| (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, | ||
| or | ||
| ¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
| For the transition period from to . | ||
Delaware | 04-3040660 | |
|
| |
|
| |
Title of Each Class | Name of Each Exchange on Which Registered | |
Common Stock, $0.01 par value | The NASDAQ Stock Market LLC | |
Large accelerated filer þ | Accelerated filer ¨ | Non-accelerated filer ¨ | Smaller reporting company ¨ | |||
| (Do not check if a smaller reporting company) | ||||||
Item 1. Item 1A. Item 1B. Item 2. Item 3. Item 4. Item 5. Item 6. Item 7. Item 7A. Item 8. Item 9. Item 9A. Item 9B. Item 10. Item 11. Item 12. Item 13. Item 14. Item 15. continue our internal development efforts and seek acquisitions where we can expand or enhance our product and service offerings. Semiconductor capital equipment Service and spares Industrial capital equipment Life sciences Other adjacent technology markets market. adhesion of the film on and to the panel. using vacuum processes for certain production steps, very similar to the steps used in semiconductor samples during the storage and retrieval processes. customers who have purchased our equipment. Systems. hospitals. our total revenue derived from certain OEM customers would be higher. North America Asia/Pacific Europe North America Asia/Pacific Europe LabTech, Ltd. The expansion in research and development spending primarily reflects our investment in life sciences as we have developed the Twinbank platform and continue to develop automated bio-sample storage solutions for environments operating at ultra-low temperatures. Our major manufacturing facilities are located in Chelmsford, Massachusetts; Poway, California; allows us to better serve our customers in these regions. also had approximately 140 pending U.S. patent applications, with foreign counterparts of certain of these applications having been filed or may be filed at the appropriate time. Our patents will expire at various dates through 2032. recei Our Operations demand for our products as a result of the cyclical nature of the semiconductor manufacturing industry and the markets upon which changes in the timing and terms of product orders by our customers as a result of our customer concentration or otherwise; changes in the mix of products and services that we offer; changes in the demand for the mix of products and services that we offer; timing and market acceptance of our new product and services introductions; delays or problems in the planned introduction of new products or service, or in the performance of any such products following delivery to new products, services or technological innovations by our competitors, which can, among other things, render our products less competitive due to the rapid technological the timing and related costs of any acquisitions, divestitures or other strategic transactions; our ability to accurately estimate customer demand, including the accuracy of demand forecasts used by us; write-offs for excess or obsolete inventory; and competitive pricing pressures. accurately identify and define new market opportunities, products and obtain market acceptance of our timely innovate, develop and commercialize new technologies and applications; adjust to changing market conditions; differentiate our offerings from our obtain and maintain intellectual property rights where necessary; continue to develop a comprehensive, integrated product and service strategy; properly price our products and services; and design our products to high standards of manufacturability longer sales-cycles and time to collection; tariff and international trade barriers;BROOKS AUTOMATION, INC.TABLE OF CONTENTSPAGE NUMBER 10153839848485858585858585892PART IItem 1. BusinessBrooks Automation, Inc. (“Brooks”, “we”, “us”, or “our”), a Delaware corporation, isWe are a leading worldwide provider of automation vacuum and instrumentationcryogenic solutions for multiple markets including semiconductor manufacturing, technology device manufacturing and life sciences. Our technologies, engineering competencies and global service capabilities provide customers speed to market and ensure high uptime and rapid response, which equate to superior value in theirour customers' mission-critical controlled environments. Since 1978, we have been a leading partner to the global semiconductor manufacturing markets and through product development initiatives and strategic business acquisitions we have expanded our reachproducts and services to meet the needs of customers in technology markets adjacent to semiconductor manufacturing and life sciences. Brooks isWe are headquartered in Chelmsford, MA withMassachusetts and have full service operations in North America, Europe and Asia.Our company initially developed and marketed automated handling equipment for front endfront-end semiconductor manufacturing tools and became a publicly traded company in February 1995. Through both internal product development and significant business acquisition activityacquisitions we became the leading provider of these automation solutions in this market. Since that time, we have expanded both the markets we serve as well as our core product capabilities. A notable step in our diversificationexpansion was the acquisition of Helix Technology Corporation in 2005, which provided us with leading technology solutions in vacuum and instrumentation equipment and which allowed us to serve a broader set of markets. In 2011, we identified life sciences as a strategically underserved market with favorable growth opportunities where Brooks’ core competencies of automation and cold temperature management of a controlled environment could provide enabling technology solutions. During 2011 we made two strategic acquisitions to penetrate this market. In April 2011, we acquired RTS Life Sciences (“RTS”), a Manchester, UK-based business, and in July 2011 we acquired Nexus Biosystems, Inc. (“Nexus”), a Poway, CA-based business. We further enhanceddivested our life sciences offering in 2012 by acquiring the Celigo® automated Cell Cytometer product line (“Celigo”) from Cyntellect, Inc., a San Diego, CA-based business.During the period 2006 through June 2011 we acquired and then further developed a significant contract manufacturing business providing leading wafer front-end equipment manufacturers with an extension of their own assembly and test capability to better focus on their core processes and to offer flexibility during industry cycles. In June 2011, we divested this business in order to focus on our core technology solutions.AlthoughIn 2011, we identified life sciences as an underserved strategic market where our core competencies in automation and cryogenic solutions could provide enabling products and services to the market and favorable opportunities for growth of our business. Since 2011, we have entered into transactionsmade several strategic acquisitions to penetrate the automated sample storage system market, and we now are a leading worldwide provider of these solutions. In addition to automated sample management, our life sciences business offers related services, along with consumables and complementary bench-top instruments.In addition to the acquisitions made to expand the non-semiconductor portions of our business, we will continuehave continued to make investments to maintain and grow our semiconductor product and service offerings. In January 2012, we acquired primarily intangible assets from Intevac, Inc. for $3.0 million, which we intend to use in the development of next generation semiconductor automation tools. In October 2012, we acquired Crossing Automation Inc., a Fremont, CA-based provider of automation solutions for the global semiconductor front-end market,market. In April 2014, we acquired Dynamic Micro Systems Semiconductor Equipment GmbH, or DMS, a German provider of automated contamination control solutions for $63.1front opening unified pod, or "FOUP," carriers and reticle storage.In March 2014, we entered into an agreement to sell the Granville-Phillips Gas Analysis & Vacuum Measurement, or Granville-Phillips, business unit to MKS Instruments, Inc. for $87.0 million in cash which is subjectand we completed this sale in May 2014. Unless otherwise noted, the description of our business relates solely to a working capital adjustmentour continuing operations and does not include the operations of our former Granville-Phillips business unit.We expect to be determined subsequent to the closing.MarketsOur fiscal years 2014, 2013 and 2012 2011 and 2010 revenuespercentage of revenue by end market werewas as follows: 2012 2011 2010 54 % 65 % 71 % 17 % 13 % 13 % 11 % 11 % 8 % 10 % 2 % — % 8 % 9 % 8 % 100 % 100 % 100 % 2014 2013 2012 Semiconductor capital equipment 46 % 46 % 51 % Service and spares 19 % 21 % 17 % Industrial capital equipment 11 % 12 % 11 % Other adjacent technology markets 11 % 11 % 10 % Life sciences 13 % 10 % 11 % 100 % 100 % 100 % The markets we serve areproportion of our revenue by end market is changing rapidly as a result of our internal product and sales initiatives, our acquisitions and divestituredivestitures and the cyclical nature of the semiconductor capital equipment market. Our divested contract manufacturingOver time, we expect the percentage of revenue from our life science business exclusively servedto increase given its higher expected growth rate. Changes from year to year, however, will depend on a variety of factors, including the cyclicality of the semiconductor product end markets, and the RTS, Nexus andCeligo acquisitions serve life sciences markets. Although we have entered into transactions to expand the non-semiconductor portions of our business, we will continue to make investments to maintain and grow our semiconductor product and service offerings.Semiconductor capital equipmentThe global semiconductor capital equipment industry is a highly cyclical industry with a long term growth profile driven by the expanded use of semiconductor devices and the increase in device complexity, each necessitating incremental equipment purchases.purchases by manufacturers. This growth is increasingly focused in Asia. The production of advanced semiconductor chips is an extremelya complex and logistically challenging manufacturing activity. To create the tens of millions of microscopic transistors and connect them both3horizontally and in vertical layers in order to produce a functioning integrated circuit chip, or IC chip, the silicon wafers must go through hundreds of process steps that requireperformed by complex processing equipment, or tools, to create the integrated circuits.tools. A large production fabrication plant, or fab, may have more than 70 different types of process and metrology tools, totaling as many as 500 tools or more. Up to 40% of these tools perform processes in a vacuum, such as removing, depositing, or measuring material on wafer surfaces. Wafers can go through as many as 400 different process steps before fabrication is complete. These steps, which comprise the initial fabrication of the integrated circuit and are referred to in the industry as front-end processes, are repeated many times to create the desired pattern on the silicon wafer. As the complexity of semiconductors continues to increase, the number of process steps that occur in a vacuum environment have also increases,increased, resulting in a greater need for both automation and vacuum technology solutions due to the sensitive handling requirements and increased number of tools. The requirement for efficient, higher throughput and extremely clean manufacturing for semiconductor wafer fabs and other high performance electronic-based products has created a substantial market for substrate handling automation (moving the wafers around and between tools in a semiconductor fab), tool automation (the use of robots and modules used in conjunction with and inside process tools that move wafers from station to station)station-to-station), and vacuum systems technology to create and sustain the clean environment necessary to fabricate various products. Advanced chipThe use of advanced processing used to form three dimensional structures of the previously patterned integrated circuitcircuits is emerging.emerging in the industry. This processing, often referred to as wafer level packaging,Wafer Level Packaging, or WLP, is typically performed at what would be considered the back-end processing of aan IC chip. To accomplish this work, there is an extension of someSome traditional front-end processes into theare being used in this back-end advance packaging, thereby increasing the market for automation solutions.Service and sparesWhereas sales for production equipment are typically made to original equipment manufacturers (“OEMs”), the service and spares support of that equipment is more typicallycan be provided in collaboration with the OEMs, or through a relationship with the end-user manufacturer who is using that equipment in a productive capacity. While the majority of the market that we currently address with our service and spares activities is the semiconductor manufacturing market, we are actively looking to increase our service and spares offerings in the life science market.Industrial capital equipmentThereIn addition to semiconductor manufacturing, there are a variety of industrial manufacturing operations that require either a vacuum or significant cooling for effective deposition of films or coatings.coatings during the production process. The expansion of technologiesthe use of mobile devices such as touch screen equipment is driving greater application of these operationssmart phones, tablets, and wearable technologies, and the requirementresulting increase in the need for associated manufacturing equipment continues to drive demand for the associateduse of vacuum and instrumentation solutions that we provide. These deposition processes are typically performed on equipment that cycle from an uncontrolled atmospheric environment for loading and unloading to a controlled vacuum environment for processing. The transition to the controlled vacuum environment requires removal of large amounts of moisture inherent fromin the air in a typical operation. This moisture removal is accomplished by deep cooling of coils within the vacuum chamber and thechamber. The increased need for the equipment necessary to deliver refrigerant supply to thosethese coils resultshas resulted in increased demand for our products.Life SciencesThere is a broad market of devices, systems and consumables that support the pharmaceutical, biotechnology, health care research and diagnostics industries in the advanced handling, processing, storage anddistribution of biological and compound samples. At the heart of these activities is sample storage. Facilities that store biological samples are commonly called biobanks or biorepositories. Such sample storage is generally more effective in maintaining a controlled environment, tracking samples, and reliably and quickly handling samples, if the store is automated. These automated sample management systems are at the heart of the complete sample handling process. With the advent of personalized medicine linking DNA to optimal treatment regimens, the expansion of mass storage of key biological material to support rapidly expanding comparative and longitudinal studies, and the accumulation of samples taken from surgical and other procedures, we believe that the numbers of samples in storage is expanding at between 25 — 30% per annum on a global basis. We believe that this expansion, together with manual stores that become overwhelmed by the numbers of samples they accumulate, will drive a solid growth in automated sample management equipment.Other adjacent technology marketsThere are a variety of markets that have adopted, or are adopting, similar manufacturing methods to those utilized by the semiconductor industry. Frequently, these markets have common customers but technology applications in the end markets are still maturing. We serve a variety of these evolving markets including light emitting diode, (“LED”)or LED, applications. High Brightness LED, (“HBLED”)or HBLED, is a potential clean energy solution replacing incandescent lighting sources. We believe that the application of HBLED solutions to these general illumination applications is expected towill expand as manufacturing processes for these products advance, resulting in lower costs of production and more attractive pricing for these products. Organic LED, (“OLED”)or OLED, solutions provide lower power consumption for high clarity video.still and video images. OLED applications are gaining traction in the mobile computing and telecommunications device markets. Other evolving markets which utilize our products include microelectronic mechanical systems (“MEMS”)Micro-Electro-Mechanical Systems, or MEMS, manufacturing and solar panel manufacturing. MEMS applications, which include accelerometers, self tuning antennae and pressure gauges, are expanding in automotive, mobile computing and telecommunications device markets. We believe that solar panel production is also expanding, and our products are used in the production of thin film solar panels which require cooling to effectuate deposition and adhesion.Life SciencesThere is a broad market of devices, systems and consumables that support the pharmaceutical, biotechnology, healthcare research and diagnostics industries in the advanced handling, processing, storage and distribution of biological and compound samples. At the core of these activities is sample storage. Automated sample stores are generally more effective in maintaining a controlled environment, tracking samples, reliably processing and quickly handling samples, than are manual systems. These automated sample storage management systems are at the center of the complete sample handling process. With the advent of personalized medicine linking DNA to optimal treatment regimens, the expansion of mass storage of key biological material to support rapidly expanding comparative and longitudinal studies, and the accumulation of samples taken from surgical and other4procedures, we believe that the numbers of samples in storage is expanding between 25 and 30% per annum on a global basis. We believe that this expansion, together with the problems associated with traditional manual storage systems, will drive consistent growth in automated sample management equipment.ProductsIn the semiconductor industry, wafer handling robotics have emerged as a critical technology in determining the efficacy and productivity of complex production tools in the world’sworld's most advanced 300mm wafer fabs. A tool is designed and built around a process chamber using automation technology to move wafers into and out of the chamber. Today, OEMs design and build their tools using a cluster architecture, whereby several process chambers are mounted to one central transfer module that processes these wafers.module. High wafer throughput density and new materials require advanced automation solutions to address the challenging equipment needs for multiple substrate sizes, including the emerging 450mm wafer size transition and advancedsub 20nm technology nodes, in today’sThru Silicon Via, EUV Lithography and tomorrow’s production environment.450mm substrates. We specialize in developing and building the handling system,systems, as well as the vacuum technologytechnologies used in these tools. Our products can be utilized as an individual componentcomponents or as a completelycomplete integrated handling system. Automationsystems. In addition, our automation products are provided to support both atmospheric and vacuum based processes while our focus remains on improvingand are designed to improve performance and productivity.productivity of the manufacturing process. The majority of our product revenue is derived from sales to OEMs and end-user semiconductor device manufacturers.We provide high vacuum pumps and instrumentation which are required in certain process steps to create and to optimize the process environment by maintaining pressure consistency of the known process gas. To achieve optimal production yields, semiconductor manufacturers must ensure that each process operates at carefully controlled pressure levels. Impurities or incorrect pressure levels can lower production yields, thereby significantly increasing the cost per useable semiconductorusable IC chip produced. We provide various pressure measurement instruments that form part of this pressure control loop on production processing equipment. Some key vacuum processes include: dry etching and dry stripping, chemical vapor deposition, or CVD, physical vapor deposition, or PVD, and ion implantation. Our cryogenic vacuum pumps are considered the industry standard by many leading semiconductor device manufacturers for ion implant and PVD applications.In the HBLED market we have worked with leading manufacturers to develop advanced automation solutions that improve the productivity of processes that were previously manual. These LEDs are also made alsomanufacturing flow.manufacturing. We have been successful in capturing LED market share for our vacuum product offerings and for high payload and throughputautomated tool architectures. In other adjacent markets, such as MEMS and Wafer Level Packaging (“WLP”)WLP applications, unique wafer handling and automation solutions are required to accommodate increasingly thinner and sometimes bowed substrates are required.substrates. We are developing differentiated solutions to address the requirements in these high growth market segments.For the life science markets we provide automated sample management platforms that store samples (e.g.: DNA,, nucleic acid, blood, drug compounds, biologics)biological tissue, etc.) in a controlled environment and automate the process (vials are typically stored in racks or plates) of the subsequent extractions ofsubsequently retrieving specifically selected samples from those racks or plates. The controlled storage environments ensure that samples are preserved within a narrow temperature band to maintain their integrity for long periods while providing absolute accuracy in the identification and selection of samples. We are an early pioneer in bringing to market stores that operate as low as minus 80OC.In providing comprehensive solutions to the life science markets we also provide systemsequipment for automated blood fractionation, sealing and de-sealing equipment for samples stored on plates and automated cappers and de-cappers for samples stored in tubes. We also provide consumables in the form of sample plates, micro-plates and tubes.In the Cytometry application, we offer whole well cell counting systems using brightfield imaging technology to improve the accuracy of cell culturestubes and eliminate the needsupport services for detached enzymes and hematocytometer. The flexibility and ease-of-usemany of the Celigo cell counting application also allows cell growth to be monitored over time and facilitates the daily management of cultures. The standardization of this process leads to increased consistency of quantitative cell-based assays.SegmentsWe report financial results in fourthree segments: Brooks Product Solutions; Brooks Global Services; and Brooks Life Science Systems; and Contract Manufacturing.The Brooks Product Solutions segment provides a variety of products critical to technology equipment productivity and availability.solutions that enable improved throughput and yield in controlled operating environments. Those products include atmospheric and vacuum robots, robotic modules, and tool automation systems atmosphericthat provide precision handling and vacuum robots and robotic modules and cryogenicclean wafer environments as well as vacuum pumping and thermal management and vacuum measurement solutions which are used to create measure and control critical process vacuum applications.The Brooks Global Services segment provides an extensive range of support services, including on and off-site repair services, on and off-site diagnostic support services, and installation services toin support of the base equipment installed by our Brooks Product Solutions segment, which enable our customers to maximize process tool uptime and productivity. This segment also provides end-user customers with spare parts support services to maximize customer tool productivity.The Brooks Life Science Systems segment provides automated sample management systems for automated cold sample storage, automated blood fractionation equipment for sample preparation and handling, equipment, cellular imaging, consumables, and parts and support services to a wide range of life science customers including pharmaceutical companies, biotechnology companies, biobanks, national laboratories, research institutes and research universities.The Contract Manufacturing segment provided services to build equipment front-end modules, vacuum transport modules and other subassemblies which enabled our customers to effectively source high quality and high reliability process tools for semiconductor market applications. We sold this segment on June 28, 2011.5CustomersWithin the semiconductor industry, we sell our products and services to most of the major semiconductor chip manufacturers and semiconductor equipment OEMs in the world. Our customers outside the semiconductor industry are broadly diversified. We have major customers in North America, Europe and Asia. Additionally, although much of our equipment sales ship to OEMs in the United States, OEMs, many of thoseour products are incorporated into equipment that is ultimately are utilized in international markets.outside of North America. See Part I, Item 1A, “Risk Factors” for a discussion of the risks related to foreign operations. The Brooks Global Services business provides support to leading OEMs, fabs and foundries across the globe.Our life sciences systems solutions are used by pharmaceutical customers,companies, biotechnology companies, national laboratories, biological drug development companies, research institutes and research hospitals. There is no continuing concentration of customers for the Brooks Life Science Systems segment although given the size of particular projects, an individual customer may be significant to the life science segment in a given quarter or fiscal year.Relatively few customers account for a substantial portion of our revenues,revenue, with the top 10 customers accounting for approximately 43%37% of our business in fiscal 2012.year 2014. We have one customer, Applied Materials, Inc., that accounted for more than 10%11% of our overall revenuesrevenue for the year.In our assessmentFor purposes of determining the percentage of revenue from any OEM customer, concentration, we primarily consider the OEM who designs the proprietary tool as our customer since they make the design-in decision rather than an intermediarydo not include revenue from products sold to a contract manufacturer who iscustomer which in turn sells to the entityOEM. If we did include revenue from products sold to whom we invoice. For fiscal 2012, no contract manufacturer represented more than 10%customers supporting our OEM customers, the percentage of revenues.Sales, Marketing and Customer SupportWe market and sell most of our semiconductor, industrial and other adjacent technology market products and services in Asia, Europe, the Middle East and North America through our direct sales organization. The sales process for our products is often multilevel, involving a team comprised of individuals from sales, marketing, engineering, operations and senior management. In many cases we assign a team to a customer is assigned aand that team that engages the customer at different levels of its organization to facilitate planning, provide product customization when required, and to ensure open communication and support. Some of our vacuum and instrumentation products and services for certain international markets are sold through local country distributors. Additionally, we serve the Japanese market for our robotics and automation products through our Yaskawa Brooks Automation, (YBA)our joint venture with Yaskawa Electric Corporation of Japan.We market to mostMuch of our life sciences customerssales are completed through our direct Brooks Life Science Systems sales force.force, particularly our store systems and services. In addition, we facilitate the sale of consumables and instruments with distributors which reach a broader range of customers. In regions with emerging life science industries such as China, India and the Middle East, we leverage local distributors to assist in the sales process.process of stores. The sales process for our larger sample management systems may take 6-18 months to complete and it involves a team typically comprised of individuals from sales, marketing, engineering and senior management.We typically provide warranties from one to two years, depending upon the type of product, with the average warranty on our products lasting for 15 months.Our marketing activities include participation in trade shows, delivery of seminars, participation in industry forums, distribution of sales literature, publication of press releases and articles in business and industry publications. To enhance communication and support, particularly with our international customers, we maintain sales and service centers in Asia, Europe, the Middle East and North America. These facilities, together with our headquarters, maintain local support capabilitycapabilities and demonstration equipment for customers to evaluate. Customers are encouraged to discuss features and applications of our demonstration equipment with our engineers located at these facilities.Net revenuesrevenue for the fiscal years ended September 30, 2012, 20112014, 2013 and 20102012 based upon the source of the order by geographic area areis as follows (in thousands): Year Ended September 30, 2012 2011 2010 $ 230,735 $ 349,456 $ 322,542 194,711 244,524 203,172 94,005 94,125 67,258 $ 519,451 $ 688,105 $ 592,972 Year Ended September 30, 2014 2013 2012 North America $ 174,343 $ 177,779 $ 214,060 Asia/Pacific 198,695 154,358 183,406 Europe 109,810 90,303 91,517 $ 482,848 $ 422,440 $ 488,983 The geographic location of an OEM is not indicative of where our products will eventually be used. ThisThe geographic area for our orders is determined by the onward sale of an OEM system which incorporates our sub-systems and/or components.Long-lived assets, consisting6Our property, plant and equipment as of September 30, 2014 and 2013 by geographic area areis as follows (in thousands): September 30, 2012 2011 $ 51,546 $ 55,295 2,123 1,920 10,809 11,381 $ 64,478 $ 68,596 September 30, 2014 2013 North America $ 40,232 $ 38,505 Asia/Pacific 870 1,646 Europe/Middle East 9,081 7,355 $ 50,183 $ 47,506 CompetitionWe operate in a variety of niches of varying breadth and with differing competitors and competitive dynamics. The semiconductor and adjacent technology markets, and process equipment manufacturing industries are highly competitive and characterized by continual changes and improvements in technology. TheA significant portion of equipment automation is still done in-house by OEMs. Our competitors among external vacuum automation suppliers are primarily Japanese companies such as Daihen Corporation, Daikin Industries, Ltd. and Rorze.Rorze Corporation. Our competitors among vacuum components suppliers include Sumitomo Heavy Industries Genesis and Telemark. We have a significant share of the market for vacuum cryogenic pumps and mixed gas cryo-chillers. Competitors in markets for our instrumentation products include MKS Instruments and Inficon.Telemark, Inc. Atmospheric tool automation is typically less demanding, has fewer barriers to entry and has a larger field of competitors. We compete directly with other equipment automation suppliers of atmospheric modules and systems such as Hirata Corporation, Kawasaki Heavy Industries, Ltd., Genmark Automation, Inc., Rorze Corporation, Sankyo Seisakusho Co., Ltd., TDK Corporation and Symphonia.Sinfonia Technology Co., Ltd. Contract manufacturers such as Celestica Inc. and Flextronics areInternational Ltd. also providingprovide assembly and manufacturing services for atmospheric systems.Our Life Science Systems business unit competes with a number of smaller private companies in providing automated sample management systems. These competitors include Hamilton Matrical, HighRes Biosolutions,Company, Liconic AG and TTP LabTech.We believe our customers will purchase our equipment automation products and vacuum subsystems as long as weour products continue to provide the necessary throughput, reliability, contamination control and accuracy in our products at an acceptable price point.price. We believe that we have competitive offerings with respect to all of these factors; however, wefactors. We cannot guarantee, however, that we will be successful in selling our products to OEMs who currently satisfy a portion of their automation needs in-house or from other independent suppliers, regardless of the performance or price of our products.Research and DevelopmentOur research and development efforts are focused on developing new products and also enhancing the functionality, degree of integration, reliability and performance of our existing products. Our engineering, marketing, operations and management personnel leverage their close collaborative relationships with many of their counterparts in customer organizations in an effort to proactively identify market demands with an ability towhich helps us refocus our research and development investment to meet our customercustomers' demands. With the rapid pace of change that characterizes the markets we serve, it is essential for us to provide high-performance and reliable products in order for us to maintain our leadership position.Our research and development spending for fiscal years 2014, 2013 and 2012 2011 and 2010 was $47.5$52.6 million, $39.8$46.2 million and $31.2$44.7 million, respectively.ManufacturingOur manufacturing operations are used for product assembly, integration and testing. We have adoptedimplemented quality assurance procedures that include standard design practices including reliability testing and analysis, supplier and component selection procedures, vendor control procedurescontrols, manufacturing process controls, and comprehensive reliability testing and analysis toservice processes that ensure thehigh-quality performance of our products.Petaluma, California; Longmont, Colorado;Spokane, Washington; Monterrey, Mexico; Yongin-City, South KoreaKorea; Manchester, UK; and Manchester, UK.Jena, Germany. We also provide service and spare parts support to end usersend-users throughout the world. Many of our service customers are based outside of the U.S.,United States, with many in Asia. We have service and support locations close to these customers to provide rapid response to their service needs. We have service and support locations in Chelmsford, Massachusetts; Poway, California; Fremont, California; Spokane, Washington; Chu Bei City, Taiwan; Yongin City,Yongin-City, South Korea; Yokohama, Japan; Shanghai, China; Singapore; Jena, Germany; Oberdiessbach, Switzerland; Manchester, UK; and Kiryat-Gat, Israel.Our manufacturing operations are designed to provide high quality, low cost, differentiated products to our customers in short lead times through responsive and flexible processes and sourcing strategies. We utilize a just-in-timelean manufacturing strategy, based on the concepts of demand flow technology,techniques for a large portion of our manufacturing process. We believe that this strategy, coupled withcapabilities. This includes the outsourcing of non-critical components such as machined parts, wire harnessesassemblies and PC boards, reduces our fixed operating costs, improves our working capital efficiency, reduces our manufacturing cycle times and improves our flexibilityproducts to rapidly adjust production capacities. While we often use single source suppliers for certain key components and common assemblies to achieve quality control and the benefits of economies of scale, we believe that these parts and materials are readily available from other supply sources.competitive regions, including Asia. We expect to continue to broaden theour sourcing of certain portions of our componentsmanufacturing process to low cost7ensure we continue to provide high quality products at competitive costs. We also believe the continued sourcing of portions of our manufacturing processes in these regions including Asia.Patents and Proprietary RightsWe rely on patents, trade secret laws, confidentiality procedures, copyrights, trademarks and licensing agreements to protect our technology. Our United States patents expire at various times through 2028. Due to the rapid technological change that characterizes the life sciences, semiconductor, adjacent technology markets and related process equipment industries, we believe that the improvement of existing technology, reliance upon trade secrets and unpatented proprietary know-how and the development of new products may be as important as patent protection in establishing and maintaining a competitive advantage. To protect trade secrets and know-how, it is our policy to require all technical and management personnelemployees to enter into proprietary information and nondisclosure agreements. We cannot guarantee that these efforts will meaningfully protect our trade secrets.As of September 30, 2014, we owned approximately 480 issued U.S. patents, with various corresponding patents issued in foreign jurisdictions. We have successfully licensed our front-opening unified pod (“FOUP”) load port technology to significant FOUP manufacturers.BacklogBacklogTotal backlog for our products as of September 30, 2012,2014, totaled $81.1$126.9 million as compared to $99.7$107.2 million at September 30, 2011.2013. Backlog consists ofor total backlog, includes all purchase orders for which a customer has scheduled delivery, regardless of the expected delivery date, and consists principally of orders for products and service agreements. The backlog for our products within the next 12 months was $113.6 million and $104.9 million at September 30, 2014 and 2013, respectively. Twelve-month backlog includes orders scheduled to be delivered within the next 12 months. Backlog consists of orders principally for hardware and service agreements. Orders included in the backlog may be cancelled or rescheduled by customers without significant penalty. products with scheduled deliveries beyond one year relate primarily to our life science products.Backlog as of any particular date should not be relied upon as indicative of our revenuesrevenue for any future period. A substantial percentage of current business generates no backlog because we deliver our products and services in the same period in which the order is received.Environmental MattersWe are subject to federal, state, and local environmental laws and regulations, as well as the environmental laws and regulations of the foreign national and local jurisdictions in which we have manufacturing facilities. We believe we are in material compliance with all such laws and regulations.Compliance with foreign, federal, state, and local laws and regulations has not had, and is not expected to have, an adverse effect on our capital expenditures, competitive position, financial condition or results of operations.EmployeesAt September 30, 2012,2014, we had 1,4271,455 full time employees. In addition, we utilized 120employ part time employeesworkers and contractors. Approximately 4645 employees in our facility in Jena, Germany are covered by a collective bargaining agreement. We consider our relationships with these and all employees to be good.Available InformationWe file annual, quarterly, and current reports, proxy statements, and other documents with the Securities and Exchange Commission, (“SEC”)or SEC, under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”).or the Exchange Act. The public may read and copy any materials that we file with the SEC at the SEC’sSEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Also, the SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers, including Brooks Automation, Inc., that file electronically with the SEC. The public can obtain any documents that we file with the SEC atwww.sec.gov.Our internet website address ishttp://www.brooks.com. Through our website, we make available, free of charge, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and any amendments to those reports, as soon as reasonably practicable after such materials are electronically filed, or furnished to, the SEC. These SEC reports can be accessed through the investor relationsinvestors section of our website. The information found on our website is not part of this or any other report we file with or furnish to the SEC.8Item 1A. Risk Factors Factors That May Affect Future ResultsYou 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 IndustryDue in part to the cyclical nature of the semiconductor manufacturing industry and related industries, as well as due to volatility in worldwide capital and equity markets, we have previously incurred operating losses and may have future losses.Our business is largely dependent on capital expenditures in the semiconductor manufacturing industry and other businesses employing similar manufacturing technology.technologies. The semiconductor manufacturing industry in turn depends on current and anticipated demand for integrated circuits and the products that use them. In recent years, these businesses have experienced unpredictable and volatile business cycles due in large part to rapid changes in demand and manufacturing capacity for semiconductors, and these cycles have had an impact on our business, sometimes causing declining revenuesrevenue and operating losses. We could experience future operating losses during an industry downturn. If an industry downturn continues for an extended period of time, our business could be materially harmed. Conversely, in periods of rapidly increasing demand, we could have insufficient inventory and manufacturing capacity to meet our customercustomers' needs on a timely basis, which could result in the loss of customers and various other expenses that could reduce gross margins and profitability.We face competition which may lead to price pressure and otherwise adversely affect our sales.We face competition throughout the world in each of our product areas. This comesand service areas, including from the competitors as discussed in Part I, Item 1, “Business —- Competition” as well as from internal roboticautomation capabilities at larger OEMs. Many of our competitors have substantial engineering, manufacturing, marketing and customer support capabilities. We expect our competitors to continue to improve the performance of their current products and services and to introduce new products, services and technologies that could adversely affect sales of our current and future products and services. New products, services and technologies developed by our competitors or more efficient production of their products or provisions of their services could require us to make significant price reductions or decide not to compete for certain orders. If we fail to respond adequately to pricing pressures or fail to develop products with improved performance or developments or better quality services with respect to the other factors on which we compete, we could lose customers or orders. If we are unable to compete effectively, our business and prospects could be materially harmed.Risks Relating to BrooksOur operating results could fluctuate significantly, which could negatively impact our business.Our revenues,revenue, operating margins and other operating results could fluctuate significantly from quarter to quarter depending upon a variety of factors, including:itthe industry depends or otherwise;customers;changechanges in our industry;9our ability to reduce our costs in response to decreased demand for our products and services;disruptions in our manufacturing process or in the supply of components to us;As a result of these risks, we believe that quarter to quarterquarter-to-quarter comparisons of our revenue and operating results may not be meaningful, and that these comparisons may not be an accurate indicator of our future performance.If we do not continue to introduce new products and services that reflect advances in technology in a timely and effective manner, our products and services may become obsolete and our operating results will suffer.Our success is dependent on our ability to respond to the technological change present in the markets we serve. The success of our product development and introduction depends on our ability to:products;products;competitors’competitors' offerings;suchso that they meet customer requirements.If we cannot succeed in responding in a timely manner to technological and/or market changes or if the new products and services that we introduce do not achieve market acceptance, it could diminish our competitive position would diminish which could materially harm our business and our prospects.The global nature of our business exposes us to multiple risks.For the fiscal years ended September 30, 20122014 and 2011,2013, approximately 56%64% and 49%58%, respectively, of our revenues wererevenue was derived from sales outside North America. We expect that international sales, including increased sales in Asia, will continue to account for a significant portion of our revenues.revenue. We maintain a global footprint of sales, service and repair operations. As a result of our international operations, we are exposed to many risks and uncertainties, including:
fewer or less certain legal protections for intellectual property and contract rights abroad;
different and changing legal and regulatory requirements in the jurisdictions in which we operate;
government currency control and restrictions on repatriation of earnings;
fluctuations in foreign currency exchange and interest rates, particularly in Asia and Europe; and
political and economic instability, changes, hostilities and other disruptions in regions where we operate.
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;
unanticipated problems or latent liabilities, such as problems with the quality of the installed base of the target company’scompany's products or infringement of another company’scompany's intellectual property by a target company’scompany's activities or products;
problems associated with compliance with the target company’sacquired company's existing contracts;
difficulties in managing geographically dispersed operations; and
the diversion of management’smanagement's attention from normal daily operations of the business.
We may be subject
future operations.
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.
Our failure to protect our intellectual property could adversely affect our future operations.
Our ability to compete is significantly affected by our ability to protect our intellectual property. Existing trade secret, trademark and copyright laws offer only limited protection. Our success depends in part on our ability to obtain and enforce patent protection for our products both in the United States and in other countries. We own numerous U.S. and foreign patents, and we intend to file additional applications, as appropriate, for patents covering our products and technology. Our current patents will expire from time to time through 2028 and new patents may not be issued for any pending or future patent applications, and the claims allowed under any issued patents may not be sufficiently broad to protect our technology. Any issued patents owned by or licensed to us may be challenged, invalidated or circumvented, and the rights under these patents may not provide us with competitive advantages. In addition, the laws of some countries in which our products are or may be developed, manufactured or sold may not fully protect our products. We cannot guarantee that the steps we have taken to protect our intellectual property will be adequate to prevent the misappropriation of our technology. Other companies could independently develop similar or superior technology without violating our intellectual property rights. In the future, it may be necessary to engage in litigation or like activities to enforce our intellectual property rights, to protect our trade secrets or to determine the validity and scope of proprietary rights of others, including our customers. This could require us to incur significant expenses and to divert the efforts and attention of our management and technical personnel from our business operations.
harmed, while the failure to estimate customer demand accurately could result in excess or obsolete inventory.
The impact of any disruption at one of our facilities may be exacerbated if the disruption occurs at a time when we need to rapidly increase our manufacturing capabilities to meet increased demand or expedited shipment schedules.
The market priceoutsource providers may fail to perform as we expect.
variations in operating results from quarter to quarter;
changes in earnings estimates by analysts or our failure to meet analysts’ expectations;
for intangible assets, a revised useful life. These events and circumstances include significant changes in the market price per sharebusiness climate, legal factors, operating performance indicators, advances in technology and competition. Any impairment or revised useful life could have a material and adverse effect on our financial position and results of our public company customers;
market conditions inoperations, and could harm the semiconductor and other industries into which we sell products;
economic conditions in Europe and general economic conditions;
political changes, hostilities or natural disasters such as hurricanes and floods;
low trading volume of our common stock; and
the number of firms making a market in our common stock.
In addition, the stock market has in the past experienced significant 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.
| Item 1B. | Unresolved Staff Comments |
| Item 2. | Properties |
Location | Functions |
|
| |||||
Chelmsford, Massachusetts | Corporate headquarters, training, manufacturing, R&D and | 201,000 | Owned | |||||
Chelmsford, Massachusetts | Manufacturing | 97,000 | ||||||
| ||||||||
Poway, California | ||||||||
| ||||||||
| Manufacturing, R&D and sales & support | 67,600 | ||||||
Fremont, California | R&D and sales & support | 44,900 | August 2018 | |||||
| Manchester, UK | Manufacturing, R&D and sales & support | 42,000 | December 2019 | |||||
| Manufacturing, R&D and sales & support | 34,100 | August 2019 | |||||
| Jena, Germany | Manufacturing, R&D and sales & support | 30,100 | January 2017 | |||||
Chu Bei City, Taiwan | Sales & support | 28,600 | June | |||||
UK as well as an additional facility in Spokane, Washington.
| Item 3. | Legal Proceedings |
The Company is
In the event of unexpected subsequent developments and given the inherent unpredictability of these legal proceedings, there can be no assurance that our assessment of any claim will reflect the ultimate outcome and an adverse outcome in certain matters could, from time-to-time, have a material adverse effect on our consolidated financial condition or results of operations in particular quarterly or annual periods.
| Item 4. | Mine Safety Disclosures |
| Item 5. | Market for |
| Market Price | Dividends Declared | |||||||||||
| High | Low | |||||||||||
Fiscal year ended September 30, 2012 | ||||||||||||
First quarter | $ | 10.96 | $ | 7.52 | $ | 0.08 | ||||||
Second quarter | 12.38 | 10.13 | 0.08 | |||||||||
Third quarter | 12.34 | 8.95 | 0.08 | |||||||||
Fourth quarter | 9.84 | 7.86 | 0.08 | |||||||||
Fiscal year ended September 30, 2011 | ||||||||||||
First quarter | $ | 9.48 | $ | 6.37 | ||||||||
Second quarter | 13.94 | 8.72 | ||||||||||
Third quarter | 14.59 | 9.96 | ||||||||||
Fourth quarter | 11.66 | 7.74 | 0.08 | |||||||||
| Market Price | Dividends Declared | ||||||||||
| High | Low | ||||||||||
| Fiscal year ended September 30, 2014 | |||||||||||
| First quarter | $ | 10.75 | $ | 9.01 | $ | 0.08 | |||||
| Second quarter | 11.64 | 9.43 | 0.08 | ||||||||
| Third quarter | 11.50 | 8.75 | 0.08 | ||||||||
| Fourth quarter | 11.53 | 9.86 | 0.10 | ||||||||
| Fiscal year ended September 30, 2013 | |||||||||||
| First quarter | $ | 8.24 | $ | 7.00 | $ | 0.08 | |||||
| Second quarter | 10.50 | 8.23 | 0.08 | ||||||||
| Third quarter | 10.97 | 8.78 | 0.08 | ||||||||
| Fourth quarter | 10.56 | 8.74 | 0.08 | ||||||||
5, 2014.
Performance Graph
 * $100 invested on |
Fiscal year ending September 30.
| 9/28/07 | 9/30/08 | 9/30/09 | 9/30/10 | 9/30/11 | 9/28/12 | |||||||||||||||||||
Brooks Automation, Inc. | 100.00 | 58.71 | 54.28 | 47.12 | 57.75 | 58.84 | ||||||||||||||||||
NASDAQ/AMEX/NYSE | 100.00 | 74.19 | 85.17 | 122.91 | 108.42 | 126.72 | ||||||||||||||||||
Peer Group | 100.00 | 64.37 | 71.68 | 78.60 | 76.17 | 86.24 | ||||||||||||||||||
30, 2009 in stock or index, including reinvestment of dividends.
| 9/30/09 | 9/30/10 | 9/30/11 | 9/30/12 | 9/30/13 | 9/30/14 | |||||||
| Brooks Automation, Inc. | 100.00 | 86.80 | 106.38 | 108.40 | 130.06 | 151.69 | ||||||
| NASDAQ/NYSE MKT/NYSE | 100.00 | 109.28 | 105.09 | 132.49 | 158.51 | 181.57 | ||||||
| Peer Group | 100.00 | 102.67 | 101.89 | 125.13 | 167.58 | 173.52 | ||||||
Issuance
Securities
Issuer’s
Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs | ||||||||||||
July 1 — 31, 2012 | — | $ | — | — | $ | — | ||||||||||
August 1 — 31, 2012 | 1,585 | 9.52 | 1,585 | — | ||||||||||||
September 1 — 30, 2012 | — | — | — | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | 1,585 | $ | 9.52 | 1,585 | $ | — | ||||||||||
|
|
|
|
|
|
|
| |||||||||
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number (or Approximate Dollar Value) of Shares that May Yet be Purchased Under the Plans or Programs | ||||||||||
| July 1 - 31, 2014 | — | $ | — | — | $ | — | ||||||||
| August 1 - 31, 2014 | 8,608 | 10.56 | 8,608 | — | ||||||||||
| September 1 - 30, 2014 | — | — | — | — | ||||||||||
| Total | 8,608 | $ | 10.56 | 8,608 | $ | — | ||||||||
| Item 6. | Selected Financial Data |
| Year Ended September 30, | ||||||||||||||||||||
| 2012(6)(7)(8) | 2011(4)(5)(9) | 2010(3)(9) | 2009(2)(9) | 2008(1)(9) | ||||||||||||||||
| (In thousands, except per share data) | ||||||||||||||||||||
Revenues | $ | 519,451 | $ | 688,105 | $ | 592,972 | $ | 218,706 | $ | 526,366 | ||||||||||
Gross profit (loss) | $ | 173,486 | $ | 223,021 | $ | 166,295 | $ | (5,996 | ) | $ | 126,828 | |||||||||
Income (loss) from continuing operations before income taxes and equity in earnings (losses) of joint ventures | $ | 11,420 | $ | 127,576 | $ | 56,064 | $ | (226,917 | ) | $ | (236,152 | ) | ||||||||
Net income (loss) from continuing operations | $ | 136,835 | $ | 130,437 | $ | 59,884 | $ | (227,527 | ) | $ | (236,351 | ) | ||||||||
Net income (loss) attributable to Brooks Automation, Inc. | $ | 136,789 | $ | 130,385 | $ | 59,841 | $ | (227,612 | ) | $ | (235,619 | ) | ||||||||
Basic net income (loss) from continuing operations per share attributable to Brooks Automation, Inc. common stockholders | $ | 2.10 | $ | 2.02 | $ | 0.94 | $ | (3.62 | ) | $ | (3.66 | ) | ||||||||
Diluted net income (loss) from continuing operations per share attributable to Brooks Automation, Inc. common stockholders | $ | 2.08 | $ | 2.01 | $ | 0.93 | $ | (3.62 | ) | $ | (3.66 | ) | ||||||||
Shares used in computing basic earnings (loss) per share | 65,128 | 64,549 | 63,777 | 62,911 | 64,542 | |||||||||||||||
Shares used in computing diluted earnings (loss) per share | 65,722 | 65,003 | 64,174 | 62,911 | 64,542 | |||||||||||||||
Cash dividends per share | $ | 0.32 | $ | 0.08 | $ | — | $ | — | $ | — | ||||||||||
Total assets Working capital Total Brooks Automation, Inc. stockholders’ equity As of September 30, 2012 2011(10) 2010(10) 2009(10) 2008(10) (In thousands) $ 741,960 $ 636,958 $ 517,040 $ 411,569 $ 662,611 $ 266,298 $ 224,785 $ 219,176 $ 150,700 $ 235,795 $ 648,666 $ 518,347 $ 387,631 $ 317,376 $ 540,968
| Year Ended September 30, 2012 | ||||||||||||||||
| First Quarter(9) | Second Quarter(7)(9) | Third Quarter(7) | Fourth Quarter(6)(7)(8) | |||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
Revenues | $ | 120,228 | $ | 139,337 | $ | 140,437 | $ | 119,449 | ||||||||
Gross profit | $ | 40,357 | $ | 48,282 | $ | 46,240 | $ | 38,607 | ||||||||
Net income | $ | 2,831 | $ | 9,726 | $ | 8,025 | $ | 116,253 | ||||||||
Net income attributable to Brooks Automation, Inc. | $ | 2,823 | $ | 9,721 | $ | 8,028 | $ | 116,217 | ||||||||
Basic net income per share attributable to Brooks Automation, Inc. common stockholders | $ | 0.04 | $ | 0.15 | $ | 0.12 | $ | 1.78 | ||||||||
Diluted net income per share attributable to Brooks Automation, Inc. common stockholders | $ | 0.04 | $ | 0.15 | $ | 0.12 | $ | 1.77 | ||||||||
| Year Ended September 30, 2011 | ||||||||||||||||
| First Quarter(9) | Second Quarter(9) | Third Quarter(4)(5)(9) | Fourth Quarter(4)(9) | |||||||||||||
| (In thousands, except per share data) | ||||||||||||||||
Revenues | $ | 178,367 | $ | 192,651 | $ | 186,136 | $ | 130,951 | ||||||||
Gross profit | $ | 57,319 | $ | 61,674 | $ | 56,970 | $ | 47,058 | ||||||||
Net income | $ | 23,955 | $ | 26,841 | $ | 66,921 | $ | 12,720 | ||||||||
Net income attributable to Brooks Automation, Inc. | $ | 23,955 | $ | 26,823 | $ | 66,915 | $ | 12,692 | ||||||||
Basic net income per share attributable to Brooks Automation, Inc. common stockholders | $ | 0.37 | $ | 0.42 | $ | 1.03 | $ | 0.20 | ||||||||
Diluted net income per share attributable to Brooks Automation, Inc. common stockholders | $ | 0.37 | $ | 0.41 | $ | 1.03 | $ | 0.19 | ||||||||
| Year Ended September 30, | |||||||||||||||||||
2014(1)(2)(3) | 2013(1)(4)(5) | 2012(1)(6)(7)(8) | 2011(1)(9)(10) | 2010(1)(11) | |||||||||||||||
| (In thousands, except per share data) | |||||||||||||||||||
| Revenue | $ | 482,848 | $ | 422,440 | $ | 488,983 | $ | 653,299 | $ | 562,744 | |||||||||
| Gross profit | $ | 167,337 | $ | 132,307 | $ | 159,453 | $ | 207,012 | $ | 152,605 | |||||||||
| Operating income (loss) | $ | (2,699 | ) | $ | (16,798 | ) | $ | 1,642 | $ | 70,301 | $ | 39,295 | |||||||
| Income (loss) from continuing operations | $ | 1,520 | $ | (7,114 | ) | $ | 131,835 | $ | 121,141 | $ | 52,172 | ||||||||
| Income from discontinued operations, net of tax | $ | 30,002 | $ | 4,964 | $ | 5,000 | $ | 9,296 | $ | 7,712 | |||||||||
| Net income (loss) attributable to Brooks Automation, Inc. | $ | 31,361 | $ | (2,215 | ) | $ | 136,789 | $ | 130,385 | $ | 59,841 | ||||||||
| Basic net income (loss) per share attributable to Brooks Automation, Inc. common stockholders: | |||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.02 | $ | (0.11 | ) | $ | 2.02 | $ | 1.88 | $ | 0.82 | ||||||||
| Income from discontinued operations, net of tax | 0.45 | 0.08 | 0.08 | 0.14 | 0.12 | ||||||||||||||
| Basic net income (loss) per share attributable to Brooks Automation, Inc. | $ | 0.47 | $ | (0.03 | ) | $ | 2.10 | $ | 2.02 | $ | 0.94 | ||||||||
| Diluted net income (loss) per share attributable to Brooks Automation, Inc. common stockholders: | |||||||||||||||||||
| Income (loss) from continuing operations | $ | 0.02 | $ | (0.11 | ) | $ | 2.01 | $ | 1.86 | $ | 0.81 | ||||||||
| Income from discontinued operations, net of tax | 0.44 | 0.08 | 0.08 | 0.14 | 0.12 | ||||||||||||||
| Diluted net income (loss) per share attributable to Brooks Automation, Inc. | $ | 0.46 | $ | (0.03 | ) | $ | 2.08 | $ | 2.01 | $ | 0.93 | ||||||||
| Dividend declared per share | $ | 0.34 | $ | 0.32 | $ | 0.32 | $ | 0.08 | $ | — | |||||||||
| As of September 30, | |||||||||||||||||||
| 2014 | 2013 | 2012 | 2011 | 2010 | |||||||||||||||
| (In thousands) | |||||||||||||||||||
| Cash and cash equivalents and marketable securities | $ | 245,456 | $ | 173,362 | $ | 200,231 | $ | 205,818 | $ | 142,427 | |||||||||
Working capital(12) | $ | 98,228 | $ | 105,511 | $ | 121,709 | $ | 95,579 | $ | 107,064 | |||||||||
| Total assets | $ | 778,038 | $ | 736,763 | $ | 741,960 | $ | 636,958 | $ | 517,040 | |||||||||
| Total capital lease obligation | $ | 8,298 | $ | — | $ | — | $ | — | $ | — | |||||||||
| Total equity | $ | 642,889 | $ | 632,656 | $ | 649,301 | $ | 518,936 | $ | 388,168 | |||||||||
| Year Ended September 30, 2014 | |||||||||||||||
First Quarter(1) | Second Quarter | Third Quarter(2)(3) | Fourth Quarter(3) | ||||||||||||
| (In thousands, except per share data) | |||||||||||||||
| Revenue | $ | 117,072 | $ | 125,900 | $ | 117,359 | $ | 122,517 | |||||||
| Gross profit | $ | 40,891 | $ | 44,298 | $ | 40,746 | $ | 41,402 | |||||||
| Operating income (loss) | $ | 1,458 | $ | 2,396 | $ | (5,910 | ) | $ | (643 | ) | |||||
| Income (loss) from continuing operations | $ | 1,919 | $ | 2,103 | $ | (2,764 | ) | $ | 262 | ||||||
| Income from discontinued operations, net of tax | $ | 1,577 | $ | 1,162 | $ | 27,263 | $ | — | |||||||
| Net income attributable to Brooks Automation, Inc. | $ | 3,448 | $ | 3,189 | $ | 24,476 | $ | 248 | |||||||
| Basic net income per share attributable to Brooks Automation, Inc. common stockholders: | |||||||||||||||
| Income (loss) from continuing operations | $ | 0.03 | $ | 0.03 | $ | (0.04 | ) | $ | 0.00 | ||||||
| Income from discontinued operations, net of tax | 0.02 | 0.02 | 0.41 | — | |||||||||||
| Basic net income per share attributable to Brooks Automation, Inc. | $ | 0.05 | $ | 0.05 | $ | 0.37 | $ | 0.00 | |||||||
| Diluted net income per share attributable to Brooks Automation, Inc. common stockholders: | |||||||||||||||
| Income (loss) from continuing operations | $ | 0.03 | $ | 0.03 | $ | (0.04 | ) | $ | 0.00 | ||||||
| Income from discontinued operations, net of tax | 0.02 | 0.02 | 0.40 | — | |||||||||||
| Diluted net income per share attributable to Brooks Automation, Inc. | $ | 0.05 | $ | 0.05 | $ | 0.36 | $ | 0.00 | |||||||
| Year Ended September 30, 2013 | |||||||||||||||
First Quarter(5) | Second Quarter(5) | Third Quarter(5) | Fourth Quarter(4)(5) | ||||||||||||
| (In thousands, except per share data) | |||||||||||||||
| Revenue | $ | 91,506 | $ | 109,482 | $ | 110,771 | $ | 110,681 | |||||||
| Gross profit | $ | 26,281 | $ | 33,083 | $ | 36,075 | $ | 36,868 | |||||||
| Operating income (loss) | $ | (14,468 | ) | $ | (3,170 | ) | $ | 2,133 | $ | (1,293 | ) | ||||
| Income (loss) from continuing operations | $ | (10,407 | ) | $ | (3,165 | ) | $ | 4,549 | $ | 1,909 | |||||
| Income (loss) from discontinued operations, net of tax | $ | 1,188 | $ | 2,654 | $ | (2,981 | ) | $ | 4,103 | ||||||
| Net income (loss) attributable to Brooks Automation, Inc. | $ | (9,236 | ) | $ | (538 | ) | $ | 1,544 | $ | 6,015 | |||||
| Basic net income (loss) per share attributable to Brooks Automation, Inc. common stockholders: | |||||||||||||||
| Income (loss) from continuing operations | $ | (0.16 | ) | $ | (0.05 | ) | $ | 0.07 | $ | 0.03 | |||||
| Income (loss) from discontinued operations, net of tax | 0.02 | 0.04 | (0.05 | ) | 0.06 | ||||||||||
| Basic net income (loss) per share attributable to Brooks Automation, Inc. | $ | (0.14 | ) | $ | (0.01 | ) | $ | 0.02 | $ | 0.09 | |||||
| Diluted net income (loss) per share attributable to Brooks Automation, Inc. common stockholders: | |||||||||||||||
| Income (loss) from continuing operations | $ | (0.16 | ) | $ | (0.05 | ) | $ | 0.07 | $ | 0.03 | |||||
| Income (loss) from discontinued operations, net of tax | 0.02 | 0.04 | (0.04 | ) | 0.06 | ||||||||||
| Diluted net income (loss) per share attributable to Brooks Automation, Inc. | $ | (0.14 | ) | $ | (0.01 | ) | $ | 0.02 | $ | 0.09 | |||||
| (1) |
| (2) |
| (3) | We acquired Dynamic Micro Systems Semiconductor Equipment GmbH, or DMS, in April 2014. The results of |
| (4) | We acquired certain assets and |
| (5) | We acquired Crossing Automation Inc. |
| (6) | We acquired the Celigo® product line in December 2011. The results from the Celigo® product line were included in our results of operations from the date of acquisition through March 2014, when we completed the sale of |
| (7) | Income (loss) from continuing operations and net income (loss) attributable to Brooks Automation, Inc. includes a $121.8 million deferred income tax benefit in connection with a reversal of a majority of the valuation allowance against our net deferred tax assets. |
|
| (8) | Income (loss) |
| (9) | We acquired RTS Life Science Limited, or RTS, in April 2011 and Nexus Biosystems, Inc., or Nexus, in July 2011. The results of RTS and Nexus have been included in our results of operations from the date of each acquisition. |
| (10) | On June 28, 2011, we disposed of our contract manufacturing business which did not qualify as discontinued operations because of the significance of the ongoing commercial arrangements between us and the buyer. As such, the operations prior to the divestiture are included in our results of operations. Income (loss) from continuing operations and net income (loss) attributable to Brooks Automation, Inc. includes a $45.0 million pre-tax gain on the sale of our contract manufacturing business. |
| (11) | Income (loss) from continuing operations and net income (loss) attributable to Brooks Automation, Inc. |
| (12) | The calculation of |
| Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations |
The demand for semiconductors and semiconductor manufacturing equipment is cyclical, resulting in periodic expansions and contractions of this market. Demand for our products has been impacted by these cyclical industry conditions. Our revenues from the latter half of fiscal 2009 through fiscal year 2011 benefited from an upturn in the semiconductor capital equipment market. Revenues for fiscal year 2012 have been impacted by our acquisitions and divestures, and also impacted more recently by weakness in demand for semiconductor capital equipment. We expect this weakness to continue into the early part of fiscal year 2013.
RTS Life Sciences (“RTS”), a United Kingdom based provider of automation solutions to the life sciences markets, acquired on April 1, 2011 for $3.4 million, net of cash on hand;
Nexus Biosystems, Inc. (“Nexus”), a California based provider of automation solutions and consumables to the life sciences markets on July 25, 2011 for $84.9 million, net of cash on hand;
|
Although we have entered into transactions to expand the non-semiconductor portions of our business, we will continue to make investments to maintain and grow our semiconductor product and service offerings. On January 6, 2012, weWe acquired primarily intangible assets from Intevac, Inc.DMS Dynamic Micro Systems Semiconductor Equipment GmbH, or DMS, in April 2014 for $3.0approximately $31.6 million. We will use these assets in the developmentDMS is a German based provider of a next generationautomated contamination control solutions for front opening unified pod, or FOUP, carriers and reticle storage, for improving yield of semiconductor automation tools. We expensed essentially all of this asset purchase as an in-process research and development cost in the three months ended March 31, 2012. Onprocesses at semiconductor fabrication plants. In October 29, 2012, we acquired Crossing Automation Inc. (“Crossing”), or Crossing, a U.S. based provider of automation solutions for the global semiconductor front-end markets. The purchase price was approximately $63.1 million, which is subject$59.0 million. The acquisition of these businesses provides us with the opportunity to a working capital adjustmentenhance our existing capabilities with respect to be determinedmanufacturing of atmospheric and vacuum automation solutions within the semiconductor front-end market.
On April 20, 2011,reporting period of this filing, we announced the acquisition of FluidX Ltd., or FluidX, a UK based provider of biological sample storage tubes and complementary bench-top instruments for approximately $16.0 million.
as a discontinued operation.
The Contract Manufacturing segment provided services
sale of the Granville-Phillips business unit. Income from continuing operations was $1.5 million in fiscal year 2014 after a loss of $7.1 million in fiscal year 2013. In the third quarter of fiscal 2012, we identified prior period errors relatedaddition to the accounting foracquisitions activity described above, we intend to continue to implement measures to improve the profitability of our equity method investment in ULVAC Cryogenics, Inc. (“UCI”). We determined thatcontinuing operations. For example, during fiscal year 2014, we discontinued certain subsidiaries of UCI were not fully includedproduct lines in the results UCI reportedBrooks Life Science Systems and Brooks Product Solutions segments, transitioned manufacturing of our line of Polycold cryochillers to usa third party contract manufacturer, consolidated our global footprint and therefore not reflected within equity in earningsimplemented other programs designed to improve our cost structure. In connection with these initiatives, we recorded restructuring charges of joint ventures in our consolidated statements of operations or within equity investment in joint ventures in our consolidated balance sheets$6.3 million for the quarterly and annual periods beginning in the fiscal year ended September 30, 2006 through the quarterly period ended March 31, 2012. We concluded that these errors were not material
individually or in the aggregate2014, compared to any$6.4 million of the prior reporting periods, and therefore, amendments of previously filed reports were not required. However, if the entire correction wasrestructuring charges recorded in the third quarter of 2012, the cumulative amount would be material in thefiscal year ended September 30, 2012 and would have impacted comparisons2013. We expect these changes to prior periods. As such, the revisions for these corrections to the applicable prior periods are reflected in the financial information herein and will be reflectedimprove our profitability in future filings containing such financial information. The revision had no net impact on the Company’s consolidated statements of cash flows for any prior period. The specific amount of each revision is detailed in Note 1 to our consolidated financial statements.
periods.
of operations.
Revenues
Revenue from product sales that does not include significant customization is recorded upon delivery and transfer of risk of loss torevenue.
from the customer.
recorded as deferred revenue.
than goodwill and other long-lived assets are subject to an impairment test if there is an indicator of impairment. We conduct our annual goodwill impairment test as of our fiscal year end, or September 30th. Our testsManagement's judgments are based on market and operational conditions at the time of goodwill asthe evaluation and can include management's best estimate of September 30, 2012, 2011future business activity, which in turn drives estimates of future cash flows from these assets and 2010 indicatedthe reporting units with associated goodwill. These periodic evaluations could cause management to conclude that we did not have any impairment factors exist, requiring an adjustment of these assets to goodwill.
Under U.S. Generally Accepted Accounting Principles (“GAAP”),their then-current fair market value. Future business conditions and/or activity could differ materially from the projections made by management causing the need for additional adjustments and impairment charges.
We determine the fair value of our reporting units using an Income Approach, specifically the Discounted Cash Flow Method (“DCF Method”). The DCF Method includes five year future cash flow projections, which are discounted to present value, and an estimate of terminal values, which are also discounted to present value. Terminal values represent the present value an investor would pay today for the rights to the cash flows of the business for the years subsequent to the discrete cash flow projection period. We consider the DCF Method to be the most appropriate valuation indicator as the DCF analyses are based on management’s long-term financial projections. However, we also use market-based valuation techniques to test the reasonableness of the fair values determined by the DCF Method. We also compare the aggregate fair value of our reporting units and corporate assets to our overall market capitalization.
segments.
Under GAAP, wereporting units have reached stable growth rates.
determine the fair value of the individual net assets within the long-lived asset group. If the aggregate fair values of the individual net assets of the group are less than the carrying values, an impairment charge is recorded equal to the excess of the aggregate carrying value of the group over the aggregate fair value. The loss is allocated to each asset within the group based on their relative carrying values, with no asset reduced below its fair value.
Prior to fiscal year 2012 management had concluded that it was more likely than not that our deferred tax assets would not be realizedU.S. and recorded a full valuation allowance against all global deferred tax assets. As of September 30, 2012 management has changed this judgment upon the careful consideration of all available positive and negative evidence. The positive evidence considered was three year U.S. historical cumulative income, projected future taxable income and the length of carry-forward periods of tax attributes. The primary negative evidence to be considered is the volatility of the semiconductor industry which creates uncertainty in forecasting profits. As a result of this change in judgment we recorded a tax benefit of $121.8 million resulting from the reduction in the valuation allowance. We continue to maintain a valuation allowance in the U.S. against certain tax attributes based on the uncertainty of their realization based on long-term forecasts and the expiration dates of the attributes.
We also maintain a valuation allowance against deferred tax assets in certain foreign jurisdictions. We will continue to assess the need for a valuation allowance in future periods. If future operating results of the U.S. or these foreign jurisdictions significantly exceeddeviate from long-term expectations, it is reasonably possible that there could be a further reductionchange in the valuation allowance in the future. Further reduction ofA change in the valuation allowance, in whole or in part, would result in a non-cash income tax expense or benefit during the period of reduction.
change.
Our U.S.
Revenues
Our Brooks Product Solutions segment reported revenues of $380.9 million for fiscal year 2012, a decrease of 16% from $451.3 millionrevenue. We continue to seek opportunities to expand our market share in the prior year. These decreases are attributable to lower volumes of shipments to most of the endsemiconductor and adjacent technology markets served by this segment. Recent demand for semiconductor capital equipment has declined, and we expect this reduction in demand to result in lower revenues for this segment in the near term as compared to the revenues achieved in the fourth quarter of fiscal year 2012.
Our Brooks Global Services segment reported revenues of $86.0 million for fiscal year 2012, a 3% decrease from $88.8 million in the prior year. The decrease includes a $3.4 million decrease in product revenues, which are comprised mostly of spare part sales to end users. This decrease, which is primarily attributable to decreased demand from our semiconductor customers, is partially offset by a $0.6 million increase in revenues from services.
Our Brooks Life Science Systems segment reported revenues of $52.6 million for fiscal year 2012, a 396% increase from $10.6 million in the prior year. This increase is primarily the result of the timing of our acquisitions. We acquired RTS on April 1, 2011, Nexus on July 25, 2011 and Celigo on December 31, 2011. Revenues for this segment for fiscal year 2012 include $39.7 million of product revenue, which includes sales of automated systems and consumables. The balance of the fiscal year 2012 revenues, or $12.9 million, is comprised of service revenues to support deployed automation systems.
Our Contract Manufacturing segment reported revenues of $137.3 million for fiscal year 2011. This segment was sold on June 28, 2011.
Revenues from the Brooks Product Solutions segment for the fiscal year 2011 include intercompany sales of $49.2 million from this segment to the Contract Manufacturing segment. These intercompany revenues have been eliminated from the revenues of Contract Manufacturing.
Revenues for the Contract Manufacturing segment for the fiscal year 2011 exclude intercompany sales of $10.7 million from this segment to the Brooks Product Solutions segment.
Revenues outside the United States were $290.8 million, or 56% of total revenues, and $339.9 million, or 49% of total revenues, for fiscal years 2012 and 2011, respectively. We expect that revenues outside the United States will continue to account for a significant portion of total revenues.
Gross Margin
Gross margin percentage increased to 33.4% for fiscal year 2012, compared to 32.4% for the prior year. This increase was primarily attributable to a more favorable product mix with the addition of our higher margin Brooks Life Science Systems segment and the sale of our lower margin Contract Manufacturing segment. This increase in gross margin percentage was partially offset by weaker margins in our Brooks Product Solutions and Brooks Global Services segments.
However, these markets are cyclical and demand for the products and services offered will be affected by these cycles. We anticipate continued growth in revenue from our Brooks Life Science Systems segment through our internally developed products and services, including our Twinbank platform for automated systems, and through acquisition of products and services that expand our addressable markets, including our recent acquisition of FluidX.
Gross margin1.5 percentage of ourpoints. Our Brooks Global Services segment decreased to 29.8% fordid not have any step-up charges in fiscal year 2012 as compared to 35.7% in the prior year. This decrease is due to lower sales of higher margin spare parts, which reduced2014.
Gross margin percentage for our Brooks Life Science Systems segment increased to 38.8%37.1% for fiscal year 20122014 as compared to 21.2%32.7% in the prior fiscal year. The increase is duewas driven by leverage on increased volume, a reduction in inventory step-up charges associated with acquisitions and a reduction in impairment charges related to the reductioncompleted technology intangible assets. The segment operating leverage drove significant benefits with revenue growth of purchase accounting related adjustments that impact the valuation of deferred revenue obligations and the step-up in value of acquired inventory, which reduced gross margin percentage by 1.6% for46% compared to fiscal year 2012 as compared to a reduction of 11.9% for2013. The operational improvements in the prior year. In addition, reduced charges for excess and obsolete inventories for fiscal year 2012 as compared to the prior year resulted in a 5.5% improvement in gross margin percentage. The balance of the increase relates to the increased production and improved absorption of our fixed costs. These increases in gross margin percentagesegment were partially offset by increased amortization for completed technology intangible assets which decreased gross margin percentage by 1.0% as compared toone $3.6 million project, recognized in the prior year.
Gross margin percentage for our Contract Manufacturing segment for fiscal year 2011 was 12.5%. The sale of this lower gross margin segment at the end of our third quarter of fiscal 2013, that made a minimal contribution to gross margin. Gross profit margin in fiscal year 2011 has led2014 benefited from $2.0 million of lower costs related to an overall increasethe step-up of inventory balances in our consolidated post-sale gross margin percentage.
purchase accounting, impairment of intangible assets and restructuring charges.
fiscal year as a result of our recently completed acquisitions.
valuation techniques, principally, the discounted cash flow method, and the subordination to the new lender. As a result, the fair value of the loan, which we currently estimate to be $1.0 million, could be different under different conditions or different assumptions, including the varying assumptions regarding future cash flows of the partner or discount rates.
implemented to improve our cost structure.
transaction, and therefore, this transaction was treated as the purchase of an asset group. This asset group includes primarily intellectual property that will be utilized in the development of a next generation of semiconductor automation tools that resides within the Brooks Product Solutions segment. We expensed essentially all of this asset purchase as an in-process research and development cost in the three months ended March 31,fiscal 2012.
Sale2013 consisted primarily of Contract Manufacturing Business in 2011
We closed the sale of our extended factory contract manufacturing business on June 28, 2011 with affiliates of Celestica Inc. The gross proceeds on this transaction were $81.8a $1.4 million of which $79.3 million was received on the closing. The balance of $2.5 million represents a working capital normalizing adjustment, and was received during our fourth quarter of 2011. The gross proceeds included the reimbursement of $1.3 million of cash on hand at the closing offset by $2.3 million of transaction expenses. The pre-tax gain on the sale was $45.0 million. Our fiscal year 2011 income tax provision includes $2.4of certain underutilized buildings in Chelmsford, MA and Oberdiessbach, Switzerland and $0.6 million of incremental taxes on this gain.
We also entered into certain commercial supply and license agreements with Celesticajoint venture management fee income which will govern the ongoing relationship between Celestica and us. Pursuant to those agreements we will supply Celestica with certain products and have licensed to Celestica certain intellectual property needed to run the business and Celestica will supply certain products to us. Due to the significancewas partially offset by foreign exchange losses of these ongoing commercial arrangements, the sale did not qualify for discontinued operations treatment. Therefore, historical financial results of the divested business will not be segregated within our consolidated financial statements for the historical periods in which this business was part of us.
Other Income
$0.9 million. Other income, net of $0.7 million for fiscal year 2012 consistsconsisted primarily of $1.0 million of joint venture management fee income of $1.0 million which has been partially offset by foreign exchange losses of $0.4 million. Other income, net of $1.9 million for fiscal year 2011 consists primarily of joint venture management fee income of $1.1 million and $0.7 million from a litigation settlement.
Benefit
Equity Method Investments
Year Ended September 30, 2011, Compared to Year Ended September 30, 2010
Revenues
We reported revenues of $688.1 million for fiscal year 2011, compared to $593.0 million in the previous year, a 16% increase. The total increase in revenues of $95.1 million is the result of increased demand for our products and services which resulted in $88.8 million of increased revenues from our Brooks Product Solutions segment and $13.9 million of higher revenues from our Brooks Global Services segment. In addition, the acquisitions of RTS and Nexus provided $10.6 million of increased revenues from our Brooks Life Science Systems segment. These increases were partially offset by an $18.2 million decrease in Contract Manufacturing revenues, due to the sale of that segment at the end of our third fiscal quarter.
Our Brooks Product Solutions segment reported revenues of $451.3 million for fiscal year 2011, an increase of 24% from $362.5 million in the prior year. These increases are primarily attributable to higher volumes of shipments to semiconductor capital equipment customers, which increased $46.8 million for fiscal year 2011 as compared to the prior year, and an increase of $42.0 million from non-semiconductor customers for fiscal year 2011 as compared to the prior year.
Our Brooks Global Services segment reported revenues of $88.8 million for fiscal year 2011, a 19% increase from $74.9 million in the prior year. The increase includes a $1.0 million increase in product revenues, which are comprised mostly of spare part sales to end users, and a $12.9 million increase in revenues from services. These increases are primarily attributable to increased demand from our semiconductor customers.
Our Brooks Life Science Systems segment reported revenues of $10.6 million for fiscal year 2011. This segment includes revenues for RTS, which was acquired on April 1, 2011 and for Nexus, which was acquired on July 25, 2011. Revenues from these newly acquired entities are included in our operating results from their respective acquisition dates through the end of our fiscal year. Revenue from this segment includes $7.7 million for the sale of product, including automation systems and consumables, and includes $2.9 million of service revenue for the support of deployed automation systems.
Our Contract Manufacturing segment reported revenues of $137.3 million for fiscal year 2011, a 12% decrease from $155.5 million in the prior year. This decrease is due to the sale of this segment at the end of our third fiscal quarter. Through the first nine months of fiscal year 2011, Contract Manufacturing revenues increased 28% as compared to the same prior year period.
Revenues from the Brooks Product Solutions segment for the fiscal years 2011 and 2010 include intercompany sales of $49.2 million and $62.9 million, respectively, from this segment to the Contract Manufacturing segment. These intercompany revenues have been eliminated from the revenues of Contract Manufacturing.
Revenues for the Contract Manufacturing segment for the fiscal years 2011 and 2010 exclude intercompany sales of $10.7 million and $12.5 million, respectively, from this segment to the Brooks Product Solutions segment.
Revenues outside the United States were $339.9 million, or 49% of total revenues, and $271.5 million, or 46% of total revenues, for fiscal years 2011 and 2010, respectively.
Gross Margin
Gross margin percentage increased to 32.4% for fiscal year 2011, compared to 28.0% for the prior year. This increase is primarily attributable to higher absorption of indirect factory overhead on higher revenues. Further, the sale of our Contract Manufacturing segment, which earned lower gross margins than our other operating segments, favorably impacted our gross margin percentage in the fourth quarter of fiscal year 2011. These increases in gross margin percentage were partially offset by reduced benefits from the sale of previously reserved excess and obsolete inventory. The increase in the net charge for excess and obsolete inventory in fiscal year 2011 as compared to the prior year decreased gross margin percentage by 0.6%.
Gross margin percentage of our Brooks Product Solutions segment was 38.1% for fiscal year 2011 as compared to 35.4% in the prior year. This increase is primarily the result of higher absorption of indirect factory
overhead on higher revenues. This increase was partially offset by increased net charges for excess and obsolete inventory which reduced gross margin percentage by 1.0% as compared to the prior year.
Gross margin percentage of our Brooks Global Services segment was 35.7% for fiscal year 2011 as compared to 27.2% in the prior year. The increase in gross margin percentage was attributable to higher absorption of indirect service overhead on higher revenues. In addition, decreased charges for excess and obsolete inventory led to an increase in gross margin percentage of 0.9% for fiscal year 2011 as compared to the prior year.
Gross margin percentage for our Brooks Life Science Systems segment was 21.2% for fiscal year 2011, and has been reduced 11.9% for the impact of the valuation of deferred revenue obligations and the step-up in value of acquired inventory. Gross margin percentage was also decreased by 6.0% for charges for excess and obsolete inventories. Gross margin was further reduced by 2.8% for amortization of completed technology intangible assets.
Gross margin percentage of our Contract Manufacturing segment was 12.5% for fiscal year 2011 as compared to 11.2% in the prior year. For the first nine months of fiscal year 2011, revenues for Contract Manufacturing had increased 28% over the same prior year period. This increase in revenues led to higher absorption of indirect factory overhead and resulted in a higher gross margin percentage.
Research and Development
R&D expenses for fiscal year 2011 were $39.8 million, an increase of $8.6 million, compared to $31.2 million in the previous year. This increase includes $1.8 million of R&D costs incurred by RTS and Nexus since their respective acquisition dates. The balance of the increase is the result of our increased pace of spending for R&D throughout fiscal year 2011 as we supported certain enhancements to our product offerings.
Selling, General and Administrative
SG&A expenses were $102.5 million for fiscal year 2011, an increase of $16.9 million compared to $85.6 million in the prior year. The increase is partly attributable to higher labor-related costs of $8.9 million as a result of increased accruals for incentive based compensation due to our improved financial performance, combined with a 3% increase in SG&A headcount. We have included the results of RTS and Nexus in our results since their respective acquisition dates, which increased our SG&A costs by $4.0 million, which includes a $0.4 million increase in amortization of intangible assets. Other increases in SG&A costs include outside strategic consulting costs of $1.7 million, professional fees associated with the acquisition of Nexus of $0.7 million, higher commissions to independent sales representatives of $0.8 million due to higher revenues and $0.7 million of increased legal fees associated with our intellectual property portfolio as we increase our investments in R&D.
Restructuring Charges
We recorded a restructuring charge of $1.0 million for fiscal year 2011. These charges include severance related costs of $0.7 million, which are comprised of $0.3 million of severance for the elimination of 19 employees, including 13 employees in the Brooks Life Science Systems segment resulting from the consolidation of certain functions as the operations of RTS and Nexus are combined into one operating segment, and $0.4 million of adjustments for contingent severance arrangements for corporate management positions eliminated in prior periods. We also incurred $0.3 million of facility-related costs for facilities exited in previous years. We have reached the end of the lease period for all of our exited leased facilities as of September 30, 2011.
We recorded a restructuring charge of $2.5 million for fiscal year 2010. These charges include severance related costs of $0.9 million, and facility related costs of $1.6 million. The severance costs primarily include adjustments for contingent severance arrangements for corporate management positions eliminated in prior periods. The facility costs include $0.4 million to amortize the deferred discount on multi-year facility restructuring liabilities.
Interest Income
Interest income was $1.2 million for fiscal year 2011 as compared to $1.1 million for the prior year. The increase is primarily related to higher balances available for investing.
Sale of Intellectual Property Rights
During fiscal year 2010, we sold certain patents and patents pending related to a legacy product line and recorded a gain of $7.8 million. The terms of the sale permit us to continue to use these patents to support our ongoing service and spare parts business included within our Brooks Global Services segment.
Sale of Contract Manufacturing Business
We closed the sale of our extended factory contract manufacturing business on June 28, 2011 with affiliates of Celestica Inc. The gross proceeds on this transaction were $81.8 million, of which $79.3 million was received on the closing. The balance of $2.5 million represents a working capital normalizing adjustment, and was received during our fourth quarter of 2011. The gross proceeds include the reimbursement of $1.3 million of cash on hand at the closing offset by $2.3 million of transaction expenses. The pre-tax gain on the sale was $45.0 million. Our fiscal year 2011 income tax provision includes $2.4 million of incremental taxes on this gain.
Loss on Investment
During fiscal year 2010, we recorded a charge of $0.2 million for the sale of our minority equity investment in a closely-held Swiss public company. We no longer have an equity investment in this entity.
Other Income
Other income, net of $1.9 million for fiscal year 2011 consists primarily of joint venture management fee income of $1.1 million and $0.7 million from a litigation settlement. Other income, net of $0.4 million for fiscal year 2010 consists of joint venture management fee income of $0.7 million which has been partially offset by foreign exchange losses of $0.3 million.
Income Tax Provision
We recorded an income tax provision of $2.0 million for fiscal year 2011, which includes $2.5 million of foreign and U.S. state income taxes, and an additional $2.4 million of income taxes relating to the sale of our Contract Manufacturing segment. These provisions have been reduced by net favorable adjustments of $3.9 million to our liability for unrecognized tax benefits, primarily due to the expiration of certain statutes and a favorable audit outcome. We recorded an income tax benefit of $2.7 million for fiscal year 2010. This benefit includes a $3.9 million refund from the carryback of alternative minimum tax losses as a result of the Worker, Home Ownership and Business Assistance Act of 2009 which provides for 100% (previously 90%) of certain net operating loss carrybacks against alternative minimum taxable income. The tax benefit for fiscal year 2010 was partially offset by U.S. state income taxes and foreign taxes.
Equity in Earnings of Joint Ventures
Income associated with our 50% interest in ULVAC Cryogenics, Inc. was $4.3 million for fiscal year 2011 as compared to $1.0 million for fiscal year 2010. These numbers reflect the revision to UCI’s earnings as discussed in Note 1 to our consolidated financial statements. Income associated with our 50% interest in Yaskawa Brooks Automation, Inc. was $0.5 million for fiscal year 2011 as compared to $0.1 million for fiscal year 2010.
2012.
At September 30, 2012, we had cash, cash equivalents and marketable securities aggregating $200.2 million. This amount was comprised of $54.6 million of cash and cash equivalents, $85.7 million of investments in short-term marketable securities and $59.9 million of investments in long-term marketable securities. Our marketable securities are generally readily convertible to cash without an adverse impact.
Cash and cash equivalents were $54.6 million at September 30, 2012, a decrease of $4.2 million from September 30, 2011. The significant uses of cash during fiscal year 2012 included a payment of cash dividends of $21.0 million, a cash outflow of $9.2 million in connection with the acquisition of Celigo, $8.7 million of capital expenditures and an investment of $3.0 million. These uses of cash were mostly offset by cash provided by operating activities of $36.0 million and $1.7 million of proceeds from the issuance of common stock under our employee stock purchase plans.
Cash provided by operating activities was $36.0 million for fiscal year 2012, and was comprised of net income of $136.8 million, plus non-cash charges of $44.5 million, such as $21.6 million of depreciation and amortization, an $8.9 million non-cash charge related to our pension settlement and $8.6 million of stock-based compensation. These sources of cash were partially offset by a $121.8 million of a non-cash tax benefit included in our net income related to the reversal of a significant portion of our deferred tax asset valuation allowance, and a $23.1 million of increase in working capital. Increases to working capital included an $11.2 million decrease in accounts payable, a $5.8 million decrease in accrued pension costs due primarily to the settlement of the U.S. defined benefit pension plan and a $4.9 million decrease in accrued compensation. The decrease in accounts payable was due to lower purchasing activity on reduced semiconductor equipment demand while the reduction in accrued compensation was a result of the timing of payments for incentive compensation related to the prior fiscal year.
Cash used in investing activities was $21.0 million for fiscal year 2012 and was principally comprised of $9.2 million in connection with the acquisition of Celigo, $8.7 million of capital expenditures, an investment of $3.0 million and net purchases of marketable securities of $0.7 million. Cash used in investing activities was partially offset by a $0.5 million decrease in restricted cash related to expirations of certain cash collateralized international letters of credit. Capital expenditures include $1.4 million for the implementations of software, including the completion of our international implementations of our Oracle ERP system, the implementation of the Oracle system for Brooks Life Science Systems and a new global Human Resource Information System.
Cash used in financing activities was $19.2 million for fiscal year 2012 and includes $21.0 million for our quarterly cash dividends paid on December 30, 2011, March 30, 2012, June 29, 2012 and September 28, 2012, which was partially offset by $1.7 million of cash generated from our employee stock purchase plans.
At September 30, 2011, we had cash, cash equivalents and marketable securities aggregating $205.8 million. This amount was comprised of $58.8 million of cash and cash equivalents, $65.7 million of investments in short-term marketable securities and $81.3 million of investments in long-term marketable securities.
Cash and cash equivalents were $58.8 million at September 30, 2011, a decrease of $1.0 million from September 30, 2010. The significant uses of cash during fiscal year 2011 included the acquisitions of RTS and Nexus, which cost $88.3 million, net of cash acquired, net investments in marketable securities of $66.6 million, capital expenditures of $6.5 million and the payment of $5.2 million in dividends. The significant sources of cash include $87.7 million of cash provided by operations and $78.2 million of cash generated from the sale of our Contract Manufacturing segment.
Cash provided by operating activities was $87.7 million for fiscal year 2011, and was comprised of net income of $130.4 million, which includes $26.3 million of non-cash related charges such as $17.2 million of depreciation and amortization and $6.8 million of stock-based compensation. Cash provided by operations was partially offset by $21.4 million of increases in working capital. Increases in inventory levels were the primary contributor to increased working capital. Increases in inventory were driven by reductions in demand from our semiconductor equipment customers during our fourth quarter, along with $5.0 million of increased service inventories to improve delivery and service responsiveness. In addition, the gain of $45.0 million from the sale of
our Contract Manufacturing segment, which is included in our net income, has been removed from cash provided by operating activities since the cash flow from this transaction is considered to be an investing activity.
Cash used in investing activities was $84.3 million for fiscal year 2011 and was attributable to the acquisitions of RTS and Nexus, which cost $88.3 million, net investments in marketable securities of $66.6 million, capital expenditures of $6.5 million and a $1.3 million increase in restricted cash to support certain international letters of credit. These uses of cash were partially offset by $78.2 million of net proceeds from the sale of our Contract Manufacturing segment and $0.2 million from the sale of other assets.
Cash used in financing activities was $3.8 million for fiscal year 2011 and includes $5.2 million for our first quarterly cash dividend paid during the fourth quarter, which was partially offset by $1.4 million of cash generated from our employee stock purchase plans.
At September 30, 2012, we had approximately $3.3 million of letters of credit outstanding.
Our contractual obligations consist of the following at September 30, 2012 (in thousands):
| Total | Less than One Year | One to Three Years | Four to Five Years | Thereafter | ||||||||||||||||
Contractual obligations | ||||||||||||||||||||
Operating leases | $ | 18,771 | $ | 6,694 | $ | 8,994 | $ | 1,499 | $ | 1,584 | ||||||||||
Pension funding | 2,166 | 478 | 960 | 500 | 228 | |||||||||||||||
Purchase commitments and other | 65,268 | 63,774 | 1,494 | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total contractual obligations | $ | 86,205 | $ | 70,946 | $ | 11,448 | $ | 1,999 | $ | 1,812 | ||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
As of September 30, 2012, the total amount of net unrecognized tax benefits for uncertain tax positions and the accrual for the related interest was $7.6 million, all of which represents a potential future cash outlay. We are unable to make a reasonably reliable estimate of the timing of the cash settlement for this liability since the timing of future tax examinations by various tax jurisdictions and the related resolution is uncertain.
In connection with our acquisition of Nexus, we assumed responsibility for the Nexus Biosystems AG Pension Plan (the “Nexus Plan”). The timing of payments we make for the Nexus Plan is impacted by a number of estimates including earnings on plan assets and the timing of future distributions. Actual results may differ from these estimates, which may materially impact the timing of future payments. Nexus prepaid contributions to the investment manager of this plan prior to the closing of the acquisition. The investment manager draws on these prepaid contributions to fund contributions to the plan, as required. As of September 30, 2012, we had $0.2 million on deposit for this plan which is expected to cover contribution requirements in the near term.
In addition, we are a guarantor on a lease in Mexico that expires in January 2015. The remaining payments under this lease at September 30, 2012 are approximately $0.9 million.
On June 21, 2010, we filed a registration statement on Form S-3 with the SEC to sell up to $200 million of securities, before any fees or expenses of the offering. Securities that may be sold include common stock, preferred stock, warrants or debt securities. Any such offering, if it does occur, may happen in one or more transactions. Specific terms of any securities to be sold will be described in supplemental filings with the SEC. This registration statement will expire on July 1, 2013.
Our Board of Directors declared the following dividends (in thousands, except per share data):
Declaration Date | Dividend per Share | Record Date | Total | Payment Date | ||||||||
Year Ended September 30, 2012 | ||||||||||||
November 8, 2011 | $ | 0.08 | December 9, 2011 | $ | 5,184 | December 30, 2011 | ||||||
February 8, 2012 | 0.08 | March 9, 2012 | 5,258 | March 30, 2012 | ||||||||
May 9, 2012 | 0.08 | June 8, 2012 | 5,277 | June 29, 2012 | ||||||||
August 8, 2012 | 0.08 | September 7, 2012 | 5,234 | September 28, 2012 | ||||||||
Year Ended September 30, 2011 | ||||||||||||
August 3, 2011 | 0.08 | September 9, 2011 | 5,180 | September 30, 2011 | ||||||||
On November 7, 2012, our Board of Directors approved a cash dividend of $0.08 per share of the Company’s common stock. The total dividend of approximately $5.2 million will be paid on December 28, 2012 to shareholders of record at the close of business on December 7, 2012.
Dividends are declared at the discretion of our Board of Directors and depend on actual cash from operations, our financial condition and capital requirements and any other factors our Board of Directors may consider relevant. We intend to pay quarterly cash dividends in the future; however, the amount and timing of these dividends may be impacted by the cyclical nature of certain markets that we serve. We may reduce, delay or cancel a quarterly cash dividend based on the severity of a cyclical downturn.
On October 29, 2012, we acquired Crossing, a U.S. based provider of automation solutions for the global semiconductor front-end markets. The purchase price was approximately $63.1 million, which consists entirely of cash consideration. The purchase price is subject to a working capital adjustment, also payable in cash, with the amount to be determined subsequent to the closing. For the trailing twelve months ended September 30, 2012, Crossing had revenues of approximately $51 million, which generated operating profits of approximately $3 million with gross margins of approximately 41%.
We believe that we have adequate resources to fund our currently planned working capital and capital expenditure requirements for the next twelve months. The cyclical nature of our served markets and uncertainty with the current global economic environment makes it difficult for us to predict longer-term liquidity requirements with certainty. We may be unable to obtain any required additional financing on terms favorable to us, if at all. If adequate funds are not available on acceptable terms, we may be unable to successfully develop or enhance products, respond to competitive pressure or take advantage of acquisition opportunities, any of which could have a material adverse effect on our business.
Other Key Indicators
EBITDA2013 consist of the following (in thousands):
| September 30, | |||||||
| 2014 | 2013 | ||||||
| Cash and cash equivalents | $ | 94,114 | $ | 82,971 | |||
| Short-term marketable securities | 68,130 | 45,900 | |||||
| Long-term marketable securities | 83,212 | 44,491 | |||||
| $ | 245,456 | $ | 173,362 | ||||
EBITDA represents net income before interest income, income tax provision (benefit), depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted to give effect to certain non-recurring and/or non-cash items and other adjustments. We believe that the inclusion of EBITDA and Adjusted EBITDA in this Form 10-K is appropriate because we consider it an important supplemental measure of our performance and believe it is frequently used by securities analysts, investors and other interested parties. We use Adjusted EBITDA internally as a critical measurement of operating effectiveness. We believe EBITDA and Adjusted EBITDA facilitates operating performance comparison from period to period and company to company by backing out potential differences caused by variations in capital structures, tax positions (such as the impact on periods or companies of changes in effective tax rates or net operating losses) and the age and book depreciation of facilities and equipment (affecting relative depreciation expense).
In determining Adjusted EBITDA, we eliminate the impact of a number of items. For the reasons indicated herein, you are encouraged to evaluate each adjustment and whether you consider it appropriate. In addition, in
evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses similar to the adjustments in the presentation of Adjusted EBITDA. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.
EBITDA and Adjusted EBITDA have limitations as analytical tools, and you should not consider them in isolation, or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
they do not reflect our cash expenditures for capital expenditure or contractual commitments;
they do not reflect changes in, or cash requirements for, our working capital requirements;
other companies, including other companies in our industry, may calculate these measures differently than we do, limiting their usefulness as a comparative measure.
Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as measures of discretionary cash available to us to invest in the growth of our business. For these purposes, we rely on our GAAP results. For more information, see our consolidated financial statements and notes thereto appearing elsewhere in this report.
The following table sets forth a reconciliation$85.4 million of net income to EBITDA forproceeds received from the years indicated (in thousands):
| Year Ended September 30, | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
Net income attributable to Brooks Automation, Inc. | $ | 136,789 | $ | 130,385 | $ | 59,841 | ||||||
Interest income, net | (1,199 | ) | (1,088 | ) | (1,041 | ) | ||||||
Provision for (benefit from) income taxes | (123,282 | ) | 1,954 | (2,746 | ) | |||||||
Depreciation and amortization | 21,620 | 17,249 | 18,420 | |||||||||
|
|
|
|
|
| |||||||
EBITDA | $ | 33,928 | $ | 148,500 | $ | 74,474 | ||||||
|
|
|
|
|
| |||||||
The following table sets forth a reconciliationsale of EBITDA to Adjusted EBITDA for the years indicated (in thousands):
| Year Ended September 30, | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
EBITDA | $ | 33,928 | $ | 148,500 | $ | 74,474 | ||||||
Stock-based compensation | 8,647 | 6,752 | 6,567 | |||||||||
Restructuring charges | 3,275 | 1,036 | 2,529 | |||||||||
Restructuring and acquisition related inventory charges | — | 625 | — | |||||||||
Purchase accounting impact on contracts acquired | 866 | 1,270 | — | |||||||||
Merger costs | 221 | 719 | — | |||||||||
Pension settlement | 8,937 | — | — | |||||||||
In-process research and development | 3,026 | — | — | |||||||||
Gain on sale of Contract Manufacturing business, pre-tax | — | (45,009 | ) | — | ||||||||
Litigation settlement | — | (664 | ) | — | ||||||||
Sale of intellectual property rights | — | — | (7,840 | ) | ||||||||
Loss on investment | — | — | 191 | |||||||||
|
|
|
|
|
| |||||||
Adjusted EBITDA | $ | 58,900 | $ | 113,229 | $ | 75,921 | ||||||
|
|
|
|
|
| |||||||
The decrease in EBITDAdivested businesses and $53.8 million of cash flow from fiscal 2011 to fiscal 2012 is primarily related to decreases in our pre-tax incomeoperations. These sources of $116.2 million. This decrease wascash were partially offset by $3.3$62.2 million of insurance proceeds received duringnet purchases of marketable securities, $35.6 million used in acquisitions and $22.9 million of cash dividends paid to our shareholders. Our cash and cash equivalents of $83.0 million at September 30, 2013 increased $28.3 million compared with cash and cash equivalents at September 30, 2012. In fiscal 2012 as reimbursement of litigation related costs incurred in prior fiscal years. Theyear 2013, the increase in EBITDA from fiscal 2010cash and cash equivalents was due primarily to fiscal 2011 is primarily related to increased profits on $95.1$54.4 million of higher revenues,cash flow from operations, $53.3 million of net sales of marketable securities and the $45.0 million gain on the sale of our contract manufacturing business.
In fiscal 2011, based on a review of Nexus inventory values performed shortly after the closing of the acquisition, we recorded a charge of $0.6 million for excess and obsolete inventories.
In connection with the acquisitions of RTS, Nexus and Celigo, we allocated the purchase price to the net assets acquired based on the fair value of each asset and liability. As part of this allocation, we valued certain inventory and deferred revenue balances above and below their pre-acquisition carrying values, respectively. These adjustments reduced our net income for fiscal year 2012 by $0.9 million and by $1.3 million in fiscal year 2011.
In fiscal 2011, we received $1.3$14.1 million of proceeds from the sale of our stockreal estate offset, in part, by a former executive,$68.3 million used for acquisitions and remitted half$21.3 million of these proceedscash dividends paid to our insurance providers. We recorded $0.7shareholders.
For a discussionadjusted by $8.2 million for non-cash related charges and $14.1 million of ournet working capital improvements. Non-cash related charges in fiscal year 2014 consisted of $23.5 million of depreciation and amortization and $10.9 million of stock-based compensation restructuring charges, pension settlement, in-process research and development,offset by $27.4 million related to gains from the sale of divested businesses. The decrease in working capital is primarily due to a $12.1 million decrease in accounts receivable and a $9.6 million decrease in inventory. In fiscal year 2013, cash provided by operating activities was composed primarily of a $2.2 million net loss adjusted by $28.4 million for non-cash related charges and a $28.1 million decrease in net working capital. Non-cash related charges in fiscal year 2013 consisted of $24.2 million of depreciation and amortization and $7.8 million of stock-based compensation. The decrease in working capital was primarily due to a $15.5 million decrease in inventory and $9.0 million increase in deferred revenue. The change in assets and liabilities due to acquisitions and divestitures is treated as an investing activity, not as an operating activity.
The decreasemajority-owned subsidiary in Adjusted EBITDA from fiscal 2011 to fiscal 2012 was the result of lower revenues which led to a $49.5 million reductionKorea. Cash used in gross profits. The increase in Adjusted EBITDA from fiscal 2010 to fiscal 2011 is primarily related to increased revenue, which led to a $56.7 million increase in gross profits. This increase in gross profitfinancing activities for fiscal 2011 as compared to fiscal 2010 wasyear 2013 consisted of $21.3 million for quarterly cash dividends partially offset by higher operating expenses. For$1.8 million of cash generated from employee contributions to our employee stock purchase plans.
| Total | Less than One Year | One to Three Years | Four to Five Years | Thereafter | |||||||||||||||
| Operating leases | $ | 12,472 | $ | 5,140 | $ | 5,132 | $ | 2,107 | $ | 93 | |||||||||
| Capital lease | 9,544 | 881 | 8,663 | — | — | ||||||||||||||
| Pension funding | 2,082 | 309 | 619 | 311 | 843 | ||||||||||||||
| Purchase commitments and other | 72,353 | 68,385 | 3,829 | 139 | — | ||||||||||||||
| Total contractual obligations | $ | 96,451 | $ | 74,715 | $ | 18,243 | $ | 2,557 | $ | 936 | |||||||||
| Declaration Date | Dividend per Share | Record Date | Payment Date | Total | ||||||||
| Fiscal year Ended September 30, 2014 | ||||||||||||
| November 12, 2013 | $ | 0.08 | December 6, 2013 | December 27, 2013 | $ | 5,391 | ||||||
| February 5, 2014 | 0.08 | March 7, 2014 | March 28, 2014 | 5,408 | ||||||||
| May 7, 2014 | 0.08 | June 6, 2014 | June 27, 2014 | 5,344 | ||||||||
| July 30, 2014 | 0.10 | September 5, 2014 | September 26, 2014 | 6,732 | ||||||||
| Fiscal year Ended September 30, 2013 | ||||||||||||
| November 7, 2012 | $ | 0.08 | December 7, 2012 | December 28, 2012 | $ | 5,311 | ||||||
| January 30, 2013 | 0.08 | March 8, 2013 | March 29, 2013 | 5,361 | ||||||||
| May 8, 2013 | 0.08 | June 7, 2013 | June 28, 2013 | 5,316 | ||||||||
| August 7, 2013 | 0.08 | September 6, 2013 | September 27, 2013 | 5,340 | ||||||||
our financial condition and capital requirements and any other factors our Board of Directors may consider relevant. We intend to pay quarterly cash dividends in the future; however, the amount and timing of these dividends may be impacted by the cyclical nature of certain markets that we serve. We may reduce, delay or cancel a quarterly cash dividend based on the severity of a cyclical downturn.
In December 2010, the FASB issued an amendment to the accounting requirements of business combinations, which establishes accounting and reporting standards for pro forma revenue and earnings of the combined entity for the current and comparable reporting periods. On October 1, 2011 we adopted this standard, which had no impact on our financial position or results of operations.
In May 2011, the FASB issued updated accounting guidance related to fair value measurements and disclosures that result in common fair value measurements and disclosures between GAAP and International Financial Reporting Standards. This guidance includes amendments which change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. On January 1, 2012 we adopted this standard, which had no impact on our financial position or results of operations.
In June 2011, the FASB, issued an amendment to the accounting guidance for presentation of comprehensive income.unrecognized tax benefits. The prior guidance related to unrecognized tax benefits did not explicitly address financial statement presentation of unrecognized tax benefits when a net operating loss carryforward, a similar tax loss or a tax credit carryforward exists. The amended guidance eliminates the existing diversity in practice in the presentation of
| Item 7A. | Quantitative and Qualitative Disclosures About Market Risk |
As our
| Item 8. | Financial Statements and Supplementary Data |
To the
of
In our opinion, the consolidated financial statements listed in
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.
opinion.
except for the effects of discontinued operations discussed in Note 3 as to which the date is November 13, 2014
| September 30, 2012 | September 30, 2011 | |||||||
| (In thousands, except share and per share data) | ||||||||
ASSETS |
| |||||||
Current assets | ||||||||
Cash and cash equivalents | $ | 54,639 | $ | 58,833 | ||||
Restricted cash | 763 | 1,293 | ||||||
Marketable securities | 85,646 | 65,695 | ||||||
Accounts receivable, net | 78,855 | 76,701 | ||||||
Inventories | 102,985 | 107,654 | ||||||
Deferred tax assets | 15,531 | — | ||||||
Prepaid expenses and other current assets | 9,070 | 10,348 | ||||||
|
|
|
| |||||
Total current assets | 347,489 | 320,524 | ||||||
Property, plant and equipment, net | 64,478 | 68,596 | ||||||
Long-term marketable securities | 59,946 | 81,290 | ||||||
Long-term deferred tax assets | 104,626 | — | ||||||
Goodwill | 88,440 | 84,727 | ||||||
Intangible assets, net | 39,400 | 44,314 | ||||||
Equity investment in joint ventures | 31,428 | 34,950 | ||||||
Other assets | 6,153 | 2,557 | ||||||
|
|
|
| |||||
Total assets | $ | 741,960 | $ | 636,958 | ||||
|
|
|
| |||||
LIABILITIES AND EQUITY |
| |||||||
Current liabilities | ||||||||
Accounts payable | $ | 28,988 | $ | 40,199 | ||||
Deferred revenue | 9,986 | 14,073 | ||||||
Accrued warranty and retrofit costs | 7,329 | 7,438 | ||||||
Accrued compensation and benefits | 14,118 | 17,288 | ||||||
Accrued restructuring costs | 2,098 | 293 | ||||||
Accrued income taxes payable | 1,699 | 4,015 | ||||||
Accrued expenses and other current liabilities | 16,973 | 12,433 | ||||||
|
|
|
| |||||
Total current liabilities | 81,191 | 95,739 | ||||||
Income taxes payable | 6,356 | 11,728 | ||||||
Long-term pension liability | 1,688 | 7,161 | ||||||
Other long-term liabilities | 3,424 | 3,394 | ||||||
|
|
|
| |||||
Total liabilities | 92,659 | 118,022 | ||||||
|
|
|
| |||||
Commitments and contingencies (Note 20) | ||||||||
Equity | ||||||||
Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued and outstanding at September 30, 2012 and 2011 | — | — | ||||||
Common stock, $0.01 par value, 125,000,000 shares authorized, 79,790,557 shares issued and 66,328,688 shares outstanding at September 30, 2012, 79,737,189 shares issued and 66,275,320 shares outstanding at September 30, 2011 | 798 | 797 | ||||||
Additional paid-in capital | 1,817,706 | 1,809,287 | ||||||
Accumulated other comprehensive income | 23,642 | 17,324 | ||||||
Treasury stock at cost, 13,461,869 shares at September 30, 2012 and 2011 | (200,956 | ) | (200,956 | ) | ||||
Accumulated deficit | (992,524 | ) | (1,108,105 | ) | ||||
|
|
|
| |||||
Total Brooks Automation, Inc. stockholders’ equity | 648,666 | 518,347 | ||||||
Noncontrolling interests in subsidiaries | 635 | 589 | ||||||
|
|
|
| |||||
Total equity | 649,301 | 518,936 | ||||||
|
|
|
| |||||
Total liabilities and equity | $ | 741,960 | $ | 636,958 | ||||
|
|
|
| |||||
| September 30, 2014 | September 30, 2013 | ||||||
| (In thousands, except share and per share data) | |||||||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 94,114 | $ | 82,971 | |||
| Restricted cash | — | 177 | |||||
| Marketable securities | 68,130 | 45,900 | |||||
| Accounts receivable, net | 80,106 | 77,483 | |||||
| Inventories | 93,567 | 94,411 | |||||
| Deferred tax assets | 19,009 | 16,839 | |||||
| Assets held for sale | — | 27,778 | |||||
| Prepaid expenses and other current assets | 19,387 | 9,030 | |||||
| Total current assets | 374,313 | 354,589 | |||||
| Property, plant and equipment, net | 50,183 | 47,506 | |||||
| Long-term marketable securities | 83,212 | 44,491 | |||||
| Long-term deferred tax assets | 67,563 | 99,146 | |||||
| Goodwill | 109,501 | 97,924 | |||||
| Intangible assets, net | 59,550 | 60,088 | |||||
| Equity method investments | 28,944 | 25,687 | |||||
| Other assets | 4,772 | 7,332 | |||||
| Total assets | $ | 778,038 | $ | 736,763 | |||
| Liabilities and equity | |||||||
| Current liabilities | |||||||
| Accounts payable | $ | 33,740 | $ | 35,392 | |||
| Capital lease obligation | 881 | — | |||||
| Deferred revenue | 26,279 | 19,610 | |||||
| Accrued warranty and retrofit costs | 6,499 | 7,260 | |||||
| Accrued compensation and benefits | 21,663 | 14,225 | |||||
| Accrued restructuring costs | 3,475 | 1,412 | |||||
| Accrued income taxes payable | 1,808 | 1,058 | |||||
| Deferred tax liabilities | 808 | 19 | |||||
| Liabilities held for sale | — | 132 | |||||
| Accrued expenses and other current liabilities | 18,688 | 13,453 | |||||
| Total current liabilities | 113,841 | 92,561 | |||||
| Long-term capital lease obligation | 7,417 | — | |||||
| Long-term tax reserves | 5,708 | 6,115 | |||||
| Long-term deferred tax liabilities | 2,567 | 921 | |||||
| Long-term pension liability | 1,774 | 815 | |||||
| Other long-term liabilities | 3,842 | 3,695 | |||||
| Total liabilities | 135,149 | 104,107 | |||||
| Commitments and contingencies (Note 22) | |||||||
| Equity | |||||||
| Preferred stock, $0.01 par value, 1,000,000 shares authorized, no shares issued or outstanding | — | — | |||||
| Common stock, $0.01 par value, 125,000,000 shares authorized, 80,375,777 shares issued and 66,913,908 shares outstanding at September 30, 2014, 80,039,104 shares issued and 66,577,235 shares outstanding at September 30, 2013 | 804 | 800 | |||||
| Additional paid-in capital | 1,834,619 | 1,825,499 | |||||
| Accumulated other comprehensive income | 15,687 | 22,604 | |||||
| Treasury stock at cost, 13,461,869 shares | (200,956 | ) | (200,956 | ) | |||
| Accumulated deficit | (1,007,265 | ) | (1,015,991 | ) | |||
| Total Brooks Automation, Inc. stockholders’ equity | 642,889 | 631,956 | |||||
| Noncontrolling interest in subsidiaries | — | 700 | |||||
| Total equity | 642,889 | 632,656 | |||||
| Total liabilities and equity | $ | 778,038 | $ | 736,763 | |||
| Year Ended September 30, | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
| (In thousands, except per share data) | ||||||||||||
Revenues | ||||||||||||
Product | $ | 431,961 | $ | 611,117 | $ | 531,807 | ||||||
Services | 87,490 | 76,988 | 61,165 | |||||||||
|
|
|
|
|
| |||||||
Total revenues | 519,451 | 688,105 | 592,972 | |||||||||
|
|
|
|
|
| |||||||
Cost of revenues | ||||||||||||
Product | 283,377 | 411,610 | 377,466 | |||||||||
Services | 62,588 | 53,474 | 49,211 | |||||||||
|
|
|
|
|
| |||||||
Total cost of revenues | 345,965 | 465,084 | 426,677 | |||||||||
|
|
|
|
|
| |||||||
Gross profit | 173,486 | 223,021 | 166,295 | |||||||||
|
|
|
|
|
| |||||||
Operating expenses | ||||||||||||
Research and development | 47,464 | 39,846 | 31,162 | |||||||||
Selling, general and administrative | 101,223 | 102,542 | 85,597 | |||||||||
Restructuring charges | 3,275 | 1,036 | 2,529 | |||||||||
Pension settlement | 8,937 | — | — | |||||||||
In-process research and development | 3,026 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total operating expenses | 163,925 | 143,424 | 119,288 | |||||||||
|
|
|
|
|
| |||||||
Operating income | 9,561 | 79,597 | 47,007 | |||||||||
Interest income | 1,213 | 1,153 | 1,121 | |||||||||
Interest expense | (14 | ) | (65 | ) | (80 | ) | ||||||
Gain on sale of intellectual property rights | — | — | 7,840 | |||||||||
Gain on sale of contract manufacturing business | — | 45,009 | — | |||||||||
Loss on investment | — | — | (191 | ) | ||||||||
Other income, net | 660 | 1,882 | 367 | |||||||||
|
|
|
|
|
| |||||||
Income before income taxes and equity in earnings of joint ventures | 11,420 | 127,576 | 56,064 | |||||||||
Income tax provision (benefit) | (123,282 | ) | 1,954 | (2,746 | ) | |||||||
|
|
|
|
|
| |||||||
Income before equity in earnings of joint ventures | 134,702 | 125,622 | 58,810 | |||||||||
Equity in earnings of joint ventures | 2,133 | 4,815 | 1,074 | |||||||||
|
|
|
|
|
| |||||||
Net income | $ | 136,835 | $ | 130,437 | $ | 59,884 | ||||||
Net income attributable to noncontrolling interests | (46 | ) | (52 | ) | (43 | ) | ||||||
|
|
|
|
|
| |||||||
Net income attributable to Brooks Automation, Inc. | $ | 136,789 | $ | 130,385 | $ | 59,841 | ||||||
|
|
|
|
|
| |||||||
Basic net income per share attributable to Brooks Automation, Inc. common stockholders | $ | 2.10 | $ | 2.02 | $ | 0.94 | ||||||
|
|
|
|
|
| |||||||
Diluted net income per share attributable to Brooks Automation, Inc. common stockholders | $ | 2.08 | $ | 2.01 | $ | 0.93 | ||||||
|
|
|
|
|
| |||||||
Shares used in computing earnings per share | ||||||||||||
Basic | 65,128 | 64,549 | 63,777 | |||||||||
Diluted | 65,722 | 65,003 | 64,174 | |||||||||
| Year ended September 30, | |||||||||||
| 2014 | 2013 | 2012 | |||||||||
| (In thousands, except per share data) | |||||||||||
| Revenue | |||||||||||
| Product | $ | 387,032 | $ | 335,011 | $ | 402,505 | |||||
| Services | 95,816 | 87,429 | 86,478 | ||||||||
| Total revenue | 482,848 | 422,440 | 488,983 | ||||||||
| Cost of revenue | |||||||||||
| Product | 252,688 | 229,411 | 267,448 | ||||||||
| Services | 62,823 | 60,722 | 62,082 | ||||||||
| Total cost of revenue | 315,511 | 290,133 | 329,530 | ||||||||
| Gross profit | 167,337 | 132,307 | 159,453 | ||||||||
| Operating expenses | |||||||||||
| Research and development | 52,649 | 46,209 | 44,717 | ||||||||
| Selling, general and administrative | 111,098 | 96,516 | 97,978 | ||||||||
| Restructuring and other charges | 6,289 | 6,380 | 3,153 | ||||||||
| Pension settlement | — | — | 8,937 | ||||||||
| In-process research and development | — | — | 3,026 | ||||||||
| Total operating expenses | 170,036 | 149,105 | 157,811 | ||||||||
| Operating income (loss) | (2,699 | ) | (16,798 | ) | 1,642 | ||||||
| Interest income | 950 | 1,032 | 1,213 | ||||||||
| Interest expense | (202 | ) | (2 | ) | (14 | ) | |||||
| Other income, net | 256 | 1,227 | 660 | ||||||||
| Income (loss) before income taxes and equity in earnings of equity method investments | (1,695 | ) | (14,541 | ) | 3,501 | ||||||
| Income tax benefit | (1,980 | ) | (4,985 | ) | (126,201 | ) | |||||
| Income (loss) before equity in earnings of equity method investments | 285 | (9,556 | ) | 129,702 | |||||||
| Equity in earnings of equity method investments | 1,235 | 2,442 | 2,133 | ||||||||
| Income (loss) from continuing operations | 1,520 | (7,114 | ) | 131,835 | |||||||
| Income from discontinued operations, net of tax | 30,002 | 4,964 | 5,000 | ||||||||
| Net income (loss) | 31,522 | (2,150 | ) | 136,835 | |||||||
| Net income attributable to noncontrolling interests | (161 | ) | (65 | ) | (46 | ) | |||||
| Net income (loss) attributable to Brooks Automation, Inc. | $ | 31,361 | $ | (2,215 | ) | $ | 136,789 | ||||
| Basic net income (loss) per share attributable to Brooks Automation, Inc. common stockholders: | |||||||||||
| Income (loss) from continuing operations | $ | 0.02 | $ | (0.11 | ) | $ | 2.02 | ||||
| Income from discontinued operations, net of tax | 0.45 | 0.08 | 0.08 | ||||||||
| Basic net income (loss) per share attributable to Brooks Automation, Inc. | $ | 0.47 | $ | (0.03 | ) | $ | 2.10 | ||||
| Diluted net income (loss) per share attributable to Brooks Automation, Inc. common stockholders: | |||||||||||
| Income (loss) from continuing operations | $ | 0.02 | $ | (0.11 | ) | $ | 2.01 | ||||
| Income from discontinued operations, net of tax | 0.44 | 0.08 | 0.08 | ||||||||
| Diluted net income (loss) per share attributable to Brooks Automation, Inc. common stockholders | $ | 0.46 | $ | (0.03 | ) | $ | 2.08 | ||||
| Dividend declared per share | $ | 0.34 | $ | 0.32 | $ | 0.32 | |||||
| Weighted-average shares used in computing earnings (loss) per share: | |||||||||||
| Basic | 66,648 | 65,912 | 65,128 | ||||||||
| Diluted | 67,644 | 65,912 | 65,722 | ||||||||
| Year Ended September 30, | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
| (In thousands) | ||||||||||||
Cash flows from operating activities | ||||||||||||
Net income | $ | 136,835 | $ | 130,437 | $ | 59,884 | ||||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||||
Depreciation and amortization | 21,620 | 17,249 | 18,420 | |||||||||
Stock-based compensation | 8,647 | 6,752 | 6,567 | |||||||||
Amortization of premium on marketable securities | 2,401 | 2,283 | 942 | |||||||||
Undistributed (earnings) losses of joint ventures | 2,942 | (2,416 | ) | (1,074 | ) | |||||||
Deferred income tax benefit | (122,136 | ) | (276 | ) | — | |||||||
Pension settlement | 8,937 | — | — | |||||||||
Gain on sale of contract manufacturing business | — | (45,009 | ) | — | ||||||||
(Gain) loss on disposal of long-lived assets | (63 | ) | 10 | 4 | ||||||||
Loss on investment | — | — | 191 | |||||||||
Gain on sale of intellectual property rights | — | — | (7,840 | ) | ||||||||
Changes in operating assets and liabilities, net of acquisitions and disposals: | ||||||||||||
Accounts receivable | (784 | ) | 9,916 | (53,163 | ) | |||||||
Inventories | 5,874 | (19,131 | ) | (31,341 | ) | |||||||
Prepaid expenses and other current assets | 726 | 1,806 | (499 | ) | ||||||||
Accounts payable | (11,182 | ) | (15,099 | ) | 39,352 | |||||||
Deferred revenue | (4,684 | ) | 1,841 | 1,487 | ||||||||
Accrued warranty and retrofit costs | (123 | ) | (1,420 | ) | 2,483 | |||||||
Accrued compensation and benefits | (4,878 | ) | 1,717 | (755 | ) | |||||||
Accrued restructuring costs | 1,930 | (3,212 | ) | (4,123 | ) | |||||||
Accrued pension | (5,772 | ) | 2,014 | (2,605 | ) | |||||||
Accrued expenses and other current liabilities | (4,252 | ) | 188 | (58 | ) | |||||||
|
|
|
|
|
| |||||||
Net cash provided by operating activities | 36,038 | 87,650 | 27,872 | |||||||||
|
|
|
|
|
| |||||||
Cash flows from investing activities | ||||||||||||
Purchases of property, plant and equipment | (8,653 | ) | (6,455 | ) | (3,472 | ) | ||||||
Purchases of marketable securities | (132,015 | ) | (186,718 | ) | (117,473 | ) | ||||||
Sale/maturity of marketable securities | 131,317 | 120,095 | 84,546 | |||||||||
Decrease (increase) in restricted cash | 530 | (1,293 | ) | — | ||||||||
Proceeds from the sale of the contract manufacturing business | — | 78,249 | — | |||||||||
Acquisitions, net of cash acquired | (9,216 | ) | (88,309 | ) | — | |||||||
Other investment | (3,000 | ) | — | — | ||||||||
Proceeds from the sale of intellectual property rights | — | — | 7,840 | |||||||||
Purchase of intangible assets | — | — | (892 | ) | ||||||||
Other | — | 181 | 243 | |||||||||
|
|
|
|
|
| |||||||
Net cash used in investing activities | (21,037 | ) | (84,250 | ) | (29,208 | ) | ||||||
|
|
|
|
|
| |||||||
Cash flows from financing activities | ||||||||||||
Proceeds from the issuance of common stock under stock option and stock purchase plans | 1,705 | 1,358 | 1,245 | |||||||||
Common stock dividend paid | (20,953 | ) | (5,180 | ) | — | |||||||
|
|
|
|
|
| |||||||
Net cash (used in) provided by financing activities | (19,248 | ) | (3,822 | ) | 1,245 | |||||||
|
|
|
|
|
| |||||||
Effects of exchange rate changes on cash and cash equivalents | 53 | (568 | ) | (71 | ) | |||||||
|
|
|
|
|
| |||||||
Net decrease in cash and cash equivalents | (4,194 | ) | (990 | ) | (162 | ) | ||||||
Cash and cash equivalents, beginning of year | 58,833 | 59,823 | 59,985 | |||||||||
|
|
|
|
|
| |||||||
Cash and cash equivalents, end of year | $ | 54,639 | $ | 58,833 | $ | 59,823 | ||||||
|
|
|
|
|
| |||||||
Supplemental disclosures: | ||||||||||||
Cash paid during the year for interest | $ | 14 | $ | 65 | $ | 80 | ||||||
Cash paid (refunded) during the year for income taxes, net | $ | 4,282 | $ | 1,042 | $ | (1,866 | ) | |||||
| Year ended September 30, | |||||||||||
| 2014 | 2013 | 2012 | |||||||||
| (In thousands) | |||||||||||
| Net income (loss) | $ | 31,522 | $ | (2,150 | ) | $ | 136,835 | ||||
| Comprehensive income (loss), net of tax: | |||||||||||
| Change in cumulative translation adjustment | (6,296 | ) | (2,113 | ) | (2,406 | ) | |||||
| Change in unrealized gain (loss) on marketable securities | (104 | ) | (135 | ) | 393 | ||||||
| Change in fair value on cash flow hedges | (14 | ) | 14 | — | |||||||
| Actuarial gain (loss) | (503 | ) | 1,109 | (606 | ) | ||||||
| Pension settlement | — | 87 | 8,937 | ||||||||
| Comprehensive income (loss), net of tax | 24,605 | (3,188 | ) | 143,153 | |||||||
| Comprehensive income attributable to noncontrolling interests | (161 | ) | (65 | ) | (46 | ) | |||||
| Comprehensive income (loss) attributable to Brooks Automation, Inc., net of tax | $ | 24,444 | $ | (3,253 | ) | $ | 143,107 | ||||
| Common Stock Shares | Common Stock at Par Value | Additional Paid-In Capital | Comprehensive Income (Loss) | Accumulated Other Comprehensive Income (Loss) | Accumulated Deficit | Treasury Stock | Total Brooks Automation, Inc. Stockholders’ Equity | Noncontrolling Interests in Subsidiaries | Total Equity | |||||||||||||||||||||||||||||||
| (In thousands, except share data) | ||||||||||||||||||||||||||||||||||||||||
Balance September 30, 2009 | 77,883,173 | $ | 779 | $ | 1,795,619 | $ | 14,963 | $ | (1,293,029 | ) | $ | (200,956 | ) | $ | 317,376 | $ | 494 | $ | 317,870 | |||||||||||||||||||||
Shares issued under stock option, restricted stock and purchase plans, net | 986,158 | 10 | 935 | 945 | �� | 945 | ||||||||||||||||||||||||||||||||||
Stock-based compensation | 6,567 | 6,567 | 6,567 | |||||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||
Net income | $ | 59,841 | 59,841 | 59,841 | 43 | 59,884 | ||||||||||||||||||||||||||||||||||
Currency translation adjustments | 3,940 | 3,940 | 3,940 | 3,940 | ||||||||||||||||||||||||||||||||||||
Changes in unrealized loss on marketable securities | (36 | ) | (36 | ) | (36 | ) | (36 | ) | ||||||||||||||||||||||||||||||||
Actuarial loss arising in the year | (1,001 | ) | (1,001 | ) | (1,001 | ) | (1,001 | ) | ||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Comprehensive income | $ | 62,744 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Balance September 30, 2010 | 78,869,331 | 789 | 1,803,121 | 17,866 | (1,233,188 | ) | (200,956 | ) | 387,632 | 537 | 388,169 | |||||||||||||||||||||||||||||
Shares issued under stock option, restricted stock and purchase plans, net | 867,858 | 8 | (586 | ) | (578 | ) | (578 | ) | ||||||||||||||||||||||||||||||||
Stock-based compensation | 6,752 | 6,752 | 6,752 | |||||||||||||||||||||||||||||||||||||
Common stock dividend declared | (5,302 | ) | (5,302 | ) | (5,302 | ) | ||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||
Net income | $ | 130,385 | 130,385 | 130,385 | 52 | 130,437 | ||||||||||||||||||||||||||||||||||
Currency translation adjustments | 947 | 947 | 947 | 947 | ||||||||||||||||||||||||||||||||||||
Changes in unrealized loss on marketable securities | (445 | ) | (445 | ) | (445 | ) | (445 | ) | ||||||||||||||||||||||||||||||||
Actuarial loss arising in the year | (1,044 | ) | (1,044 | ) | (1,044 | ) | (1,044 | ) | ||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Comprehensive income | $ | 129,843 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Balance September 30, 2011 | 79,737,189 | $ | 797 | $ | 1,809,287 | $ | 17,324 | $ | (1,108,105 | ) | $ | (200,956 | ) | $ | 518,347 | $ | 589 | $ | 518,936 | |||||||||||||||||||||
Shares issued under stock option, restricted stock and purchase plans, net | 53,368 | 1 | (228 | ) | (227 | ) | (227 | ) | ||||||||||||||||||||||||||||||||
Stock-based compensation | 8,647 | 8,647 | 8,647 | |||||||||||||||||||||||||||||||||||||
Common stock dividend declared | (21,208 | ) | (21,208 | ) | (21,208 | ) | ||||||||||||||||||||||||||||||||||
Comprehensive income (loss): | ||||||||||||||||||||||||||||||||||||||||
Net income | $ | 136,789 | 136,789 | 136,789 | 46 | 136,835 | ||||||||||||||||||||||||||||||||||
Currency translation adjustments | (2,406 | ) | (2,406 | ) | (2,406 | ) | (2,406 | ) | ||||||||||||||||||||||||||||||||
Changes in unrealized gain on marketable securities | 393 | 393 | 393 | 393 | ||||||||||||||||||||||||||||||||||||
Actuarial loss arising in the year | (606 | ) | (606 | ) | (606 | ) | (606 | ) | ||||||||||||||||||||||||||||||||
Recognition of pension settlement in earnings | 8,937 | 8,937 | 8,937 | 8,937 | ||||||||||||||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||||||||||
Comprehensive income | $ | 143,107 | ||||||||||||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||
Balance September 30, 2012 | 79,790,557 | $ | 798 | $ | 1,817,706 | $ | 23,642 | $ | (992,524 | ) | $ | (200,956 | ) | $ | 648,666 | $ | 635 | $ | 649,301 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||||||||||
CASH FLOWS
| Year ended September 30, | |||||||||||
| 2014 | 2013 | 2012 | |||||||||
| (In thousands) | |||||||||||
| Cash flows from operating activities | |||||||||||
| Net income (loss) | $ | 31,522 | $ | (2,150 | ) | $ | 136,835 | ||||
| Adjustments to reconcile net income (loss) to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 23,459 | 24,155 | 21,620 | ||||||||
| Impairment of intangible assets | 398 | 1,960 | — | ||||||||
| Impairment of other assets | 2,621 | — | — | ||||||||
| Stock-based compensation | 10,912 | 7,757 | 8,647 | ||||||||
| Amortization of premium on marketable securities | 1,255 | 1,274 | 2,401 | ||||||||
| Undistributed earnings of equity method investments | (1,235 | ) | (2,442 | ) | (2,133 | ) | |||||
| Deferred income tax benefit | (1,779 | ) | (2,936 | ) | (122,136 | ) | |||||
| Pension settlement | — | 87 | 8,937 | ||||||||
| Gain on disposal of businesses | (27,444 | ) | — | — | |||||||
| Loss (gain) on disposal of long-lived assets | 13 | (1,394 | ) | (63 | ) | ||||||
| Changes in operating assets and liabilities, net of acquisitions and disposals: | |||||||||||
| Accounts receivable | 12,098 | 6,422 | (784 | ) | |||||||
| Inventories | 9,598 | 15,490 | 5,874 | ||||||||
| Prepaid expenses and other current assets | (12,325 | ) | 4,359 | 5,801 | |||||||
| Accounts payable | (11,924 | ) | 3,123 | (11,182 | ) | ||||||
| Deferred revenue | 5,900 | 8,971 | (4,684 | ) | |||||||
| Accrued warranty and retrofit costs | (1,102 | ) | (1,806 | ) | (123 | ) | |||||
| Accrued compensation and benefits | 6,783 | (2,625 | ) | (4,878 | ) | ||||||
| Accrued restructuring costs | 2,161 | (972 | ) | 1,930 | |||||||
| Accrued pension | 997 | (950 | ) | (5,772 | ) | ||||||
| Accrued expenses and other current liabilities | 1,873 | (3,934 | ) | (4,252 | ) | ||||||
| Net cash provided by operating activities | 53,781 | 54,389 | 36,038 | ||||||||
| Cash flows from investing activities | |||||||||||
| Purchases of property, plant and equipment | (5,518 | ) | (3,635 | ) | (8,653 | ) | |||||
| Purchases of marketable securities | (174,287 | ) | (91,740 | ) | (132,015 | ) | |||||
| Sale/maturity of marketable securities | 112,085 | 145,023 | 131,317 | ||||||||
| Proceeds from divestitures | 85,369 | — | — | ||||||||
| Acquisitions, net of cash acquired | (35,625 | ) | (68,331 | ) | (9,216 | ) | |||||
| Decrease in restricted cash | 177 | 586 | 530 | ||||||||
| Other investment | — | — | (3,000 | ) | |||||||
| Proceeds from the sale of property, plant and equipment | — | 14,082 | — | ||||||||
| Payment of deferred leasing cost | — | (3,134 | ) | — | |||||||
| Net cash used in investing activities | (17,799 | ) | (7,149 | ) | (21,037 | ) | |||||
| Cash flows from financing activities | |||||||||||
| Proceeds from issuance of common stock, net of issuance costs | 1,838 | 1,851 | 1,705 | ||||||||
| Repayment of capital lease obligations | (239 | ) | — | — | |||||||
| Acquisition of noncontrolling interest | (3,189 | ) | — | — | |||||||
| Common stock dividend paid | (22,875 | ) | (21,328 | ) | (20,953 | ) | |||||
| Net cash used in financing activities | (24,465 | ) | (19,477 | ) | (19,248 | ) | |||||
| Effects of exchange rate changes on cash and cash equivalents | (374 | ) | 569 | 53 | |||||||
| Net increase (decrease) in cash and cash equivalents | 11,143 | 28,332 | (4,194 | ) | |||||||
| Cash and cash equivalents, beginning of year | 82,971 | 54,639 | 58,833 | ||||||||
| Cash and cash equivalents, end of year | $ | 94,114 | $ | 82,971 | $ | 54,639 | |||||
| Supplemental disclosures: | |||||||||||
| Cash paid during the year for interest | $ | 202 | $ | 2 | $ | 14 | |||||
| Cash paid (refunded) during the year for income taxes, net | $ | 1,084 | $ | (762 | ) | $ | 4,282 | ||||
| Supplemental disclosure of non-cash investing and financing activities: | |||||||||||
| Acquisition of buildings and land through capital lease | $ | 8,537 | $ | — | $ | — | |||||
| Common Stock Shares | Common Stock at Par Value | Additional Paid-In Capital | Accumulated Other Comprehensive Income | Accumulated Deficit | Treasury Stock | Total Brooks Automation, Inc. Stockholders’ Equity | Noncontrolling Interests in Subsidiaries | Total Equity | ||||||||||||||||||||||||||
| (In thousands, except share data) | ||||||||||||||||||||||||||||||||||
| Balance September 30, 2011 | 79,737,189 | $ | 797 | $ | 1,809,287 | $ | 17,324 | $ | (1,108,105 | ) | $ | (200,956 | ) | $ | 518,347 | $ | 589 | $ | 518,936 | |||||||||||||||
| Shares issued under stock option, restricted stock and purchase plans, net | 53,368 | 1 | (228 | ) | (227 | ) | (227 | ) | ||||||||||||||||||||||||||
| Stock-based compensation | 8,647 | 8,647 | 8,647 | |||||||||||||||||||||||||||||||
| Common stock dividend declared | (21,208 | ) | (21,208 | ) | (21,208 | ) | ||||||||||||||||||||||||||||
| Net income | 136,789 | 136,789 | 46 | 136,835 | ||||||||||||||||||||||||||||||
| Currency translation adjustments | (2,406 | ) | (2,406 | ) | (2,406 | ) | ||||||||||||||||||||||||||||
| Changes in unrealized gain on marketable securities | 393 | 393 | 393 | |||||||||||||||||||||||||||||||
| Actuarial loss arising in the year | (606 | ) | (606 | ) | (606 | ) | ||||||||||||||||||||||||||||
| Recognition of pension settlement in earnings | 8,937 | 8,937 | 8,937 | |||||||||||||||||||||||||||||||
| Balance September 30, 2012 | 79,790,557 | 798 | 1,817,706 | 23,642 | (992,524 | ) | (200,956 | ) | 648,666 | 635 | 649,301 | |||||||||||||||||||||||
| Shares issued under stock option, restricted stock and purchase plans, net | 248,547 | 2 | 186 | 188 | 188 | |||||||||||||||||||||||||||||
| Stock-based compensation | 7,607 | 7,607 | 7,607 | |||||||||||||||||||||||||||||||
| Common stock dividend declared | (21,252 | ) | (21,252 | ) | (21,252 | ) | ||||||||||||||||||||||||||||
| Net loss | (2,215 | ) | (2,215 | ) | 65 | (2,150 | ) | |||||||||||||||||||||||||||
| Currency translation adjustments | (2,113 | ) | (2,113 | ) | (2,113 | ) | ||||||||||||||||||||||||||||
| Changes in unrealized loss on marketable securities, net of tax of $79 | (135 | ) | (135 | ) | (135 | ) | ||||||||||||||||||||||||||||
| Changes in unrealized gain on cash flow hedges, net of tax of $9 | 14 | 14 | 14 | |||||||||||||||||||||||||||||||
| Actuarial gain arising in the year, net of tax of $360 | 1,109 | 1,109 | 1,109 | |||||||||||||||||||||||||||||||
| Recognition of pension settlement in earnings | 87 | 87 | 87 | |||||||||||||||||||||||||||||||
| Balance September 30, 2013 | 80,039,104 | 800 | 1,825,499 | 22,604 | (1,015,991 | ) | (200,956 | ) | 631,956 | 700 | 632,656 | |||||||||||||||||||||||
| Shares issued under restricted stock and purchase plans, net | 336,673 | 4 | 386 | 390 | 390 | |||||||||||||||||||||||||||||
| Stock-based compensation | 11,062 | 11,062 | 11,062 | |||||||||||||||||||||||||||||||
| Common stock dividend declared | (22,635 | ) | (22,635 | ) | (22,635 | ) | ||||||||||||||||||||||||||||
| Acquisition of noncontrolling interest | (2,328 | ) | (2,328 | ) | (861 | ) | (3,189 | ) | ||||||||||||||||||||||||||
| Net income | 31,361 | 31,361 | 161 | 31,522 | ||||||||||||||||||||||||||||||
| Currency translation adjustments | (6,296 | ) | (6,296 | ) | (6,296 | ) | ||||||||||||||||||||||||||||
| Changes in unrealized loss on marketable securities, net of tax of $62 | (104 | ) | (104 | ) | (104 | ) | ||||||||||||||||||||||||||||
| Changes in unrealized loss on cash flow hedges, net of tax of $9 | (14 | ) | (14 | ) | (14 | ) | ||||||||||||||||||||||||||||
| Actuarial loss arising in the year, net of tax of $471 | (503 | ) | (503 | ) | (503 | ) | ||||||||||||||||||||||||||||
| Balance September 30, 2014 | 80,375,777 | $ | 804 | $ | 1,834,619 | $ | 15,687 | $ | (1,007,265 | ) | $ | (200,956 | ) | $ | 642,889 | $ | — | $ | 642,889 | |||||||||||||||
Revision of Prior Period Financial Statements
semiconductor.
The Company concluded these errors were not material individually or in the aggregate to any of the prior reporting periods, and therefore, amendments of previously filed reports were not required. The Company evaluated the cumulative error in relationunless otherwise noted, relate solely to the results for the year ended September 30, 2012 and concluded revision of prior periods was appropriate. As such, the revisions for these corrections to the applicable prior periods are reflected in the financial information herein and will be reflected in future filings containing such financial information. The revision had no net impact on the Company’s consolidated statements of cash flows for any prior period.
The following table summarizes the effects of the error on the annual prior period financial statements (in thousands, except per share data):
Revised Consolidated Balance Sheet Amounts
| As of September 30, 2011 | ||||||||||||
| As Previously Reported | Adjustment | As Revised | ||||||||||
Equity investments in joint ventures | $ | 34,612 | $ | 338 | $ | 34,950 | ||||||
Total assets | 636,620 | 338 | 636,958 | |||||||||
Accumulated other comprehensive income | 19,480 | (2,156 | ) | 17,324 | ||||||||
Accumulated deficit | (1,110,599 | ) | 2,494 | (1,108,105 | ) | |||||||
Total Brooks Automation, Inc. stockholders’ equity | 518,009 | 338 | 518,347 | |||||||||
Total equity | 518,598 | 338 | 518,936 | |||||||||
Total liabilities and equity | 636,620 | 338 | 636,958 | |||||||||
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Revised Consolidated Statement of Operations Amounts
| Year Ended September 30, 2011 | Year Ended September 30, 2010 | |||||||||||||||||||||||
| As Previously Reported | Adjustment | As Revised | As Previously Reported | Adjustment | As Revised | |||||||||||||||||||
Equity in earnings of joint ventures | $ | 2,782 | $ | 2,033 | $ | 4,815 | $ | 215 | $ | 859 | $ | 1,074 | ||||||||||||
Net income | 128,404 | 2,033 | 130,437 | 59,025 | 859 | 59,884 | ||||||||||||||||||
Net income attributable to Brooks Automation, Inc. | 128,352 | 2,033 | 130,385 | 58,982 | 859 | 59,841 | ||||||||||||||||||
Net income per share attributable to Brooks Automation, Inc. common shareholders: | ||||||||||||||||||||||||
Basic | $ | 1.99 | $ | 0.03 | $ | 2.02 | $ | 0.92 | $ | 0.01 | $ | 0.94 | ||||||||||||
Diluted | $ | 1.97 | $ | 0.03 | $ | 2.01 | $ | 0.92 | $ | 0.01 | $ | 0.93 | ||||||||||||
Company's continuing operations.
method of accounting.
as a part of the currency translation adjustment. Ineffective portions of net investment hedges are recognized in the results of operations.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
, respectively. Cash equivalents are held at cost which approximates fair value due to their short-term maturities and varying interest rates.
The Company's top ten largest customers account for approximately 37%, 40% and 45% of revenue for the fiscal years ended September 30, 2014, 2013 and 2012, respectively. One of the Company's customers accounted for 11% of revenue for the fiscal year ended September 30, 2014. At September 30, 2014, no single customer represented 10% of the Company’s accounts receivable.
and Sales Returns
Buildings | 20 - 40 years | |||
Computer equipment and software | 2 - 7 years | |||
Machinery and equipment | 2 - 10 years | |||
Furniture and fixtures | 3 - 10 years | |||
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Patents include capitalized direct costs associated with obtaining patents as well aslife using methods that approximate the pattern in which the economic benefits are expected to be realized.
Intangiblesfixed assets other than goodwill are tested for impairment when indicators of impairment are present. For purposes of this test, long-lived assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. When the Company determines that indicators of potential impairment exist, the next step of the impairment test requires that the potentially impaired long-lived asset group is tested for recoverability. The test for recoverability compares the undiscounted future cash flows of the long-lived asset group to its carrying value. The future cash flow period is based on the future service life of the primary asset within the long-lived asset group. If the carrying values of the long-lived asset group exceed the future cash flows, the assets are considered to be potentially impaired. The next step in the impairment process is to determine the fair value of the individual net assets within the long-lived asset group. If the aggregate fair values of the individual net assets of the group are less than their carrying values, an impairment is recorded equal to the excess of the aggregate carrying value of the group over the aggregate fair value. The loss is allocated to each asset within the group based on their relative carrying values, with no asset reduced below its fair value.
Patents | 7 - 15 years | |||
Completed technology | ||||
| Customer relationships | 5 | ||
| ||||
| ||||
| ||||
requiring an adjustment of these assets to their then-current fair market value. Future business conditions and/or activity could differ materially from the projections made by management causing the need for additional adjustments and impairment charges.
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
considers the DCF Method to be the most appropriate valuation indicator as the DCF analyses are based on management’smanagement's long-term financial projections. Given the dynamic nature of the cyclical semiconductor equipment market, management’smanagement's projections as of the valuation date are considered more objective since otherthan comparisons to market metrics for peer companies, which fluctuate over the cycle. However, the Company also uses market-based valuation techniques to test the reasonableness of the reporting unit fair values determined by the DCF Method and compares the aggregate fair value of its reporting units andplus its net corporate assets to its overall market capitalization.
The Company’s U.S. defined benefit pension plan was fully settled in September 2012 but it continues to sponsor two non-U.S. defined benefit pension plans.
Revenue from product sales that does not include significant customization is recorded upon delivery and transfer of risk of loss torevenue.
from the customer.
completed or substantially completed.
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
repair effort and upon the shipment of the repaired item back to the customer. In instances where the repair or upgrade includes installation, revenue is recognized when the installation is completed.
During the year ended September 30, 2012, the Company granted 1,527,000 shares of restricted stock to members of senior management of which 406,750 shares vest over the service period and the remaining 1,120,250 shares vest upon the achievement of certain financial performance goals which will be measured at the end of fiscal year 2014. Total compensation expense on these awards is a maximum of $18.1 million, net of cancellations. Awards subject to service criteria are being recorded to expense ratably over the vesting period. Awards subject to performance criteria are expensed over the related service period when attainment of the performance condition is considered probable. The total amount of compensation recorded will depend on the Company’s achievement against performance targets. Changes to the projected attainment against performance targets during the vesting period may result in an adjustment to the amount of cumulative compensation recorded as of the date the estimate is revised.
During the three months ended December 31, 2011, the Company’s Chief Executive Officer was granted an award of 100,000 cash settled phantom units, which are subject to the same vesting terms as the performance-based restricted stock units. The Company’s consolidated balance sheet at September 30, 2012 includes a liability of approximately $78,000 for this potential cash payment. The Company incurred an expense of $78,000 for the year ended September 30, 2012 in connection with the cash settled phantom unit award.
| Year Ended September 30, | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
Stock options | $ | — | $ | — | $ | 170 | ||||||
Restricted stock | 8,098 | 6,248 | 5,944 | |||||||||
Employee stock purchase plan | 549 | 504 | 453 | |||||||||
|
|
|
|
|
| |||||||
| $ | 8,647 | $ | 6,752 | $ | 6,567 | |||||||
|
|
|
|
|
| |||||||
BROOKS AUTOMATION, INC.
| Year ended September 30, | |||||||||||
| 2014 | 2013 | 2012 | |||||||||
| Restricted stock | $ | 10,469 | $ | 7,112 | $ | 7,949 | |||||
| Employee stock purchase plan | 445 | 496 | 549 | ||||||||
| $ | 10,914 | $ | 7,608 | $ | 8,498 | ||||||
No stock options were granted for the years ended September 30, 2012, 2011 and 2010.
Plan
Year Ended September 30, | ||||||
2012 | 2011 | 2010 | ||||
Risk-free interest rate | 0.1% | 0.2% | 0.2% | |||
Volatility | 45% | 50% | 58% | |||
Expected life | 6 months | 6 months | 6 months | |||
Dividend yield | 2.75% - 3.30% | 0% - 3% | 0% | |||
Expected volatilities are based on historical volatilities ofassumptions for the Company’s common stock; the expected life represents the weighted average period of time that options granted are expected to be outstanding giving consideration to vesting schedulesfiscal years ended September 30, 2014, 2013 and the Company’s historical exercise patterns; and the2012:
| Year ended September 30, | ||||||||
| 2014 | 2013 | 2012 | ||||||
| Risk-free interest rate | 0.1 | % | 0.1 | % | 0.1 | % | ||
| Volatility | 25 | % | 32 | % | 45 | % | ||
| Expected life | 6 months | 6 months | 6 months | |||||
| Dividend yield | 3.40% | 3.30% - 3.40% | 2.75% - 3.30% | |||||
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
litigation processes, if any. If we determinethe Company determines that a tax position will more likely than not be sustained on audit, the second step requires usthe Company to estimate and measure the tax benefit as the largest amount that is more than 50% likely to be realized upon ultimate settlement. It is inherently difficult and subjective to estimate such amounts, as we havethe Company has to determine the probability of various possible outcomes. We re-evaluateThe Company re-evaluates these uncertain tax positions on a quarterly basis. This evaluation is based on factors such as changes in facts or circumstances, changes in tax law, new audit activity, and effectively settled issues. Determining whether an uncertain tax position is effectively settled requires judgment. Such a change in recognition or measurement would result in the recognition of a tax benefit or an additional charge to the tax provision.
Fair Value
The Company’s financial instruments include cash and cash equivalents, marketable securities, accounts receivable, accounts payable and accrued expenses. The carrying amounts of these items reported in the balance sheets approximate their fair value at September 30, 2012 and 2011. In the case of marketable securities, measurement is based on quoted market prices.
Reclassifications(Continued)
Certain reclassifications have been made in the 2011 and 2010 consolidated financial statements to conform to the 2012 presentation.
In May 2011, the FASB issued updated accounting guidance related to fair value measurements and disclosures that result in common fair value measurements and disclosures between GAAP and International Financial Reporting Standards. This guidance includes amendments which change the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements. On January 1, 2012 the Company adopted this standard, which had no impact on its financial position or results of operations.
In June 2011,April 2014, the FASB issued an amendment to the accounting guidance for presentationreporting discontinued operations. The amended guidance raises the threshold for disposals to qualify as a discontinued operation by requiring a component of comprehensive income.an entity that is held for sale, or has been disposed of by sale, to represent a strategic shift that has or will have a major effect on operations and financial results. Under the amended guidance, a company may presentstrategic shift could include the totaldisposal of comprehensive income,a major line of business, a major geographical area, a major equity method investment or other major parts of an entity. In addition, the components of net income,new guidance allows companies to have significant continuing involvement and continuing cash flows with the components of other comprehensive income either in a single continuous statement of comprehensive income or in two separate but consecutive statements. This authoritativediscontinued operation. The amended guidance eliminates the option to present the components of other comprehensive income as part of the statement of changes in stockholder’s equity. This amendment is effective for annual periodsfiscal years beginning on or after December 15, 2014. Early adoption is permitted but not required for disposals, or classifications as held for sale, that have not been previously reported in financial statements. The Company has elected not to adopt this amended guidance in regard to the Granville-Phillips discontinued operation.
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
2011. Other than a change in presentation, 2016. Early adoption is not permitted. The Company is evaluating the impact that the adoption of this guidance will not have on its financial position and results of operations.
| Year Ended September 30, | |||||||||||
| 2014 | 2013 | 2012 | |||||||||
| Revenue | $ | 18,921 | $ | 28,512 | $ | 30,468 | |||||
| Income from discontinued operations | $ | 4,888 | $ | 7,779 | $ | 7,919 | |||||
| Gain on the sale of the discontinued operations | 56,804 | — | — | ||||||||
| Income tax provision | 31,690 | 2,815 | 2,919 | ||||||||
| Income from discontinued operations, net of tax | $ | 30,002 | $ | 4,964 | $ | 5,000 | |||||
| September 30, 2013 | |||
| Inventory | $ | 3,308 | |
| Property, plant and equipment | 364 | ||
| Goodwill | 24,106 | ||
| Assets held for sale | $ | 27,778 | |
| Deferred revenue | $ | 43 | |
| Accrued warranty and retrofit costs | 89 | ||
| Liabilities held for sale | $ | 132 | |
In September 2011, the FASB issued revised guidance intended to simplify how an entity tests goodwill for impairment.acquisition date. The amendment will allow an entity to first assess qualitative factors to determine whether it is necessary to perform the two-step quantitative goodwill impairment test. An entity no longer will be required to calculatepreliminary amounts recorded were as follows (in thousands):
| Accounts receivable | $ | 15,262 | |
| Inventory | 10,051 | ||
| Prepaid and other current assets | 2,727 | ||
| Property, plant and equipment | 2,049 | ||
| Completed technology | 3,610 | ||
| Customer relationships | 7,100 | ||
| Goodwill | 11,638 | ||
| Accounts payable | (10,393 | ) | |
| Accrued liabilities | (5,522 | ) | |
| Deferred revenue | (1,309 | ) | |
| Long-term deferred tax liabilities | (3,588 | ) | |
| Total purchase price, net of cash acquired | $ | 31,625 | |
| Year ended September 30, | |||||||
| 2014 | 2013 | ||||||
| Revenue | $ | 501,951 | $ | 456,588 | |||
| Income (loss) from continuing operations | (4,788 | ) | (10,678 | ) | |||
| Net income (loss) attributable to Brooks Automation, Inc. | 25,053 | (5,779 | ) | ||||
3. Acquisitionsexisting product offerings in biobanking and Divestiture
Acquisition of Intellectual Property from Intevac, Inc.
Duringsample management for the three months ended March 31,Brooks Life Science Systems segment.
| Matrical Assets | Crossing | ||||||
| Accounts receivable | $ | 636 | $ | 5,356 | |||
| Inventory | 2,095 | 8,668 | |||||
| Prepaid and other current assets | 103 | 1,968 | |||||
| Property, plant and equipment | 534 | 2,270 | |||||
| Completed technology | 500 | 10,530 | |||||
| Customer relationships | 1,500 | 20,010 | |||||
| Goodwill | 7,076 | 26,453 | |||||
| Other long-term assets | — | 885 | |||||
| Debt | (902 | ) | — | ||||
| Accounts payable | (294 | ) | (3,024 | ) | |||
| Deferred revenue | (351 | ) | (319 | ) | |||
| Customer deposits | (1,249 | ) | — | ||||
| Other current liabilities | (322 | ) | (5,560 | ) | |||
| Other long-term liabilities | — | (8,232 | ) | ||||
| Total purchase price, net of cash acquired | $ | 9,326 | $ | 59,005 | |||
Acquisition of Celigo
On
Accounts receivable | $ | 897 | ||
Inventory | 1,139 | |||
Property, plant and equipment | 202 | |||
Completed technology | 3,540 | |||
Trademarks and trade names | 70 | |||
Goodwill | 3,713 | |||
Accounts payable | (13 | ) | ||
Deferred revenue | (326 | ) | ||
Other current liabilities | (6 | ) | ||
|
| |||
Total purchase price, net of cash acquired | $ | 9,216 | ||
|
|
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The estimated fair value attributed to the completed technologies was determined based upon a discounted cash flow forecast. Cash flows were discounted at a rate of 25%. The fair value of the completed technologies will be amortized over a period of 6 years on a straight-line basis, which approximates the pattern in which the economic benefits of the completed technologies are expected to be realized.
The fair value of the trade names will be amortized over 6 years on a straight-line basis, which approximates the pattern in which the economic benefits of the trade names will be realized.
Goodwill represents the excess of the purchase price over the fair values of the net tangible and intangible assets acquired and is primarily the result of expected synergies. Goodwill arising from the acquisition will be deductible for tax purposes.
Celigo’s operating results have been includedCeligo product line in the Company’s results of operations from the acquisition date. Pro forma results are not provided as Celigo’s results of operations were not material. Transaction costs related to this acquisition were $105,000 for the first quarter ended December 31, 2011, and are included in selling, general and administrative expense. There were no transaction costs subsequent to December 31, 2011.
Acquisition of Nexus
On July 25, 2011, the Company acquired all of the outstanding stock of Nexus Biosystems, Inc. (“Nexus”), a privately held company, for $84.9 million, net of cash acquired. Nexus is a U.S. based provider of automation solutions and consumables to the life sciences market, with a product development, service and support operation located in Switzerland, and service and support locations in Japan and Germany. The acquisition significantly enhances the breadth of the Company’s product offering for its main target market within the life sciences industry, specifically biobanking and compound sample management. Shortly after completing the Nexus acquisition, the Company reorganized the management of Nexus and RTS into one operating segment, Brooks Life Science Systems.
The assets and liabilities of Nexus were recorded at their fair values as of the acquisition date as follows (in thousands):
Accounts receivable | $ | 5,708 | ||
Inventory | 7,481 | |||
Other current assets | 4,522 | |||
Property, plant and equipment | 12,527 | |||
Completed technology | 6,000 | |||
Customer relationships | 31,000 | |||
Trademarks and trade names | 100 | |||
Goodwill | 33,033 | |||
Accounts payable and accrued expenses | (6,563 | ) | ||
Deferred revenue | (3,692 | ) | ||
Other current liabilities | (1,534 | ) | ||
Deferred tax liabilities | (2,584 | ) | ||
Other long-term liabilities | (1,070 | ) | ||
|
| |||
Total purchase price, net of cash acquired | $ | 84,928 | ||
|
|
The estimated fair value attributed to the completed technologies was determined based upon a discounted cash flow forecast utilizing the relief from royalty method. The royalty rate was determined to be 6% based on a review of comparable royalty arrangements. Cash flows were discounted at a rate of 17%. The fair value of the
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
completed technologies will be amortized over a period of 6 years on a straight-line basis, which approximates the pattern in which the economic benefits of the completed technologies are expected to be realized.
The estimated fair value attributed to the customer relationships was determined based upon a discounted forecast of estimated net future cash flows to be generated from the relationships discounted at a rate of 17% — 18%. The fair value of customer relationships for systems will be amortized over a period of 6 years, while the estimated fair value of customer relationships for consumables and service are expected to be amortized over a period of 13 years. The amortization will be amortized on a straight-line basis, which approximates the pattern in which the economic benefits of the customer relationships are expected to be realized.
The fair value of the trade name will be amortized over 2 years on a straight-line basis, which approximates the pattern in which the economic benefits of the trade names will be realized.
Goodwill represents the excess of the purchase price over the fair values of the net tangible and intangible assets acquired. Goodwill arising from the acquisition will not be deductible for tax purposes.
Nexus operating results have been included in the Company’s results of operations from the acquisition date. Nexus revenues and net loss for the period from July 26, 2011 to September 30, 2011 was $4.9 million and $(3.2) million, respectively. The net loss includes charges to expense from the step-up of acquired inventories of $0.7 million and $0.6 million of charges for excess and obsolete inventory based on an assessment of inventory performed in the fourthsecond quarter of fiscal year 2011.
2014. The following unaudited pro forma summary presents consolidated information of the Company as if the acquisition of Nexus occurred on October 1, 2009 (in thousands):
| Year Ended September 30, | ||||||||
| 2011 | 2010 | |||||||
Revenue | $ | 720,989 | $ | 625,128 | ||||
Net income attributable to Brooks Automation, Inc. | 124,114 | 70,205 | ||||||
The pro forma net income has been adjusted to reflect additional amortization and depreciation expense from the adjustments to intangible assets and property, plant and equipment as if those adjustments had been applied as of October 1, 2009.
Nexus net income for fiscal year 2010 included a $12.0recorded impairment charges totaling $2.4 million gain (unaudited) from the bargain purchase of Nexus Biosystems AG (formerly Remp AG), which is included in the pro forma net income attributable to Brooks Automation, Inc. for fiscal year 2010.
Transaction costs related to this acquisition were $719,000 for fiscal year 2011,long-lived assets acquired with the Celigo product line in connection with the sale. The impairment charge is described more fully in “Note 8. Goodwill and are included in selling, general and administrative expense.
Acquisition of RTS
On April 1, 2011, the Company acquired all of the outstanding stock of RTS Life Science Limited (“RTS”), a privately held company, for $3.4 million, net of cash acquired. RTS is a provider of automation solutions to the life sciences market, located in Manchester, United Kingdom. The acquisition provides the Company with biobanking and compound sample management, and the ability to leverage the Company’s existing automation technologies with those of RTS.
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The assets and liabilities of RTS were recorded at their fair values as of the acquisition date as follows (in thousands):
Accounts receivable | $ | 3,156 | ||
Inventory | 1,668 | |||
Other current assets | 1,008 | |||
Property, plant and equipment | 860 | |||
Completed technology | 1,524 | |||
Customer relationships | 577 | |||
Trademarks and trade names | 64 | |||
Goodwill | 3,556 | |||
Accounts payable | (1,397 | ) | ||
Deferred revenue | (5,232 | ) | ||
Other current liabilities | (2,403 | ) | ||
|
| |||
Total purchase price, net of cash acquired | $ | 3,381 | ||
|
|
The completed technology will be amortized to cost of revenue over its estimated useful life of 5 to 7 years, the customer relationships will be amortized to operating expense over 7 years and the trademarks and trade names will be amortized to operating expense over 3 years. Goodwill arising from the acquisition will not be deductible for tax purposes.
RTS’s operating results have been included in the Company’s results of operations from the acquisition date, and were not material. Pro forma results are not provided as RTS’s results of operations were not material. Transaction costs related to this acquisition were $188,000 for fiscal year 2011, and are included in selling, general and administrative expense.
Divestiture
On April 20, 2011, the Company entered into an agreement with affiliates of Celestica Inc. (the “Buyers”) to sell the assets of its extended factory contract manufacturing business (the “Business”). The Buyers also agreed to assume certain liabilities related to the Business (the “Asset Sale”). The Asset Sale was completed on June 28, 2011 (the “Closing”). At the Closing, the Buyers paid the Company a total purchase price of $78.0 million in cash, plus $1.3 million as consideration for cash acquired in the Asset Sale. An additional $2.5 million of proceeds was paid during the Company’s fourth quarter of 2011, which represents a working capital normalizing adjustment. The Company paid $2.3 million of transaction expenses. During the three months ended June 30, 2011, the Company recorded a gain on this sale of $45.0 million, before income taxes. Income taxes directly attributable to this gain of $2.4 million were also recorded during the three months ended June 30, 2011.
The Company and the Buyers also entered into certain commercial supply and license agreements at the Closing which will govern the ongoing relationship between the Buyers and the Company. Pursuant to those agreements, the Company will supply the Buyers with certain products and has licensed to the Buyers certain intellectual property needed to run the Business and the Buyers will supply certain products to the Company. Due to the significance of these ongoing commercial arrangements, the sale did not qualify for discontinued operations treatment. Therefore, historical financial results of the divested business will not be segregated in the Company’s consolidated financial statements for the historical periods in which this business was part of the Company.
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
4.Intangible Assets."
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | |||||||||||||
September 30, 2012: | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | 41,202 | $ | 15 | $ | (2 | ) | $ | 41,215 | |||||||
Corporate securities | 64,102 | 138 | (16 | ) | 64,224 | |||||||||||
Mortgage-backed securities | 1,310 | 42 | (1 | ) | 1,351 | |||||||||||
Other debt securities | 13 | — | — | 13 | ||||||||||||
Municipal securities | 34,777 | 25 | (1 | ) | 34,801 | |||||||||||
Bank certificate of deposits | 3,987 | 1 | — | 3,988 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| $ | 145,391 | $ | 221 | $ | (20 | ) | $ | 145,592 | ||||||||
|
|
|
|
|
|
|
| |||||||||
September 30, 2011: | ||||||||||||||||
U.S. Treasury securities and obligations of U.S. government agencies | $ | 53,342 | $ | 17 | $ | (21 | ) | $ | 53,338 | |||||||
Corporate securities | 66,045 | 50 | (203 | ) | 65,892 | |||||||||||
Mortgage-backed securities | 1,576 | 26 | (53 | ) | 1,549 | |||||||||||
Other debt securities | 434 | — | — | 434 | ||||||||||||
Municipal securities | 24,125 | 9 | (17 | ) | 24,117 | |||||||||||
Bank certificate of deposits | 1,655 | — | — | 1,655 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
| $ | 147,177 | $ | 102 | $ | (294 | ) | $ | 146,985 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | ||||||||||||
| September 30, 2014: | |||||||||||||||
| U.S. Treasury securities and obligations of U.S. government agencies | $ | 26,052 | $ | 1 | $ | (39 | ) | $ | 26,014 | ||||||
| Corporate securities | 74,614 | 23 | (174 | ) | 74,463 | ||||||||||
| Mortgage-backed securities | 964 | 36 | — | 1,000 | |||||||||||
| Other debt securities | 7,358 | — | (10 | ) | 7,348 | ||||||||||
| Municipal securities | 15,888 | 1 | (16 | ) | 15,873 | ||||||||||
| Bank certificate of deposits | 26,645 | 2 | (3 | ) | 26,644 | ||||||||||
| $ | 151,521 | $ | 63 | $ | (242 | ) | $ | 151,342 | |||||||
| September 30, 2013: | |||||||||||||||
| U.S. Treasury securities and obligations of U.S. government agencies | $ | 19,528 | $ | 6 | $ | (13 | ) | $ | 19,521 | ||||||
| Corporate securities | 35,045 | 11 | (47 | ) | 35,009 | ||||||||||
| Mortgage-backed securities | 1,093 | 25 | (1 | ) | 1,117 | ||||||||||
| Other debt securities | 88 | — | — | 88 | |||||||||||
| Municipal securities | 25,199 | 15 | (7 | ) | 25,207 | ||||||||||
| Bank certificate of deposits | 9,451 | — | (2 | ) | 9,449 | ||||||||||
| $ | 90,404 | $ | 57 | $ | (70 | ) | $ | 90,391 | |||||||
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
2012.
| Fair Value | ||||
Due in one year or less | $ | 85,646 | ||
Due after one year through five years | 56,148 | |||
Due after ten years | 3,798 | |||
|
| |||
| $ | 145,592 | |||
|
| |||
Loss on Investment
During fiscal 2010, the Company recorded a charge of $0.2 million related to its minority equity investment in a Swiss public company. The $0.2 million charge represents the loss on the sale of this investment. As of September 30, 2010, the Company no longer had an equity investment in this entity.
5.penalties.
| Fair Value | |||
| Due in one year or less | $ | 68,130 | |
| Due after one year through five years | 79,885 | ||
| Due after ten years | 3,327 | ||
| $ | 151,342 | ||
| September 30, 2012 | Fair Value Measurements at Reporting Date Using | |||||||||||||||
Description | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||
Assets | ||||||||||||||||
Cash Equivalents | $ | 17,508 | $ | 17,508 | $ | — | $ | — | ||||||||
Available-for-sale securities | 145,592 | 60,231 | 85,361 | — | ||||||||||||
Foreign exchange contracts | 10 | — | 10 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 163,110 | $ | 77,739 | $ | 85,371 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
Liabilities | ||||||||||||||||
Foreign exchange contracts | $ | 13 | $ | — | $ | 13 | $ | — | ||||||||
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
| September 30, 2011 | Fair Value Measurements at Reporting Date Using | |||||||||||||||
| Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||||
Assets | ||||||||||||||||
Cash Equivalents | $ | 9,576 | $ | 9,576 | $ | — | $ | — | ||||||||
Available-for-sale securities | 146,985 | 63,331 | 83,654 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total Assets | $ | 156,561 | $ | 72,907 | $ | 83,654 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
| Fair Value Measurements at Reporting Date Using | ||||||||||||||||
| Description | September 30, 2014 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
| Assets | ||||||||||||||||
| Cash equivalents | $ | 6,404 | $ | 5,166 | $ | 1,238 | $ | — | ||||||||
| Available-for-sale securities | 151,342 | — | 151,342 | — | ||||||||||||
| Total Assets | $ | 157,746 | $ | 5,166 | $ | 152,580 | $ | — | ||||||||
| Liabilities | ||||||||||||||||
| Foreign exchange contracts | $ | 58 | $ | — | $ | 58 | $ | — | ||||||||
| Fair Value Measurements at Reporting Date Using | ||||||||||||||||
| Description | September 30, 2013 | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | ||||||||||||
| Assets | ||||||||||||||||
| Cash equivalents | $ | 7,754 | $ | 6,152 | $ | 1,602 | $ | — | ||||||||
| Available-for-sale securities | 90,391 | 2,199 | 88,192 | — | ||||||||||||
| Foreign exchange contracts | 31 | — | 31 | — | ||||||||||||
| Total Assets | $ | 98,176 | $ | 8,351 | $ | 89,825 | $ | — | ||||||||
| Liabilities | ||||||||||||||||
| Foreign exchange contracts | $ | 5 | $ | — | $ | 5 | $ | — | ||||||||
Available-For-Sale Securities
Available-for-sale securities Cash equivalents of $60.2$1.2 million and $63.3$1.6 million at September 30, 20122014 and 2011,2013, respectively, consisting primarily of Bank Certificate of Deposits, are classified within Level 2 of the hierarchy because they are not actively traded.
| September 30, | ||||||||
| 2012 | 2011 | |||||||
Buildings and land | $ | 55,352 | $ | 54,330 | ||||
Computer equipment and software | 70,719 | 68,476 | ||||||
Machinery and equipment | 51,813 | 49,105 | ||||||
Furniture and fixtures | 10,908 | 10,451 | ||||||
Leasehold improvements | 18,938 | 17,301 | ||||||
Capital projects in progress | 2,614 | 1,899 | ||||||
|
|
|
| |||||
| 210,344 | 201,562 | |||||||
Less accumulated depreciation and amortization | (145,866 | ) | (132,966 | ) | ||||
|
|
|
| |||||
Property, plant and equipment, net | $ | 64,478 | $ | 68,596 | ||||
|
|
|
| |||||
| September 30, | |||||||
| 2014 | 2013 | ||||||
| Buildings and land | $ | 47,639 | $ | 38,539 | |||
| Computer equipment and software | 59,962 | 72,240 | |||||
| Machinery and equipment | 42,104 | 49,947 | |||||
| Furniture and fixtures | 4,774 | 9,456 | |||||
| Leasehold improvements | 17,771 | 13,937 | |||||
| Capital projects in progress | 1,528 | 2,042 | |||||
| 173,778 | 186,161 | ||||||
| Less accumulated depreciation and amortization | (123,595 | ) | (138,655 | ) | |||
| Property, plant and equipment, net | $ | 50,183 | $ | 47,506 | |||
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Depreciation expense, excluding amounts related to the discontinued operations, was $13.4$12.7 million, $12.6$13.7 million and $14.6$13.1 million for the fiscal years ended September 30, 2014, 2013 and 2012, 2011 and 2010, respectively.
7.
The Company performs an annual impairment test of its goodwill on September 30 of each fiscal year unless interim indicators of impairment exist. Goodwill is considered to be impaired when the net book value of a reporting unit exceeds its estimated fair value. Fair values are estimated using a discounted cash flow methodology. Discounted cash flows are based on the businesses’ strategic plans and management’s best estimate of revenue growth and gross profit by each reporting unit.
The Company completed its annual goodwill impairment test by reporting unit as As of September 30, 2012 and determined that2014, the estimated fair value of eachall reporting unitunits substantially exceeded itsthe respective carrying value and no impairment existed.values. The discount rateobservable inputs used in the Company's DCF analysisMethod for the Brooks Life Science Systems operating segment was 18.5%.reporting units include discount rates at our above the Company's weighted-average cost of capital. The revenue multiple usedCompany derives discount rates that are commensurate with the risks and uncertainties inherent in the respective businesses and its internally developed projections of future cash flows. In addition, the Company determined the terminal value calculation forusing the Brooks Life Science Systems operating segment was 1.9x, and is consistent with revenue multiples of peers in the life science industry. The final terminal value calculation for this reporting unit reflects an equal weighting of a revenue multiple and capitalizing cash flow from the terminal year,Gordon growth method which is consistent with the approach used by the Company in the prior year. The Company acquired the businesses comprising the Brooks Life Science Systems operating segment at various dates over the last eighteen months. While the Company believes its assumptions are reasonable, actual results could differ from its projections. To the extent projected results of cash flows are revised downward,assumes that the reporting unit may be required to write down all orwill grow and generate free cash flow at a portion of its goodwill,constant rate. The Company believes that the Gordon growth method is the most appropriate method for determining the terminal value because the terminal value is calculated at the point in which would adversely impact the Company’s earnings.
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Company has assumed that the reporting units have reached stable growth rates.
| Brooks Product Solutions | Brooks Global Services | Brooks Life Science Systems | Contract Manufacturing | Other | Total | |||||||||||||||||||
Gross goodwill at September 30, 2010 | $ | 485,844 | $ | 151,238 | $ | — | $ | 18,593 | $ | 7,421 | $ | 663,096 | ||||||||||||
Acquisitions and adjustments during fiscal 2011 | — | — | 36,589 | — | — | 36,589 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Gross goodwill at September 30, 2011 | 485,844 | 151,238 | 36,589 | 18,593 | 7,421 | 699,685 | ||||||||||||||||||
Acquisitions and adjustments during fiscal 2012 | — | — | 3,713 | — | — | 3,713 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Gross goodwill at September 30, 2012 | $ | 485,844 | $ | 151,238 | $ | 40,302 | $ | 18,593 | $ | 7,421 | $ | 703,398 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Accumulated goodwill impairments at September 30, 2010 | $ | (437,706 | ) | $ | (151,238 | ) | $ | — | $ | (18,593 | ) | $ | (7,421 | ) | $ | (614,958 | ) | |||||||
Impairments recorded during fiscal 2011 | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Accumulated goodwill impairments at September 30, 2011 | (437,706 | ) | (151,238 | ) | — | (18,593 | ) | (7,421 | ) | (614,958 | ) | |||||||||||||
Impairments recorded during fiscal 2012 | — | — | — | — | — | — | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Accumulated goodwill impairments at September 30, 2012 | $ | (437,706 | ) | $ | (151,238 | ) | $ | — | $ | (18,593 | ) | $ | (7,421 | ) | $ | (614,958 | ) | |||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Goodwill, less accumulated impairments at September 30, 2011 | $ | 48,138 | $ | — | $ | 36,589 | $ | — | $ | — | $ | 84,727 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Goodwill, less accumulated impairments at September 30, 2012 | $ | 48,138 | $ | — | $ | 40,302 | $ | — | $ | — | $ | 88,440 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
Brooks Product Solutions | Brooks Global Services | Brooks Life Science Systems | Other | Total | |||||||||||||||
| Gross goodwill at September 30, 2012 | $ | 461,738 | $ | 151,238 | $ | 40,302 | $ | 26,014 | $ | 679,292 | |||||||||
| Acquisitions and adjustments during fiscal year 2013 | 20,899 | 5,554 | 7,137 | — | 33,590 | ||||||||||||||
| Gross goodwill at September 30, 2013 | 482,637 | 156,792 | 47,439 | 26,014 | 712,882 | ||||||||||||||
| Acquisitions and adjustments during fiscal year 2014 | 11,638 | — | (61 | ) | — | 11,577 | |||||||||||||
| Gross goodwill at September 30, 2014 | $ | 494,275 | $ | 156,792 | $ | 47,378 | $ | 26,014 | $ | 724,459 | |||||||||
| Accumulated goodwill impairments at September 30, 2012 | $ | (437,706 | ) | $ | (151,238 | ) | $ | — | $ | (26,014 | ) | $ | (614,958 | ) | |||||
| Impairments recorded during fiscal year 2013 | — | — | — | — | — | ||||||||||||||
| Accumulated goodwill impairments at September 30, 2013 | (437,706 | ) | (151,238 | ) | — | (26,014 | ) | (614,958 | ) | ||||||||||
| Impairments recorded during fiscal year 2014 | — | — | — | — | — | ||||||||||||||
| Accumulated goodwill impairments at September 30, 2014 | $ | (437,706 | ) | $ | (151,238 | ) | $ | — | $ | (26,014 | ) | $ | (614,958 | ) | |||||
| Goodwill, less accumulated impairments at September 30, 2013 | $ | 44,931 | $ | 5,554 | $ | 47,439 | $ | — | $ | 97,924 | |||||||||
| Goodwill, less accumulated impairments at September 30, 2014 | $ | 56,569 | $ | 5,554 | $ | 47,378 | $ | — | $ | 109,501 | |||||||||
| Year Ended September 30, | |||||||
| 2014 | 2013 | ||||||
| Reported as cost of revenue: | |||||||
| Completed technology intangible asset impairment | $ | 398 | $ | 1,910 | |||
| Reported as selling, general and administrative expense: | |||||||
| Trademarks and trade name intangible asset impairment | — | 50 | |||||
| Total impairment charges | $ | 398 | $ | 1,960 | |||
| September 30, 2012 | September 30, 2011 | |||||||||||||||||||||||
| Cost | Accumulated Amortization | Net Book Value | Cost | Accumulated Amortization | Net Book Value | |||||||||||||||||||
Patents | $ | 7,808 | $ | 7,093 | $ | 715 | $ | 7,808 | $ | 6,989 | $ | 819 | ||||||||||||
Completed technology | 54,583 | 42,751 | 11,832 | 50,975 | 39,235 | 11,740 | ||||||||||||||||||
Trademarks and trade names | 4,014 | 3,880 | 134 | 3,941 | 3,719 | 222 | ||||||||||||||||||
Customer relationships | 48,654 | 21,935 | 26,719 | 49,029 | 17,496 | 31,533 | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
| $ | 115,059 | $ | 75,659 | $ | 39,400 | $ | 111,753 | $ | 67,439 | $ | 44,314 | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||
In connection with the acquisition of Celigo during fiscal year 2012, the Company allocated a portion of the purchase price
| September 30, 2014 | September 30, 2013 | ||||||||||||||||||||||
| Cost | Accumulated Amortization | Net Book Value | Cost | Accumulated Amortization | Net Book Value | ||||||||||||||||||
| Patents | $ | 7,808 | $ | 7,300 | $ | 508 | $ | 7,808 | $ | 7,196 | $ | 612 | |||||||||||
| Completed technology | 57,155 | 41,539 | 15,616 | 57,050 | 40,354 | 16,696 | |||||||||||||||||
| Trademarks and trade names | 3,496 | 3,496 | — | 3,564 | 3,554 | 10 | |||||||||||||||||
| Customer relationships | 73,389 | 29,963 | 43,426 | 66,687 | 23,917 | 42,770 | |||||||||||||||||
| $ | 141,848 | $ | 82,298 | $ | 59,550 | $ | 135,109 | $ | 75,021 | $ | 60,088 | ||||||||||||
In connection with the acquisitions of Nexus and RTS during fiscal year 2011, the Company allocated a portion of the purchase price to the following intangible assets: Completed Technology — $7.5 million,
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Customer Relationships — $31.6 million and Trademarks and Trade Names — $0.2 million. For details regarding these intangible assets see Note 3. These intangible assets support the products and services provided by the Brooks Life Science Systems segment.
Amortization expensediscontinued operations, for intangible assets was $8.2
Year ended September 30, | ||||
2013 | $ | 6.5 | ||
2014 | 5.8 | |||
2015 | 5.7 | |||
2016 | 5.1 | |||
2017 | 4.5 | |||
Thereafter | 11.8 | |||
|
| |||
| $ | 39.4 | |||
|
|
8. Investment
| Year ended September 30, | |||
| 2015 | $ | 11,555 | |
| 2016 | 10,240 | ||
| 2017 | 9,536 | ||
| 2018 | 7,229 | ||
| 2019 | 6,660 | ||
| Thereafter | 14,330 | ||
| $ | 59,550 | ||
Joint Ventures(Continued)
| Year Ended June 30, | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
Statements of Operations: | ||||||||||||
Revenue | $ | 70,532 | $ | 75,311 | $ | 38,470 | ||||||
Gross profit | 19,816 | 22,974 | 10,747 | |||||||||
Net income | 4,004 | 8,644 | 2,341 | |||||||||
which reduced the carrying value of the Company's investment.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
| June 30, | ||||||||
| 2012 | 2011 | |||||||
Balance Sheets: | ||||||||
Current assets | $ | 62,144 | $ | 79,226 | ||||
Noncurrent assets | 13,805 | 13,904 | ||||||
Current liabilities | 24,784 | 45,518 | ||||||
Noncurrent liabilities | 206 | 192 | ||||||
Shareholders’ equity | 50,959 | 47,420 | ||||||
The Company participates in a 50% joint venture with Yaskawa Electric Corporation (“Yaskawa”) called Yaskawa Brooks Automation, Inc. (“YBA”) to exclusively market and sell Yaskawa’sYaskawa's semiconductor robotics products and Brooks’Brooks' automation hardware products to semiconductor customers in Japan. At September 30, 2014 and 2013, the carrying value of YBA in the Company's Consolidated Balance Sheet was $2.6 million and $3.0 million, respectively. For the fiscal years ended September 30, 2012, 20112014, 2013 and 2010,2012, the Company recorded income (expense) associated with YBA of $0.1$(0.1) million $0.5, $(0.2) million and $0.1$0.1 million, respectively. For the fiscal years ended September 30, 2012, 20112014, 2013 and 2010,2012, the Company earned revenuesrevenue for sales to YBA of $8.0$7.4 million, $9.6$6.3 million and $13.5$8.0 million, respectively. The amount due from YBA included in accounts receivable at September 30, 20122014 and 20112013 was $2.0$2.1 million and $2.2$2.3 million, respectively. For the fiscal years ended September 30, 2012, 20112014, 2013 and 2010,2012, the Company incurred charges from YBA for products andor services of $0.5$0.7 million, $0.3$0.5 million and $0.2$0.5 million, respectively. At September 30, 20122014 and 20112013 the Company owed YBA $0.1$133,000 and $47,000, respectively, in connection with accounts payable for unpaid products and services. Summarized condensed financial information for YBA is as follows (in thousands):
| Year Ended September 30, | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
Statements of Operations: | ||||||||||||
Revenue | $ | 83,192 | $ | 104,940 | $ | 65,923 | ||||||
Gross profit | 8,112 | 10,445 | 6,950 | |||||||||
Net income | 6 | 1,258 | 261 | |||||||||
| September 30, | ||||||||
| 2012 | 2011 | |||||||
Balance Sheets: | ||||||||
Current assets | $ | 32,046 | $ | 44,211 | ||||
Noncurrent assets | 587 | 504 | ||||||
Current liabilities | 23,801 | 35,533 | ||||||
Noncurrent liabilities | 504 | 397 | ||||||
Shareholders’ equity | 8,328 | 8,785 | ||||||
These investments are accounted for using the equity method. Under this method
9.
| Year Ended September 30, | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
Net income attributable to Brooks Automation, Inc. | $ | 136,789 | $ | 130,385 | $ | 59,841 | ||||||
|
|
|
|
|
| |||||||
Weighted average common shares outstanding used in computing basic earnings per share | 65,128 | 64,549 | 63,777 | |||||||||
Dilutive common stock options and restricted stock awards | 594 | 454 | 397 | |||||||||
|
|
|
|
|
| |||||||
Weighted average common shares outstanding for purposes of computing diluted earnings per share | 65,722 | 65,003 | 64,174 | |||||||||
|
|
|
|
|
| |||||||
Basic net income per share attributable to Brooks Automation, Inc. common stockholders | $ | 2.10 | $ | 2.02 | $ | 0.94 | ||||||
|
|
|
|
|
| |||||||
Diluted net income per share attributable to Brooks Automation, Inc. common stockholders | $ | 2.08 | $ | 2.01 | $ | 0.93 | ||||||
|
|
|
|
|
| |||||||
Approximately 238,000, 387,000
| Year ended September 30, | |||||||||||
| 2014 | 2013 | 2012 | |||||||||
| Income (loss) from continuing operations | $ | 1,520 | $ | (7,114 | ) | $ | 131,835 | ||||
| Income from discontinued operations, net of tax | 30,002 | 4,964 | 5,000 | ||||||||
| Net income (loss) | 31,522 | (2,150 | ) | 136,835 | |||||||
| Net income attributable to noncontrolling interests | (161 | ) | (65 | ) | (46 | ) | |||||
| Net income (loss) attributable to Brooks Automation, Inc. | $ | 31,361 | $ | (2,215 | ) | $ | 136,789 | ||||
| Weighted average common shares outstanding used in computing basic earnings per share | 66,648 | 65,912 | 65,128 | ||||||||
| Dilutive common stock options and restricted stock units | 996 | — | 594 | ||||||||
| Weighted average common shares outstanding for purposes of computing diluted earnings per share | 67,644 | 65,912 | 65,722 | ||||||||
| Basic net income (loss) per share attributable to Brooks Automation, Inc. common stockholders: | |||||||||||
| Income (loss) from continuing operations | $ | 0.02 | $ | (0.11 | ) | $ | 2.02 | ||||
| Income from discontinued operations, net of tax | 0.45 | 0.08 | 0.08 | ||||||||
| Basic net income (loss) per share attributable to Brooks Automation, Inc. | $ | 0.47 | $ | (0.03 | ) | $ | 2.10 | ||||
| Diluted net income (loss) per share attributable to Brooks Automation, Inc. common stockholders: | |||||||||||
| Income (loss) from continuing operations | $ | 0.02 | $ | (0.11 | ) | $ | 2.01 | ||||
| Income from discontinued operations, net of tax | 0.44 | 0.08 | 0.08 | ||||||||
| Diluted net income (loss) per share attributable to Brooks Automation, Inc. common stockholders | $ | 0.46 | $ | (0.03 | ) | $ | 2.08 | ||||
10. Investment in Variable Interest Entity
During Outstanding stock options of 43,000 shares and 3,006,000 of unvested shares of restricted stock units were excluded from the three monthscomputation of diluted earnings per share for the fiscal year ended JuneSeptember 30, 2013 as a result of the net loss for that period.
interest under the loan.
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
movement can be positive or negative in any period. We mitigateThe Company mitigates the impact of potential currency translation gains and losses on short-term intercompany advances through timely settlement of each transaction, generally within 30 days.
Operations related to these contracts is as follows for the fiscal years ended September 30, 2014, 2013 and 2012 (in thousands):
| Year ended September 30, | ||||||||||||
| 2014 | 2013 | 2012 | ||||||||||
| Realized gains (losses) on derivative instruments not designated as hedging instruments | $ | 185 | $ | 123 | $ | (151 | ) | |||||
Buy Currency | Notional Amount of Buy Currency | Sell Currency | Maturity | Notional Amount of Sell Currency in U.S. Dollars | Fair Value of Assets | Fair Value of Liabilities | ||||||||||||||||
U.S. Dollar | $ | 2,791 | Taiwan Dollar | October 2012 | $ | 2,786 | $ | 5 | $ | — | ||||||||||||
U.S. Dollar | 1,842 | Israeli Shekel | October 2012 | 1,854 | — | 12 | ||||||||||||||||
U.S. Dollar | 1,058 | Singapore Dollar | October 2012 | 1,056 | 2 | — | ||||||||||||||||
U.S. Dollar | 806 | Korean Won | October 2012 | 803 | 3 | — | ||||||||||||||||
U.S. Dollar | 611 | Japanese Yen | October 2012 | 611 | — | — | ||||||||||||||||
U.S. Dollar | 524 | British Pound | October 2012 | 525 | — | 1 | ||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
| $ | 7,632 | $ | 7,635 | $ | 10 | $ | 13 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||
There were no forward contracts outstanding at
2014:
| Buy Currency | Notional Amount of Buy Currency | Sell Currency | Maturity | Notional Amount of Sell Currency | Fair Value of Assets | Fair Value of Liabilities | ||||||||||||
| U.S. dollar | 1,736 | Japanese yen | October 2014 to December 2014 | 190,000 | $ | — | $ | 11 | ||||||||||
| U.S. dollar | 1,395 | Euro | October 2014 | 1,100 | — | 16 | ||||||||||||
| U.S. dollar | 656 | Taiwan dollar | October 2014 | 20,000 | — | 5 | ||||||||||||
| U.S. dollar | 650 | British pound | October 2014 | 400 | — | 5 | ||||||||||||
| U.S. dollar | 731 | Israeli shekel | October 2014 | 2,700 | — | 5 | ||||||||||||
| U.S. dollar | 76 | Korean won | October 2014 | 80,000 | — | 1 | ||||||||||||
| British pound | 3,513 | Euro | October 2014 | 4,500 | — | 15 | ||||||||||||
| $ | — | $ | 58 | |||||||||||||||
| Buy Currency | Notional Amount of Buy Currency | Sell Currency | Maturity | Notional Amount of Sell Currency | Fair Value of Assets | Fair Value of Liabilities | ||||||||||||
| U.S. dollar | 2,762 | Japanese yen | October 2013 to December 2013 | 273,000 | $ | 8 | $ | — | ||||||||||
| Korean won | 740,000 | U.S. dollar | October 2013 | 688 | — | 2 | ||||||||||||
| U.S. dollar | 304 | Israeli shekel | October 2013 | 1,075 | — | 3 | ||||||||||||
| U.S. dollar | 231 | Singapore dollar | October 2013 | 290 | — | — | ||||||||||||
| $ | 8 | $ | 5 | |||||||||||||||
12.liabilities.
| Year Ended September 30, | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
Current income tax provision (benefit): | ||||||||||||
Federal | $ | 15 | $ | 16 | $ | (3,883 | ) | |||||
State | 213 | 1,356 | 616 | |||||||||
Foreign | (1,374 | ) | 858 | 521 | ||||||||
|
|
|
|
|
| |||||||
Total current income tax provision (benefit) | (1,146 | ) | 2,230 | (2,746 | ) | |||||||
|
|
|
|
|
| |||||||
Deferred income tax (benefit): | ||||||||||||
Federal | (118,432 | ) | — | — | ||||||||
State | (291 | ) | — | — | ||||||||
Foreign | (3,413 | ) | (276 | ) | — | |||||||
|
|
|
|
|
| |||||||
Total deferred income tax (benefit) | (122,136 | ) | (276 | ) | — | |||||||
|
|
|
|
|
| |||||||
Income tax provision (benefit) | $ | (123,282 | ) | $ | 1,954 | $ | (2,746 | ) | ||||
|
|
|
|
|
| |||||||
BROOKS AUTOMATION, INC.
| Year Ended September 30, | |||||||||||
| 2014 | 2013 | 2012 | |||||||||
| Current income tax provision (benefit): | |||||||||||
| Federal | $ | 15 | $ | 15 | $ | 15 | |||||
| State | 177 | 70 | 213 | ||||||||
| Foreign | 1,417 | 681 | (1,374 | ) | |||||||
| Total current income tax provision (benefit) | 1,609 | 766 | (1,146 | ) | |||||||
| Deferred income tax benefit: | |||||||||||
| Federal | (2,276 | ) | (5,245 | ) | (121,203 | ) | |||||
| State | (35 | ) | (183 | ) | (439 | ) | |||||
| Foreign | (1,278 | ) | (323 | ) | (3,413 | ) | |||||
| Total deferred income tax benefit | (3,589 | ) | (5,751 | ) | (125,055 | ) | |||||
| Income tax benefit | $ | (1,980 | ) | $ | (4,985 | ) | $ | (126,201 | ) | ||
| Year Ended September 30, | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
Domestic | $ | 2,204 | $ | 111,053 | $ | 44,956 | ||||||
Foreign | 9,216 | 16,523 | 11,108 | |||||||||
|
|
|
|
|
| |||||||
| $ | 11,420 | $ | 127,576 | $ | 56,064 | |||||||
|
|
|
|
|
| |||||||
| Year Ended September 30, | |||||||||||
| 2014 | 2013 | 2012 | |||||||||
| Domestic | $ | (7,338 | ) | $ | (14,747 | ) | $ | (5,715 | ) | ||
| Foreign | 5,643 | 206 | 9,216 | ||||||||
| $ | (1,695 | ) | $ | (14,541 | ) | $ | 3,501 | ||||
| Year Ended September 30, | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
Income tax provision computed at federal statutory rate | $ | 4,728 | $ | 45,736 | $ | 19,622 | ||||||
State income taxes, net of federal benefit | 260 | 1,848 | 699 | |||||||||
Net operating loss carryback refund | — | — | (3,899 | ) | ||||||||
Foreign income taxed at different rates | (832 | ) | (1,546 | ) | (1,650 | ) | ||||||
Dividends | 956 | (219 | ) | 1,006 | ||||||||
Change in deferred tax asset valuation allowance | (125,479 | ) | (42,608 | ) | (18,423 | ) | ||||||
Reduction in uncertain tax positions | (3,732 | ) | (3,719 | ) | (609 | ) | ||||||
Nondeductible compensation | 1,339 | 295 | 379 | |||||||||
Tax credits generated | (1,195 | ) | (1,179 | ) | (414 | ) | ||||||
Other | 673 | 3,346 | 543 | |||||||||
|
|
|
|
|
| |||||||
Income tax provision (benefit) | $ | (123,282 | ) | $ | 1,954 | $ | (2,746 | ) | ||||
|
|
|
|
|
| |||||||
As
| Year Ended September 30, | |||||||||||
| 2014 | 2013 | 2012 | |||||||||
| Income tax provision (benefit) computed at federal statutory rate | $ | (217 | ) | $ | (4,257 | ) | $ | 1,957 | |||
| State income taxes, net of federal benefit | (12 | ) | (101 | ) | 112 | ||||||
| Foreign income taxed at different rates | (596 | ) | 493 | (832 | ) | ||||||
| Dividends | (1,373 | ) | 115 | 956 | |||||||
| Change in deferred tax asset valuation allowance | 453 | 523 | (125,479 | ) | |||||||
| Reduction in uncertain tax positions | (1,236 | ) | (1,022 | ) | (3,732 | ) | |||||
| Nondeductible compensation | 1,064 | 474 | 1,339 | ||||||||
| Tax credits | (704 | ) | (2,002 | ) | (1,195 | ) | |||||
| Travel and entertainment | 220 | 124 | 139 | ||||||||
| Merger costs | 187 | 251 | — | ||||||||
| Other | 234 | 417 | 534 | ||||||||
| Income tax benefit | $ | (1,980 | ) | $ | (4,985 | ) | $ | (126,201 | ) | ||
| September 30, | ||||||||
| 2012 | 2011 | |||||||
Accruals and reserves not currently deductible | $ | 10,489 | $ | 10,357 | ||||
Federal, state and foreign tax credits | 18,963 | 22,673 | ||||||
Other assets | 1,655 | 3,304 | ||||||
Net operating loss carryforwards | 101,713 | 119,167 | ||||||
Inventory reserves and valuation | 8,790 | 11,650 | ||||||
|
|
|
| |||||
Deferred tax assets | 141,610 | 167,151 | ||||||
|
|
|
| |||||
Depreciation and intangible amortization | 5,418 | 6,851 | ||||||
|
|
|
| |||||
Deferred tax liabilities | 5,418 | 6,851 | ||||||
|
|
|
| |||||
Valuation allowance | (16,035 | ) | (162,208 | ) | ||||
|
|
|
| |||||
Net deferred tax asset (liability) | $ | 120,157 | $ | (1,908 | ) | |||
|
|
|
| |||||
| September 30, | |||||||
| 2014 | 2013 | ||||||
| Accruals and reserves not currently deductible | $ | 12,456 | $ | 11,050 | |||
| Federal, state and foreign tax credits | 20,434 | 20,084 | |||||
| Other assets | 3,523 | 1,859 | |||||
| Net operating loss carryforwards | 67,380 | 101,717 | |||||
| Inventory reserves and valuation | 9,956 | 9,052 | |||||
| Deferred tax assets | 113,749 | 143,762 | |||||
| Depreciation and intangible amortization | 12,198 | 12,208 | |||||
| Deferred tax liabilities | 12,198 | 12,208 | |||||
| Valuation allowance | (18,354 | ) | (16,509 | ) | |||
| Net deferred tax asset | $ | 83,197 | $ | 115,045 | |||
$31.8 million was primarily driven by a tax provision of $29.9 million related to the taxable gain on the sale of discontinued operations. When the business was sold, the Company realized a higher gain on a tax basis than the gain reported on a GAAP basis. The higher taxable gain resulted in an effective tax rate on the sale
change.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued).
| Unrecognized Tax Benefit | Interest and Penalties | Total | ||||||||||
Balance at October 1, 2009 | $ | 9,794 | $ | 1,669 | $ | 11,463 | ||||||
Additions for tax positions of prior years | 3,287 | 506 | 3,793 | |||||||||
Additions for tax positions related to current year | 468 | — | 468 | |||||||||
Reductions for tax positions of prior years | (40 | ) | (19 | ) | (59 | ) | ||||||
Reductions from lapses in statutes of limitations | (413 | ) | — | (413 | ) | |||||||
Reductions from settlements with taxing authorities | (193 | ) | (4 | ) | (197 | ) | ||||||
Foreign exchange rate adjustment | (87 | ) | — | (87 | ) | |||||||
|
|
|
|
|
| |||||||
Balance at September 30, 2010 | 12,816 | 2,152 | 14,968 | |||||||||
Additions for tax positions of prior years | 184 | 447 | 631 | |||||||||
Additions for tax positions related to current year | 242 | — | 242 | |||||||||
Reductions from lapses in statutes of limitations | (961 | ) | — | (961 | ) | |||||||
Reductions from settlements with taxing authorities | (3,392 | ) | (610 | ) | (4,002 | ) | ||||||
Foreign exchange rate adjustment | 122 | — | 122 | |||||||||
|
|
|
|
|
| |||||||
Balance at September 30, 2011 | 9,011 | 1,989 | 11,000 | |||||||||
Additions for tax positions of prior years | 242 | 247 | 489 | |||||||||
Reductions from lapses in statutes of limitations | (3,125 | ) | (607 | ) | (3,732 | ) | ||||||
Foreign exchange rate adjustment | (167 | ) | 15 | (152 | ) | |||||||
|
|
|
|
|
| |||||||
Balance at September 30, 2012 | $ | 5,961 | $ | 1,644 | $ | 7,605 | ||||||
|
|
|
|
|
| |||||||
| Unrecognized Tax Benefit | Interest and Penalties | Total | |||||||||
| Balance at October 1, 2011 | $ | 9,011 | $ | 1,989 | $ | 11,000 | |||||
| Additions for tax positions of prior years | 242 | 247 | 489 | ||||||||
| Reductions from lapses in statutes of limitations | (3,125 | ) | (607 | ) | (3,732 | ) | |||||
| Foreign exchange rate adjustment | (167 | ) | 15 | (152 | ) | ||||||
| Balance at September 30, 2012 | 5,961 | 1,644 | 7,605 | ||||||||
| Additions for tax positions of prior years | — | 228 | 228 | ||||||||
| Additions for tax positions related to acquired entities | 116 | — | 116 | ||||||||
| Reductions from lapses in statutes of limitations | (944 | ) | (78 | ) | (1,022 | ) | |||||
| Foreign exchange rate adjustment | 14 | — | 14 | ||||||||
| Balance at September 30, 2013 | 5,147 | 1,794 | 6,941 | ||||||||
| Additions for tax positions of prior years | — | 286 | 286 | ||||||||
| Reductions from lapses in statutes of limitations | (861 | ) | (375 | ) | (1,236 | ) | |||||
| Foreign exchange rate adjustment | (24 | ) | — | (24 | ) | ||||||
| Balance at September 30, 2014 | $ | 4,262 | $ | 1,705 | $ | 5,967 | |||||
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
13.
On October 26, 2005,
The Company acquired Nexus on July 25, 2011, and in connection with this acquisition, assumed responsibility for the liabilities of the Nexus Biosystems AG Pension Plan (the “Nexus Plan”). The Nexus Plan covers substantially all employees of the Company’s Swiss subsidiary. Admittance for risk benefits (disability and death) is as of January 1 for employees who are 17 or older. Admittance into the pension plan with retirement pension occurs as of January 1 for employees who are age 24 or older. Pension benefits are based on the accumulated savings credits plus interest. The amount of the savings credit is based on the employee’s age.
The Company also has a pension plan covering certain employees of its Taiwan subsidiary that were employed by this entity on or before July 1, 2005 (the “Taiwan Plan”). After July 1, 2005, most participants of this plan decided to join a defined contribution plan and as a result, their service earned under the Taiwan Plan was frozen.
| September 30, | |||||||
| 2014 | 2013 | ||||||
| Benefit obligation at beginning of fiscal year | $ | 7,107 | $ | 10,181 | |||
| Service cost | 406 | 604 | |||||
| Interest cost | 154 | 148 | |||||
| Actuarial loss (gain) | 968 | (670 | ) | ||||
| Benefits paid | (141 | ) | (1,421 | ) | |||
| Settlements paid | — | (1,383 | ) | ||||
| Curtailment gain | — | (500 | ) | ||||
| Foreign currency translation | (281 | ) | 148 | ||||
| Benefit obligation at end of fiscal year | $ | 8,213 | $ | 7,107 | |||
| Fair value of assets at beginning of fiscal year | $ | 5,996 | $ | 8,015 | |||
| Actual return on plan assets | 98 | 304 | |||||
| Disbursements | (264 | ) | (1,573 | ) | |||
| Employer contributions | 302 | 292 | |||||
| Employee contributions | 200 | 194 | |||||
| Settlements paid | — | (1,383 | ) | ||||
| Foreign currency translation | (201 | ) | 147 | ||||
| Fair value of assets at end of fiscal year | $ | 6,131 | $ | 5,996 | |||
| Accrued benefit obligation | $ | 2,082 | $ | 1,111 | |||
| September 30, | ||||||||
| 2012 | 2011 | |||||||
Benefit obligation at beginning of year | $ | 28,068 | $ | 15,914 | ||||
Acquisition date benefit obligations from entities acquired during the fiscal year | — | 10,354 | ||||||
Service cost | 787 | 216 | ||||||
Interest cost | 984 | 796 | ||||||
Actuarial loss | 1,235 | 2,138 | ||||||
Benefits paid | (2,203 | ) | (356 | ) | ||||
Settlement loss | 1,040 | — | ||||||
Settlements paid | (18,928 | ) | — | |||||
Foreign currency translation | (802 | ) | (994 | ) | ||||
|
|
|
| |||||
Benefit obligation at end of year | $ | 10,181 | $ | 28,068 | ||||
|
|
|
| |||||
BROOKS AUTOMATION, INC.
2013.
| September 30, | ||||||||
| 2012 | 2011 | |||||||
Fair value of assets at beginning of year | $ | 20,173 | $ | 9,990 | ||||
Acquisition date fair value of assets for entities acquired during the fiscal year | — | 9,226 | ||||||
Actual return on plan assets | 1,446 | 1,322 | ||||||
Disbursements | (2,463 | ) | (356 | ) | ||||
Employer contributions | 7,684 | 778 | ||||||
Employee contributions | 334 | 76 | ||||||
Settlements paid | (18,928 | ) | — | |||||
Foreign currency translation | (231 | ) | (863 | ) | ||||
|
|
|
| |||||
Fair value of assets at end of year | $ | 8,015 | $ | 20,173 | ||||
|
|
|
| |||||
| September 30, | ||||||||
| 2012 | 2011 | |||||||
Funded status/accrued benefit liability | $ | (2,166 | ) | $ | (7,895 | ) | ||
|
|
|
| |||||
| September 30, | ||||||||
| 2012 | 2011 | |||||||
Accrued compensation and benefits | $ | 478 | $ | 734 | ||||
Long-term pension liability | 1,688 | 7,161 | ||||||
| September 30, | |||||||
| 2014 | 2013 | ||||||
| Accrued compensation and benefits | $ | 308 | $ | 296 | |||
| Long-term pension liability | 1,774 | 815 | |||||
Net periodic pension cost consisted of the followingas follows (in thousands):
| Year Ended September 30, | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
Service cost | $ | 787 | $ | 216 | $ | 100 | ||||||
Interest cost | 984 | 796 | 775 | |||||||||
Expected return on assets | (1,072 | ) | (764 | ) | (604 | ) | ||||||
Amortization of losses | 620 | 458 | 327 | |||||||||
|
|
|
|
|
| |||||||
Net periodic pension cost | 1,319 | 706 | 598 | |||||||||
|
|
|
|
|
| |||||||
Settlement loss | 8,937 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total pension cost | $ | 10,256 | $ | 706 | $ | 598 | ||||||
|
|
|
|
|
| |||||||
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
| Year ended September 30, | |||||||||||
| 2014 | 2013 | 2012 | |||||||||
| Service cost | $ | 406 | $ | 604 | $ | 787 | |||||
| Interest cost | 154 | 148 | 984 | ||||||||
| Expected return on plan assets | (214 | ) | (247 | ) | (1,072 | ) | |||||
| Amortization of losses | 2 | 4 | 620 | ||||||||
| Other | — | 160 | — | ||||||||
| Net periodic pension cost | 348 | 669 | 1,319 | ||||||||
| Settlement loss | — | 87 | 8,937 | ||||||||
| Total pension cost | $ | 348 | $ | 756 | $ | 10,256 | |||||
| September 30, | ||||||||
| 2012 | 2011 | |||||||
Net loss | $ | 1,226 | $ | 1,502 | ||||
Amortization of net loss | (620 | ) | (458 | ) | ||||
Settlement loss | (8,937 | ) | — | |||||
|
|
|
| |||||
Total recognized in other comprehensive income | (8,331 | ) | 1,044 | |||||
|
|
|
| |||||
Total recognized in net periodic benefit cost and other comprehensive income | $ | (7,012 | ) | $ | 1,750 | |||
|
|
|
| |||||
Certain information for the Plans with respect to accumulated benefit obligationsas of September 30, 2014 and 2013 is as follows (in thousands):
| September 30, | ||||||||
| 2012 | 2011 | |||||||
Projected benefit obligation | $ | 10,181 | $ | 28,068 | ||||
Accumulated benefit obligation | 8,906 | 26,663 | ||||||
Fair value of plan assets | 8,015 | 20,173 | ||||||
Weighted-average assumptions used to determine net cost at September 30, 2012, 2011 and 2010 follows:
| Year Ended September 30, | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
Discount rate | 3.51 | % | 3.99 | % | 5.50 | % | ||||||
Expected return on plan assets | 2.18 | % | 4.68 | % | 8.00 | % | ||||||
Rate of compensation increase | 1.84 | % | 1.79 | % | N/A | |||||||
| September 30, | |||||||
| 2014 | 2013 | ||||||
| Net loss (gain) | $ | 961 | $ | (791 | ) | ||
| Amortization of net loss | (2 | ) | (3 | ) | |||
| Curtailment loss | — | (675 | ) | ||||
| Settlement loss | — | (87 | ) | ||||
| Total recognized in other comprehensive income (loss) | 959 | (1,556 | ) | ||||
| Total recognized in net periodic pension cost and other comprehensive income (loss) | $ | 1,307 | $ | (887 | ) | ||
| Year Ended September 30, | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
Discount rate | 1.89 | % | 3.76 | % | 4.75 | % | ||||||
Rate of compensation increase | 1.84 | % | 1.79 | % | N/A | |||||||
Compensation increase assumptions
| Year Ended September 30, | ||||||||
| 2014 | 2013 | 2012 | ||||||
| Discount rate | 1.55 | % | 2.15 | % | 3.51 | % | ||
| Expected return on plan assets | 2.18 | % | 2.17 | % | 2.18 | % | ||
| Expected rate of compensation increases | 1.87 | % | 1.89 | % | 1.84 | % | ||
asset allocation of the Plans.
BROOKS AUTOMATION, INC.Plans.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The discount rate utilized for determining the future pension obligations for the Nexus Plan is based on corporate bonds yields for bonds denominated in Swiss francs. This discount rate was 1.90% at September 30, 2012, down from 2.30% at September 30, 2011.
The expected long term rate of return on Plan assets used to determine future pension obligations was 2.18% and 4.68% as of September 30, 2012 and 2011, respectively. In developing the expected return on plan assets assumption, the Company evaluated fixed income yield curve data and equity return assumption studies, and applied this data to the expected asset allocation to develop an appropriate projected return on Plan assets.
| Debt securities | 73 | % | ||
Equity securities | 6 | |||
| 2 | |||
Other | 19 | |||
| ||||
| 100 | % | |||
| As of September 30, 2012 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Swiss Life collective foundation | $ | — | 7,513 | — | $ | 7,513 | ||||||||||
Taiwan collective trust | — | 502 | — | 502 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
Total | $ | — | $ | 8,015 | $ | — | $ | 8,015 | ||||||||
|
|
|
|
|
|
|
| |||||||||
| As of September 30, 2014 | |||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | ||||||||||||
| Swiss Life collective foundation | $ | 5,608 | $ | — | $ | 5,608 | $ | — | |||||||
| Taiwan collective trust | 523 | — | 523 | — | |||||||||||
| Total | $ | 6,131 | $ | — | $ | 6,131 | $ | — | |||||||
During the fourth quarter of fiscal year 2012, the Company made contributions of $6.4 million to the Helix Plan in connection with the settlement, which was in addition to the $0.7 million of required minimum contributions made to this plan throughout fiscal year 2012. The Company made required minimum contributions throughout fiscal year 2012 to all of its plans of $1.2 million. The Company expects to contribute $0.5 million to its plans in fiscal 2013 to meet minimum funding targets.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Expected benefit payments over the next ten fiscal years are anticipated to be paid as follows (in thousands):
2013 | $ | 1,590 | ||
2014 | 53 | |||
2015 | 55 | |||
2016 | 56 | |||
2017 | 57 | |||
2018-2022 | 457 |
| 2015 | $ | 231 | |
| 2016 | 54 | ||
| 2017 | 55 | ||
| 2018 | 56 | ||
| 2019 | 57 | ||
| 2020-2024 | 664 | ||
The Company’s contribution expense for worldwidethis United States defined contribution plansplan was $3.1$3.5 million, $2.9
14.
| Currency Translation Adjustments | Unrealized Gains (Losses) on Available-for-Sale Securities | Unrealized Gains (Losses) on Cash Flow Hedges | Pension Liability Adjustments | Total | ||||||||||||||||
| Balance at September 30, 2011 | $ | 26,917 | $ | (192 | ) | $ | — | $ | (9,401 | ) | $ | 17,324 | ||||||||
| Other comprehensive income before reclassifications | (2,406 | ) | 408 | — | (606 | ) | (2,604 | ) | ||||||||||||
| Amounts reclassified from accumulated other comprehensive income | — | (15 | ) | — | 8,937 | 8,922 | ||||||||||||||
| Balance at September 30, 2012 | 24,511 | 201 | — | (1,070 | ) | 23,642 | ||||||||||||||
| Other comprehensive income before reclassifications | (2,113 | ) | (114 | ) | 14 | 1,109 | (1,104 | ) | ||||||||||||
| Amounts reclassified from accumulated other comprehensive income | — | (21 | ) | — | 87 | 66 | ||||||||||||||
| Balance at September 30, 2013 | 22,398 | 66 | 14 | 126 | 22,604 | |||||||||||||||
| Other comprehensive income before reclassifications | (6,296 | ) | (78 | ) | 79 | (503 | ) | (6,798 | ) | |||||||||||
| Amounts reclassified from accumulated other comprehensive income | — | (26 | ) | (93 | ) | — | (119 | ) | ||||||||||||
| Balance at September 30, 2014 | $ | 16,102 | $ | (38 | ) | $ | — | $ | (377 | ) | $ | 15,687 | ||||||||
During the year ended September 30, 2012, the Company issued 685,171 shares of restricted stock or units under the Amended and Restated 2000 Equity Incentive Plan, net of cancellations. These restricted stock awards generally have the following vesting schedules: immediate; three year vesting in which one-quarter vest at the end of Year 1, one-quarter vest at the end of Year 2 and one-half vest at the end of Year 3; and three year vesting in which one-third vest at the end of Year 1, one-third vest at the end of Year 2 and one-third vest at the end of Year 3. Compensation expense related to these awards is being recognized on a straight line basis over the vesting period, based on the fair market value of the Company’s common stock on the date of grant. In addition, in fiscal 2012, the Company granted 1,054,250 restricted stock awards net of cancellations to senior management, the number of shares ultimately issued will be measured at the end of fiscal year 2014 and is dependent upon the achievement of certain financial performance goals. These awards are expensed over the related service period when attainment of the performance condition is considered probable. The total amount of compensation recorded will depend on the Company’s achievement of performance targets. Changes to the
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
projected attainment of performance targets during the vesting period may result in an adjustment to the amount of cumulative compensation recorded as of the date the estimate is revised.
1998 Employee Equity Incentive 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 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, 2012, 3,211,820 options were forfeited due to employee terminations. On August 5, 2009, the Board of Directors voted not to issue any further shares out of the 1998 Plan. A total of 1,000 options are outstanding under the 1998 Plan as of September 30, 2012.
1993 Non-Employee Director Stock Option Plan
The purpose of the 1993 Non-Employee Director Stock Option Plan (the “Directors Plan”) was to attract and retain the services of experienced and knowledgeable independent directors of the Company. Options granted under the Directors Plan generally vested over a period of five years and generally expired ten years from the date of grant. A total of 10,000 options are outstanding and no shares remain available for grant under the Directors Plan as2000 Plan.
2014.
Aggregate
| 2012 | ||||||||||||||||
| Shares | Weighted- Average Remaining Contractual Term | Weighted Average Price | Aggregate Intrinsic Value (In Thousands) | |||||||||||||
Options outstanding at beginning of year | 370,137 | $ | 14.57 | |||||||||||||
Exercised | (13,320 | ) | $ | 7.75 | ||||||||||||
Forfeited/expired | (163,635 | ) | $ | 16.84 | ||||||||||||
|
| |||||||||||||||
Options outstanding at end of year | 193,182 | 0.4 years | $ | 13.11 | $ | 3 | ||||||||||
|
| |||||||||||||||
Vested at end of year | 193,182 | 0.4 years | $ | 13.11 | $ | 3 | ||||||||||
|
| |||||||||||||||
Options exercisable at end of year | 193,182 | 0.4 years | $ | 13.11 | $ | 3 | ||||||||||
|
| |||||||||||||||
Options available for future grant | 3,848,477 | |||||||||||||||
|
| |||||||||||||||
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The aggregate intrinsic value in the table above represents the total intrinsic value, based2014:
| 2014 | ||||||||||||
| Shares | Weighted- Average Remaining Contractual Term | Weighted Average Price | Aggregate Intrinsic Value (In Thousands) | |||||||||
| Options outstanding at September 30, 2013 | 15,540 | $ | 15.86 | |||||||||
| Forfeited/expired | (9,990 | ) | $ | 17.34 | ||||||||
| Options outstanding at September 30, 2014 | 5,550 | 0.3 years | $ | 13.20 | $ | — | ||||||
| Vested at September 30, 2014 | 5,550 | 0.3 years | $ | 13.20 | $ | — | ||||||
| Options exercisable at September 30, 2014 | 5,550 | 0.3 years | $ | 13.20 | $ | — | ||||||
| Shares available for future grant | 2,486,983 | |||||||||||
holders.
Based on information currently available, the Company believes that, although certain options may have been granted in violation of its applicable option plans, those options are valid and enforceable obligations of the Company.
Restricted stock for the year ended September 30, 2012 was determined using the fair value method.
| 2012 | ||||||||
Shares | Weighted Average Grant-Date Fair Value | |||||||
Outstanding at beginning of year | 1,590,989 | $ | 10.15 | |||||
Awards granted | 1,887,419 | $ | 11.80 | |||||
Awards vested | (597,962 | ) | $ | 9.67 | ||||
Awards canceled | (147,998 | ) | $ | 11.54 | ||||
|
|
|
| |||||
Outstanding at end of year | 2,732,448 | $ | 10.47 | |||||
|
|
|
| |||||
| 2014 | ||||||
| Shares | Weighted Average Grant-Date Fair Value | |||||
| Outstanding at September 30, 2013 | 2,915,413 | $ | 11.25 | |||
| Awards granted | 1,517,057 | $ | 9.49 | |||
| Awards vested | (592,857 | ) | $ | 9.48 | ||
| Awards canceled | (1,113,128 | ) | $ | 10.28 | ||
| Outstanding at September 30, 2014 | 2,726,485 | $ | 11.05 | |||
| Total Units | Time-Based Units | Performance-Based Units | ||||||
| Year ended September 30, 2014 | 1,517,057 | 678,307 | 838,750 | |||||
| Year ended September 30, 2013 | 1,471,977 | 794,602 | 677,375 | |||||
| Year ended September 30, 2012 | 1,887,419 | 767,169 | 1,120,250 | |||||
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
plan at any time or upon termination of employment. As of September 30, 2012, 2,909,6452014, 3,350,645 shares of common stock have been purchased under the 1995 Plan and 1,090,355649,355 shares remain available for purchase.
16.
Other Charges
The Company recorded a charge to operations of $1.0 million in the year ended September 30, 2011 for restructuring costs. Of this amount, $0.7 million related to workforce reductions and $0.3 million related to facility costs. The severance costs are comprised of $0.3 million of severance for the elimination of 19 employees, including 13 employees in the Brooks Life Science Systems segment resulting from the consolidation of certain functions as the operations of RTS and Nexus were combined into one operating segment, and $0.4 million of adjustments for contingent severance arrangements for corporate management positions eliminated in prior periods. The facility costs relate to facilities exited in previous years. The costs for these exited facilities ended as of September 30, 2011.
Fiscal 2010 Activities(Continued)
The Company recorded a charge to operations of $2.5 million in the year ended September 30, 2010 for restructuring costs. Of this amount, $0.9 million related to workforce reductions and $1.6 million related to facility costs. The severance costs primarily included adjustments for contingent severance arrangements for corporate management positions eliminated in prior periods. The facility costs included $0.4 million to amortize the deferred discount on multi-year facility restructuring liabilities.
| Fiscal 2012 Activity | ||||||||||||||||
| Balance September 30, 2011 | Expense | Utilization | Balance September 30, 2012 | |||||||||||||
Workforce-related | $ | 293 | $ | 3,275 | $ | (1,470 | ) | $ | 2,098 | |||||||
| Fiscal 2011 Activity | ||||||||||||||||
| Balance September 30, 2010 | Expense | Utilization | Balance September 30, 2011 | |||||||||||||
Facilities and other | $ | 3,509 | $ | 310 | $ | (3,819 | ) | $ | — | |||||||
Workforce-related | — | 726 | (433 | ) | 293 | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| $ | 3,509 | $ | 1,036 | $ | (4,252 | ) | $ | 293 | ||||||||
|
|
|
|
|
|
|
| |||||||||
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
| Fiscal 2010 Activity | ||||||||||||||||
| Balance September 30, 2009 | Expense | Utilization | Balance September 30, 2010 | |||||||||||||
Facilities | $ | 6,289 | $ | 1,584 | $ | (4,364 | ) | $ | 3,509 | |||||||
Workforce-related | 1,372 | 945 | (2,317 | ) | — | |||||||||||
|
|
|
|
|
|
|
| |||||||||
| $ | 7,661 | $ | 2,529 | $ | (6,681 | ) | $ | 3,509 | ||||||||
|
|
|
|
|
|
|
| |||||||||
17.
| Fiscal Year 2014 Activity | |||||||||||||||
| Balance September 30, 2013 | Expense | Utilization | Balance September 30, 2014 | ||||||||||||
| Facility and other contract termination costs | $ | 155 | $ | 583 | $ | (667 | ) | $ | 71 | ||||||
| Workforce-related termination benefits | 1,257 | 5,706 | (3,559 | ) | 3,404 | ||||||||||
| $ | 1,412 | $ | 6,289 | $ | (4,226 | ) | $ | 3,475 | |||||||
| Fiscal Year 2013 Activity | |||||||||||||||
| Balance September 30, 2012 | Expense | Utilization | Balance September 30, 2013 | ||||||||||||
| Facility and other contract termination costs | $ | — | $ | 818 | $ | (663 | ) | $ | 155 | ||||||
| Workforce-related termination benefits | 2,098 | 5,475 | (6,316 | ) | 1,257 | ||||||||||
| $ | 2,098 | $ | 6,293 | $ | (6,979 | ) | $ | 1,412 | |||||||
| Fiscal Year 2012 Activity | |||||||||||||||
| Balance September 30, 2011 | Expense | Utilization | Balance September 30, 2012 | ||||||||||||
| Workforce-related termination benefits | $ | 293 | $ | 3,153 | $ | (1,348 | ) | $ | 2,098 | ||||||
Systems.
The Contract Manufacturing segment provided services to build equipment front-end modules, vacuum transport modules and other subassemblies which enabled the Company’s customers to effectively source high quality and high reliability process tools for semiconductor market applications. The Company sold this segment on June 28, 2011.
BROOKS AUTOMATION, INC.
equity method investments.
| Brooks Product Solutions | Brooks Global Services | Brooks Life Science Systems | Contract Manufacturing | Total | ||||||||||||||||
Year ended September 30, 2012 | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Product | $ | 380,888 | $ | 11,324 | $ | 39,749 | $ | — | $ | 431,961 | ||||||||||
Services | — | 74,628 | 12,862 | — | 87,490 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| $ | 380,888 | $ | 85,952 | $ | 52,611 | $ | — | $ | 519,451 | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Gross profit | $ | 127,472 | $ | 25,599 | $ | 20,415 | $ | — | $ | 173,486 | ||||||||||
Segment operating income (loss) | $ | 21,319 | $ | 9,404 | $ | (3,139 | ) | $ | — | $ | 27,584 | |||||||||
Depreciation | $ | 8,952 | $ | 2,344 | $ | 2,111 | $ | — | $ | 13,407 | ||||||||||
Assets | $ | 218,799 | $ | 56,120 | $ | 107,530 | $ | — | $ | 382,449 | ||||||||||
Year ended September 30, 2011 | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Product | $ | 451,287 | $ | 14,786 | $ | 7,715 | $ | 137,329 | $ | 611,117 | ||||||||||
Services | — | 74,058 | 2,930 | — | 76,988 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| $ | 451,287 | $ | 88,844 | $ | 10,645 | $ | 137,329 | $ | 688,105 | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Gross profit | $ | 171,801 | $ | 31,750 | $ | 2,260 | $ | 17,210 | $ | 223,021 | ||||||||||
Segment operating income (loss) | $ | 64,921 | $ | 13,293 | $ | (4,684 | ) | $ | 10,649 | $ | 84,179 | |||||||||
Depreciation | $ | 8,597 | $ | 2,481 | $ | 543 | $ | 1,000 | $ | 12,621 | ||||||||||
Assets | $ | 235,322 | $ | 52,354 | $ | 101,331 | $ | — | $ | 389,007 | ||||||||||
Year ended September 30, 2010 | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Product | $ | 362,524 | $ | 13,740 | $ | — | $ | 155,543 | $ | 531,807 | ||||||||||
Services | — | 61,165 | — | — | 61,165 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
| $ | 362,524 | $ | 74,905 | $ | — | $ | 155,543 | $ | 592,972 | |||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Gross profit | $ | 128,479 | $ | 20,354 | $ | — | $ | 17,462 | $ | 166,295 | ||||||||||
Segment operating income | $ | 40,143 | $ | 3,805 | $ | — | $ | 8,335 | $ | 52,283 | ||||||||||
Depreciation | $ | 9,465 | $ | 2,843 | $ | — | $ | 2,255 | $ | 14,563 | ||||||||||
Assets | $ | 227,408 | $ | 53,564 | $ | — | $ | 57,024 | $ | 337,996 | ||||||||||
Revenues fromexcluding amounts related to the Brooks Product Solutions segmentdiscontinued operations, for the fiscal years ended September 30, 20112014, 2013 and 2010 include intercompany sales2012 are as follows (in thousands):
| Brooks Product Solutions | Brooks Global Services | Brooks Life Science Systems | Total | ||||||||||||
| Year ended September 30, 2014 | |||||||||||||||
| Revenue | |||||||||||||||
| Product | $ | 325,639 | $ | 14,978 | $ | 46,415 | $ | 387,032 | |||||||
| Services | — | 79,083 | 16,733 | 95,816 | |||||||||||
| $ | 325,639 | $ | 94,061 | $ | 63,148 | $ | 482,848 | ||||||||
| Gross profit | $ | 111,746 | $ | 32,168 | $ | 23,423 | $ | 167,337 | |||||||
| Segment operating income (loss) | $ | 10,836 | $ | 12,451 | $ | (8,431 | ) | $ | 14,856 | ||||||
| Depreciation expense | $ | 8,316 | $ | 2,361 | $ | 2,022 | $ | 12,699 | |||||||
| Assets | $ | 252,944 | $ | 58,678 | $ | 103,498 | $ | 415,120 | |||||||
| Year ended September 30, 2013 | |||||||||||||||
| Revenue | |||||||||||||||
| Product | $ | 290,523 | $ | 13,152 | $ | 31,336 | $ | 335,011 | |||||||
| Services | — | 75,477 | 11,952 | 87,429 | |||||||||||
| $ | 290,523 | $ | 88,629 | $ | 43,288 | $ | 422,440 | ||||||||
| Gross profit | $ | 91,255 | $ | 26,912 | $ | 14,140 | $ | 132,307 | |||||||
| Segment operating income (loss) | $ | 1,116 | $ | 9,592 | $ | (12,380 | ) | $ | (1,672 | ) | |||||
| Depreciation expense | $ | 8,698 | $ | 2,746 | $ | 2,256 | $ | 13,700 | |||||||
| Assets | $ | 226,759 | $ | 59,762 | $ | 105,221 | $ | 391,742 | |||||||
| Year ended September 30, 2012 | |||||||||||||||
| Revenue | |||||||||||||||
| Product | $ | 351,432 | $ | 11,324 | $ | 39,749 | $ | 402,505 | |||||||
| Services | — | 73,616 | 12,862 | 86,478 | |||||||||||
| $ | 351,432 | $ | 84,940 | $ | 52,611 | $ | 488,983 | ||||||||
| Gross profit | $ | 113,945 | $ | 25,093 | $ | 20,415 | $ | 159,453 | |||||||
| Segment operating income (loss) | $ | 13,330 | $ | 8,898 | $ | (3,139 | ) | $ | 19,089 | ||||||
| Depreciation expense | $ | 8,600 | $ | 2,344 | $ | 2,111 | $ | 13,055 | |||||||
| As of and for the Year Ended September 30, | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
Segment operating income | $ | 27,584 | $ | 84,179 | $ | 52,283 | ||||||
Other unallocated corporate expenses(1) | (1,833 | ) | 1,135 | 778 | ||||||||
Amortization of acquired intangible assets | 4,618 | 2,411 | 1,969 | |||||||||
Restructuring charges | 3,275 | 1,036 | 2,529 | |||||||||
Pension settlement | 8,937 | — | — | |||||||||
In-process research and development | 3,026 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total operating income | $ | 9,561 | $ | 79,597 | $ | 47,007 | ||||||
|
|
|
|
|
| |||||||
Segment assets | $ | 382,449 | $ | 389,007 | ||||||||
Investments in cash, cash equivalents, restricted cash and marketable securities | 200,994 | 207,111 | ||||||||||
Long-term deferred tax assets | 104,626 | — | ||||||||||
Investments in joint ventures | 31,428 | 34,950 | ||||||||||
Other unallocated corporate net assets | 22,463 | 5,890 | ||||||||||
|
|
|
| |||||||||
Total assets | $ | 741,960 | $ | 636,958 | ||||||||
|
|
|
| |||||||||
| As of and for the Year Ended September 30, | |||||||||||
| 2014 | 2013 | 2012 | |||||||||
| Segment operating income (loss) | $ | 14,856 | $ | (1,672 | ) | $ | 19,089 | ||||
| Other unallocated corporate expenses (1) | 5,096 | 3,002 | (1,833 | ) | |||||||
| Amortization of acquired intangible assets | 6,170 | 5,694 | 4,164 | ||||||||
| Impairment of acquired intangible assets | — | 50 | — | ||||||||
| Restructuring and other charges | 6,289 | 6,380 | 3,153 | ||||||||
| Pension settlement | — | — | 8,937 | ||||||||
| In-process research and development | — | — | 3,026 | ||||||||
| Total operating income (loss) | $ | (2,699 | ) | $ | (16,798 | ) | $ | 1,642 | |||
| Segment assets | $ | 415,120 | $ | 391,742 | |||||
| Cash, cash equivalents, restricted cash and marketable securities | 245,456 | 173,539 | |||||||
| Deferred tax assets | 86,572 | 115,985 | |||||||
| Assets held for sale | — | 27,778 | |||||||
| Equity method investments | 28,944 | 25,687 | |||||||
| Other unallocated corporate net assets | 1,946 | 2,032 | |||||||
| Total assets | $ | 778,038 | $ | 736,763 | |||||
| (1) | Other unallocated corporate expenses for the fiscal year ended September 30, 2012 includes a credit of |
| Year Ended September 30, | ||||||||||||
| 2012 | 2011 | 2010 | ||||||||||
North America | $ | 230,735 | $ | 349,456 | $ | 322,542 | ||||||
Asia/Pacific | 194,711 | 244,524 | 203,172 | |||||||||
Europe | 94,005 | 94,125 | 67,258 | |||||||||
|
|
|
|
|
| |||||||
| $ | 519,451 | $ | 688,105 | $ | 592,972 | |||||||
|
|
|
|
|
| |||||||
Long-lived assets, consisting of property,
| Year Ended September 30, | |||||||||||
| 2014 | 2013 | 2012 | |||||||||
| North America | $ | 174,343 | $ | 177,779 | $ | 214,060 | |||||
| Asia/Pacific | 198,695 | 154,358 | 183,406 | ||||||||
| Europe | 109,810 | 90,303 | 91,517 | ||||||||
| $ | 482,848 | $ | 422,440 | $ | 488,983 | ||||||
| September 30, | ||||||||
| 2012 | 2011 | |||||||
North America | $ | 51,546 | $ | 55,295 | ||||
Asia/Pacific | 2,123 | 1,920 | ||||||
Europe | 10,809 | 11,381 | ||||||
|
|
|
| |||||
| $ | 64,478 | $ | 68,596 | |||||
|
|
|
| |||||
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
18.
| September 30, | |||||||||
| 2014 | 2013 | ||||||||
| North America | $ | 40,232 | $ | 38,505 | |||||
| Asia/Pacific | 870 | 1,646 | |||||||
| Europe | 9,081 | 7,355 | |||||||
| $ | 50,183 | $ | 47,506 | ||||||
2014 or 2013.
| September 30, | ||||||||
| 2012 | 2011 | |||||||
Accounts receivable | $ | 79,706 | $ | 77,318 | ||||
Less allowance for doubtful accounts | 851 | 617 | ||||||
|
|
|
| |||||
| $ | 78,855 | $ | 76,701 | |||||
|
|
|
| |||||
| September 30, | |||||||
| 2014 | 2013 | ||||||
| Accounts receivable | $ | 81,270 | $ | 78,460 | |||
| Less allowance for doubtful accounts | (1,031 | ) | (863 | ) | |||
| Less allowance for sales returns | (133 | ) | (114 | ) | |||
| $ | 80,106 | $ | 77,483 | ||||
Description | Balance at Beginning of Period | Provisions | Reversals of Bad Debt Expense | Write-offs and Adjustments | Balance at End of Period | |||||||||||||||
2012 Allowance for doubtful accounts | $ | 617 | $ | 367 | $ | (130 | ) | $ | (3 | ) | $ | 851 | ||||||||
2011 Allowance for doubtful accounts | 491 | — | — | 126 | 617 | |||||||||||||||
2010 Allowance for doubtful accounts | 719 | 125 | (192 | ) | (161 | ) | 491 | |||||||||||||
| Description | Balance at Beginning of Period | Provisions | Reversals of Bad Debt Expense | Write-offs and Adjustments | Balance at End of Period | |||||||||||||||
| 2014 Allowance for doubtful accounts | $ | 863 | $ | 438 | $ | (315 | ) | $ | 45 | $ | 1,031 | |||||||||
| 2013 Allowance for doubtful accounts | 851 | 48 | (143 | ) | 107 | 863 | ||||||||||||||
| 2012 Allowance for doubtful accounts | 617 | 367 | (130 | ) | (3 | ) | 851 | |||||||||||||
| Description | Balance at Beginning of Period | Provisions | Write-offs and Adjustments | Balance at End of Period | |||||||||||
| 2014 Allowance for sales returns | $ | 114 | $ | 19 | $ | — | $ | 133 | |||||||
| 2013 Allowance for sales returns | — | 72 | 42 | 114 | |||||||||||
| September 30, | ||||||||
| 2012 | 2011 | |||||||
Inventories | ||||||||
Raw materials and purchased parts | $ | 64,732 | $ | 65,770 | ||||
Work-in-process | 20,800 | 29,460 | ||||||
Finished goods | 17,453 | 12,424 | ||||||
|
|
|
| |||||
| $ | 102,985 | $ | 107,654 | |||||
|
|
|
| |||||
| September 30, | |||||||
| 2014 | 2013 | ||||||
| Inventories | |||||||
| Raw materials and purchased parts | $ | 57,250 | $ | 57,678 | |||
| Work-in-process | 20,068 | 19,991 | |||||
| Finished goods | 16,249 | 16,742 | |||||
| $ | 93,567 | $ | 94,411 | ||||
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Company’s warranty obligation is affected by product failure rates, utilization levels, material usage, service delivery costs incurred in correcting a product failure, and supplier warranties on parts delivered to the Company. Product warranty and retrofit activity on a gross basis for the fiscal years ended September 30, 2014, 2013 and 2012, 2011 and 2010excluding amounts related to discontinued operations, is as follows (in thousands):
Balance at September 30, 2009 | $ | 5,698 | ||
Accruals for warranties during the year | 17,948 | |||
Settlements made during the year | (15,451 | ) | ||
|
| |||
Balance at September 30, 2010 | 8,195 | |||
Adjustments for acquisitions and divestitures | 698 | |||
Accruals for warranties during the year | 11,299 | |||
Settlements made during the year | (12,754 | ) | ||
|
| |||
Balance at September 30, 2011 | 7,438 | |||
Adjustments for acquisitions and divestitures | 7 | |||
Accruals for warranties during the year | 13,751 | |||
Settlements made during the year | (13,867 | ) | ||
|
| |||
Balance at September 30, 2012 | $ | 7,329 | ||
|
|
| Balance at September 30, 2011 | $ | 7,438 | |
| Adjustments for acquisitions and divestitures | 7 | ||
| Accruals for warranties during the year | 13,551 | ||
| Costs incurred during the year | (13,750 | ) | |
| Balance at September 30, 2012 | 7,246 | ||
| Adjustments for acquisitions and divestitures | 1,187 | ||
| Accruals for warranties during the year | 9,968 | ||
| Costs incurred during the year | (11,141 | ) | |
| Balance at September 30, 2013 | 7,260 | ||
| Adjustments for acquisitions and divestitures | 364 | ||
| Accruals for warranties during the year | 9,969 | ||
| Costs incurred during the year | (11,094 | ) | |
| Balance at September 30, 2014 | $ | 6,499 | |
| Sale proceeds | $ | 11,275 | |
| Net book value of building and land | (6,095 | ) | |
| Deferred leasing costs and other | (3,718 | ) | |
| Direct transaction costs | (437 | ) | |
| Gain on the sale of building and land | $ | 1,025 | |
| Year ended September 30, | |||
| 2015 | $ | 881 | |
| 2016 | 881 | ||
| 2017 | 881 | ||
| 2018 | 6,901 | ||
| Total minimum lease payments | 9,544 | ||
| Less amounts representing interest | 1,246 | ||
| Total capital lease obligation | 8,298 | ||
| Less current portion of capital lease obligation | 881 | ||
| Long-term capital lease obligation | $ | 7,417 | |
| Operating Leases | ||||
Year ended September 30, 2013 | $ | 6,694 | ||
2014 | 4,871 | |||
2015 | 2,825 | |||
2016 | 1,298 | |||
2017 | 835 | |||
Thereafter | 2,248 | |||
|
| |||
| $ | 18,771 | |||
|
| |||
| Year ended September 30, 2015 | $ | 5,140 | |
| 2016 | 3,384 | ||
| 2017 | 1,748 | ||
| 2018 | 1,401 | ||
| 2019 | 706 | ||
| Thereafter | 93 | ||
| $ | 12,472 | ||
credit outstanding related primarily to customer advances and other performance obligations. These arrangements guarantee the refund of advance payments received from customers in the event that the product is not delivered or warranty obligations are not fulfilled in compliance with the terms of the contract. While the Company does not anticipate that these obligations will be called, they could be called by the beneficiaries at any time before the expiration date of the particular letter of credit should the Company fail to meet certain contractual requirements.
BROOKS AUTOMATION, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
2014.
On August 22, 2006, an action captioned asMark Levy v. Robert J. Therrien and Brooks Automation, Inc., was filed in the United States District Court for the District of Delaware, seeking recovery, on behalf of Brooks, from Mr. Therrien (the Company’s former Chairman and CEO) under Section 16(b) of the Exchange Act for alleged “short-swing” profits earned by Mr. Therrien due to the loan and stock option exercise in November 1999, and a sale by Mr. Therrien of Brooks stock in March 2000. On February 20, 2007, a second Section 16(b) action, concerning the same loan and stock option exercise in November 1999 discussed above, was filed in the United States District Court of the District of Delaware, captionedAron Rosenberg v. Robert J. Therrien and Brooks Automation, Inc. On April 4, 2007, the court issued an order consolidating theLevyandRosenbergactions (the “Section 16(b) Action”).
On February 24, 2011, the parties executed a settlement agreement to resolve the Section 16(b) Action. Pursuant to this agreement, Mr. Therrien sold 150,000 shares of Brooks stock, the proceeds of which formed the settlement fund and totaled approximately $1.9 million.
In connection with the agreement to settle the Section 16(b) Action, the Company reached an agreement with Mr. Therrien and the Company’s former Directors and Officers Liability Insurance Carriers (the “Global Settlement Agreement”) to resolve (1) Mr. Therrien’s civil litigation with the United States Securities and Exchange Commission (“SEC”), (2) any of the Company’s advancement or indemnification obligations to Mr. Therrien in connection with that matter, and (3) the Company’s claim against these insurance carriers for reimbursement of certain defense costs which the Company paid to Mr. Therrien pursuant to his indemnification agreement with the Company. Pursuant to the Global Settlement Agreement, Mr. Therrien agreed to enter into a settlement with the SEC. If approved by the SEC and the court in that matter, in addition to delivering to the Company the net proceeds of the sale of 150,000 shares of Brooks stock in connection with the Section 16(b) matter, Mr. Therrien would pay the SEC approximately $728,000 in disgorgement and $100,000 in fines. To resolve any indemnification claim by Mr. Therrien against the Company in connection with this matter, the Company has agreed to reimburse him $500,000 towards his disgorgement payment. Finally, upon resolution of both the Section 16(b) matter and the SEC matter, the Company’s insurers agreed to pay Brooks a net sum of approximately $3.5 million to resolve any claim the Company may have against its former insurers for certain defense costs paid to Mr. Therrien.
Following a hearing on May 17, 2011, the court in the Section 16(b) Action found that the settlement in the Section 16(b) Action and the Global Settlement Agreement were both in the best interest of the parties and the Company’s shareholders. On June 16, 2011, the settlement of the Section 16(b) Action became final and the Company received $1.3 million in settlement proceeds of which 50% will be paid to the Company’s insurance company and the remaining 50% has been recorded as income. On February 1, 2012, the court approved Mr. Therrien’s settlement with the SEC, and the Company subsequently received additional net insurance proceeds to reimburse litigation related costs previously incurred of approximately $3.3 million which was recorded as a reduction to Selling, General & Administrative costs during the three months ended March 31, 2012.
21. In the event of unexpected subsequent developments and given the inherent unpredictability of these legal proceedings, there can be no assurance that the Company's assessment of any claim will reflect the ultimate outcome and an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company's consolidated financial condition or results of operations in particular quarterly or annual periods.
BROOKS AUTOMATION, INC.
FluidX provides the Company
provides the Company
Life Science Systems segment.
| Item 9. |
Not applicable.
| Item 9A. | Controls and Procedures |
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. dated November 13, 2014 expressed an unqualified opinion thereon. year and is incorporated herein by reference. 13, 2014 Executive Vice President and Robyn C. Davis John K. McGillicuddy Krishna G. Palepu Evaluation of Disclosure Controls and ProceduresUnder 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 under Rule 13a-15(e) promulgated under the Exchange Act. Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported on a timely basis and that such information is accumulated and communicated to management, including the chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon this evaluation, our chief executive officer and our chief financial officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.Management’s Report on Internal Control Over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, as a process designed by, or under the supervision of our chief executive and chief financial officers and effected by our board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that: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, 2012.2014. In making this assessment, we used the criteria set forth in the 1992 framework established by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) anin Internal Control-Integrated Framework.Based on our assessment, we concluded that, as of September 30, 2012,2014, our internal control over financial reporting was effective.Our audited consolidated financial statements include the results of Dynamic Micro Systems Semiconductor Equipment GmbH, or DMS, which we acquired in April 2014. The scope of our assessment of the effectiveness of our internal control over financial reporting as of September 30, 2014 does not include the internal controls of DMS as management determined that it would not be practical to conduct a sufficiently comprehensive assessment of the internal controls of DMS based on the date of the acquisition and managements’ other time commitments. Guidance issued by the Securities and Exchange Commission permits companies to exclude acquisitions from their assessment of internal control over financial reporting for the first fiscal year in which the acquisition occurred. Our consolidated revenue for the fiscal year ended September 30, 2014 was $482.8 million, of which DMS represented $5.5 million. Our total assets as of September 30, 2014 were $778.0 million, of which DMS tangible assets represented $22.3 million. Our net assets as of September 30, 2014 were $642.9 million, of which DMS represented $16.6 million.The effectiveness of our internal control over financial reporting as of September 30, 20122014 has been audited by PricewaterhouseCoopersBDO USA LLP, an independent registered public accounting firm, as stated in theirthe following report:78Report of Independent Registered Public Accounting FirmBoard of Directors and StockholdersBrooks Automation, Inc.Chelmsford, MassachusettsWe have audited Brooks Automation Inc.’s internal control over financial reporting as of September 30, 2014, based on criteria established in Internal Control - Integrated Framework (1992) issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Brooks Automation, Inc.’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Internal Control Over Financial Reporting appearing under Item 9A. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.As indicated in the accompanying Item 9A, Management's Report on Internal Control Over Financial Reporting, management's assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Dynamic Micro Systems Semiconductor Equipment GmbH (“DMS”), which was acquired on April 30, 2014, and which is included in the consolidated balance sheet of Brooks Automation, Inc. as of September 30, 2014, and the related consolidated statement of operations, comprehensive income (loss), changes in equity, and cash flows for the year then ended. DMS constituted 3% and 3% of total assets and net assets, respectively, as of September 30, 2014, and 1% of revenues for the year then ended. Management did not assess the effectiveness of internal control over financial reporting of DMS because of the timing of the acquisition which was completed on April 30, 2014. Our audit of internal control over financial reporting of Brooks Automation, Inc. also did not include an evaluation of the internal control over financial reporting of DMS.In our opinion, Brooks Automation, Inc. maintained, in all material respects, effective internal control over financial reporting as of September 30, 2014, based on the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Brooks Automation, Inc. as of September 30, 2014 and the related consolidated statements of operations, comprehensive income (loss), changes in equity, and cash flows for the year then ended and our report which appears herein./s/ BDO USA, LLPBoston, MassachusettsNovember 13, 2014Changes in Internal Control Over Financial ReportingThere were no changes in internal control over financial reporting during the fiscal fourth quarter ended September 30, 2012,2014, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.79Item 9B. None.PART IIIItem 10. The information required by this Item 10 is hereby incorporated by reference tocontained in our definitive proxy statement for our 2015 annual meeting of shareholders to be filed by us within 120 days after the close of our fiscal year.year (the "2015 Proxy Statement") under the caption "Proposal No. 1-Election of Directors," "Other Matters-Section 16(a) Beneficial Ownership Compliance," "Other Matters-Standards of Conduct," "Other Matters-Stockholder Proposals and Recommendations for Directors" and "Corporate Governance" and is incorporated herein by reference.Item 11. Executive CompensationThe information required by this Item 11 is hereby incorporated by reference to our definitive proxy statementcontained under the caption "Corporate Governance and Director Compensation" and "Executive Officers" in the 2015 Proxy Statement to be filed by us within 120 days after the close of our fiscal year.year and is incorporated herein by reference.Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder MattersThe information required by this Item 12 is hereby incorporated by reference to our definitive proxy statementcontained under the caption "General Information-Security Ownership of Certain Beneficial Owners" and "Equity Compensation Plan Information" in the 2015 Proxy Statement to be filed by us within 120 days after the close of our fiscal year.year and is incorporated herein by reference.Item 13. Certain Relationships and Related Transactions, and Director IndependenceThe information required by this Item 13 is hereby incorporated by reference to our definitive proxy statementcontained under the caption "Related Party Transactions" and "Corporate Governance and Director Compensation" in the 2015 Proxy Statement to be filed by us within 120 days after the close of our fiscal year.year and is incorporated herein by reference.Item 14. Principal Accountant Fees and Services The information required by this Item 14 is hereby incorporated by reference to our definitive proxy statementcontained under the caption "Independent Auditor Fees and Other Matters" in the 2015 Proxy Statement to be filed by us within 120 days after the close of our fiscal year.PART IVItem 15. Exhibits and Financial Statement Schedules (a) Financial Statements and Financial Statement SchedulesThe consolidated financial statements of the Company are listed in the index under Part II, Item 8, in this Form 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) ExhibitsExhibitNo.Description Description3.01 Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.1 of the Company’s registration statement on Form S-4 (Reg. No. 333-127945), filed on August 30, 2005 (the “Helix S-4”), as amended on September 22, 2005).3.02Certificate of Designations of the Company’s Series A Junior Participating Preferred Stock (incorporated herein by reference3.01 to Exhibit 3.03 of the Company’s registration statement on Form S-3 (Reg. No. 333-34487)333-189582), filed on August 27, 1997)June 25, 2013). 3.03 Certificate of Amendment of the Company’s Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 of the Helix S-4, as amended on September 22, 2005).3.04Certificate of Amendment of the Company’s Certificate of Incorporation (incorporated herein by reference to Exhibit 3.4 of the Helix S-4).3.05Certificate 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 Helix S-4).3.06Certificate of Ownership and Merger of PRI Automation, Inc. into the Company (incorporated herein by reference to Exhibit 3.6 of the Helix S-4).3.07Certificate of Change of Registered Agent and Registered Office of the Company (incorporated herein by reference to Exhibit 3.8 of the Helix S-4).3.08Certificate of Amendment of Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.9 to the Company’s annual report on Form 10-K for the fiscal year ended September 30, 2010, as filed on November 23, 2010 (“2010 10-K”)).3.09Certificate of Amendment of Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.10 to the Company’s 2010 10-K).3.10Certificate of Increase of Shares Designated as Series A Junior Participating Preferred Stock (incorporated herein by reference to Exhibit 3.12 to the Company’s 2010 10-K).3.113.02 Amended and Restated Bylaws (incorporated herein by reference to Exhibit 3.01 of the Company’sCompany's current report on Form 8-K, filed on February 11, 2008).4.01 Specimen Certificate for shares of the Company’sCompany's common stock (incorporated herein by reference to the Company’sCompany's registration statement on Form S-3 (Reg. No. 333-88320), filed on May 15, 2002).10.01 Shareholders’ Agreement, dated as of June 30, 2006, among Yaskawa Electric Corporation, Brooks Automation, Inc. and Yaskawa Brooks Automation, Inc. (incorporated herein by reference to Exhibit 10.01 to the Company’sCompany's 2010 10-K)10-K, filed on November 23, 2010 (the "2010 10-K")).10.02 U.S. Robot Supply Agreement, made as of June 30, 2006, by and between Brooks Automation, Inc. and Yaskawa Electric Corporation (incorporated herein by reference to Exhibit 10.02 to the 2010 10-K). 10.03 Brooks Japan Robot Supply Agreement, made as of June 30, 2006, by and between Yaskawa Brooks Automation, Inc. and Brooks Automation, Inc. (incorporated herein by reference to Exhibit 10.03 to the Company’s 2010 10-K).10.04 Basic agreement between the Company and Ulvac Corporation dated August 17, 1981 (incorporated herein by reference to Exhibit 10.13 of the registration statement on Form S-2 (Reg. No. 2-84880) filed by Helix Technology Corporation) ). 10.05 10.05 Form of Indemnification Agreement for directors and officers of the Company (incorporated herein by reference to the Company’sCompany's registration statement on Form S-1 (Reg. No. 333-87296), filed on December 13, 1994 (the “Brooks S-1”)).ExhibitNo. Description10.06 Employment Agreement, effective as of January 28, 2008, by and between Brooks Automation, Inc. and Martin S. Headley (incorporated herein by reference to Exhibit 10.1 to the Company’s current report on Form 8-K filed on January 31, 2008).10.07 Employment Agreement, effective as of April 5, 2010, by and between Brooks Automation, Inc. and Stephen S. Schwartz (incorporated herein by reference to Exhibit 10.01 to the Company’sCompany's quarterly report on Form 10-Q for the fiscal quarter ended March 31, 2010, filed on May 6, 2010).10.0810.07 Offer letter dated December 1, 2011 between the Company and Mark D. Morelli.10.09Separation Agreement dated November 8, 2012 between the Company and Steven Michaud.10.101993 Nonemployee Director Stock Option PlanMorelli (incorporated herein by reference to Exhibit 99.110.08 to the Company’s registration statementCompany's annual report on Form S-8 (Reg. No. 333-22717),10-K for the fiscal year ended September 30, 2012, as filed on March 4, 1997)November 21, 2012 (the “2012 10-K”)). 10.11 10.08 Offer letter dated September 5, 2013 between the Company and Lindon G. Robertson (incorporated herein by reference to Exhibit 10.11 to the Company's 2013 10-K, filed on November 22, 2013). 10.09 1995 Employee Stock Purchase Plan, as amended (incorporated herein by reference to Exhibit 10.13 to the Company’s 2010 10-K).10.12 10.10 Second Amended and Restated 2000 Equity Incentive Plan, restated as of December 29, 2008May 7, 2013 (incorporated herein by reference to Exhibit 10.01 to the Company’s quarterlyCompany's current report on Form 10-Q for the fiscal quarter ended December 31, 2008,8-K, filed on FebruaryMay 9, 2009)2013). 10.13 10.11 Helix Technology Corporation 1996 Equity Incentive Plan (incorporated herein by reference to Exhibit 4.1 of the Company’sCompany's registration statement on Form S-8 (Reg. No. 333-129724), filed on November 16, 2005).10.14 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 on Form S-8 (Reg. No. 333-129724), filed on November 16, 2005).10.1510.12 Form of 2000 Equity Incentive Plan New Employee Nonqualified Stock Option Agreement (incorporated herein by reference to Exhibit 10.18 to the Company’s 2010 10-K).10.1610.13 Form of 2000 Equity Incentive Plan Existing Employee Nonqualified Stock Option Agreement (incorporated herein by reference to Exhibit 10.19 to the Company’s 2010 10-K).10.1710.14 Form of 2000 Equity Incentive Plan Director Stock Option Agreement (incorporated herein by reference to Exhibit 10.20 to the Company’s 2010 10-K).10.1810.15 Form of Restricted Stock Agreement (incorporated herein by reference to Exhibit 10.21 to the Company’s 2010 10-K).10.1910.16 Form of Restricted Stock Unit Award Notice (incorporated herein by reference to Exhibit 10.18 to the Company’sCompany's annual report on Form 10-K for the fiscal year ended September 30, 2011, as filed on November 28, 2011 (“2011(the “2011 10-K”)) .10.2010.17 Non-Employee Directors Stock Grant/Restricted Stock Unit Election Form (incorporated herein by reference to Exhibit 10.40 to the Company’s 2010 10-K).10.2110.18 Brooks Automation, Inc. Deferred Compensation Plan, as amended (incorporated herein by reference to Exhibit 10.25 to the Company’s 2010 10-K).10.2210.19 Amendment No. 2008-01 to the Brooks Automation, Inc. Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.01 to the Company’sCompany's quarterly report on Form 10-Q for the quarter ended June 30, 2008, filed on August 8, 2008).10.2310.20 Lease between the Company and BerCar II, LLC for 12 Elizabeth Drive, Chelmsford, Massachusetts dated October 23, 2002 (incorporated herein by reference to Exhibit 10.28 to the Company’sCompany's 2008 10-K)10-K filed on November 26, 2008 (the "2008 10-K")).ExhibitNo. Description10.2410.21 First Amendment to Lease between the Company and BerCar II, LLC for 12 Elizabeth Drive, Chelmsford, Massachusetts dated November 1, 2002 (incorporated herein by reference to Exhibit 10.29 to the Company’s 2008 10-K).8110.21.1 Amendment to Lease between the Company and BerCar II, LLC for 12 Elizabeth Drive, Chelmsford, Massachusetts dated September 30, 2013 (incorporated herein by reference to Exhibit 10 to the Company's quarterly report on Form 10-Q for the quarter ended March 30, 2014, filed on May 8, 2014). 10.25 10.22 Lease, dated May 14, 1999, between MUM IV, LLC as Lessor and the Company as Lessee (incorporated herein by reference to Exhibit 10.30 to the 2010 10-K). 10.26 Factory Lease Advanced Agreement among Sang Chul Park, Young Ja Kim, Joon Ho Park, Brooks Automation Asia, Ltd. and Brooks Automation Korea, Inc. (incorporated herein by reference to Exhibit 10.36 to the Company’s 2010 10-K).10.2710.23 Lease dated September 6, 2001 between The Harry Friedman and Edith B. Friedman Revocable Living Trust Dated May 15, 1986 et al as Lessor and the Company (IGC —- Polycold Systems Inc.) as Lessee (incorporated herein by reference to Exhibit 10.37 to the Company’s 2010 10-K).10.2810.24 Lease dated August 8, 2008 between the Company and Koll/Intereal Bay Area for 4051 Burton Drive, Santa Clara, CA (incorporated herein by reference to Exhibit 10.38 to the Company’s 2008 10-K).10.2910.25 Standard Industrial lease dated May 31, 2010 by and between Brooks Automation, Inc. (formerly Nexus Biosystems, Inc.) and Crest Partners-Poway One Danielson for 14100 Danielson Street, Building 100, Poway, California (incorporated herein by reference to Exhibit 10.29 to the Company’s 2011 10-K).10.26 Purchase Agreement dated July 31, 2013 between Brooks Automation, Inc. and Ram Management Co., Inc. (incorporated herein by reference to Exhibit 10.01 to the Company's current report on Form 8-K filed on August 5, 2013). 10.3010.27 Asset Purchase Agreement dated March 17, 2014 by and between Brooks Automation, Inc. and MKS Instruments, Inc., as amended (incorporated herein by reference to Exhibit 10.1 to the Company's current report on Form 8-K, filed on May 30, 2014). 10.28 Share Purchase and Transfer Agreement, effective as of April 29, 2014, by and Plan of Merger among Nexus Biosystems,Brooks Automation, Inc., the Company, Spurs Acquisition, Inc., a wholly-owned subsidiary of the Company,Brooks Automation (Germany) GmbH, DMS Beteiligungs GmbH, and Telegraph Hill Partners Management Company LLC, dated as of July 25, 2011HSH Nordbank AG (incorporated herein by reference to Exhibit 2.1 to the Company’sCompany's current report on Form 8-K, filed on July 29, 2011)May 5, 2014). 10.3116.1 Master Purchase and Sale Agreement by and among Brooks Automation, Inc., Celestica Oregon LLC, 2281392 Ontario Inc., and, for the limited purposes set forth therein, Celestica, Inc.,Letter of PricewaterhouseCoopers LLP dated as of April 20, 2011November 27, 2012 (incorporated herein by reference to Exhibit 2.116.1 to the Company’sCompany's current report on Form 8-K filed on April 26, 2011)November 27, 2012). 10.32 Agreement and Plan of Merger among Crossing Automation Inc., the Company, Niners Acquisition Corporation, a wholly-owned subsidiary of the Company, and Shareholder Representative Services LLC, dated as of October 28, 2012 (incorporated herein by reference to Exhibit 2.1 to the Company’s current report on Form 8-K, filed on October 31, 2012).21.01 Subsidiaries of the Company. 23.01 Consent of BDO (Independent registered public accounting firm for the Company). 23.01 23.02 Consent of PricewaterhouseCoopers LLP (Independent registered public accounting firm for the Company). 31.01 Certification of the Company's Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. 31.0131.02 Certification of the Company's Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. Rule 13a-14(a), 15d-14(a) Certification.32 Certification of the Company's Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 31.02 Rule 13a-14(a), 15d-14(a) Certification.32Section 1350 Certification.101 The following material from the Company’sCompany's Annual Report on Form 10-K, for the year ended September 30, 2012,2014, formatted in XBRL (Extensible(Xtensible Business Reporting Language): (i) the Consolidated Balance Sheets; (ii) the Consolidated Statements of Operations; (iii) the Consolidated Statements of Comprehensive Income (Loss) (iv) the Consolidated Statements of Cash Flows; (iv)(v) the Consolidated Statements of Changes in Equity; and (v)(vi) the Notes to Consolidated Financial Statements.82SIGNATURESPursuant 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:BROOKS AUTOMATION, INC. By: /S/ STEPHEN S. SCHWARTZStephen S. SchwartzChief Executive OfficerDate: November 20, 2012Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.SignatureTitleDate/S/ STEPHEN S. SCHWARTZStephen S. SchwartzTitle Date /S/ STEPHEN S. SCHWARTZDirector and Chief Executive Officer November 13, 2014 Stephen S. Schwartz (Principal Executive Officer) November 20, 2012/S/LINDONG. ROBERTSON/S/ MARTIN S. HEADLEYMartin S. HeadleyNovember 13, 2014 Lindon G. Robertson Chief Financial Officer (Principal Financial Officer) November 20, 2012/S/ DAVID PIETRANTONIVice President - Finance and November 13, 2014 /S/ TIMOTHY S. MATHEWSTimothy S. MathewsCorporate Controller Vice President andCorporate Controller(Principal Accounting Officer) November 20, 2012/S/ A. CLINTON ALLENDirector November 13, 2014 A. Clinton Allen Director November 20, 2012/S/ ROBYN C.DAVISDirector November 13, 2014 /S/ JOSEPH R. MARTINDirector November 13, 2014 Joseph R. Martin Director November 20, 2012/S/ JOHN K. MCGILLICUDDYDirector November 13, 2014 /S/ JOHN K. MCGILLICUDDY Director November 20, 2012/S/ KRISHNA G. PALEPUDirector November 13, 2014 /S/ KRISHNA G. PALEPU Director November 20, 2012/S/ KIRK P. PONDDirector November 13, 2014 /S/ CHONG SUP PARKChong Sup Park Director November 20, 2012/S/ ALFRED WOOLLACOTT IIIDirector November 13, 2014 /S/ KIRK P. PONDKirk P. Pond Director November 20, 2012/S/ MARK S. WRIGHTONDirector November 13, 2014 /S/ ALFRED WOOLLACOTT IIIAlfred Woollacott III Director November 20, 2012/S/ ELLEN M. ZANEDirector November 13, 2014 /S/ MARK S. WRIGHTONMark S. Wrighton DirectorNovember 20, 2012/S/ ELLEN M. ZANEEllen M. ZaneDirectorNovember 20, 20128983