designated as Series A Junior Participating Preferred Stock (incorporated herein by reference to Exhibit 3.3 of the Company’s current report onForm 8-K, filed on October 26, 2005).
3 .13 Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.4 of the Company’s current report onForm 8-K, filed on October 26, 2005).
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 (RegistrationNo. 333-88320), filed on May 15, 2002).
4 .02 Rights Agreement dated July 23, 1997 (incorporated by incorporated by reference to Exhibit No. 1 to the Company’s Registration Statement onForm 8-A, filed on August 7, 1997).
4 .03 Amendment No. 1 to Rights Agreement between the Company and the Rights Agent.
4 .04 Amendment No. 2 to Rights Agreement between the Company and the Rights Agent (incorporated herein by reference to the Company’s registration statement onForm 8-A/A filed on June 4, 2002).

9177

Exhibit

No.

Description

4 .05 Amendment No. 3 to Rights Agreement between the Company and the Rights Agent (incorporated herein by reference to the Company’s registration statement onForm 8-A/A, filed on July 11, 2005).
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 10.2 to the Company’s quarterly report onForm 10-Q for the fiscal quarter ended June 30, 2006, filed on August 9, 2006 (the “2006 Q310-Q”).
10 .02 Agreement and Plan of Merger, dated May 8, 2006, by and among Brooks Automation, Inc., Bravo Acquisition Subsidiary, Inc. and Synetics Solutions, Inc. (incorporated herein by reference to Exhibit 10.3 of the 2006 Q310-Q).
10 .03 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 10.4 of the 2006 Q310-Q).
10 .04 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 10.5 of the 2006 Q310-Q).
10 .05 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 (RegistrationNo. 2- 84880) filed by Helix Technology Corporation).
10 .06 Form of Indemnification Agreement for directors and officers of the Company (incorporated herein by reference to the Company’s registration statement onForm S-1 (RegistrationNo. 333-87296), filed on December 13, 1994 (the “BrooksS-1”)).
10 .07 Second Amended and Restated Employment Agreement, dated as of October 18, 2006, by and between the Company and Edward C. Grady (incorporated herein by reference to Exhibit 10.1 to the Company’s current report onForm 8-K, filed on October 20, 2006).
10 .08 Employment Agreement, dated as of December 8, 2006, by and between the Company and Robert Woodbury.
10 .09 Employment Agreement, dated as of October 24, 2005, by and between the Company and Thomas S. Grilk.
10 .10 Employment Agreement, dated as of October 26, 2005, by and between the Company and James Gentilcore.
10 .11 Employment Agreement, dated as of October 24, 2005, by and between the Company and Joseph Bellini.
10 .12 Employment Agreement, dated as of October 26, 2005, by and between the Company and Robert Anastasi.
10 .13 1993 Nonemployee Director Stock Option Plan (incorporated herein by reference to Exhibit 99.1 to the Company’s registration statement onForm S-8 (RegistrationNo. 333-22717), filed on March 4, 1997).
10 .14 1992 Combination Stock Option Plan (incorporated herein by reference to Exhibit 99.2 to the Company’s registration statement onForm S-8 (RegistrationNo. 333-07313), filed on July 1, 1996.
10 .15 1995 Employee Stock Purchase Plan, as amended.
10 .16 Amended and Restated 2000 Equity Incentive Plan (incorporated herein by reference to Exhibit 10.1 of the Company’s current report onForm 8-K, filed on March 7, 2006).
10 .17 Helix Technology Corporation 1996 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.1 of the Company’s registration statement onForm S-8 (RegistrationNo. 333-129724), filed on November 16. 2005).
10 .18 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 (RegistrationNo. 333-129724), filed on November 16. 2005).
10 .19 Helix Technology Corporation 1981 Employee Stock Option Plan (incorporated herein by reference to Exhibit 4.3. of the Company’s registration statement onForm S-8 (RegistrationNo. 333-129724), filed on November 16. 2005).
10 .20 Form of 2000 Equity Incentive Plan New Employee Nonqualified Stock Option Agreement (incorporated herein by reference to Exhibit 10.44 to the 200410-K).
(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, as amended on September 26, 2005 (the “HelixS-4”).
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 (RegistrationNo. 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 3.3 of the HelixS-4).
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 Designations, Preferences, Rights and Limitations of the Company’s Special Voting Preferred Stock (incorporated herein by reference to Exhibit 4.13 of the Company’s registration statement onForm S-3 (RegistrationNo. 333-87194), filed on April 29, 2002, as amended May 13, 2002).
3 .08 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 .09 Certificate of Amendment of Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.01 of the Company’s quarterly report for the fiscal quarter ended March 31, 2003, filed on May 13, 2003).
3 .10 Certificate of Amendment of Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 of the Company’s current report onForm 8-K, filed on October 26, 2005).
3 .11 Certificate of Elimination of Special Voting Preferred Stock (incorporated herein by reference to Exhibit 3.2 of the Company’s current report onForm 8-K, filed on October 26, 2005).
3 .12 Certificate of Increase of Shares Designated as Series A Junior Participating Preferred Stock (incorporated herein by reference to Exhibit 3.3 of the Company’s current report onForm 8-K, filed on October 26, 2005).
3 .13 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 (RegistrationNo. 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 10.2 to the Company’s quarterly report onForm 10-Q for the fiscal quarter ended June 30, 2006, filed on August 9, 2006 (the “2006 Q310-Q”)).
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 10.4 of the 2006 Q310-Q).
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 10.5 of the 2006 Q310-Q).
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 (RegistrationNo. 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 (RegistrationNo. 333-87296), filed on December 13, 1994 (the “BrooksS-1”))).
92
78


Exhibit	Exhibit			Exhibit
No.	No.		Description	No.		Description

	10	.21	Form of 2000 Equity Incentive Plan Existing Employee Nonqualified Stock Option Agreement (incorporated herein by reference to Exhibit 10.45 to the 200410-K).	10	.06	Employment Agreement dated as of October 24, 2005, by and between the Company and Thomas S. Grilk (incorporated herein by reference to Exhibit 10.09 to the Company’s annual report onForm 10-K for the fiscal year ended September 30, 2006, filed on December 14, 2006 (the “200610-K”)).
	10	.22	Form of 2000 Equity Incentive Plan Director Stock Option Agreement (incorporated herein by reference to Exhibit 10.46 to the 200410-K).	10	.07	Employment Agreement dated as of September 30, 2007, by and between the Company and Robert Lepofsky (incorporated herein by reference to Exhibit 10.14 to the Company’s annual report onForm 10-K for the fiscal year ended September 30, 2007, filed on November 29, 2007 (the “200710-K”)).
	10	.23	Form of Restricted Stock Grant Agreement.	10	.08	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	.24	Deferred Compensation Plan, as amended (incorporated herein by reference to Exhibit 10.1 to the Q3 200610-Q).	10	.09	Employment Agreement, effective as of October 26, 2005, by and between Brooks Automation, Inc. and Steven A. Michaud.
	10	.25	Lease between the Company and BerCar II, LLC for 12 Elizabeth Drive, Chelmsford, Massachusetts dated October 23, 2002 (incorporated herein by reference to the Company’s annual report onForm 10-K for the fiscal year ended September 30, 2002, filed on December 30, 2002).	10	.10	Employment Agreement, effective as of October 17, 2005, by and between Brooks Automation, Inc. and Michael W. Pippins.
	10	.26	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 the Company’s annual report onForm 10-K for the fiscal year ended September 30, 2002, filed on December 30, 2002).	10	.11	Contract of Employment for a Managing Director, effective as of March 28, 2008, by and between Brooks Automation (Germany) Holding GmbH and Ralf Wuellner.
	10	.27	Lease Agreement dated as of May 5, 1994 between the Company and The Prudential Insurance Company of America for 805 Middlesex Turnpike, Billerica, MA (incorporated herein by reference to the BrooksS-1).	10	.12	1993 Nonemployee Director Stock Option Plan (incorporated herein by reference to Exhibit 99.1 to the Company’s registration statement onForm S-8 (RegistrationNo. 333-22717), filed on March 4, 1997).
	10	.28	Amendment to Lease dated as of July 24, 2000 between the Company and BCIA New England Holdings LLC (successor in interest to The Prudential Insurance Company of America) for 805 Middlesex Turnpike, Billerica, MA.	10	.13	1992 Combination Stock Option Plan (incorporated herein by reference to Exhibit 99.2 to the Company’s registration statement onForm S-8 (RegistrationNo. 333-07313), filed on July 1, 1996).
	10	.29	Lease Agreement dated as of October 12, 2000 between the Company and Progress Road LLC for 17 Progress Road, Billerica, MA.	10	.14	1995 Employee Stock Purchase Plan, as amended (incorporated herein by reference to Exhibit 10.15 to the 200610-K).
	10	.30	First Amendment to Lease dated as of March 21, 2001 between the Company and Progress Road LLC for 17 Progress Road, Billerica, MA.	10	.15	Amended and Restated 2000 Equity Incentive Plan, restated as of May 6, 2008 (incorporated herein by reference to Exhibit 10.02 of the Company’s quarterly report onForm 10-Q for the fiscal quarter ended June 20, 2008, filed on August 7, 2008 (the “2008 Q310-Q”)).
	10	.31	Lease, dated May 14, 1999, between MUM IV, LLC as Lessor and the Company as Lessee.	10	.16	Helix Technology Corporation 1996 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.1 of the Company’s registration statement onForm S-8 (RegistrationNo. 333-129724), filed on November 16, 2005).
	10	.32	Multi-Tenant Industrial Triple Net Lease, effective December 15, 2000, between Catellus Development Corporation and Synetics Solutions, Inc., including amendments thereto.	10	.17	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 (RegistrationNo. 333-129724), filed on November 16, 2005).
	10	.33	Factory Lease Advanced Agreement among Sang Chul Park, Young Ja Kim, Joon Ho Park, Brooks Automation Asia, Ltd. and Brooks Automation Korea, Inc.	10	.18	Helix Technology Corporation 1981 Employee Stock Option Plan (incorporated herein by reference to Exhibit 4.3. of the Company’s registration statement onForm S-8 (RegistrationNo. 333-129724), filed on November 16, 2005).
	12	.01	Calculation of Ratio of Earnings to Fixed Charges.	10	.19	Form of 2000 Equity Incentive Plan New Employee Nonqualified Stock Option Agreement (incorporated herein by reference to Exhibit 10.44 to the 200410-K).
	21	.01	Subsidiaries of the Company.	10	.20	Form of 2000 Equity Incentive Plan Existing Employee Nonqualified Stock Option Agreement (incorporated herein by reference to Exhibit 10.45 to the 200410-K).
	23	.01	Consent of PricewaterhouseCoopers LLP (Independent registered public accounting firm for the Company).	10	.21	Form of 2000 Equity Incentive Plan Director Stock Option Agreement (incorporated herein by reference to Exhibit 10.46 to the 200410-K).
	31	.01	Rule 13a-14(a),15d-14(a) Certification.	10	.22	Form of Restricted Stock Grant Agreement (incorporated herein by reference to Exhibit 10.23 to the 200610-K).
	31	.02	Rule 13a-14(a),15d-14(a) Certification.	10	.23	Restricted Stock Agreement, dated as of April 25, 2008, by and between the Company and Robert J. Lepofsky (incorporated herein by reference to Exhibit 10.03 to the 2008 Q310-Q).
	32		Section 1350 Certifications.	10	.24	Restricted Stock Agreement, dated as of April 25, 2008, by and between the Company and Robert J. Lepofsky (incorporated herein by reference to Exhibit 10.04 to the 2008 Q310-Q).
				10	.25	Restricted Stock Agreement, dated as of April 25, 2008, by and between the Company and Robert J. Lepofsky (incorporated herein by reference to Exhibit 10.05 to the 2008 Q310-Q).
				10	.26	Brooks Automation, Inc. Deferred Compensation Plan, as amended (incorporated herein by reference to Exhibit 10.1 to the 2006 Q310-Q).

Exhibit

No.

Description

10 .27 AmendmentNo. 2008-01 to the Brooks Automation, Inc. Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.01 to the 2008 Q310-Q).
10 .28 Lease between the Company and BerCar II, LLC for 12 Elizabeth Drive, Chelmsford, Massachusetts dated October 23, 2002.
10 .29 First Amendment to Lease between the Company and BerCar II, LLC for 12 Elizabeth Drive, Chelmsford, Massachusetts dated November 1, 2002.
10 .30 Lease Agreement dated as of May 5, 1994 between the Company and The Prudential Insurance Company of America for 805 Middlesex Turnpike, Billerica, MA (incorporated herein by reference to the BrooksS-1).
10 .31 Amendment to Lease dated as of July 24, 2000 between the Company and BCIA New England Holdings LLC (successor in interest to The Prudential Insurance Company of America) for 805 Middlesex Turnpike, Billerica, MA (incorporated herein by reference to Exhibit 10.28 to the 200610-K).
10 .32 Lease Agreement dated as of October 12, 2000 between the Company and Progress Road LLC for 17 Progress Road, Billerica, MA (incorporated herein by reference to Exhibit 10.29 to the 200610-K).
10 .33 First Amendment to Lease dated as of March 21, 2001 between the Company and Progress Road LLC for 17 Progress Road, Billerica, MA (incorporated herein by reference to Exhibit 10.30 to the 200610-K).
10 .34 Lease, dated May 14, 1999, between MUM IV, LLC as Lessor and the Company as Lessee (incorporated herein by reference to Exhibit 10.31 to the 200610-K).
10 .35 Multi-Tenant Industrial Triple Net Lease, effective December 15, 2000, between Catellus Development Corporation and Synetics Solutions, Inc., including amendments thereto (incorporated herein by reference to Exhibit 10.32 to the 200610-K).
10 .36 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 10.33 to the 200610-K).
10 .37 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 200710-K).
10 .38 Lease dated August 8, 2008 between the Company and Koll/Intereal Bay Area for 4051 Burton Drive, Santa Clara, CA.
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 Certifications.
93
80

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.

By:
/s/  ~~Edward C. Grady~~Robert J. Lepofsky
~~Edward C. Grady,~~Robert J. Lepofsky,
Chief Executive Officer

Date: ~~December 13, 2006~~November 26, 2008

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.

Signature

Title

Date

/s/  ~~Edward C. Grady~~Robert J. Lepofsky

~~Edward C. Grady~~Robert J. Lepofsky Director and Chief Executive Officer (Principal Executive Officer) ~~December 13, 2006~~November 26, 2008

/s/  ~~Robert W. Woodbury, Jr.~~Martin S. Headley

~~Robert W. Woodbury, Jr.~~Martin S. Headley ~~Senior~~Executive Vice President and
Chief Financial Officer
(Principal ~~Accounting~~Financial Officer) ~~December 13, 2006~~November 26, 2008

/s/  ~~A. Clinton Allen~~Timothy S. Mathews

~~A. Clinton Allen~~Timothy S. Mathews ~~Director~~Vice President and
Corporate Controller
(Principal Accounting Officer) ~~December 13, 2006~~November 26, 2008

/s/  ~~Robert J. Lepofsky~~A. Clinton Allen

~~Robert J. Lepofsky~~A. Clinton Allen Director ~~December 13, 2006~~November 26, 2008

/s/  Joseph R. Martin

Joseph R. Martin Director ~~December 13, 2006~~November 26, 2008

/s/  John K. McGillicuddy

John K. McGillicuddy Director ~~December 13, 2006~~November 26, 2008

/s/  Krishna G. Palepu

Krishna G. Palepu Director ~~December 13, 2006~~November 26, 2008

/s/  ~~Alfred Woollacott III~~Chong Sup Park

~~Alfred Woollacott III~~Chong Sup Park Director ~~December 13, 2006~~November 26, 2008

/s/  Kirk P. Pond

Kirk P. Pond Director November 26, 2008
/s/  Alfred Woollacott III

Alfred Woollacott III Director November 26, 2008
/s/  Mark S. Wrighton

Mark S. Wrighton Director ~~December 13, 2006~~November 26, 2008

9481


PART I
	Item 1.	Business		1
	Item 1A.	Risk Factors		157
	Item 1B.	Unresolved Staff Comments		2315
	Item 2.	Properties		2315
	Item 3.	Legal Proceedings		2415
	Item 4.	Submission of Matters to a Vote of Security Holders		2719

PART II
	Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		2819
	Item 6.	Selected Financial Data		2920
	Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		3022
	Item 7A.	Quantitative and Qualitative Disclosures About Market Risk		4536
	Item 8.	Financial Statements and Supplementary Data		4637
	Item 9.	Changes In and Disagreements With Accountants on Financial Accounting and Financial Disclosure		8976
	Item 9A.	Controls and Procedures		8976
	Item 9B.	Other Information		9077

PART III
	Item 10.	Directors and Executive Officers of the Registrant		9077
	Item 11.	Executive Compensation		9077
	Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		9077
	Item 13.	Certain Relationships and Related Transactions		9077
	Item 14.	Principal Accountant Fees and Services		9077

PART IV
	Item 15.	Exhibits and Financial Schedules		9177
SIGNATURES			9481
~~Ex-4.03 Amendment No.1 to Rights Agreement~~EX-10.09 EMPLOYMENT AGREEMENT STEVEN A. MICHAUD
~~Ex-10.08 Employment Agreement (Robert Woodbury)~~EX-10.10 EMPLOYMENT AGREEMENT MICHAEL W. PIPPINS
~~Ex-10.09 Employment Agreement (Thomas S. Grilk)~~EX-10.11 CONTRACT OF EMPLOYMENT RALF WUELLNER
~~Ex-10.10 Employment Agreement (James Gentilcore)~~EX-10.28 LEASE BERCAR II, LLC
~~Ex-10.11 Employment Agreement (Joseph Bellini)~~EX-10.29 FIRST AMENDMENT TO LEASE BERCAR II, LLC
~~Ex-10.12 Employment Agreement (Robert Anastasi)~~EX-10.38 LEASE KOLL/INTEREAL BAY AREA
~~Ex-10.15 1995 Employee Stock Purchase Plan, as amended~~EX-21.01 SUBSIDIARIES OF THE COMPANY
~~Ex-10.23 Form of Restricted Stock Option Grant Agreement~~
~~Ex-10.28 Amendment to Lease dated as of July 24, 2000~~
~~Ex-10.29 Lease Agreement dated as of October 12, 2000~~
~~Ex-10.30 First Amendment to Lease dated as of March 21, 2001~~
~~Ex-10.31 Lease, dated March 14, 1999~~
~~Ex-10.32 Multi-Tenant Industrial Triple Net Lease, effective December 15, 2000~~
~~Ex-10.33 Factory Lease Advanced Agreement~~
~~Ex-12.01 Calculation of Ratio of Earnings to Fixed Charges~~
~~Ex-21.01 Subsidiaries of the Company~~
~~Ex-23.01 Consent of PricewaterhouseCoopers~~EX-23.01 CONSENT OF PRICEWATERHOUSECOOPERS LLP
~~Ex-31.01 Section~~EX-31.01 SECTION 302 ~~Certification of~~CERTIFICATION OF CEO
~~Ex-31.02 Section~~EX-31.02 SECTION 302 ~~Certification of~~CERTIFICATION OF CFO
~~Ex-32 Section~~EX-32 SECTION 906 ~~Certification of~~CERTIFICATION OF CEO &AND CFO


	Year Ended September 30,
	2006(4)(7)		2005(4)			2004(4)		2003(1)(2)(4)(5)			2002(3)(4)(6)
	(In thousands, except per share data)

Revenues	$	692,870	$	463,746		$	535,053	$	340,092		$	300,538
Gross profit	$	244,784	$	160,136		$	199,666	$	95,211		$	63,681
Income (loss) from continuing operations before income taxes and minority interests	$	29,907	$	(2,751	)	$	32,398	$	(194,806	)	$	(637,491	)
Income (loss) from continuing operations	$	25,841	$	(8,096	)	$	24,134	$	(199,926	)	$	(732,222	)
Net income (loss)	$	25,930	$	(11,612	)	$	14,659	$	(203,024	)	$	(738,637	)
Basic earnings (loss) from continuing operations per share	$	0.36	$	(0.18	)	$	0.56	$	(5.44	)	$	(28.37	)
Diluted earnings (loss) from continuing operations per share	$	0.36	$	(0.18	)	$	0.55	$	(5.44	)	$	(28.37	)
Shares used in computing basic earnings (loss) per share		72,323		44,919			43,006		36,774			25,807
Shares used in computing diluted earnings (loss) per share		72,533		44,919			43,573		36,774			25,807


Item 7.	*Management’s Discussion and Analysis of Financial Condition and Results of Operations*


Current assets	$	79.9
Property, plant and equipment		15.4
Intangible assets		84.4
Goodwill		276.8
Other assets		20.8

Total assets acquired		477.3

Current liabilities		18.1
Other liabilities		1.1

Total liabilities assumed		19.2

Total purchase price including acquisition costs	$	458.1


Completed and core technology	$	56.4	6.9 years weighted average estimated useful life
Customer and contract relationships		23.3	6.9 years weighted average estimated economic consumption life
Trade names and trademarks		4.7	6 year weighted average estimated useful life

	$	84.4


Current assets	$	19.8
Property, plant and equipment		8.6
Intangible assets		17.4
Goodwill		12.6
Other assets		0.1

Total assets acquired		58.5

Current liabilities		8.3

Total purchase price including acquisition costs	$	50.2


	Year Ended
	September 30, 2006

Benefit obligation at October 1, 2005	$	—
Benefit obligation assumed at date of acquisition		13,777
Service cost		1,740
Interest cost		821
Actuarial gain		(567	)
Disbursements		(3,444	)

Benefit obligation at September 30, 2006	$	12,327


	Year Ended
	September 30, 2006

Fair value of assets at October 1, 2005	$	—
Fair value assumed at date of acquisition		11,865
Actual return on plan assets		1,637
Company contributions		3,000
Disbursements		(3,444	)

Fair value of assets at September 30, 2006	$	13,058


	Options Outstanding
			Weighted-
			Average						Options Exercisable
			Remaining				Aggregate						Aggregate
			Contractual		Weighted-		Intrinsic				Weighted-		Intrinsic
			Life		Average		Value (In				Average		Value (In
Range of Exercise Prices	Shares		(Years)		Exercise Price		Thousands)		Shares		Exercise Price		Thousands)

$3.62 — $13.05		1,028,780		4.44	$	11.07	$	2,038		708,468	$	10.74	$	1,635
$13.06 — $24.02		1,218,225		4.69	$	17.95	$	—		766,103	$	18.62	$	—
$24.30 — $24.30		1,328,279		3.13	$	24.30	$	—		1,318,836	$	24.30	$	—
$24.78 — $59.44		1,215,193		1.86	$	30.89	$	—		1,215,193	$	30.89	$	—

$3.62 — $59.44		4,790,477		3.49	$	21.51	$	2,038		4,008,600	$	22.82	$	1,635


15.	~~Acquisition-Related and~~ Restructuring Costs and Accruals


Item 9.	*Changes In and Disagreements With Accountants on Financial Accounting and Financial Disclosure*


	•	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 regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.


Item 10.	*Directors and Executive Officers of the Registrant*


Item 12.	*Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters*


Item 13.	*Certain Relationships and Related Transactions*


Item 15.	*Exhibits and Financial Statement Schedules*


Signature	Title	Date


/s/ ~~Edward C. Grady~~Robert J. Lepofsky ~~Edward C. Grady~~Robert J. Lepofsky	Director and Chief Executive Officer (Principal Executive Officer)	~~December 13, 2006~~November 26, 2008

/s/ ~~Robert W. Woodbury, Jr.~~Martin S. Headley ~~Robert W. Woodbury, Jr.~~Martin S. Headley	~~Senior~~Executive Vice President and Chief Financial Officer (Principal ~~Accounting~~Financial Officer)	~~December 13, 2006~~November 26, 2008

/s/ ~~A. Clinton Allen~~Timothy S. Mathews ~~A. Clinton Allen~~Timothy S. Mathews	~~Director~~Vice President and Corporate Controller (Principal Accounting Officer)	~~December 13, 2006~~November 26, 2008

/s/ ~~Robert J. Lepofsky~~A. Clinton Allen ~~Robert J. Lepofsky~~A. Clinton Allen	Director	~~December 13, 2006~~November 26, 2008

/s/ Joseph R. Martin Joseph R. Martin	Director	~~December 13, 2006~~November 26, 2008

/s/ John K. McGillicuddy John K. McGillicuddy	Director	~~December 13, 2006~~November 26, 2008

/s/ Krishna G. Palepu Krishna G. Palepu	Director	~~December 13, 2006~~November 26, 2008

/s/ ~~Alfred Woollacott III~~Chong Sup Park ~~Alfred Woollacott III~~Chong Sup Park	Director	~~December 13, 2006~~November 26, 2008

/s/ Kirk P. Pond Kirk P. Pond	Director	November 26, 2008

/s/ Alfred Woollacott III Alfred Woollacott III	Director	November 26, 2008

/s/ Mark S. Wrighton Mark S. Wrighton	Director	~~December 13, 2006~~November 26, 2008