~~eted~~

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

	For the quarterly period ended: ~~December 31, 2017~~June 30, 2022

	OR

☐	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from __________ to _________

Commission File Number 000-25434

AZENTA, INC.

~~BROOKS AUTOMATION, INC.~~

(Exact name of registrant as specified in its charter)


Delaware	04-3040660
~~Delaware~~	~~04-3040660~~
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)

15 Elizabeth Drive

Chelmsford, Massachusetts

(Address of principal executive offices)

01824

(Zip Code)

Registrant’s telephone number, including area code: ~~(978)~~ (978) 262-2400

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	AZTA	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Web site, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). Yes ☒ No ☐

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


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐ ~~(Do not check if a smaller reporting company)~~	Smaller reporting company	☐

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date, ~~January 26, 2018:~~August 7, 2022: common stock, $0.01 par value and ~~70,429,583~~75,020,404 shares outstanding.

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

AZENTA, INC.

~~BROOKS AUTOMATION, INC.~~

CONSOLIDATED BALANCE SHEETS

(unaudited)

(In thousands, except share and per share data)


	June 30,		September 30,
	2022		2021


Assets
Current assets
Cash and cash equivalents	$	1,474,189	$	227,427
Marketable securities		709,063		81
Accounts receivable, net of allowance for expected credit losses ($4,326 and $4,318, respectively)		150,274		119,877
Inventories		81,213		60,398
Prepaid expenses and other current assets		160,557		58,198
Current assets held for sale		—		311,385
Total current assets		2,575,296		777,366
Property, plant and equipment, net		154,596		130,719
Long-term marketable securities		312,027		3,598
Long-term deferred tax assets		1,926		10,043
Goodwill		464,885		469,356
Intangible assets, net		160,691		186,534
Other assets		53,296		58,068
Non-current assets held for sale		—		183,828
Total assets	$	3,722,717	$	1,819,512
Liabilities and stockholders' equity
Current liabilities
Accounts payable	$	34,576	$	42,360
Deferred revenue		33,132		25,724
Accrued warranty and retrofit costs		2,524		2,330
Accrued compensation and benefits		44,279		33,183
Accrued restructuring costs		169		304
Accrued income taxes payable		7,095		8,711
Accrued expenses and other current liabilities		73,152		103,537
Current liabilities held for sale		—		128,939
Total current liabilities		194,927		345,088
Long-term debt		—		49,677
Long-term tax reserves		1,681		1,973
Long-term deferred tax liabilities		44,286		13,030
Long-term pension liabilities		698		705
Long-term operating lease liabilities		46,719		45,088
Other long-term liabilities		6,620		6,173
Non-current liabilities held for sale		—		32,444
Total liabilities		294,931		494,178
Commitments and contingencies (Note 16)
Stockholders' equity
Preferred stock, $0.01 par value - 1,000,000 shares authorized, 0 shares issued or outstanding		—		—
Common stock, $0.01 par value - 125,000,000 shares authorized, 88,451,223 shares issued and 74,989,354 shares outstanding at June 30, 2022, 87,808,922 shares issued and 74,347,053 shares outstanding at September 30, 2021		885		878
Additional paid-in capital		1,990,281		1,976,112
Accumulated other comprehensive income		(38,493)		19,351
Treasury stock, at cost - 13,461,869 shares at June 30, 2022 and September 30, 2021		(200,956)		(200,956)
Retained earnings (accumulated deficit)		1,676,069		(470,051)
Total stockholders' equity		3,427,786		1,325,334
Total liabilities and stockholders' equity	$	3,722,717	$	1,819,512

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

December 31,

September 30,

2017

2017

(In thousands, except share and per share data)
Assets




Current assets




Cash and cash equivalents

$
202,339

$
101,622
Marketable securities

15,658

28
Accounts receivable, net

139,047

120,828
Inventories

115,033

106,395
Prepaid expenses and other current assets

24,782

23,138
Total current assets

496,859

352,011
Property, plant and equipment, net

60,294

58,462
Long-term marketable securities

13,885

2,642
Long-term deferred tax assets

1,642

1,692
Goodwill

272,724

233,638
Intangible assets, net

105,757

83,520
Equity method investment

30,925

28,593
Other assets

5,591

6,070
Total assets

$
987,677

$
766,628
Liabilities and Stockholders' Equity




Current liabilities




Current portion of long term debt

$
1,993

$
—
Accounts payable

54,242

49,100
Deferred revenue

25,701

24,292
Accrued warranty and retrofit costs

8,218

8,054
Accrued compensation and benefits

16,027

27,065
Accrued restructuring costs

1,127

1,708
Accrued income taxes payable

15,120

11,417
Accrued expenses and other current liabilities

26,977

25,142
Total current liabilities

149,405

146,778
Long-term debt

195,276

—
Long-term tax reserves

1,412

1,687
Long-term deferred tax liabilities

8,290

3,748
Long-term pension liabilities

1,995

1,979
Other long-term liabilities

5,295

4,792
Total liabilities

361,673

158,984
Commitments and contingencies (Note 16)




Stockholders' 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, 83,891,452 shares issued and 70,429,583 shares outstanding at December 31, 2017, 83,294,848 shares issued and 69,832,979 shares outstanding at  September 30, 2017

839

833
Additional paid-in capital

1,879,721

1,874,918
Accumulated other comprehensive income

19,335

15,213
Treasury stock, at cost- 13,461,869 shares

(200,956)

(200,956)
Accumulated deficit

(1,072,935)

(1,082,364)
Total stockholders' equity

626,004

607,644
Total liabilities and stockholders' equity

$
987,677

$
766,628

Table of Contents

AZENTA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(In thousands, except per share data)


	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2022		2021		2022		2021

Revenue
Products	$	42,688	$	44,169	$	138,006	$	131,864
Services		90,047		84,918		279,925		244,900
Total revenue		132,735		129,087		417,931		376,764
Cost of revenue
Products		24,090		23,603		73,565		69,183
Services		49,045		43,053		146,897		129,915
Total cost of revenue		73,135		66,656		220,462		199,098
Gross profit		59,600		62,431		197,469		177,666
Operating expenses
Research and development		6,515		5,489		19,895		15,813
Selling, general and administrative		58,133		57,825		187,361		171,648
Restructuring charges		25		-		319		53
Total operating expenses		64,673		63,314		207,575		187,514
Operating loss		(5,073)		(883)		(10,106)		(9,847)
Interest income		6,822		409		9,933		503
Interest expense		(2,101)		(477)		(4,111)		(1,485)
Loss on extinguishment of debt		—		—		(632)		—
Other income (expenses), net		630		(1,651)		(1,617)		(263)
Income (loss) before income taxes		278		(2,602)		(6,533)		(11,092)
Income tax provision (benefit)		7,293		(760)		(560)		(4,620)
Loss from continuing operations		(7,015)		(1,842)		(5,973)		(6,472)
(Loss) income from discontinued operations, net of tax		(2,555)		41,008		2,159,597		95,414
Net (loss) income	$	(9,570)	$	39,166	$	2,153,624	$	88,942
Basic net (loss) income per share:
Loss from continuing operations	$	(0.09)	$	(0.02)	$	(0.08)	$	(0.09)
(Loss) income from discontinued operations, net of tax		(0.03)		0.55		28.84		1.29
Basic net (loss) income per share	$	(0.13)	$	0.53	$	28.76	$	1.20
Diluted net (loss) income per share:
Loss from continuing operations	$	(0.09)	$	(0.02)	$	(0.08)	$	(0.09)
(Loss) income from discontinued operations, net of tax		(0.03)		0.55		28.84		1.29
Diluted net (loss) income per share	$	(0.13)	$	0.53	$	28.76	$	1.20
Weighted average shares used in computing net income per share:
Basic		74,989		74,296		74,879		74,195
Diluted		74,989		74,296		74,879		74,195

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

~~BROOKS AUTOMATION,~~AZENTA, INC.

CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~COMPREHENSIVE (LOSS) INCOME

(unaudited)

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

Three Months Ended

December 31,


2017

2016

Revenue





Products

$
142,184

$
122,114

Services

47,144

37,841

Total revenue

189,328

159,955

Cost of revenue





Products

84,177

75,679

Services

29,936

27,333

Total cost of revenue

114,113

103,012

Gross profit

75,215

56,943

Operating expenses





Research and development

13,200

10,845

Selling, general and administrative

41,175

31,962

Restructuring charges

—

975

Total operating expenses

54,375

43,782

Operating income

20,840

13,161

Interest income

149

68

Interest expense

(2,181)

(96)

Gain on settlement of equity method investment

—

1,847

Other expenses, net

(1,652)

(251)

Income before income taxes and earnings of equity method investments

17,156

14,729

Income tax provision

2,850

2,800

Income before equity in earnings of equity method investments

14,306

11,929

Equity in earnings of equity method investments

2,180

1,942

Net income

$
16,486

$
13,871

Basic net income per share

$
0.23

$
0.20

Diluted net income per share

0.23

0.20

Dividend declared per share

0.10

0.10

Weighted average shares used in computing net income per share:





Basic

70,183

69,181

Diluted

70,864

69,870


	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2022		2021		2022		2021

Net (loss) income	$	(9,570)	$	39,166	$	2,153,624	$	88,942
Other comprehensive (loss) income, net of tax:
Foreign currency translation reclassification adjustments included in income from discontinued operation (Note 2)		—		—		(16,567)		—
Net investment hedge currency translation adjustment, net of tax effects of $13,815 and $16,733, respectively, for the three and nine months ended June 30, 2022.		41,956		—		49,081		—
Foreign currency translation adjustments		(70,179)		4,003		(85,160)		4,721
Unrealized loss on marketable securities, net of tax effects of $(911) and $(1,809), respectively, for the three and nine months ended June 30, 2022		(2,898)		—		(5,306)		—
Actuarial gains, net of tax effects of $7 and $27 during the three and nine months ended June 30, 2022, ($2) and $4 during the three and nine months ended June 30, 2021		26		(21)		108		(20)
Total other comprehensive (loss) income, net of tax		(31,095)		3,982		(57,844)		4,701
Comprehensive (loss) income	$	(40,665)	$	43,148	$	2,095,780	$	93,643

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

~~BROOKS AUTOMATION,~~AZENTA, INC.

CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME~~ CASH FLOWS

(unaudited)

(In thousands)

Three Months Ended

December 31,


2017

2016

Net income

$
16,486

$
13,871

Other comprehensive income (loss), net of tax:





Cumulative foreign currency translation adjustments

4,131

(10,103)

Unrealized losses on marketable securities, net of tax effects of $0 during each of the three months ended December 31, 2017 and 2016

—

(11)

Actuarial (losses) gains, net of tax effects of ($2), and $2 during the three months ended December 31, 2017 and 2016

(9)

11

Total other comprehensive income (loss), net of tax

4,122

(10,103)

Comprehensive income

$
20,608

$
3,768


	Nine Months Ended
	June 30,
	2022		2021

Cash flows from operating activities
Net income	$	2,153,624	$	88,942
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		38,813		48,684
Stock-based compensation		10,715		20,277
Amortization of deferred financing costs and unrealized gains/losses on investments		(7,048)		169
Deferred income taxes		24,207		(10,293)
Loss on extinguishment of debt		632		—
(Gain) loss on disposals of property, plant and equipment		(100)		—
Gain on divestiture, net of tax		(2,128,761)		225
Adjustment to the gain on divestiture of semiconductor cryogenics business, net of tax		—		948
Fees paid stemming from divestiture		(52,461)		—
Taxes paid stemming from divestiture		(431,600)		—
Changes in operating assets and liabilities, net of acquisitions and divestiture:
Accounts receivable		(16,298)		(40,286)
Inventories		(61,345)		(32,532)
Prepaid expenses and other assets		(61,692)		4,000
Accounts payable		(8,320)		23,327
Deferred revenue		8,580		(1,564)
Accrued warranty and retrofit costs		(28)		(286)
Accrued compensation and tax withholdings		13,835		(338)
Accrued restructuring costs		(126)		(153)
Accrued expenses and other		41,693		21,626
Net cash (used in) provided by operating activities		(475,680)		122,745
Cash flows from investing activities
Purchases of property, plant and equipment		(59,730)		(34,606)
Purchases of technology intangibles		(4,000)		—
Purchases of marketable securities		(1,525,993)		(100)
Sales and maturities of marketable securities		503,505		50
Proceeds from divestiture, net of cash transferred		2,926,286		—
Acquisitions, net of cash acquired		—		(94,178)
Net cash provided by (used in) investing activities		1,840,068		(128,834)
Cash flows from financing activities
Proceeds from issuance of common stock		3,461		2,583
Principal payments on debt		(49,725)		(828)
Payments of finance leases		(355)		(915)
Payment for contingent consideration related to acquisition		(10,400)		—
Common stock dividends paid		(7,494)		(22,288)
Net cash used in financing activities		(64,513)		(21,448)
Effects of exchange rate changes on cash and cash equivalents		(98,972)		7,582
Net increase (decrease) in cash, cash equivalents and restricted cash		1,200,903		(19,955)
Cash, cash equivalents and restricted cash, beginning of period		285,333		257,526
Cash, cash equivalents and restricted cash, end of period	$	1,486,236	$	237,571
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
	June 30,		September 30,
	2022		2021
Cash and cash equivalents of continuing operations	$	1,474,189	$	227,427
Cash and cash equivalents included in assets held for sale		—		45,000
Short-term restricted cash included in prepaid expenses and other current assets		11,564		7,145
Long-term restricted cash included in other assets		483		5,761
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$	1,486,236	$	285,333

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

AZENTA, INC.

~~BROOKS AUTOMATION, INC.~~

CONSOLIDATED STATEMENTS OF ~~CASH FLOWS~~CHANGES IN STOCKHOLDERS EQUITY

(unaudited)

(In ~~thousands)~~thousands, except share data)

Three Months Ended

December 31,


2017

2016

Cash flows from operating activities





Net income

$
16,486

$
13,871

Adjustments to reconcile net income to net cash provided by operating activities:





Depreciation and amortization

8,521

6,752

Gain on settlement of equity method investment

—

(1,847)

Stock-based compensation

4,809

2,498

Amortization of premium on marketable securities and deferred financing costs

122

79

Earnings of equity method investments

(2,180)

(1,942)

Deferred income tax benefit

(689)

(421)

Other gains on disposals of assets

—

(109)

Changes in operating assets and liabilities, net of acquisitions:





Accounts receivable

(16,157)

(11,137)

Inventories

(5,518)

(2,930)

Prepaid expenses and other current assets

3,285

(3,516)

Accounts payable

4,449

13,040

Deferred revenue

1,376

10,737

Accrued warranty and retrofit costs

87

(4)

Accrued compensation and tax withholdings

(11,145)

(6,884)

Accrued restructuring costs

(592)

(2,538)

Accrued expenses and other current liabilities

362

3,061

Net cash provided by operating activities

3,216

18,710

Cash flows from investing activities





Purchases of property, plant and equipment

(2,700)

(3,768)

Purchases of marketable securities

(26,875)

—

Sales and maturities of marketable securities

100

—

Acquisitions, net of cash acquired

(65,074)

(5,346)

Purchases of other investments

—

(170)

Proceeds from sales of property, plant and equipment

200

—

Net cash used in investing activities

(94,349)

(9,284)

Cash flows from financing activities





Proceeds from term loan

197,554

—

Payment of deferred financing costs

(318)

(27)

Common stock dividends paid

(7,057)

(6,966)

Net cash provided by (used in) financing activities

190,179

(6,993)

Effects of exchange rate changes on cash and cash equivalents

1,671

(4,574)

Net increase (decrease) in cash and cash equivalents

100,717

(2,141)

Cash and cash equivalents, beginning of period


101,622


85,086

Cash and cash equivalents, end of period

$
202,339

$
82,945


Supplemental disclosure of non-cash investing and financing activities:





Purchases of property, plant and equipment included in accounts payable

$
865

$
424

Deferred financing costs included in accounts payable

143

—

Fair value of non-cash consideration for the acquisition of Cool Lab, LLC

—

10,348


		Common				Accumulated
	Common	Stock at		Additional		Other
	Stock	Par		Paid-In		Comprehensive		Accumulated		Treasury		Total
	Shares	Value		Capital		Income		Deficit		Stock		Equity
Balance March 31, 2022	88,450,083	$	885	$	1,986,796	$	(7,398)	$	1,685,649	$	(200,956)	$	3,464,976
Shares issued under restricted stock and purchase plans, net	1,140		—		—		—		—		—		—
Stock-based compensation	—		—		3,485		—		—		—		3,485
Net investment hedge currency translation adjustment	—		—		—		41,956		—		—		41,956
Foreign currency translation adjustments	—		—		—		(70,179)		—		—		(70,179)
Changes in unrealized gains on marketable securities, net of tax	—		—		—		(2,898)		—		—		(2,898)
Actuarial loss, net of tax effects of $7	—		—		—		26		—		—		26
Net income	—		—		—		—		(9,570)		—		(9,570)
Other	—		—		—		—		(10)		—		(10)
Balance June 30, 2022	88,451,223	$	885	$	1,990,281	$	(38,493)	$	1,676,069	$	(200,956)	$	3,427,786

Balance March 31, 2021	87,755,666	$	878	$	1,959,619	$	22,637	$	(516,152)	$	(200,956)	$	1,266,026
Shares issued under restricted stock and purchase plans, net	2,932		—		—		—		—		—		—
Stock-based compensation	—		—		6,086		—		—		—		6,086
Common stock dividends declared, at $0.10 per share	—		—		—		—		(7,431)		—		(7,431)
Foreign currency translation adjustments	—		—		—		4,003		—		—		4,003
Actuarial losses, net of tax effects of $2	—		—		—		(21)		—		—		(21)
Net income	—		—		—		—		39,166		—		39,166
Balance June 30, 2021	87,758,598	$	878	$	1,965,705	$	26,619	$	(484,417)	$	(200,956)	$	1,307,829

Balance September 30, 2021	87,808,922	$	878	$	1,976,112	$	19,351	$	(470,051)	$	(200,956)	$	1,325,334
Shares issued under restricted stock and purchase plans, net	642,301		7		3,454		—		—		—		3,461
Stock-based compensation	—				10,715		—		—		—		10,715
Common stock dividends declared, at $0.10 per share	—		—		—		—		(7,494)		—		(7,494)
Net investment hedge currency translation adjustment	—		—		—		49,081		—		—		49,081
Foreign currency translation adjustments reclassed out of accumulated other comprehensive income related to discontinued operations	—		—		—		(16,567)		—		—		(16,567)
Foreign currency translation adjustments	—		—		—		(85,160)		—		—		(85,160)
Changes in unrealized gains on marketable securities, net of tax	—		—		—		(5,306)		—		—		(5,306)
Actuarial loss, net of tax effects of $27	—		—		—		108		—		—		108
Net income	—		—		—		—		2,153,624		—		2,153,624
Other	—		—		—		—		(10)		—		(10)
Balance June 30, 2022	88,451,223	$	885	$	1,990,281	$	(38,493)	$	1,676,069	$	(200,956)	$	3,427,786

Balance September 30, 2020	87,293,710	$	873	$	1,942,850	$	21,919	$	(551,072)	$	(200,956)	$	1,213,614
Shares issued under restricted stock and purchase plans, net	464,888		5		2,578		—		—		—		2,583
Stock-based compensation	—		—		20,277		—		—		—		20,277
Common stock dividends declared, at $0.30 per share	—		—		—		—		(22,287)		—		(22,287)
Foreign currency translation adjustments	—		—		—		4,720		—		—		4,720
Actuarial losses, net of tax effects of $4	—		—		—		(20)		—		—		(20)
Net income	—		—		—		—		88,942		—		88,942
Balance June 30, 2021	87,758,598	$	878	$	1,965,705	$	26,619	$	(484,417)	$	(200,956)	$	1,307,829

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

AZENTA, INC.

~~BROOKS AUTOMATION, INC.~~

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. Nature of Operation

Azenta, Inc. (“Azenta”, or the “Company”) is a leading global provider of life science sample exploration and management solutions for the life sciences market. The Company supports its customers from research to clinical development with its sample management, automated storage, and genomic services expertise to help bring impactful therapies to market faster.

Discontinued Operations

In the fourth quarter of fiscal year 2021, the Company entered into a definitive agreement to sell its semiconductor automation business to Thomas H. Lee Partners, L.P. (“THL”). The Company determined that the semiconductor automation business met the “held for sale” criteria and the “discontinued operations” criteria in accordance with Financial Accounting Standard Boards (“FASB”) Accounting Standards Codification (“ASC”) 205, Presentation of Financial Statements, (“FASB ASC 205”) as of September 30, 2021. Results related to the semiconductor automation business are included within discontinued operations. Please refer to Note 3, “Discontinued Operations” for further information about the discontinued businesses. The Consolidated Balance Sheets and Consolidated Statements of Operations, and the notes to the Consolidated Financial Statements were restated for all periods presented to reflect the discontinuation of the semiconductor automation business in accordance with FASB ASC 205. The discussion in the notes to these Consolidated Financial Statements, unless otherwise noted, relate solely to the Company's continuing operations.

On February 1, 2022, the Company completed the sale of the semiconductor automation business for $2.9 billion in cash, subject to working capital and other customary adjustments. Net cash proceeds from the sale are expected to be $2.5 billion, after deducting estimated taxes payable and other items, such as closing costs.

Risks and Uncertainties

The Company is subject to risks common to companies in the markets it serves, including, but not limited to, global economic and financial market conditions, fluctuations in customer demand, acceptance of new products, development by its competitors of new technological innovations, risk of disruption in its supply chain, the implementation of tariffs and export controls, dependence on key personnel, protection of proprietary technology, and compliance with domestic and foreign regulatory authorities and agencies.

Throughout the pandemic, the Company’s operations have not been significantly interrupted as the Company has adapted to having required employees on site and the balance of employees mostly working from home. The Company has followed government guidance in each region and has implemented the U.S. Centers for Disease Control and Prevention social distancing guidelines and other best practices to protect the health and safety of the Company’s employees. The COVID-19 pandemic has not had a substantial negative impact on the Company’s financial results and a portion of this impact has been mitigated by the Company’s realignment of resources to satisfy incremental orders related to virus research and vaccine development and commercialization. Future impacts on the Company’s financial results are not fully determinable, as the full impact of the pandemic on the economy and markets which the Company serves is as yet unknown, but will be dependent, in part, on future variants of the virus and vaccine effectiveness against these variants and new or prolonged government responses to the pandemic. The Company’s financial results will also depend on variables including reduced demand from its customers, the degree that the supply chain may be constrained which could impact its delivery of products and services and the potential negative impact on its operations if there is an outbreak among the Company’s employees, as well as the amount of incremental demand caused by research and treatments in the areas of COVID-19 or related threats.

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2. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

The ~~unaudited consolidated financial statements~~accompanying Consolidated Financial Statements include the accounts of ~~Brooks Automation, Inc.~~the Company and its majority-owned subsidiaries ~~(“Brooks”, or the “Company”) included herein~~and have been prepared in accordance with accounting principles generally accepted in the United States ~~("GAAP"~~(“GAAP”). All intercompany ~~accounts~~balances and transactions have been eliminated in consolidation. The Company applies the equity method of accounting to investments that provide it with the ability to exercise significant influence over the entities in which it lacks controlling financial interest and is not a primary beneficiary.

In the opinion of ~~management,~~the Company, the accompanying unaudited consolidated financial statements contain all ~~material~~ adjustments, ~~which are~~consisting of aonly normal ~~and~~ recurring ~~nature and~~adjustments, necessary for a fair statement of ~~the~~its financial position as of June 30, 2022, and its results of operations for the three months and nine months ended June 30, 2022, and 2021, and cash flows for the ~~periods presented, have been reflected in the accompanying unaudited~~nine months ended June 30, 2022, and 2021. The consolidated balance sheet at September 30, 2021 was derived from audited annual financial ~~statements. The results of operations for the interim periods are~~statements but does not ~~necessarily indicative~~contain all of the ~~results of operations to be expected for~~footnote disclosures from the ~~full fiscal year.~~annual financial statements

Certain information and footnote disclosures normally included in the Company’s annual consolidated financial statements have been condensed or omitted and, accordingly, the accompanying financial information should be read in conjunction with the audited consolidated financial statements and notes thereto contained onin the Company’s Annual Report on Form ~~10‑K~~10-K filed with the United States Securities and Exchange Commission ~~(the “SEC”)~~ for the fiscal year ended September 30, ~~2017~~2021 (the ~~"2017~~“2021 Annual Report on Form ~~10‑K"~~10-K”). The accompanying Consolidated Balance Sheet as of September 30, ~~2017~~2021 was derived from the audited annual consolidated financial statements as of the period then ended.

~~2. Summary of Significant Accounting Policies~~

Use of Estimates

The preparation of unaudited consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited consolidated financial statements, ~~and~~as well as the reported amounts of revenue and expenses during the reporting period. Significant estimates are associated with recording accounts receivable, inventories, goodwill, intangible assets other than goodwill, long-lived assets, derivative financial instruments, deferred income taxes, warranty obligations, revenue ~~recognized using the percentage of completion method, pension obligations~~over time, and stock-based compensation expense. The Company ~~bases its~~assesses the estimates on ~~historical experience~~an ongoing basis and ~~various other assumptions, including~~record changes in ~~certain circumstances, future projections that management believes to be reasonable under~~estimates in the ~~circumstances. Although the Company regularly assesses these estimates, actual~~period they occur and become known. Actual results could differ from these estimates.

The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, including results of operations and financial condition will depend on future developments that are highly uncertain. This includes results from new information that may emerge concerning COVID-19 and any actions taken to contain or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets. The Company has made estimates of the impact of COVID-19 within its financial statements and there may be changes to those ~~estimates. Changes~~estimates in ~~estimates are recorded in the period in which they occur and become known.~~future periods.

Foreign Currency Translation

Certain transactions of the Company and its subsidiaries are denominated in currencies other than their functional currency.

Foreign currency exchange ~~losses~~gains (losses) generated from the settlement and remeasurement of these transactions are recognized in earnings and presented within “Other ~~expenses,~~income (expenses), net” in the Company’s ~~unaudited~~ Consolidated Statements of Operations. Net foreign currency transaction and remeasurement gains were $0.3 million for the three months ended June 30, 2022 and net foreign currency transaction and remeasurement losses ~~totaled $2.0~~were $1.6 million ~~and $0.5 million, respectively,~~ during the three months ended ~~December~~June 30, 2021. Net foreign currency transaction and remeasurement losses were $2.9 million and gains were $1.2 million during the nine months ended June 30, 2022 and 2021, respectively.

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The determination of the functional currency of the Company’s subsidiaries is based on their financial and operational environment and is the local currency of all of the Company’s foreign subsidiaries. The subsidiaries’ assets and liabilities are translated into the reporting currency at period-end exchange rates, while revenue, expenses, gains and losses are translated at the average exchange rates during the period. Gains and losses from foreign currency translations are recorded in “Accumulated other comprehensive income” in the Company’s Consolidated Balance Sheets and presented as a component of comprehensive income in the Company’s Consolidated Statements of Comprehensive Income.

The semiconductor automation business had foreign operations which had a cumulative translation adjustment balance of $16.6 million at the date of disposal. This amount was removed from accumulated other comprehensive income during the three months ended March 31, ~~2017~~2022, and ~~2016.~~included within the gain on the sale of the semiconductor automation business. As a result, the Company presented a $16.6 million reclassification adjustment in other comprehensive income for the nine months ended June 30, 2022.

Derivative Financial Instruments

The Company has transactions and balances denominated in currencies other than ~~the~~ U.S. ~~dollar.~~dollars. Most of these transactions or balances are denominated in Euros, British Pounds and a variety of Asian currencies. The Company enters into foreign exchange contracts to reduce its exposure to currency fluctuations. The ~~forward contract~~ arrangements ~~that the Company enters into~~ typically mature in three months or ~~less. These transactions~~less and they do not qualify for hedge accounting. Net gains and losses related to these contracts are recorded as a component of ~~"Other expenses, net"~~

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“Other income (expenses), net” in the accompanying unaudited Consolidated Statements of Operations and are as follows for the three and nine months ended ~~December 31, 2017~~June 30, 2022 and ~~2016~~2021 (in thousands):

Three Months Ended

December 31,

2017

2016

Realized losses on derivatives not designated as hedging instruments

$
(1,673)

$
(1,003)


	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Realized gains (losses) on derivatives not designated as hedging instruments	$	848	$	(961)	$	1,903	$	(7,295)

The fair values of the forward contracts are recorded in the ~~Company’s~~ accompanying unaudited Consolidated Balance Sheets as ~~"Prepaid~~“Prepaid expenses and other current ~~assets"~~assets” and ~~"Accrued~~“Accrued expenses and other current ~~liabilities"~~liabilities”. Foreign exchange contract assets and liabilities are measured and reported at fair value based on observable market inputs and classified within Level 2 of the fair value hierarchy described below due to a lack of an active market for these contracts.

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Hedging Activities

On February 1, 2022, the Company entered into a cross-currency swap agreement to hedge the variability of exchange rate impacts between the United States dollar and the Euro. Under the terms of the cross-currency swap agreement, the Company notionally exchanged approximately $1.03 billion for approximately €915 million at a weighted average interest rate of approximately 1.196%. The designated notional amount is $960 million and the actual interest rate is 1.283%. 1.283% was in the range of the market value for that day and is the true interest rate on the notional amount. This cross-currency swap agreement expires in February 2023. We have designated the cross-currency swap as a hedge of net investments against one of our Euro denominated subsidiaries which requires an exchange of the notional amounts at maturity. At the maturity of the cross currency-swap, the Company will deliver a notional amount of €852 million and receive a notional amount of $960 million at an exchange rate of 1.1261.

This cross-currency swap is marked to market at each reporting period, representing the fair values of the cross-currency swap and any changes in fair value are recognized as a component of Accumulated other comprehensive items, net, on the Statements of Comprehensive Income. Interest accrued on the cross-currency swap is recorded within Interest Income on the Consolidated Statements of Operations. For the three and nine months ended June 30, 2022, the Company recorded a gain of $55.1 million and $65.8 million, respectively, to Accumulated other comprehensive income and recorded interest income of $3.1 million and $5.1 million, respectively, on this instrument for the three and nine months ended June 30, 2022.

Fair Value Measurements

The Company measures ~~at fair value~~ certain financial assets and liabilities, including cash ~~equivalants and~~equivalents, available for sale ~~securities.~~securities, accounts receivable, accounts payable, and derivative instruments at fair value. FASB ~~Accounring Standards Codification (“the ASC”)~~ASC 820, Fair Value Measurement and Disclosures, establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ~~The following levels of inputs may be used to measure~~Available for sale securities and derivative instruments are measured at fair ~~value:~~

~~Level 1 Inputs:~~ ~~Quoted~~value based on quoted market prices ~~in active markets for identical assets~~ or liabilities as of the reporting date. Active markets are those in which transactions for the asset and liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

~~Level 2 Inputs:~~ ~~Observable~~observable inputs other than ~~prices included in Level 1, including~~ quoted market prices for identical or similar assets or ~~liabilities; quoted prices in markets~~liabilities. The carrying amounts of cash equivalents, accounts receivable and accounts payable approximate their fair value due to their short-term nature.

Accounts Receivable, Allowance for Expected Credit Losses and Sales Returns

Trade accounts receivable do not bear interest and are recorded at the invoiced amount. The Company maintains an allowance for expected credit losses representing its best estimate of expected credit losses related to its existing accounts receivable and their net realizable value. The Company determines the allowance based on a number of factors, including an evaluation of customer credit worthiness, the age of the outstanding receivables, economic trends, historical experience and other information over the payment periods. The Company reviews and adjusts the allowance for expected credit losses on a quarterly basis. Accounts receivable balances are written off against the allowance for expected credit losses when the Company determines that the balances are not ~~active;~~recoverable. Provisions for expected credit losses are recorded in “Selling, general and administrative” expenses in the Consolidated Statements of Operations. The Company determines the allowance for sales returns based on its best estimate of expected customer returns. Provisions for sales returns are recorded in "Revenue" in the Consolidated Statements of Operations. The Company does not have any off-balance-sheet credit exposure related to its customers.

Leases

The Company has operating leases for real estate and non-real estate and finance leases for non-real estate. The classification of a lease as operating or ~~other inputs that~~finance and the determination of the right-of-use asset (“ROU asset”) and lease liability are ~~observable or can be corroborated by observable market data~~determined at lease inception. The ROU asset represents the Company’s right to use an underlying asset for ~~substantially~~ the ~~full~~lease term and the lease liability represents the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, an incremental borrowing rate is used based on the estimated rate of interest for collateralized borrowing over a similar term of the ~~assets~~lease payments at commencement date. Lease terms may include options to extend or ~~liabilities.~~terminate the lease

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when it is reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term.

~~Level 3 Inputs:~~ ~~Unobservable inputs that~~The Company’s lease agreements may contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. Fixed payments for non-lease components are ~~significant to~~combined with lease payments and accounted for as a single lease component which increases the ~~fair value~~amount of the ~~assets~~ROU asset and liability.

The ROU asset for operating leases is included within “Other assets” and the ROU asset for finance leases is included within “Property, plant, and equipment, net” in the accompanying unaudited Consolidated Balance Sheets. The short-term lease liabilities for both operating leases and finance leases are included within “Accrued expenses and other current liabilities” in the accompanying unaudited Consolidated Balance Sheets. The long-term lease liabilities for operating leases and finance leases are included within “Long-term operating lease liabilities”, and “Other long-term liabilities”, respectively, in the accompanying unaudited Consolidated Balance Sheets.

Recently Issued Accounting Pronouncements

In November 2021, the FASB issued Accounting Standards Update (“ASU”) 2021-10, Government Assistance (Topic 832) – Disclosures by Business Entities about Government Assistance. The amendment in this ASU requires disclosures to increase the transparency of transactions with a government accounted for by applying a grant or ~~liabilities~~contribution accounting model by analogy, including (1) the types of transactions, (2) the accounting for those transactions, and ~~reflect~~(3) the effect of those transactions on an entity’s ~~own assumptions~~financial statements. This ASU is effective for annual periods beginning after December 15, 2021. The Company will adopt the provisions of this ASU in ~~pricing~~fiscal 2023. The Company is evaluating the effect of adopting this new accounting guidance.

Recently Adopted Accounting Pronouncements

In October 2021, the FASB issued ASU 2021-08, Business Combinations(Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. ASU 2021-08 requires an entity to recognize and measure contract assets orand contract liabilities ~~since they are supported by little or no market activity.~~

~~As of December 31, 2017, the Company had no assets or liabilities measured and recorded~~acquired in a business combination in accordance with Accounting Standards Codification (“ASC 606”), Revenue from Contracts with Customers. Under current GAAP, an acquirer generally recognizes such items at fair value on ~~a recurring basis using Level 3 inputs.~~

~~Recently Issued Accounting Pronouncements~~

~~In March 2016,~~ the ~~FASB issued an amendment~~acquisition date. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The standard should be applied prospectively to business combinations occurring on or after the ~~accounting guidance to simplify accounting for share-based payment awards issued to employees. The amendment requires recognition~~effective date of ~~excess tax benefits or deficiencies within income tax expense or benefit and changes their presentation requirements on~~ the statement of cash flows. Additionally, the entity can make an accounting policy election to either estimate the number of awards that are expected to vest, consistent with the current accounting guidance, or account for forfeitures as they occur.amendments. The Company adopted the guidance during the first quarter of fiscal year ~~2018~~2022. There is no accounting impact on ~~its effective date. Please refer to Note 9, “Income Taxes”~~the Company’s consolidated financial statements and ~~Note 11, “Stock-Based Compensation” and for further discussion.~~related disclosures as a result of the adoption of this ASU.

In ~~March 2016,~~October 2020, the FASB issued ~~an amendment~~ASU 2020-10, Codification Improvements. The amendments in this ASU represent changes to clarify certain ASCs, correct unintended application of guidance, or make minor improvements to certain ASC that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. ASU 2020-10 is effective for annual periods beginning after December 15, 2020 and interim periods within those annual periods, with early adoption permitted. The amendments in this ASU should be applied retrospectively. This ASU will not affect the Company's consolidated financial statements or disclosures. The Company adopted the provisions of this ASU in the first quarter of fiscal 2022.

In August 2018, the FASB issued ASU 2018-14, Disclosure Framework — Changes to the ~~accounting guidance~~Disclosure Requirements for Defined Benefit Plans, which amends ASC 715 to ~~simplify accounting~~add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The amendments require additional disclosure for ~~embedded derivatives.~~the weighted-average interest crediting rates, a narrative description of the reasons for significant gains and losses, and an explanation of any other significant changes in the benefit obligation or plan assets. The amendment ~~clarifies the~~removes disclosure requirements for ~~assessing whether contingent call (put) options that can accelerate~~accumulated other comprehensive income expected to be recognized over the ~~payment of principal on debt instruments are clearly and closely related~~next year, information about plan assets to be returned to the ~~debt host contracts. An~~ entity, ~~performing~~and the ~~assessment~~effects of a one-percentage-point change on the assumed health care costs and the effect of this change in ~~accordance with this guidance is required to assess~~rates on service cost, interest cost, and the ~~embedded call (put) options solely in accordance with the four-step decision process set forth in the guidance.~~benefit obligation for postretirement health care benefits. The ~~guidance~~ASU is effective for fiscal years ~~and interim periods within those years, beginning~~ending after December 15, ~~2016.~~2020. Early adoption is permitted. The ASU does not amend the interim disclosure requirements of ASC 715-20. The Company adopted the ~~guidance during~~provisions of

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this ASU in the first quarter of fiscal ~~year 2018 which had~~2022. There is no significant accounting impact on ~~its~~the Company’s consolidated financial ~~position~~statements and ~~results~~related disclosures as a result of ~~operations.~~the adoption of this ASU.

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In ~~February 2016,~~December 2019, the FASB issued ~~new accounting guidance~~ASU 2019-12, Simplifying the Accounting for ~~reporting lease transactions. In accordance with~~Income Taxes (Topic 740), which removes certain exceptions to the ~~provisions~~general principles in Topic 740 and improves consistent application of ~~the newly issued guidance, a lessee should recognize at the inception~~and simplifies GAAP for other areas of ~~the arrangement a right-of-use asset~~Topic 740 clarifying and a corresponding lease liability initially measured at the present value of lease payments over the lease term. For finance leases, interest on a lease liability should be recognized separately from the amortization of the right-of-use asset, while for operating leases, total lease costs are recorded on a straight-line basis over the lease term. For leases with a term of twelve months or less, a lessee is permitted to make an accounting policy election by class of underlying assets to forgo a recognition of right-of-use assets and corresponding lease liabilities and record a lease expense on a straight-line basis. Entities should determine at the inception of the arrangement whether a contract represents a lease or contains a lease which is defined as a right to control the use of identified property for a period of time in exchange for consideration. Additionally, entities should separate the lease components from the non-lease components and allocate the contract consideration on a relative standalone price basis in accordance with provisions of ASC Topic 606, ~~Revenue from Contracts with Customers. The guidance~~amending existing guidance. This ASU is effective for ~~fiscal years, and~~annual periods, including interim periods within those ~~years,~~annual periods, beginning after December 15, ~~2018 and should be adopted via a modified retrospective approach with certain optional practical expedients that entities may elect to apply.~~2020. Early adoption is permitted. The Company ~~expects to adopt~~adopted the ~~guidance during~~provisions of this ASU in the first quarter of fiscal ~~year 2020 and~~2022. There is ~~currently evaluating the~~no significant accounting impact ~~of this guidance on its financial position and results of operations.~~

In June 2016, the FASB issued new accounting guidance for reporting credit losses. The new guidance introduces a new "expected loss" impairment model that applies to most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities and other financial assets. Entities are required to estimate expected credit losses over the life of financial assets and record an allowance against the assets’ amortized cost basis to present them at the amount expected to be collected. Additionally, the guidance amends the impairment model for available for sale debt securities and requires entities to determine whether all or a portion of the unrealized loss on such debt security is a credit loss. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption of the newly issued guidance is permitted for fiscal years, and interim periods within those years, beginning after December 15, 2018. The standard should be applied as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company expects to adopt the guidance during the first quarter of fiscal year 2021 and is currently evaluating the impact of this guidance on its financial position and results of operations.

~~In July 2015, the FASB issued an amendment to the accounting guidance to simplify accounting for inventory. The amendment requires measuring inventory based~~ on the lower of its cost or net realizable value. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016. The Company adopted the guidance during the first quarter of fiscal year 2018 which did not have a significant impact on its financial position and results of operations.

In May 2014, the FASB issued new accounting guidance for reporting revenue recognition. The guidance provides for the recognition of revenue when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The Company expects to adopt the guidance during the first quarter of fiscal year 2019. The Company has initiated the evaluation of the potential impact of adopting the new guidance on its financial position and results of operations, but has not yet completed such assessment or determined the transition method that will be used to adopt the new guidance. The Company has established an implementation team to analyze its current portfolio of customer contracts and determine the impact of adopting the guidance. The implementation team is also responsible for evaluating and designing the necessary changes to the Company’s business processes, policies, systems and controls to support recognition and disclosure under the new guidance. The Company has established a project plan and substantially completed its preliminary contract assessment. The results of this assessment are currently being analyzed to determine the final impact of adoption on the Company’s operations, consolidated financial statements and related ~~disclosures. The Company is currently in the process of completing this assessment and quantifying the implications~~disclosures as a result of the ~~new guidance adoption. Based on the preliminary assessment, the Company anticipates that the new guidance will impact the timing~~adoption of revenue recognition for a portion of its life science revenue which is currently accounted for under a percentage of completion method. The Company may be required to recognize revenue for a portion of these arrangements at the point in time it ~~satisfies performance obligations by transferring control over promised deliverables to the customers~~ ~~in accordance with contractual terms of~~

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each arrangement. Additionally, revenue generated from the sale of perpetual or term licenses may be required to be recognized at the point in time control is transferred to customers upon license delivery.this ASU.

Other

For further information with regard to the Company’s ~~Significant Accounting Policies,~~significant accounting policies, please refer to Note 2 ~~"Summary~~“Summary of Significant Accounting ~~Policies"~~Policies” to the Company’s consolidated financial statements included in the ~~2017~~2021 Annual Report on Form ~~10‑K.~~10-K.

3. Discontinued Operations

Disposition of Semiconductor Automation Business

On September 20, 2021, the Company entered into a definitive agreement to sell its semiconductor automation business to THL. On February 1, 2022, the Company completed the sale of the semiconductor automation business for $2.9 billion in cash, subject to working capital and other customary adjustments. Net cash proceeds from the sale are expected to be $2.5 billion, after excluding estimated taxes payable. Net income from discontinued operations for June 30, 2022 is inclusive of the pre-tax gain on sale of $2.6 billion. As part of the transaction, the Company recorded an $18.1 million liability related to retention bonuses and cash settled stock based awards for former employees of the Company that were conveyed with the transaction. The Company will remit payment to THL during fiscal 2023, at the end of the retention period and THL will directly pay the former employees. Following the completion of the sale, the Company no longer serves the semiconductor market.

In connection with the closing of the sale, the Company and THL entered into a transition services agreement, to which both the Company and THL will provide each other with certain transition services related to finance and accounting, information technology, human resources, compliance, facilities, legal and research and development support, for time periods ranging from three to 24 months. In addition, the Company entered into 2 separate lease agreements for leases back to the Company for portions of the facilities that have served as its corporate headquarters in Chelmsford, Massachusetts, and were sold to THL as part of the sale agreement. Each lease provides for a term of 24 months, which may be terminated earlier by the Company upon 90 days’ notice to THL. The transition services agreement and lease agreements approximate fair value and there is no material impact to the Company’s results.

During the fourth quarter of fiscal 2021, the Company determined that the semiconductor automation business met the criteria to be classified as a discontinued operation and, as a result, its historical financial results are reflected in the Company’s financial statements as a discontinued operation, and assets and liabilities were classified as assets and liabilities held for sale.

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The following table presents the financial results of discontinued operations with respect to the semiconductor automation business (in thousands).



	Three months ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Revenue
Products	$	-	$	171,674	$	244,962	$	433,964
Services		-		14,588		19,468		40,710
Total revenue		-		186,262		264,430		474,674
Cost of revenue
Products		-		96,784		141,165		248,288
Services		-		7,509		11,159		19,250
Total cost of revenue		-		104,293		152,324		267,538
Gross profit		-		81,969		112,106		207,136
Operating expenses
Research and development		-		12,795		18,486		35,497
Selling, general and administrative		480		18,058		30,622		49,998
Restructuring charges		-		-		-		126
Total operating expenses		480		30,853		49,108		85,621
Operating (loss) income		(480)		51,116		62,998		121,515
Other income, net		-		26		-		(1,300)
(Loss) gain on divestiture		(990)		-		2,560,384		-
(Loss) income before income taxes		(1,470)		51,142		2,623,382		120,215
Income tax provision		1,085		10,134		463,785		24,801
Net (loss) income from discontinued operations	$	(2,555)	$	41,008	$	2,159,597	$	95,414

On July 1, 2019, the Company sold its semiconductor cryogenics business. During the three and nine months ended June 30, 2021, the Company recorded a $1.3 million negative working capital adjustment to the gain on divestiture that was previously recorded in the fourth fiscal quarter of 2019. This adjustment is shown within other income (loss), net within the income statement for the semiconductor automation business.

The following table presents the significant non-cash items and capital expenditures for the discontinued operations with respect to the semiconductor automation business that are included in the Consolidated Statements of Cash Flows (in thousands):


	Three months ended June 30,				Nine Months Ended June 30,
		2022		2021		2022		2021
Depreciation and amortization	$	-	$	2,697	$	-	$	6,393
Capital expenditures	$	-	$	903	$	2,862	$	3,634
Stock-based compensation	$	-	$	1,742	$	8,032	$	7,705

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The carrying value of the assets and liabilities of the discontinued operations with respect to the semiconductor automation business on the Consolidated Balance Sheets as of September 30, 2021 was as follows (in thousands):


		September 30, 2021
Assets
Cash and cash equivalents	$	45,000
Accounts receivable, net		142,256
Inventories		110,735
Other current assets		13,394
Total current assets of discontinued operation	$	311,385

Property, plant and equipment, net	$	32,058
Long-term deferred tax assets		3,167
Goodwill		81,477
Intangibles, net		44,468
Other assets		22,658
Total long-term assets of discontinued operation	$	183,828

Liabilities
Accounts payable	$	68,074
Deferred revenue		7,141
Accrued warranty and retrofit costs		6,081
Accrued compensation and benefits		18,144
Accrued Income Taxes		11,702
Accrued expenses and other current liabilities		18,014
Total current liabilities of discontinued operation	$	129,156

Long-term tax reserves		2,356
Long-term deferred tax liabilities		6,548
Long-term pension liabilities		5,490
Long-term operating lease liabilities		15,425
Other long-term liabilities		2,625
Total long-term liabilities of discontinued operation	$	32,444

Acquisition within the Semiconductor Automation Business

On April 29, 2021, the Company acquired Precise Automation Inc., a leading developer of collaborative robots and automation subsystems headquartered in Fremont, California. The total cash purchase price for the acquisition was approximately $69.8 million. Precise provides the semiconductor automation business with a product offering and technology portfolio to take advantage of the opportunities in the collaborative robot market.

The allocation of the consideration included $38.7 million of technology, $2.5 million of customer relationships, $33.1 million of goodwill, $6.2 million of deferred tax liabilities, and several other assets and liabilities.

The Company applied variations of the income approach to estimate the fair values of the intangible assets acquired. The completed technology was valued using excess earnings method and the customer relationships was valued using distributor margin method, both of which have a useful life of 11 years. The intangible assets acquired are amortized over the total weighted average period of 11 years using methods that approximate the pattern in which the economic benefits are expected to be realized.

Table of Contents

The Company has included the financial results of the acquired operations within income from discontinued operations on its Consolidated Statements of Operations. The goodwill and intangible assets are not tax deductible.

The Company did not present a pro forma information summary for its consolidated results of operations because such results were immaterial.

During the three months ended March 31, 2022, and prior to the completion of the sale of the semiconductor automation business, the Company exercised an option acquired with the Precise acquisition, to purchase certain technology assets for $4.0 million. The technology assets and the option to purchase was deemed to have no fair value at the time of acquisition.

4. Marketable Securities

The Company invests in marketable securities that are classified as available-for-sale and records them at fair value in the ~~Company’s~~accompanying unaudited Consolidated Balance Sheets. Marketable securities reported as current assets represent investments that mature within one year from the balance sheet date. Long-term marketable securities represent investments with maturity dates greater than one year from the balance sheet date. ~~The~~

Unrealized gains and losses are excluded from earnings and reported as a separate component of “accumulated other comprehensive income, net of tax” in the accompanying unaudited Consolidated Balance Sheets until the security is sold or matures. Gains or losses realized from sales of marketable securities are valued using matrix pricing and benchmarking and classified within Level 2 of the fair value hierarchy because they are not actively traded. Matrix pricing is a mathematical technique used to value securities by relyingcomputed based on the ~~securities’ relationship to other benchmark quoted prices.~~specific identification method and recognized as a component of "Other income (expenses), net" in the accompanying unaudited Consolidated Statements of Operations. There were insignificant sales of marketable securities for the three and nine months ended June 30, 2022 and 2021.

The following is a summary of the amortized cost and the fair value, including accrued interest receivable as well as unrealized holding gains (losses) on the short-term and long-term marketable securities as of ~~December 31, 2017~~June 30, 2022 and September 30, ~~2017~~2021 (in thousands):


			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Losses		Gains		Fair Value
June 30, 2022:
U.S. Treasury securities and obligations of U.S. government agencies	$	536,322	$	(2,981)	$	93	$	533,434
Bank certificates of deposits		6,341		(45)		—		6,296
Corporate securities		372,922		(4,009)		159		369,072
Municipal securities		112,621		(334)		1		112,288
	$	1,028,206	$	(7,369)	$	253	$	1,021,090
September 30, 2021:
Bank certificates of deposits	$	30	$	—	$	—	$	30
Corporate securities		3,624		—		—		3,624
Municipal securities		—		—		—		—
Other debt securities		25		—		—		25
	$	3,679	$	—	$	—	$	3,679

Gross

Gross


Amortized

Unrealized

Unrealized

Cost

Losses

Gains

Fair Value
December 31, 2017 :








U.S. Treasury securities and obligations of U.S. government agencies

$
14,911

$
(10)

$
—

$
14,901
Bank certificates of deposits

6,158

—

3

6,161
U.S. corporate securities

4,749

(1)

—

4,748
Municipal securities

3,710

(6)

—

3,704
Other debt securities

29

—

—

29

$
29,557

$
(17)

$
3

$
29,543
September 30, 2017 :








Corporate securities

$
2,642

$
—

$
—

$
2,642
Other debt securities

28

—

—

28

$
2,670

$
—

$
—

$
2,670

Table of Contents

The fair values of the marketable securities by contractual maturities at ~~December 31, 2017~~June 30, 2022 are presented below (in thousands):


	Fair Value


			Amortized
			Cost			Fair Value
Due in one year or less	$	15,658	$	711,599	$	708,895
Due after one year through five years		11,148		313,633		309,221
Due after five years through ten years				—		—
Due after ten years		2,737		2,974		2,974
Total marketable securities	$	29,543	$	1,028,206	$	1,021,090

Expected maturities could differ from contractual maturities because the security issuers may have the right to prepay obligations without prepayment penalties.

The Company reviews the marketable securities for impairment at each reporting period to determine if any of the securities have experienced an other-than-temporary decline in fair value. The Company considers factors, such as the length of time and extent to which the market value has been less than the cost, the financial condition and near-term

~~Table of Contents~~

prospects of the issuer, the Company’s intent to sell, or whether it is more likely than not it will be required to sell the investment before recovery of its amortized cost basis. If the Company believes that an other-than-temporary decline in fair value has occurred, it writes down the investment to its fair value and recognizes the credit loss in earnings and the non-credit loss in accumulated other comprehensive income or loss. ~~As of December 31, 2017, the aggregate fair value of the marketable securities~~Securities in an unrealized loss position ~~was $20.3 million and was comprised of~~ ~~U.S. Treasury securities and obligations of U.S. government agencies, U.S. corporate securities,~~ ~~municipal securities and bank certificates of deposits. Aggregate unrealized losses for these securities were insignificant~~ as of ~~December 31, 2017 and are presented in the table above.~~June 30, 2022 were $909.6 million. There were ~~no marketable~~0 securities in an unrealized loss position as of September 30, ~~2017.~~2021.

Cash equivalents of $64.2 million and less than $0.1 million, respectively, at December 31, 2017 and September 30, 2017 consist of money market funds and are classified within Level 1 of fair value hierarchy because they are valued using quoted market prices in active markets. Cash equivalents of $9.1 million and less than $0.1 million, respectively at December 31, 2017 and September 30, 2017 consist primarily of ~~U.S. government agency obligations,~~ ~~municipal securities and~~ ~~bank~~ ~~certificates of deposits with original maturities of less than 90 days and are classified within Level 2 of the fair value hierarchy because they are not actively traded.~~

4.5. Acquisitions

~~Acquisitions Completed in Fiscal Year 2018~~

~~Acquisition of 4titude Limited~~

~~On October 5, 2017, the Company acquired~~ all of the outstanding capital stock of 4titude Limited (“4titude”), a U.K.-based manufacturer of scientific consumables for biological sample materials used in a variety of genomic and DNA analytical applications. The acquisition of 4titude will ~~expand the Company’s existing offerings of consumables and instruments within the Brooks Life Sciences segment.~~ The aggregate purchase price of $65.2 million, net of cash acquired, consisted primarily of a cash payment of $64.7 million subject to working capital adjustments and the assumption of the seller’s liabilities of $0.5 million.

The Company ~~used a market participant approach to record~~recorded the assets acquired and liabilities assumed inrelated to the ~~4titude acquisition. The~~following acquisitions at their fair values as of the acquisition date, from a market participant’s perspective. While the Company uses its best estimates and assumptions as part of the purchase price allocation ~~is based on a preliminary valuation and is subject~~process to ~~further adjustments within~~value the ~~measurement period as additional information becomes available related to the fair value of such~~ assets acquired and liabilities ~~assumed.~~assumed on the acquisition date, its estimates and assumptions are subject to refinement. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The fair values of inventory, property, plant and equipment, intangible assets, accrued liabilities, tax-related matters and residual goodwill were preliminary as of December 31, 2017. The Company will refine suchjudgments used to determine the estimated fair value estimates as new information becomes available during the measurement period. Any adjustments to the purchase price allocation will be made as soon as practicable but no later than one year from the acquisition date.

~~The preliminary amounts recorded were as follows (in thousands):~~

Fair Value of

Assets and

Liabilities
Accounts receivable (approximates contractual value)

$
1,581
Inventories

2,667
Prepaid expenses and other current assets

140
Property, plant and equipment

1,555
Intangible assets

27,212
Goodwill

38,033
Accounts payable

(286)
Accrued liabilities

(624)
Deferred tax liabilities

(5,090)
Total purchase price, net of cash acquired

$
65,188

~~Table of Contents~~

Fair values of intangible assets acquired consisted of customer relationships of $21.4 million, completed technology of $5.2 million, backlog of $0.4 million and trademarks of $0.2 million. The Company used the income approach in accordance with the excess-earnings method to estimate the fair values of customer relationships, backlog and trademarks equal to the present value of the after-tax cash flows attributableassigned to each ~~intangible asset. The Company used the income approach in accordance with the relief-from-royalty method to estimate the fair value~~class of the completed technology which is equal to the present value of the after-tax royalty savings attributable to owning that intangible asset. The weighted average amortization periods for intangible assets acquired are 13 years for completed technology, 10 years for customer relationship intangible assets, 1 year for backlog and 1 year for trademarks. The intangible assets acquired are amortized over the total weighted average period of 10.4 years using methods that approximate the pattern in which the economic benefits are expected to be realized.

At the closing of the acquisition of 4titude, a cash payment of $0.4 million was placed into escrow which was ascribed to the purchase price. The escrow was related to potential working capital adjustments and the sellers’ satisfaction of general representations and warranties. The escrow balance was $0.4 million as of December 31, 2017.

~~Goodwill represents the excess of the consideration transferred over the fair value of the net~~ assets acquired and has been assigned to the Brooks Life Sciences segment. Goodwill is primarily the result of expected synergies from combining the operations of 4titude with the Company’s operations and is not deductible for tax purposes.

The operating results of 4titude have been reflected in the results of operations for the Brooks Life Sciences segment from the date of the acquisition, which included approximately three months of activity during the first quarter of fiscal year 2018. During the three months ended December 31, 2017, revenue and net loss from 4titude recognized inliabilities assumed, as well as asset lives, can materially impact the Company’s results of operations were $3.4 million and $1.1 million, respectively. During the three months ended December 31, 2017, the net loss included non-recurring charges of $1.2 million related to the step-up in valueoperations. The finalization of the ~~acquired inventories and recurring charges~~assignment of ~~$1.0 million related to amortization expense of acquired intangible assets.~~

~~During~~fair values will be completed within one year after the ~~three months ended December 31, 2017, the Company incurred $0.5 million in non-recurring transaction costs with respect to the 4titude~~respective acquisition ~~which were recorded in "Selling, general and administrative" expenses within the accompanying unaudited Consolidated Statements of Operations.~~date.

The Company did not present a pro forma information summary for its consolidated results of operations for ~~fiscal year ended September 30, 2017 as if~~ the ~~acquisition of 4titude occurred on October 1, 2016~~acquisitions completed because such results were immaterial.

~~Acquisitions Completed in Fiscal Year 2017~~

~~Acquisition of Pacific Bio-Material Management, Inc. and Novare,~~Abeyatech LLC

On July 5, 2017, the Company entered into an asset purchase agreement with Pacific Bio-Material Management, Inc. (“PBMMI”) and Novare, LLC, a wholly owned subsidiary of PBMMI (collectively, the “sellers”), pursuant to whichApril 2, 2021, the Company acquired ~~substantially all~~Abeyatech LLC. The Company has included the financial results of the acquired operations within the Life Sciences Products segment. The purchase price includes $9.9 million cash payment and $9.4 million in contingent consideration, at present value, based on the acquired business’ performance for the twelve-month period ending December 31, 2021, subject to customary working capital adjustments and other adjustments. The acquisition enhances the breadth and depth of the Company’s offerings and expands its expertise in the Life Sciences Products segment. The allocation of the consideration included $11.9 million of technology, $4.4 million of goodwill, and several other assets and liabilities for $3.0 million. The weighted useful life of all the ~~sellers’ business related to providing storage, transportation, management,~~intangible assets acquired is 12 years. The goodwill and cold chain logistics of biological materials. The Company paid to the sellers cash consideration of $34.3 million, net of cash acquired and subject to working capital adjustments. As of December 31, 2017, the purchase price allocation is based on a preliminary valuation and subject to further adjustments when the Company obtains additional information during the measurement period.

At the closing of the acquisition of PBMMI, a cash payment of $3.3 million was placed into escrow which was ascribed to the purchase price. The escrow balance of $3.3 million included $2.9 million related to satisfaction of the sellers' indemnification obligations with respect to their representations and warranties and other indemnities, as well as $0.4 million payable to the former owner of Novare as a compensation for a sale of his ownership interest. This escrow arrangement is administered by the Company on behalf of the sellers. The escrow balances were $2.9 million and $0.3 million, respectively, as of December 31, 2017.

~~Table of Contents~~

The operating results of PBMMI have been reflected in the results of operations for the Brooks Life Sciences segment from the date of the acquisition. During three months ended December 31, 2017, revenue and net loss from PBMMI recognized in the Company’s results of operations were $2.3 million and $0.1 million, respectively.intangibles are tax deductible. During the three months ended ~~December~~March 31, ~~2017,~~2022, the ~~net loss included recurring charges of $0.4~~Company paid $10.0 million related to ~~amortization expense~~the contingent consideration recorded at the time of ~~acquired intangible assets. Please refer to Note 3, "Acquisitions" to~~acquisition based on the ~~Company's consolidated financial statements included~~achievement of business performance targets set forth in the ~~2017 Annual Report on Form 10-K for further information on PBMMI acquisition.~~purchase agreement.

~~Acquisition~~

Table of ~~Cool Lab, LLC~~Contents

Trans-Hit Biomarkers, Inc.

On ~~November 28, 2016,~~December 3, 2020, the Company acquired ~~100%~~Trans-Hit Biomarkers Inc. (“THB”), a worldwide biospecimen procurement service provider based in Montreal Canada. THB has an extensive collection capability for biospecimens and clinical samples through a worldwide partner network of ~~the equity of Cool Lab, LLC ("Cool Lab") from BioCision, LLC ("BioCision").~~clinical sites and biobanks. The Company held a 20% equity ownership interest in BioCision prior to the acquisition. The Company used a market participant approach to record the assets acquired and liabilities assumed in the Cool Lab acquisition. Thetotal cash purchase price allocation were finalized as of December 31, 2017. Please refer to Note 3, “Acquisitions” to the Company’s consolidated financial statements included in the 2017 Annual Report on Form 10-K for further information on this transaction.

The Company recorded a liability of $0.7 million in the purchase price allocation that represented a preacquisition contingency incurred on the acquisition date. The obligation is related to a rebate that is due to a particular customer if the annual product sales volume metrics exceed threshold amounts under the provisions of the contract assumed by the Company. Fair value of such liability was determined based on a probability weighted discounted cash flow model. The carrying amount of the liability was $0.8 million and $0.7 million, respectively, at December 31, 2017 and September 30, 2017.

~~The operating results of Cool Lab have been reflected in the results of operations for the Brooks Life Sciences segment from the date~~ of the acquisition ~~which included~~was approximately ~~one month~~$15.1 million, net of ~~activity during~~cash acquired. The acquisition enhances the ~~first quarter~~breadth and depth of ~~fiscal year 2017. During~~ the ~~three months ended December 31, 2017, revenue~~Company’s offerings and ~~net loss from Cool Lab recognized~~expands its expertise in the ~~Company’s~~Life Sciences Services segment. The allocation of the consideration included $7.8 million of customer relationships, $9.3 million of goodwill, $2.4 million of deferred tax liabilities, and several other assets and liabilities. The weighted useful life of all intangibles acquired is 11 years. The Company has included the financial results of ~~operations were $1.0 million and less than $0.1 million, respectively. During~~ the ~~three months ended December 31, 201~~6~~, revenue and net loss from Cool Lab recognized~~acquired operations in the ~~Company’s results of operations were $0.3 million~~Life Sciences Services segment. The goodwill and $0.1 million, respectively. During the three months ended December 31, 2017 and 2016, the net loss included recurring charges of $0.4 million and $0.1 million, respectively, related to amortization expense of acquired intangible assets.intangibles are not tax deductible.

5.6. Goodwill and Intangible Assets

Goodwill represents the excess of net book value over the estimated fair value of net tangible and identifiable intangible assets of a reporting unit. Goodwill is tested for impairment annually or more often if impairment indicators are present at the reporting unit level. ~~The Company elected April 1 as its annual goodwill impairment assessment date and performs additional impairment tests if triggering events occur.~~ If events occur or circumstances change that would more likely than not reduce fair values of the reporting units below their carrying values, goodwill will be evaluated for impairment between annual tests. No triggering events indicating goodwill impairment occurred during the ~~three~~nine months ended ~~December 31, 2017.~~June 30, 2022. Please refer to Note 6,8, "Goodwill and Intangible Assets" to the Company's consolidated

~~Table of Contents~~

financial statements included in the ~~2017~~2021 Annual Report on Form 10-K for further information on the goodwill impairment testing performed during fiscal year ~~2017.~~2021.

The ~~components~~Company performs its annual goodwill impairment assessment on April 1^st of each year. In accordance with ASC 350, Intangibles-Goodwill and Other, the Company initially assesses qualitative factors to determine whether the existence of events or circumstances indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying value. If the Company determines, based on this assessment, that it is more likely than not that the fair value of the reporting unit is less than its carrying value, it performs a quantitative goodwill impairment test by comparing the reporting unit’s fair value with its carrying value. An impairment loss is recognized for the amount by which the reporting unit’s carrying value exceeds its fair value, up to the total amount of goodwill allocated to the reporting unit. No impairment loss is recognized if the fair value of the reporting exceeds its carrying value.

During the quarter ended June 30, 2022, the Company completed the annual goodwill impairment test for each of its reporting units, including the Life Sciences Products reporting unit within the Life Sciences Products segment, and the Life Sciences Services reporting unit within the Life Sciences Services segment. Based on the test results, the Company determined that no adjustment to goodwill was necessary. The Company conducted a qualitative assessment for both the Life Sciences Services and Life Sciences Products reporting units. The Company determined that it was more likely than not that their fair values were greater than their carrying values. As a result of the analysis, the Company did not perform the quantitative assessment for these reporting units, and therefore, did not recognize any impairment losses.

The changes in the Company’s goodwill by ~~operating~~reportable segment ~~at December 31, 2017 and~~since September 30, ~~2017~~2021 are as follows (in thousands):

Brooks






Semiconductor

Solutions

Brooks

Group

Life Sciences

Other

Total
Gross goodwill, at September 30, 2017

$
655,762

$
166,820

$
26,014

$
848,596
Accumulated goodwill impairments

(588,944)

—

(26,014)

(614,958)
Goodwill, net of accumulated impairments, at September 30, 2017

66,818

166,820

—

233,638
Acquisitions and adjustments

(15)

39,101

—

39,086
Gross goodwill, at December 31, 2017

655,747

205,921

26,014

887,682
Accumulated goodwill impairments

(588,944)

—

(26,014)

(614,958)
Goodwill, net of accumulated impairments, at December 31, 2017

$
66,803

$
205,921

$
—

$
272,724



	Life Sciences		Life Sciences
	Products		Services		Total
Balance, at September 30, 2021		110,138		359,218		469,356
Adjustments		(4,422)		(49)		(4,471)
Balance, at June 30, 2022	$	105,716	$	359,169	$	464,885

During the ~~three~~nine months ended ~~December 31, 2017,~~June 30, 2022, the Company recorded a goodwill ~~increase~~decrease of ~~$39.1~~$4.5 million primarily related to ~~the acquisition~~foreign currency translation adjustments.

Table of 4titude which represented the excess of the consideration transferred over the fair value of the net assets acquired. Please refer to the Note 4 "Acquisitions" for further information on this transaction.Contents

The components of the Company’s identifiable intangible assets as of ~~December 31, 2017~~June 30, 2022 and September 30, ~~2017~~2021 are as follows (in thousands):


	December 31, 2017						September 30, 2017
			Accumulated		Net Book				Accumulated		Net Book
	Cost		Amortization		Value		Cost		Amortization		Value

													June 30, 2022						September 30, 2021
															Accumulated		Net Book				Accumulated		Net Book
													Cost		Amortization		Value		Cost		Amortization		Value
Patents	$	9,028	$	7,806	$	1,222	$	9,028	$	7,729	$	1,299	$	1,226	$	1,077	$	149	$	1,242	$	1,002	$	240
Completed technology		67,032		55,668		11,364		61,662		54,777		6,885		74,361		37,029		37,332		75,527		32,383		43,144
Trademarks and trade names		9,405		5,241		4,164		9,244		4,969		4,275		424		56		368		424		33		391
Non-competition agreements														681		391		290		681		249		432
Customer relationships		152,797		63,790		89,007		130,655		59,594		71,061		249,277		126,725		122,552		253,486		111,159		142,327
	$	238,262	$	132,505	$	105,757	$	210,589	$	127,069	$	83,520
Other intangibles														220		220		—		246		246		—
													$	326,189	$	165,498	$	160,691	$	331,606	$	145,072	$	186,534

Amortization expense for intangible assets was ~~$5.5~~$7.6 million and ~~$4.1~~$9.6 million, respectively, ~~during~~for the three months ended ~~December 31, 2017~~June 30, 2022 and ~~2016.~~2021. Amortization expense for intangible assets was $23.4 million and $27.9 million, respectively, for the nine months ended June 30, 2022 and 2021.

Estimated future amortization expense for the intangible assets for the remainder of fiscal year ~~2018 and~~2022, the subsequent four fiscal years and thereafter is as follows (in thousands):

Fiscal year ended September 30,

2018

$
16,454
2019

20,810
2020

19,021
2021

13,240
2022

10,553
Thereafter

25,679

$
105,757


2022	$	6,121
2023		30,845
2024		27,354
2025		22,574
2026		19,435
Thereafter		54,362
	$	160,691

~~Table of Contents~~

~~6. Equity Method Investments~~

The Company accounts for certain of its investments using the equity method of accounting and records its proportionate share of the investee’s earnings in its results of operations with a corresponding increase in the carrying value of the investment.

~~ULVAC Cryogenics, Inc.~~

The Company and ULVAC Corporation of Chigasaki, Japan each own a 50% stake in the joint venture, ULVAC Cryogenics, Inc (“UCI”). UCI manufactures and sells cryogenic vacuum pumps, principally to ULVAC Corporation.

The carrying value of the investment in UCI was $30.9 million and $28.6 million, respectively, at December 31, 2017 and September 30, 2017. During the three months ended December 31, 2017 and 2016, the Company recorded income of $2.2 million and $2.4 million, respectively, representing its proportionate share of UCI’s earnings. Management fee payments received by the Company from UCI were $0.3 million during each of the three months ended December 31, 2017 and 2016.

7. Debt and Line of Credit

The Company maintains a revolving line of credit with Wells Fargo Bank, N.A. and JPMorgan Chase Bank, N.A that provides for revolving credit financing of up to $75 million, subject to borrowing base availability, as defined in the line of credit agreement. The line of credit matures on October 4, 2022 and expires no less than 90 days prior to the term loan expiration. The proceeds from the line of credit are available for permitted acquisitions and general corporate purposes.

On October 4, 2017, the Company entered into a $200.0 million Senior Secured Term Loan Facility (the “term loan”) with Morgan Stanley Senior Funding, Inc., JPMorgan Chase Bank, N.A. and Wells Fargo Securities, LLC (collectively, the “lenders”). Coincident with the entry into the term loan agreement, the Company amended certain terms and conditions of the credit agreement and entered into an arrangement with Wells Fargo Bank, N.A. and JPMorgan Chase Bank, N.A. Based on the amended terms of the credit agreement, the line of credit continues to provide for revolving credit financing of up to $75 million, subject to borrowing base availability. Borrowing base availability under the amended line of credit excludes collateral related to fixed assets and is redetermined periodically based on certain percentage of certain eligible U.S. assets, including accounts receivable and inventory. The sublimits for letters of credit were reduced to $7.5 million under the amended terms of the credit agreement. All outstanding borrowings under the credit agreement are guaranteed by the Company and BioStorage Technologies, Inc., its wholly-owned subsidiary (“Guarantor”), and subordinated to the obligations under the term loan which are secured by a first priority lien on substantially all of the assets of the Company and the Guarantor, other than accounts receivable and inventory. Please refer to Note 8, “Debt”, for further information on the term loan transaction.

There were no amounts outstanding under the line of credit as of December 31, 2017 and September 30, 2017. The Company records commitment fees and other costs directly associated with obtaining line of credit financing as deferred financing costs which are presented within "Other assets" in the accompanying unaudited Consolidated Balance Sheets. At December 31, 2017 and September 30, 2017, deferred financing costs were $0.6 million and $0.5 million, respectively. Such costs are amortized over the term of the related financing arrangement and are included in “Interest expense” in the accompanying unaudited Consolidated Statements of Operations. The line of credit contains certain customary representations and warranties, a financial covenant, affirmative and negative covenants, as well as events of default. The Company was in compliance with the line of credit covenants as of December 31, 2017 and September 30, 2017.

~~Table of Contents~~

~~8. Debt~~

On October 4, 2017, the Company entered into a $200.0 million term loan with the ~~lenders.~~lenders pursuant to the terms of a credit agreement. The term loan was issued at $197.6 million, or 98.8% of its par value, resulting in a discount of $2.4 million, or 1.2%, which represented loan origination fees paid at the closing.

The ~~Company incurred additional~~ deferred financing costs of $0.4 million during the three months ended December 31, 2017. The loan proceeds are be used for general corporate purposes, including acquisitions. The loan principal amount may be increased by an aggregate amount equal to $75.0 million plus any voluntary repayments of the term loans plus an amount such that the secured leverage ratio of the Company is less than 3.00 to 1.00.

Under the terms of the loan agreement, the Company may elect for the loan to bear an interest rate as Eurodollar Borrowings or as Alternate Base Rate, or ABR Borrowings. Interest applicable to Eurodollar Borrowings is based on the Adjusted LIBO Rate plus applicable margin of 2.50%. The Adjusted LIBO Rate is the rate appearing on Bloomberg screen LIBOR01 which gets reset at the beginning of each selected interest period based on LIBOR rate then in effect. Interest applicable to Alternate Base Rate Borrowings is based on the Alternate Base Rate plus applicable margin of 1.50%. Alternate Base Rate is determined ~~based on the highest of: (a) the federal funds effective rate plus 0.50%, (b) prime rate plus 1.00%, or (c) one-month LIBOR rate plus 1.00%.~~

~~The Company’s obligations~~ under the term loan are guaranteed by the Company’s wholly-owned subsidiary, BioStorage Technologies, Inc. (the “guarantor”), subject to the terms and conditions of the term loan agreement. The Company and the guarantor granted the lenders a perfected first priority security interest in substantially all of the assets of the Company and the guarantor to secure the repayment of the term loan.

~~The term loan matures and becomes fully payable on October 4, 2024. The principal is payable in installments equal to 0.25% of the initial principal amount of the term loans on March 31~~st~~, June 30~~th~~, September 30~~th ~~and December 31~~st of each year, with any remaining amount of principal becoming due and payable on the maturity date. The Company is required to begin making principal payments commencing with the second quarter of fiscal year 2018. All accrued and unpaid interest on ABR Borrowings shall be due and payable at the same time as the loan principal installments. All accrued and unpaid interest on Eurodollar Borrowings shall be due on the last day of each interest period elected by the Company for such Eurodollar Borrowings, except for interest periods of more than three months in which case all accrued and unpaid interest shall be due and payable every three months.

Subject to certain conditions stated in the term loan agreement, the Company may redeem the term loan at any time at its option without a significant premium or penalty, except for a repricing transaction, as defined in the term loan agreement, which is subject to a premium of 1.00% of the loan principal amount ~~during the first six months of the loan term~~. The Company would be required to redeem the term loan at the principal amount then outstanding upon occurrence of certain events, including (i) net proceeds received from the sale or other disposition of the Company’s or guarantor’ assets, subject to certain limitations, (ii) casualty and condemnation proceeds received by the Company or the guarantor, subject to certain exceptions, (iii) net proceeds received by the Company or the guarantor from the issuance of debt or disqualified capital stock after October 4, 2017. Commencing on December 31, 2018, the Company will be required to make principal payments equal to the excess cash flow amount, as defined in the term loan agreement. Such prepayments are equal to 50% of the preceding year excess cash flow amount reduced by voluntary prepayments of the term loan, subject to certain limitations.

The Company records commitment fees and other costs directly associated with obtaining term loan financing as deferred financing costs which are presented as a reduction of the term loan principal balance in the accompanying unaudited Consolidated Balance Sheets. Such costs arewere accreted over the term of the loan using the effective interest rate method and are included in “Interest expense” in the accompanying unaudited Consolidated Statements of Operations. ~~At December 31, 2017, deferred financing costs were $2.7 million.~~

During the ~~three~~nine months ended ~~December 31, 2017,~~June 30, 2022, the weighted average stated interest rate paid on ~~the term loan~~all outstanding debt was 4%2.7%. During the three and nine months ended ~~December 31, 2017,~~June 30, 2022, the Company incurred aggregate interest expense of ~~$2.1~~$0.1 million and $0.5 million, respectively, in connection with the ~~term loan borrowings, which included $0.1~~borrowings.

On February 1, 2022, the Company completed the sale of its semiconductor automation business and used $49.7 million of ~~deferred financing costs amortization.~~

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~~The term loan agreement contains certain customary representations and warranties, covenants and events of default.~~ ~~If any of~~ the ~~events of default occur and are not waived or cured within applicable grace periods, any unpaid amounts under~~proceeds from the ~~term loan agreement will bear an annual interest rate at 2.00% above~~sale to extinguish the ~~rate otherwise applicable under the terms and conditions of such agreement. The term loan agreement does not contain financial maintenance covenants.~~ ~~As of December 31, 2017, the Company was in compliance with all covenants and conditions under the term loan agreement.~~

~~The following are the future minimum principal payment obligations under the term loan as of December 31, 2017:~~

Amount
Fiscal year ended September 30,

2018

$
1,496
2019

1,978
2020

1,958
2021

1,938
2022

1,919
Thereafter

190,711
Total outstanding principal balance

200,000
Unamortized deferred financing costs

(2,731)

197,269
Term loan, current portion

1,993
Term loan, long-term portion

$
195,276

~~As of December 31, 2017, estimated fair value~~outstanding balance of the term ~~loan outstanding principal~~loan. The Company also terminated its revolving line of credit which had no borrowings outstanding. The Company recorded a loss on debt and line of credit extinguishment of $0.6 million.

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8. Leases

The Company has operating leases for real estate and non-real estate and finance leases for non-real estate in North America, Europe, and Asia. Non-real estate leases are primarily related to vehicles and office equipment. Lease expiration dates range between 2022 and 2042.

The components of lease expense were as follows (in thousands):


	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021

Operating lease costs	$	2,468	$	1,932	$	7,028	$	5,375
Finance lease costs:
Amortization of assets		18		182		147		743
Interest on lease liabilities		-		10		5		33
Total finance lease costs		18		192		152		776
Variable lease costs		783		382		2,056		1,246
Short-term lease costs		640		56		1,357		145
Total lease costs	$	3,909	$	2,562	$	10,593	$	7,542

Supplemental balance ~~approximates its carrying value.~~sheet information related to leases is as follows (in thousands, except lease term and discount rate):


	June 30, 2022			September 30, 2021
Operating Leases:
Operating lease right-of-use assets	$	50,748		$	49,650

Accrued expenses and other current liabilities	$	5,919		$	5,254
Long-term operating lease liabilities		46,719			45,088
Total operating lease liabilities	$	52,638		$	50,342

Finance Leases:
Property, plant and equipment, at cost	$	2,252		$	2,252
Accumulated amortization		(2,252)			(2,105)
Property, plant and equipment, net	$	-		$	147

Accrued expenses and other current liabilities	$	2		$	360
Other long-term liabilities		(10)			(10)
Total finance lease liabilities	$	(8)		$	350

Weighted average remaining lease term (in years):
Operating leases		11.63			11.33
Finance leases		-			0.53

Weighted average discount rate:
Operating leases		4.02	%		3.90	%
Finance leases		0	%		4.87	%

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Supplemental cash flow information related to leases was as follows (in thousands, unaudited):


	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases	$	2,116	$	1,562	$	5,715	$	4,531
Operating cash flows from finance leases		-		8		4		35
Financing cash flows from finance leases		43		269		360		880

ROU assets obtained in exchange for lease liabilities:
Operating leases	$	122	$	13,652	$	7,612	$	17,733

Future lease payments for operating and finance leases as of June 30, 2022 were as follows for the remainder of fiscal year 2022, the subsequent five fiscal years and thereafter (in thousands):


	Operating Leases
2022	$	2,048
2023		7,797
2024		6,356
2025		5,909
2026		5,830
2027		5,634
Thereafter		34,301
Total future lease payments		67,875
Less imputed interest		(15,237)
Total lease liability balance	$	52,638

As of June 30, 2022, the Company did not have significant leases that have not commenced or not recorded in the accompanying unaudited Consolidated Balance Sheets.

9. Income Taxes

TheCompanyrecordedanincometaxprovisionof$7.3millionandbenefitof$0.6million,respectivelyduring the three and nine months ended June 30, 2022. The ~~fair value~~provisionfor the three months ended June 30, 2022, was ~~determined based~~primarily driven by a true-upof theeffective tax rate on ~~observable market inputs and classified within Level 2~~ a year-to-date basis.These changes were theresultof ~~fair value hierarchy due~~fluctuationsinexpectedglobalincomefromoperations.ThetaxbenefitfortheninemonthsendedJune30,2022 wasdrivenbythepre-taxlossanda$4.6milliondiscretestockcompensationwindfallbenefitfortaxdeductions thatexceeded the associated book compensation expense. Thetax benefit for the nine monthsended June 30, 2022was partiallyoffsetby a $0.7millionchargetoincreasethedeferredtaxliability toreflect achangein the blended state income tax rate resulting from the sale of the semiconductor business.

In the period ended June 30, 2022, the Company did not include the U.S. business in the computation of the estimatedannualeffectiverate. We have utilized the discrete effective tax rate method, as allowed by Accounting Standards Codification (“ASC”) 740-270-30-18, “Income Taxes – Interim Reporting to calculate the interim income tax provision. TheU.S. taxbenefitwascomputed discretely ona ~~lack~~year-to-datebasis.The taxable lossfromcontinuingoperationsintheU.S.wouldhavedrivensignificantvolatilityintheestimatedannualeffective taxrate.Consideringthelevelofpre-taxincomeforecastedintheyear,smallchangesintheforecastfortheremainder of ~~an active market~~ theyear would changethe estimated annualeffective tax rate substantially.TheCompany concluded that calculatingthe taxprovisionfor ~~this term loan or~~ theU.S.discretelywasa ~~similar loan instrument.~~moreappropriatereflection of the year-to-datetax provision as of June 30, 2022.

9~~. Income Taxes~~

The Company recorded an income tax ~~provision~~benefit of $~~2.9~~$0.8 million and ~~$2.8~~$4.6 million, respectively during the three and nine months ended ~~December 31, 2017 and 2016.~~June 30, 2021. The tax ~~provision~~benefit for the three months ended ~~December 31, 2017~~June 30, 2021, was primarily driven by the ~~foreign income generated~~

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benefit on loss from operations during the ~~quarter. This provision is partially offset by $0.3~~period and $1.5 million overall benefit from multiple releases of ~~tax benefits related to the reduction of reserves for~~ unrecognized tax benefits and ~~$0.7~~accrued interest due to statute of limitations expirations. The benefit for the nine months ended June 30, 2021 was increased by a $2.0 million discrete stock compensation windfall benefit for tax deductions that exceeded the associated book compensation expense, respectively.

During March 2021, the United States enacted the American Rescue Plan Act of 2021 (“Act”). The company evaluated the legislation included in the Act in relation to income taxes and determined that income tax provisions included in the Act donothavea material impact on its income tax provision.

TheCompanyevaluatestherealizabilityofitsdeferredtaxassetsby tax-payingcomponent andassesses theneed fora valuationallowanceona quarterly basis.The Company evaluatesthe profitability ofeachtax-paying componentonahistoriccumulativebasisandaforward-lookingbasiswhileperformingthisanalysis.TheCompany maintainsa U.S.valuationallowancerelatedto therealizability ofcertainstate taxcredits andstatenetoperating loss carry-forwards,aswellas avaluationallowanceagainst netdeferredtaxassetson certainforeigntax-paying components as of June 30, 2022.On February 1, 2022, the Company completed the sale of its semiconductor automationbusinessthatresultedinataxablegainprimarilyrecognizedintheU.S.Duringthesecondquarteroffiscal year 2022,the Company recorded a reductionto itsvaluationallowance for the utilization of deferred tax assets thatwere previously expected to expire.Thebenefit of this valuation allowancereversalwasrecorded inincome from discontinued operations in theamount of $3.6 million since thereversalwasdriven by theincomefrom discontinued operations.

The Company maintains liabilities for uncertain tax positions. These liabilities involve judgment and estimation and are monitored based on the best available information. The Company recognizes interest related to unrecognized tax benefits related to the re-measurement of net U.S. deferred tax liabilities at the reduced 21 percent federal income tax rate. The income tax provision for the three months ended December 31, 2016 was primarily driven by foreign income generated during the quarter, partially offset by $0.7 million of tax benefits related to the reduction of reserves for unrecognized tax benefits.

~~During the first quarter of fiscal year 2018, the Company adopted the Accounting Standard Update (“ASU”) 2016-09,~~ ~~Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. Upon adoption of ASU 2016-09, the Company amends the accounting for employee share-based payment transactions to recognize tax effects resulting from the settlement of stock-based awards~~ as ~~income tax expense or benefit in the income statement in the reporting period in which they occur. Adoption of this ASU required recognition of~~ a ~~cumulative effect adjustment to retained earnings in connection with the establishment~~ componentof a deferred tax asset for any prior year net excess tax benefits or tax deficiencies not previously recorded. This adjustment resulted in a $4.0 million increase to retained earnings and deferred tax asset for net prior year excess tax benefits, with a corresponding decrease to retained earnings for the establishment of valuation allowance against the deferred tax asset. During the three months ended December 31, 2017 this change had no impact to our income statement or tax rate as a result of the full valuation allowance which exists against U.S. deferred tax assets.

During the three months ended December 31, 2017, the Tax Cuts and Jobs Act (“Tax Reform”) was enacted in the U.S., making significant tax law changes affecting the Company. The SEC has issued Staff Accounting Bulletin 118 (“SAB 118”), which has provided guidance for companies that have not completed the accounting for the income tax ~~effects~~ provisionor benefit.The Company recognized $0.1 millionof ~~Tax Reform. Under SAB 118, a company may report provisional amounts based on reasonable estimates~~

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~~where~~ interestexpenserelatedtoitsuncertaintaxpositionsduringthe ~~accounting is incomplete. These amounts are subject to adjustments during a measurement period of up to one year beginning in~~ threeandthe ~~reporting period of the enactment date.~~ninemonthsendedJune 30, 2022.

~~Upon the enactment of Tax Reform, the~~ TheCompany is subject to a toll charge in the U.S. on its previously untaxed accumulated foreign earnings. The toll charge is treated as an inclusion of the company’s accumulated foreign earnings in U.S. taxable income during the tax year ended September 30, 2018. Any taxes due associated with the toll charge will be payable over an eight year period. The Company has estimated that its accumulated foreign earnings are $120 million which is a provisional amount subject to the measurement period described in Staff Accounting Bulletin 118. There are still incomplete components related to the accumulated foreign earnings calculations for older tax years that require additional time to complete the calculations. The Company also has a history of foreign mergers and acquisitions and proper determination of the impact on the accumulated earnings is complex. The Company has not recorded any provision for currently estimated tax inclusion associated with the toll charge as sufficient previously un-benefited tax attributes, with valuation allowances, exist to offset the inclusion income or resulting tax.

As a result of Tax Reform, the Company calculated its U.S. tax provision for the three months ended December 31, 2017 using a blended U.S. statutory tax rate of 24.5% which is a prorated allocation of the 35% rate which was in effect prior to tax reform through December 31, 2017 and the 21% rate which will be in effect for the remainder of the fiscal year. The Company recorded a discrete benefit of $0.7 million in the three months ended December 31, 2017 due to the impact of the U.S. rate change on its net U.S. deferred tax liabilities.

As of December 31, 2017, the Company maintains its indefinite reinvestment assertion on foreign earnings until the Company can complete its assessment of Tax Reform impacts on reinvestment plans, which will continue to be evaluated during the measurement period described in SAB 118. While the toll charge is a forced deemed repatriation of foreign earnings and an inclusion in U.S. taxable income, there are still additional costs of repatriating the foreign earnings such as foreign withholding taxes and state taxes.

The Company evaluates the realizability of its deferred tax assets by tax-paying component and assesses the need for a valuation allowance on a quarterly basis. The Company evaluates the profitability of each tax-paying component on a historic cumulative basis and on a forward looking basis in the course of performing this analysis. As described below, the Company’s evaluation of all positive and negative evidence and corresponding conclusion regarding maintaining a valuation allowance at December 31, 2017 in the U.S. will be a part of its assessment during the measurement period under SAB 118 of the future impacts Tax Reform will have on its positive and negative evidence to support the reversal of all or some portion of these allowances. Please refer to Note 10, "Income Taxes" to the Company’s consolidated financial statements included in the 2017 Annual Report on Form 10-K for further information on the valuation allowance.

As previously described, the Company maintains a full valuation allowance on its U.S. deferred tax assets. During the three months ended December 31, 2017, the Company considered the impacts of Tax Reform that will be immediately effective and those that will be effective for future years. In consideration of the effects of Tax Reform, the Company is still in the process of fully evaluating, during the measurement period under SAB 118, all future impacts of the changes as they relate to the need for the U.S. valuation allowance. The final determination of the various impacts of Tax Reform could have a significant impact to U.S. tax obligations, and could require the Company to change its U.S. valuation allowance conclusion in a future period. As of the time of this filing, the Company believes a full valuation allowance on its U.S. deferred tax assets is required until a full analysis of the impact of Tax Reform is finalized.

~~The Company is subject to~~ U.S. federal, ~~income tax and various~~ state,local and ~~international~~foreign income taxes in variousjurisdictions.The amountofincometaxespaidissubjecttotheCompany’sinterpretationofapplicabletaxlawsinthejurisdictionsin which it ~~files tax returns.~~ files.

Inthenormal course ofbusiness,theCompany issubjecttoincome taxaudits invariousglobaljurisdictionsin whichitoperates.TheyearssubjecttoexaminationvaryfortheU.S.andinternationaljurisdictions,withtheearliest taxyear being ~~2011.~~2013. Based on theoutcomeoftheseexaminationsortheexpirationof ~~statutes~~ statuteoflimitationsfor specific jurisdictions,itis reasonably possible that the related unrecognized tax benefits could change from those recorded in the Company’s ~~unaudited~~ Consolidated Balance Sheets. The Company currently anticipates that it is reasonably possible thatthe unrecognizedtax benefitsandaccruedinterest will be reduced by ~~approximately $0.2~~ $0.6million ~~within~~ in the next twelve ~~months.~~months due tostatute of limitations expirations. Theseunrecognized tax benefits would impact theeffective tax rate if recognized.

1822

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10. Other Balance Sheet Information

The following is a summary of accounts receivable at ~~December 31, 2017~~June 30, 2022 and September 30, ~~201~~72021 (in thousands):


	December 31,		September 30,
	2017		2017

					June 30,		September 30,
					2022		2021
Accounts receivable	$	140,490	$	122,868	$	154,600	$	124,195
Less allowance for doubtful accounts		(1,384)		(1,959)
Less allowance for sales returns		(59)		(81)
Less allowance for expected credit losses						(4,326)		(4,318)
Accounts receivable, net	$	139,047	$	120,828	$	150,274	$	119,877

The following is a summary of inventories at ~~December 31, 2017~~June 30, 2022 and September 30, ~~2017~~2021 (in thousands):


	December 31,		September 30,
	2017		2017

					June 30,		September 30,
					2022		2021
Inventories
Raw materials and purchased parts	$	76,389	$	73,819	$	35,594	$	27,644
Work-in-process		11,729		10,548		5,855		4,787
Finished goods		26,915		22,028		39,764		27,967
Total inventories	$	115,033	$	106,395	$	81,213	$	60,398

Reserves for excess and obsolete inventory were ~~$22.9~~$4.1 million and ~~$23.5~~$3.7 million, respectively, at ~~December 31, 2017~~June 30, 2022 and September 30, ~~2017.~~2021.

~~During the three months ended December 31, 2017~~At June 30, 2022 and ~~the fiscal year ended~~ September 30, ~~201~~7,2021, the Company had cumulative capitalized direct costs of ~~$5.0~~$25.5 million and ~~$4.7~~$22.7 million, respectively, associated with the development of software for its internal ~~use which~~use. As of June 30, 2022, this balance included $7.5 million associated with software assets that are ~~included within "Property, plant and equipment, net"~~still in the ~~accompanying unaudited Consolidated Balance Sheets.~~development stage and not yet placed in service. During the three and nine months ended ~~December 31, 2017,~~June 30, 2022, the Company capitalized direct costs of ~~$0.3~~$1.2 million and $2.8 million, respectively, associated with the development of software for its internal use.

The Company establishes reserves for estimated costs of product warranties based on historical information. Product warranty reserves are recorded at the time product revenue is recognized, and retrofit accruals are recorded at the time retrofit programs are established. The Company’s warranty obligation is affected by product failure rates, utilization levels, material usage, service delivery costs incurred in correcting a product failure and supplier warranties on parts delivered to the Company.

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The following is a summary of product warranty and retrofit activity on a gross basis for the three and nine months ended ~~December 31, 2017~~June 30, 2022 and ~~2016~~2021 (in thousands):


Activity -Three Months Ended December 31, 2017

Activity -Three Months Ended June 30, 2022								Activity -Three Months Ended June 30, 2022
Balance								Balance					Balance
March 31,								March 31,					June 30,
2022								2022	Accruals		Costs Incurred		2022
$								2,491	$	663	$	(630)	$	2,524

Activity -Three Months Ended June 30, 2021								Activity -Three Months Ended June 30, 2021
Balance								Balance					Balance
March 31,								March 31,					June 30,
2021								2021	Accruals		Costs Incurred		2021
$								2,182	$	858	$	(703)	$	2,337

Activity -Nine Months Ended June 30, 2022								Activity -Nine Months Ended June 30, 2022
Balance	Balance					Balance		Balance					Balance
September 30,	September 30,					December 31,		September 30,					June 30,
2017		Accruals		Costs Incurred		2017
2021								2021	Accruals		Costs Incurred		2022
$	8,054	$	2,336	$	(2,172)	$	8,218	2,330	$	1,875	$	(1,681)	$	2,524

Activity -Nine Months Ended June 30, 2021								Activity -Nine Months Ended June 30, 2021
Balance								Balance					Balance
September 30,								September 30,					June 30,
2020								2020	Accruals		Costs Incurred		2021
$								2,211	$	1,671	$	(1,545)	$	2,337

Activity -Three Months Ended December 31, 2016
Balance





Balance
September 30,

December 31,
2016

Accruals

Costs Incurred

2016
$
6,324

$
2,507

$
(2,614)

$
6,217

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11. Stock-Based Compensation

The Company may issue to eligible employees options to purchase shares of the Company’s stock, restricted stock ~~units~~ and ~~restricted stock awards (collectively "restricted stock units") and stock options~~other equity incentives which vest upon the satisfaction of a performance condition and/or a service condition. In addition, the Company issues shares to participating employees pursuant to an employee stock purchase plan, and ~~unrestricted~~ stock awards and deferred restricted stock units to its directors in accordance with its director compensation program.

The stock-based compensation expense for restricted stock units for continuing operations was $3.2 million and $4.0 million, for the three months ended June 30, 2022 and 2021, respectively. The stock-based compensation expense for restricted stock units for continuing operations was $10.9 million and $11.7 million the nine months ended June 30, 2022 and 2021, respectively. The stock-based compensation expense for employee stock purchase plan for continuing operations was $0.3 million and $0.3 million, respectively, for the three months ended June 30, 2022 and 2021. The stock-based compensation expense for employee stock purchase plan for continuing operations was $1.1 million and $0.8 million, for the nine months ended June 30, 2022 and 2021.

The information included within the remaining note is on a total company basis, and includes amounts related to our discontinued operations.

The following table reflects the total stock-based compensation expense recorded during the three and nine months ended ~~December 31, 2017~~June 30, 2022 and ~~2016~~2021 (in thousands):

Three Months Ended December 31,

2017

2016

Restricted stock

$
4,602

$
2,365

Employee stock purchase plan

207

133

Total stock-based compensation expense

$
4,809

$
2,498


	Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Restricted stock units	$	3,178	$	5,475	$	18,433	$	18,667
Employee stock purchase plan		307		611		1,600		1,610
Total stock-based compensation expense	$	3,485	$	6,086	$	20,033	$	20,277

The fair value of restricted stock units is determined based on the number of shares granted and the closing price of the Company’s common stock quoted on the Nasdaq Stock Market on the date of grant. ~~The~~For awards that vest based on

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service conditions, the Company recognizes stock-based compensation expense on a straight-line basis ~~net of estimated forfeitures,~~ over the requisite service period. ~~Additionally,~~For awards that vest subject to performance conditions, the Company recognizes stock-based compensation expense ratably over the performance period if it is probable that performance condition will be met and adjusted for the probability percentage of achieving the performance goals. The Company makes estimates of stock award forfeitures and the number of awards expected to vest. The Company considers many factors in developing forfeiture estimates, including award types, employee classes and historical experience. Each quarter, the Company assesses the ~~likelihood~~probability of achieving the performance ~~goals against previously established performance targets~~goals. Current estimates may differ from actual results and future changes in ~~accordance with the Company’s long-term equity incentive plan for stock-based awards that vest upon or after the satisfaction of these goals.~~

~~During the first quarter of fiscal year 2018, the Company adopted the Accounting Standard Update (“ASU”) 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting~~.” Upon adoption of ASU 2016-09, the Company made an accounting policy election to continue accounting for forfeitures by applying an estimated forfeiture rate. The adoption of ASU 2016-09 did not have an impact on the stock compensation expense amount recognized during the three months ended December 31, 2017 and accumulated deficit at December 31, 2017.estimates.

The Company grants restricted stock units that vest over a required service period and/or achievement of certain operating performance goals. Restricted stock units granted with performance goals may also have a required service period following the achievement of all or a portion of the performance goals. The following table reflects restricted stock units, including stock awards, granted during the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2022 and ~~2016:~~2021:

Time-Based



Performance-

Total Units

Units

Stock Grants

Based Units
Three months ended December 31, 2017

471,151

190,266

546

280,339
Three months ended December 31, 2016

951,266

362,113

815

588,338


		Time-Based	Stock	Performance-
	Total Units	Units	Grants	Based Units
Nine months ended June 30, 2022	231,696	94,429	49,063	88,204
Nine months ended June 30, 2021	346,172	162,842	14,683	168,647

Time-Based Grants

Restricted stock units granted with a required service period typically have ~~three year~~three-year vesting schedules in which one-third of awards vest at the first anniversary of the grant date, one-third vest at the second anniversary of the grant date and one-third vest at the third anniversary of the grant date, subject to the award holders meeting service requirements.

Stock Grants

~~During the three months ended December 31, 2017 and 2016, the Company~~The stock awards granted ~~and issued 546 and 815 units, respectively,~~ to the members of the Company’s Board of Directors ~~which were related to~~include stock awards and deferred ~~quarterly dividends. The value~~restricted stock units.

Certain members of the ~~units granted was equal~~Board of Directors have elected to ~~the value of cash~~defer receiving their annual stock awards and related quarterly dividends that would be paid on the number of deferred shares based on the closing price of the Company’s stock on the dividend record date. Such units vested upon their issuance, but receipt of the Company shares is deferred until ~~the holders~~they attain a certain age or cease to provide services

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to as the ~~Company as~~Company’s Board members. ~~There~~Stock awards granted in fiscal years 2022 and 2021 were ~~no annual awards of unrestricted shares~~vested as of the ~~Company stock and compensation-related restricted stock units granted to the members of the Company's Board of Directors during the three months ended December 31, 2017 and 2016, respectively.~~respective grant dates.

Performance-Based Grants

Performance-based restricted stock units are earned based on the achievement of performance criteria established by the Human Resources and Compensation Committee ofand approved by the Board of Directors. The criteria for performance-based awards are weighted and have threshold, target and maximum performance goals.

Performance-based awards granted in fiscal year ~~2017~~2022, 2021 and 2020 allow participants to earn 100% of ~~a targeted number of~~the restricted stock units if the Company’s performance meets its target goal for each applicable financial metric, and up to a maximum of 200% ~~of the restricted stock units target~~ if the Company’s performance for such metrics meets or exceeds the maximum ~~threshold.~~or stretch goal. Performance below the minimum threshold for each financial metric results in award ~~forfeitures.~~forfeiture. Performance goals will be measured over a ~~three year~~three-year period for each year’s awards and at the end of ~~fiscal year 2020~~the period to determine the number of units earned by recipients who continue to meet athe service requirement. ~~Units held by recipients who fail to meet~~Around the ~~continued service requirement are forfeited. Earned units for recipients who continue to meet the service requirements vest on the~~third anniversary of each year’s awards’ grant date, the Company’s Board of Directors determines the number of units earned ~~which will be approximately~~for participants who continue to meet the ~~third anniversary~~service requirements on the vest date.

Table of ~~the grant date.~~Contents

Performance-based awards granted in fiscal year 2016 also include provisions that allow participants to earn threshold, target and maximum awards ranging from 0% of the award for performance below the minimum threshold, 100% of the award for performance at target, and up to a maximum of 200% of the award if the Company achieves the maximum performance goals.

Restricted Stock Unit Activity

The following table summarizes restricted stock unit activity for the ~~three~~nine months ended ~~December 31, 2017:~~

Weighted

Average

Grant-Date

Shares

Fair Value
Outstanding at September 30, 2017

2,474,011

$
12.34
Granted

471,151

34.25
Vested

(586,352)

12.42
Forfeited

(14,737)

16.48
Outstanding at December 31, 2017

2,344,073

$
16.75

June 30, 2022:


		Weighted
		Average
		Grant-Date
	Shares	Fair Value
Outstanding at September 30, 2021	1,088,652	$	47.35
Granted	231,696		103.00
Vested	(555,513)		41.50
Forfeited	(223,821)		39.51
Outstanding at June 30, 2022	541,014		93.96

The weighted average grant date fair value of ~~restricted~~restricted stock units granted during the three months ended ~~December 31, 2017~~June 30, 2022 and ~~2016~~2021 was ~~$34.25~~$80.58 and ~~$13.93,~~$104.54, respectively. The fair value of restricted stock units vested during the three months ended ~~December 31, 2017~~June 30, 2022 and ~~2016~~2021 was ~~$19.0~~$0.2 million and ~~$11.3~~$0.3 million, respectively. The weighted average grant date fair value of restricted stock units granted during the nine months ended June 30, 2022 and 2021 was $103.00 and $71.81, respectively. The fair value of restricted stock units vested during the nine months ended June 30, 2022 and 2021 was $66.9 million and $28.2 million, respectively. During the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2022 and ~~2016,~~2021, the Company remitted ~~$6.~~3$25.1 million and ~~$3.8~~$9.7 million, respectively, for withholding taxes on vested restricted stock units, of which $0.1 million was paid by the Company during the three months ended December 31, 2016. There were no taxes on vested restricted stock units paid by the Company during the three months ended December 31, 2017. During the three months ended December 31, 2017 and 2016, the Company received $6.3 ~~million and $3.7 million, respectively, in cash proceeds~~collected from employees to satisfy their tax obligations as a result of share issuances. Such proceeds collected and remitted were insignificant during the three months ended June 30, 2022 and 2021.

As of ~~December 31, 2017,~~June 30, 2022, the unrecognized compensation cost ~~related to restricted stock units~~ that are expected to vest is ~~$33.2~~$23.2 million and will be recognized over an estimated weighted average service period of approximately 1.91.8 years.

~~Table of Contents~~

Employee Stock Purchase Plan

The Company maintains an ~~Employee Stock Purchase Plan~~employee stock purchase plan that allows its employees to purchase shares of common stock at a price equal to 85% of the fair market value of the Company’s stock at the beginning or the end of the semi-annual offering period, whichever is lower. There were no51,133 and 58,124 shares, respectively, purchased by employees ~~or issued by the Company~~ under the employee stock purchase plan during the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2022 and ~~2016.~~2021.

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12. Earnings per Share

The calculations of basic and diluted net income per share and basic and diluted weighted average shares outstanding are as follows for the three and nine months ended ~~December 31, 2017~~June 30, 2022 and ~~2016~~2021 (in thousands, except per share data):

Three Months Ended

December 31,

2017

2016

Net income

$
16,486

$
13,871

Weighted average common shares outstanding used in computing basic earnings per share

70,183

69,181

Dilutive common stock options and restricted stock units

681

689

Weighted average common shares outstanding used in computing diluted earnings per share

70,864

69,870

Basic net income per share

$
0.23

$
0.20

Diluted net income per share

$
0.23

$
0.20


	Three Months Ended				Nine Months Ended
	June 30,				June 30,
	2022		2021		2022		2021
Loss from continuing operations	$	(7,015)	$	(1,842)	$	(5,973)	$	(6,472)
(Loss) income from discontinued operations, net of tax		(2,555)		41,008		2,159,597		95,414
Net (loss) income	$	(9,570)	$	39,166	$	2,153,624	$	88,942

Weighted average common shares outstanding used in computing basic earnings per share		74,989		74,296		74,879		74,195
Dilutive restricted stock units		—		—		—		—
Weighted average common shares outstanding used in computing diluted earnings per share		74,989		74,296		74,879		74,195

Basic net income per share:
Loss from continuing operations	$	(0.09)	$	(0.02)	$	(0.08)	$	(0.09)
(Loss) income from discontinued operations, net of tax		(0.03)		0.55		28.84		1.29
Basic net (loss) income per share	$	(0.13)	$	0.53	$	28.76	$	1.20

Diluted net (loss) income per share:
Loss from continuing operations	$	(0.09)	$	(0.02)	$	(0.08)	$	(0.09)
(Loss) income from discontinued operations, net of tax		(0.03)		0.55		28.84		1.29
Diluted net (loss) income per share	$	(0.13)	$	0.53	$	28.76	$	1.20

During the ~~three~~nine months ended ~~December 31, 2017, 190,000 antidilutive~~June 30, 2022, restricted stock units of 59,513 were excluded from the computation of diluted earnings per share as their effect would be antidilutive to earnings per share for continuing operations based on the treasury stock method. ~~There were no such awards during~~

13. Revenue from Contracts with Customers

Disaggregated Revenue

The Company disaggregates revenue from contracts with customers in a manner that depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors. The following is revenue by significant business line for the three and nine months ended ~~December 31, 2016.~~June 30, 2022 and 2021(in thousands):

~~13. Restructuring Charges~~


	Three months ended June 30,				Nine months ended June 30,
	2022		2021		2022			2021
Significant Business Line
Life Sciences Products	$	47,369	$	48,625	$	150,861	$	146,490
Sample Repository Solutions		26,000		21,772		78,806		64,496
Genomic Services		59,366		58,690		188,264		165,778
Total	$	132,735	$	129,087	$	417,931	$	376,764

~~There were no restructuring charges recorded~~

Contract Balances

Accounts Receivable, Net. Accounts receivable represent rights to consideration in exchange for products or services that have been transferred by the Company, ~~during~~when payment is unconditional and only the ~~three months ended December 31, 2017. During~~passage of time is required

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before payment is due. Accounts receivable do not bear interest and are recorded at the ~~three months ended December 31, 2016, the~~invoiced amount. The Company ~~recorded restructuring charges~~maintains an allowance for expected credit losses representing its best estimate of ~~$1.0 million~~probable credit losses related to ~~severance. Such charges~~its existing accounts receivable and their net realizable value. The Company determines the allowance for expected credit losses based on a number of factors, including an evaluation of customer credit worthiness, the age of the outstanding receivables, economic trends, historical experience and other information through the payment periods. Accounts receivable, net were ~~comprised of: (i) $0.7~~$150.3 million ~~of costs related~~and $119.9 million at June 30, 2022 and September 30, 2021, respectively.

Contract Assets. Contract assets represent rights to ~~the Company-wide restructuring action, (ii) $0.2 million of costs attributable to the Brooks Semiconductor Solutions Group segment related to the integration of Contact Co., Ltd. after its acquisition~~consideration in exchange for products or services that have been transferred by the Company, when payment is conditional on something other than the passage of time. These amounts typically relate to contracts where the right to payment is not present until completion of the contract or the achievement of specified milestones and ~~(iii) $0.1~~the value of the products or services transferred exceed this constraint. Contract assets are classified as current. Contract asset balances which are included within “Prepaid expenses and other current assets” on the Company’s Consolidated Balance Sheet, were $20.8 million and $15.3 million at June 30, 2022 and September 30, 2021, respectively.

Contract Liabilities. Contract liabilities represent the Company’s obligation to transfer products or services to a customer for which consideration has been received, or for which an amount of ~~costs attributable~~consideration is due from the customer. Contract assets and liabilities are reported on a net basis at the contract level, depending on the contracts position at the end of each reporting period. Contract liabilities are included within “Deferred revenue” on the Company’s Consolidated Balance Sheet. Contract liabilities were $33.1 million and $25.7 million at June 30, 2022 and September 30, 2021, respectively. Revenue recognized from the contract liability balance at September 30, 2021 was $13.4 million for the nine months ended June 30, 2022.

Remaining Performance Obligations. Remaining performance obligations represent the transaction price of unsatisfied or partially satisfied performance obligations within contracts with an original expected contract term that is greater than one year and for which fulfillment of the contract has started as of the end of the reporting period. The aggregate amount of transaction consideration allocated to ~~the Brooks Life Sciences segment related to streamlining the segment's management structure, integrating acquisitions and improving profitability.~~

remaining performance obligations as of June 30, 2022 was $63.7 million. The following ~~is a summary~~table summarizes when the Company expects to recognize the remaining performance obligations as revenue; the Company will recognize revenue associated with these performance obligations as transfer of ~~activity related to the Company’s restructuring charges for the three months ended December 31, 2017 and 2016~~control occurs (in thousands):

Activity -Three Months Ended December 31, 2017


Balance





Balance

September 30,

December 31,

2017

Expenses

Payments

2017
Total restructuring liabilities related to workforce termination benefits

$
1,708

$
—

$
(581)

$
1,127


	As of June 30, 2022
	Less than 1 Year		Greater than 1 Year		Total
Remaining Performance Obligations	$	35,662	$	28,010	$	63,672

~~Table of Contents~~

Activity -Three Months Ended December 31, 2016


Balance





Balance

September 30,

December 31,

2016

Expenses

Payments

2016
Total restructuring liabilities related to workforce termination benefits

$
5,939

$
975

$
(3,687)

$
3,227

~~As of December 31, 2017, accrued restructuring~~Cost to Obtain and Fulfill a Contract

The Company capitalizes sales commissions when incurred if they are (i) incremental costs of $1.1 million were primarily attributable to the restructuring actions within the Brooks Semiconductor Solutions Group segment and comprised primarily of $0.8 million related to the consolidation of the Jena, Germany repair facility and $0.2 million related to streamlining field service operations. Accrued restructuring costs areobtaining a contract, (ii) expected to be ~~paid~~recovered and (iii) have an expected amortization period that is greater than one year. As part of the Company’s cumulative effect adjustment upon the initial adoption of ASC 606, incremental costs associated with obtaining a contract were capitalized and have been classified as deferred commissions within the ~~next twelve months. Please refer~~Company’s Consolidated Balance Sheet. These amounts primarily relate to ~~Note 15, “Restructuring~~sales commissions and ~~Other Charges”~~ are being amortized over a 60-month period, which represents the average period of contract performance. The Company did not capitalize any sales commissions during the nine months ended June 30, 2022 as the amount of sales commissions that qualified for capitalization during the reporting period was insignificant. Sales commissions incurred during the reporting period have been expensed as incurred. These costs are recorded within “Selling, general and administrative” expenses on the Company’s Consolidated Statement of Operations. The Company has concluded that none of its costs incurred in fulfillment of customer contracts meet the capitalization criteria. The Company will account for shipping and handling activities as fulfillment activities and recognize the associated expense when control of the product has transferred to the ~~Company’s consolidated financial statements included in the 2017 Annual Report on Form 10-K for further information on the restructuring actions discussed above.~~customer.

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14. Segment and Geographic Information

Operating segments are defined as components of an enterprise that engage in business activities for which discrete financial information is available and regularly reviewed by the chief operating decision maker in deciding how to allocate resources and to assess performance. The Company’s Chief Executive Officer is the Company’s chief operating decision maker.

The Company ~~reports its financial results for two operating~~operates in 2 reportable segments: the Life Sciences Products segment and the Life Sciences Services segment. These reportable segments ~~which consist of Brooks~~also represent the Company’s operating segments. The Company previously operated in 3 reportable segments: the Semiconductor Solutions Group segment, ~~and Brooks~~the Life Sciences Products segment, and the Life Sciences Services segment. ~~Please refer~~As discussed in Note 3, “Discontinued Operations”, our Semiconductor Solutions Group reportable segment has been classified as a discontinued operation. The sale of the semiconductor automation business was completed on February 1, 2022. Historical information has been adjusted to ~~Note 18, "Segment~~reflect the new reportable segments.

The Life Sciences Products segment provides automated cold sample management systems for compound and ~~Geographic Information"~~biological sample storage, equipment for sample preparation and handling, consumables, and instruments, that help customers manage samples throughout their research discovery and development workflows. The segment’s product offerings include automated cold storage systems, cryogenic storage systems, consumables and instruments and the associated services business for these products.

The Life Sciences Services segment provides comprehensive sample management programs, integrated cold chain solutions, informatics, as well as sample-based laboratory services to advance scientific research and support drug development. The segment’s service offerings include sample storage, genomic sequencing, gene synthesis, laboratory processing services, laboratory analysis, biospecimen procurement services and other support services which are provided to a wide range of life science customers, including pharmaceutical companies, biotechnology companies, biorepositories and research institutes. Our Sample Repository Solutions business is a global leader in sample and material storage and management and provides a full suite of reliable cold and ultra-cold chain solutions.

The Company considers adjusted operating income, which excludes charges related to amortization of completed technology, the ~~Company’s consolidated financial statements included in~~acquisition accounting impact on inventory contracts acquired, restructuring related charges and other special charges, such as impairment losses, as the ~~201~~7 ~~Annual Report on Form 10‑K for further information on~~primary performance metric when evaluating the ~~operating segments’ description and accounting policies.~~business.

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The following is the summary of the financial information for the Company’s ~~operating and~~ reportable segments for the three and nine months ended ~~December 31, 2017~~June 30, 2022 and ~~2016~~2021 (in thousands):

Brooks




Semiconductor

Brooks

Solutions Group

Life Sciences

Total

Three Months Ended December 31, 2017:






Revenue






Products

$
120,203

$
21,981

$
142,184
Services

21,683

25,461

47,144
Segment revenue

$
141,886

$
47,442

$
189,328
Gross profit

$
59,453

$
15,762

$
75,215
Segment operating income (loss)

26,362

(140)

26,222
Depreciation expense

1,149

1,549

2,698

Three Months Ended December 31, 2016:






Revenue






Products

$
109,395

$
12,719

$
122,114
Services

17,221

20,620

37,841
Segment revenue

$
126,616

$
33,339

$
159,955
Gross profit

$
45,468

$
11,475

$
56,943
Segment operating income (loss)

17,371

112

17,483
Depreciation expense

1,275

1,090

2,365

Assets:




December 31, 2017

$
340,367

$
382,884

$
723,251
September 30, 2017

325,408

306,666

632,074


	Three Months Ended June 30,					Nine Months Ended June 30,
	2022		2021		2022		2021
Revenue:
Life Sciences Products	$	47,369	$	48,625	$	150,861	$	146,520
Life Sciences Services		85,366		80,462		267,070		230,244
Total revenue	$	132,735	$	129,087	$	417,931	$	376,764

Operating loss:
Life Sciences Products	$	2,216	$	5,060	$	11,895	$	16,492
Life Sciences Services		2,251		5,774		14,997		18,316
Reportable segment adjusted operating income		4,467		10,834		26,892		34,808
Amortization of completed technology		1,810		2,173		5,424		6,200
Amortization of other intangible assets		5,745		7,396		18,064		21,657
Restructuring charges		25		—		319		53
Tariff adjustment		—		—		(486)		5,414
Other unallocated corporate expenses		1,960		2,148		13,677		11,331
Total operating loss		(5,073)		(883)		(10,106)		(9,847)
Interest income		6,822		409		9,933		503
Interest expense		(2,101)		(477)		(4,111)		(1,485)
Loss on extinguishment of debt		—		—		(632)		—
Other income (expenses), net		630		(1,651)		(1,617)		(263)
Income (loss) before income taxes	$	278	$	(2,602)	$	(6,533)	$	(11,092)




Assets:		Life Sciences Products		Life Sciences Services		Total
June 30, 2022	$	319,632	$	876,589	$	1,196,221
September 30, 2021		278,769		780,238		1,059,007

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The following is a reconciliation of the Company’s ~~operating and~~ reportable segments’ ~~operating income and~~ segment assets to the corresponding amounts presented in the accompanying unaudited Consolidated Balance Sheets as of June 30, 2022 and ~~Consolidated Statements~~September 30, 2021 (in thousands):


	June 30,		September 30,
	2022		2021
Segment assets	$	1,196,221	$	1,059,007
Cash and cash equivalents, restricted cash, and marketable securities		2,507,326		244,012
Deferred tax assets		1,926		10,043
Other assets		17,244		11,237
Assets held for sale		—		495,213
Total assets	$	3,722,717	$	1,819,512

Table of ~~Operations~~Contents

Revenue from external customers is attributed to geographic areas based on locations to which customer orders are shipped. Net revenue by geographic area for the three and nine months ended ~~December 31, 2017~~June 30, 2022 and ~~2016~~2021 (in thousands):

Three Months Ended

December 31,

2017

2016

Segment operating income

$
26,222

$
17,483

Amortization of acquired intangible assets

4,589

3,064

Restructuring charges

—

975

Other unallocated corporate expenses

793

283

Total operating income

$
20,840

$
13,161

December 31,

September 30,

2017

2017
Segment assets

$
723,251

$
632,074
Cash, cash equivalents and marketable securities

231,882

104,292
Deferred tax assets

1,642

1,692
Equity method investments

30,902

28,570
Total assets

$
987,677

$
766,628

are as follows:


		Three Months Ended June 30,				Nine Months Ended June 30,
	2022		2021		2022		2021
Geographic Location:
North America	$	88,557	$	83,638	$	285,283	$	236,939
Europe		25,042		27,009		75,863		82,412
China		12,906		11,077		33,936		33,869
Asia Pacific/ Other		6,230		7,363		22,849		23,544
Total	$	132,735	$	129,087	$	417,931	$	376,764

Revenue for the United States comprises 99% of the revenue for North America for the three and nine months ended June 30, 2022 and 2021.

15. Significant Customers

The Company had ~~one~~no individual customer ~~within the Brooks Semiconductor Solutions Group segment~~ that accounted for 10% or more of its consolidated revenue ~~at 11%, during~~for each of the three and nine months ended ~~December 31, 2017~~June 30, 2022 and ~~2016~~. As2021. There was no customer that accounted for more than 10% of ~~December 31, 2017~~the Company’s accounts receivable balance as of both June 30, 2022 and September 30, ~~2017, the Company had no customers that accounted for 10% or more of the Company’s total receivables.~~2021.

For purposes of determining the percentage of revenue generated from any of the Company’s original equipment manufacturer (the "OEM") customers, the Company does not include revenue from products sold to contract manufacturer customers who in turn sell to the OEMs. If the Company included revenue from products sold to contract manufacturer customers supporting the Company’s OEM customers, the percentage of the Company’s total revenue derived from certain OEM customers would be higher.

16. Commitments and Contingencies

~~Letters~~Tariff Matter

In fiscal year 2021, as part of ~~Credit~~

~~At each~~the Company’s continued integration of ~~December 31, 2017 and September 30, 2017,~~GENEWIZ, which was acquired in November 2018, the Company ~~had approximately $3.5~~initiated a review during first quarter of fiscal year 2021, with the assistance of a third party consultant, of the transaction value that the Company has used to calculate tariffs on inter-company imports of samples shipped from its GENEWIZ business. As a result of the third-party review and in light of a new interpretation surrounding the valuation method used to calculate the estimated transaction value, the Company revised its estimate of the tariffs owed as a result and recorded a liability of $6.1 million ~~of letters of credit outstanding related primarily to customer advances and other performance obligations. These arrangements guarantee the refund of advance payments received from our customers~~ in the ~~event that~~second quarter of fiscal 2021. As of March 31, 2022, the product is not delivered or warranty obligations are not fulfilled in accordance with the contract terms. These obligations could be called by the beneficiaries at any time before the expiration date of the particular letter of credit if the Company fails to meet certain contractual requirements. None of these obligations were called duringaccrual was $7.4 million. During the three months ended ~~December 31, 2017~~June 30, 2022, the Company submitted a payment in the amount of $5.9 million to the customs authorities related to November 2021 and prior periods. The customs authorities will review the ~~fiscal year ended~~Company’s calculation of tariffs for these periods and determine if any further tariffs are owed. As of June 30, 2022 and September 30, ~~2017,~~2021, the accrual for these tariffs was $1.8 million and $7.0 million, respectively, which includes estimates for any additional liability for tariffs owed related to recurring operating activity. The Company does not expect to incur any significant penalties associated with the tariffs.

Purchase Commitments

At June 30, 2022, the Company ~~currently does not anticipate any~~had non-cancellable commitments of ~~these obligations to be called in the near future.~~

~~Purchase Commitments~~

~~The Company has non-cancellable contracts and~~$78.6 million, primarily comprised of purchase orders for inventory of ~~$128.6~~$65.0 million, information technology related commitments of $13.1 million, and ~~$122.0 million, respectively, at December 31, 2017 and September 30, 2017.~~China facility commitments of $0.4 million.

Contingencies

The Company is subject to various legal proceedings, both asserted and unasserted, that arise in the ordinary course of business. The Company cannot predict the ultimate outcome of such legal proceedings or in certain instances provide

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reasonable ranges of potential losses. The Company may also have certain indemnification obligations pursuant to claims made under the definitive agreement it entered into with Edwards Vacuum LLC (a member of the Atlas Copco Group) in connection with the Company’s sale of its semiconductor cryogenics business in the fourth quarter of fiscal year 2018. However, as of the date of this report, the Company believes that none of these claims will have a material adverse effect on its consolidated financial position or results of operations. In the third quarter of fiscal year 2020,

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Edwards asserted claims for indemnification under the definitive agreement relating to alleged breaches of representations and warranties relating to customer warranty claims and inventory.The Company cannot determine the probability of any losses or outcome of these claims including the amount of any indemnifiable losses, if any, resulting from these claims at this time, however, the Company believes that none of these claims will have a material adverse effect on its consolidated financial position or results of operations. If the resolution of these claims results in indemnifiable losses in excess of the applicable indemnification deductibles and indemnification escrow established under the definitive agreement, Edwards would be required to seek recovery under the representation and warranty insurance Edwards obtained in connection with the closing of the transaction. The Company believes that any indemnifiable losses in excess of the applicable deductibles and indemnification escrow established in the definitive agreement would be covered by such insurance. If Edwards is unable to obtain recovery under its insurance, however, it could seek recovery of such indemnifiable losses, if any, directly from the Company. In the event of unexpected subsequent developments and given the inherent unpredictability of these ~~legal proceedings,~~matters, 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 position or results of operations in particular quarterly or annual periods.

17. ~~Subsequent Events~~Fair Value Measurement

~~Dividend~~The fair value measurement guidance establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The following levels of inputs may be used to measure fair value:

~~On January 31, 2018, the Company’s Board of Directors declared a cash dividend of $0.10 per share payable on March 23, 201~~8 ~~to common stockholders of record~~

Level 1 Inputs: Quoted prices in active markets for identical assets or liabilities as of ~~March~~the reporting date. Active markets are those in which transactions for the asset and liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis.

Level 2 ~~201~~8~~. Dividends~~Inputs: Observable inputs other than prices included in Level 1, including quoted prices for similar assets or liabilities; quoted prices in markets that are ~~declared at~~not active; or other inputs that are observable or can be corroborated by observable market data for substantially the ~~discretion~~full term of the ~~Company’s Board~~assets or liabilities.

Level 3 Inputs: Unobservable inputs that are significant to the fair value of ~~Directors~~the assets or liabilities and ~~depend on~~reflect an entity’s own assumptions in pricing assets or liabilities since they are supported by little or no market activity.

The Company measures certain assets, including the ~~Company’s actual cash flows from operations, its financial condition~~cost and capital requirements and any other factors the Company’s Board of Directors may consider relevant. Future dividend declarations, as well as the record and payment dates for such dividends, will be determined by the Company’s Board of Directorsequity method investments, at fair value on a ~~quarterly basis.~~nonrecurring basis when they are deemed to be other-than-temporarily impaired. The fair values of these investments are determined based on valuation techniques using the best information available, and may include quoted market prices, market comparable, and discounted cash flow projections. An impairment charge is recorded when the cost of the investment exceeds its fair value and this condition is determined to be other-than-temporary.

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Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables summarize assets and liabilities measured and recorded at fair value on a recurring basis in the accompanying Consolidated Balance Sheets as of June 30, 2022 and September 30, 2021 (in thousands):


			Fair Value Measurements at Reporting Date Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
	June 30,		Identical Assets		Observable Inputs		Inputs
Description	2022		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	330,546	$	330,546	$	—	$	—
Available-for-sale securities		1,021,090		417,059		604,031		—
Foreign exchange contracts		32		—		32		—
Net investment hedge		65,814		—		65,814		—
Total assets	$	1,417,482	$	747,605	$	669,877	$	—
Liabilities:
Foreign exchange contracts		294		—		294		—
Total liabilities	$	294	$	—	$	294	$	—


			Fair Value Measurements at Reporting Date Using
			Quoted Prices in				Significant
			Active Markets for		Significant Other		Unobservable
	September 30,		Identical Assets		Observable Inputs		Inputs
Description	2021		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash equivalents	$	21	$	21	$	—	$	—
Available-for-sale securities		3,679		—		3,679		—
Foreign exchange contracts		153		—		153		—
Total assets	$	3,853	$	21	$	3,832	$	—
Liabilities:
Foreign exchange contracts		165	$	—		165		—
Acquisition-related contingent consideration		9,400		—		—		9,400
Total liabilities	$	9,565	$	—	$	165	$	9,400

Cash Equivalents

Cash equivalents consist of money market funds and are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

Available-For-Sale Securities

Available-for-sale securities primarily consist of municipal securities, bank certificate of deposits and U.S. government backed securities, and as such are classified as Level 1. Investments classified as Level 2 consist of debt securities that are valued using matrix pricing and benchmarking because they are not actively traded. Matrix pricing is a mathematical technique used to value securities by relying on the securities’ relationship to other benchmark quoted prices.

Foreign Exchange Contracts

Foreign exchange contract assets and liabilities are measured and reported at fair value based on observable market inputs and classified within Level 2 of the fair value hierarchy due to a lack of an active market for these contracts.

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Net Investment Hedge

Net investment hedge assets is measured and reported at fair value based on observable market inputs and classified within Level 2 of the fair value hierarchy due to a lack of an active market for these contracts.

Acquisition-related Contingent Consideration

Acquisition-related contingent consideration is measured and reported at fair value using the real options method based on the unobservable inputs that are significant to the fair value and classified with Level 3 of the fair value hierarchy. The amount is contingent based on the acquired business’ performance for the twelve-month period ending December 31, 2021. Please refer to Note 5, “Acquisitions” for further detail. Changes in the fair value of contingent consideration resulting from a change in the underlying inputs are recognized in results of operations until the arrangement is settled.

Financial Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

During the three months and nine months ended June 30, 2022 and 2021, the Company did not record any material other-than-temporary impairments on financial assets required to be measured at fair value on a nonrecurring basis.

18. Subsequent Event

On July 1, 2022, the Company closed its previously announced acquisition of Barkey Holding GmbH and its subsidiaries ("Barkey"), a leading provider of controlled rate thawing devices for customers in the medical, biotech and pharmaceutical industries, headquartered in Leopoldshöhe, Germany. The acquisition was completed with a purchase price of approximately €80.0 million, subject to customary adjustments. The acquisition is expected to expand the Company’s existing offerings and capabilities within its Life Sciences Products segment.

On August 8, 2022, the Company, through its wholly-owned subsidiary, Azenta Luxembourg, S.a.r.l, entered into a definitive agreement to acquire °B Medical Systems S.a.r.l and its subsidiaries (“B Medical”), a global leader in temperature-controlled storage and transportation solutions. The purchase price to be paid by Azenta at closing is approximately €410 million. Additional consideration, up to €50 million, may be paid contingent upon achieving future performance milestones. The transaction is expected to close in October 2022, upon meeting customary closing conditions.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, describes principal factors affecting the results of our operations, financial condition and liquidity as well as our critical accounting policies and estimates that require significant judgment and thus have the most significant potential impact on our unaudited consolidated financial statements included elsewhere in this ~~Quartely~~Quarterly Report on Form 10-Q. Our MD&A is organized as follows:

●

Overview. This section provides a general description of our business and operating segments as well as a brief discussion and overall analysis of our business and financial performance, including key developments affecting the Company during the three and nine months ended ~~December 31, 2017~~June 30, 2022 and ~~2016.~~

2021.

●

Critical Accounting Policies and Estimates. This section discusses accounting policies and estimates that require us to exercise subjective or complex judgments in their application. We believe these accounting policies and estimates are important to understanding the assumptions and judgments incorporated in our reported financial results.

●

Results of Operations. This section provides an analysis of our financial results for the three and nine months ended ~~December 31, 2017~~June 30, 2022 as compared to the three and nine months ended ~~December 31, 2016.~~

June 30, 2021.

●

Liquidity and Capital Resources. This section provides an analysis of our liquidity and changes in cash flows as well as a discussion of available borrowings and contractual commitments.

You should read the MD&A in conjunction with our unaudited consolidated financial statements and related notes ~~beginning on page 3 of~~included elsewhere in this Quarterly Report on Form 10-Q. In addition to historical information, the MD&A contains forward-looking statements that involve risks and uncertainties. You should read “Information Related to Forward-Looking Statements” ~~included~~ below for a discussion of important factors that could cause our actual results to differ materially from our expectations.

Sale of the Semiconductor Automation Business

In the fourth quarter of fiscal year 2021, we entered into a definitive agreement to sell our semiconductor automation business to Thomas H. Lee, Partners, L.P., or THL, for $3.0 billion in cash subject to customary adjustments. In connection with the planned divestiture of the semiconductor automation business and our continued focus on our life sciences businesses, we changed our corporate name from “Brooks Automation, Inc.” to “Azenta, Inc.” and our common stock started to trade on the Nasdaq Global Select Market under the symbol “AZTA” on December 1, 2021.

On February 1, 2022, we completed the sale of our semiconductor automation business for $2.9 billion in cash, subject to working capital and other customary adjustments. Net proceeds from the sale are expected to be $2.5 billion, net of estimated taxes payable. Since our founding in 1978, we had been a leading automation provider and partner to the global semiconductor manufacturing industry. With the completion of the sale of the semiconductor automation business, we no longer serve the semiconductor market. The semiconductor automation business has been classified as a discontinued operation and, unless otherwise noted, this MD&A relates solely to our continuing operations and does not include the operations of our semiconductor automation business.

Impact of the COVID-19 Pandemic

We have implemented business continuity plans designed to address the COVID-19 pandemic and minimize the disruption to ongoing operations. Since the beginning of the COVID-19 pandemic in March 2020, however, our business has been impacted at various times by reduced demand for services from customers experiencing lockdowns and quarantines, travel restrictions impacting our ability to service our products, supply chain constraints, increased competition for talent, and governmental mandates at times constraining our employees’ ability to work at our facilities. Since the beginning of the COVID-19 pandemic in March 2020, however, our business has been impacted at various times by reduced demand for services from customers experiencing lockdowns and quarantines, travel restrictions impacting our ability to service our products, supply chain constraints, increased competition for talent, and governmental mandates at times constraining our employees’ ability to work at our facilities. Recently, during the third quarter ended June 30, 2022, we experienced a two-week facility closure in Suzhou, China as a result of local

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government protocols and mandates. As we expect the pandemic to continue to evolve, we will continue monitoring and assessing the effects of the COVID-19 pandemic on our business. However, we cannot at this time accurately predict what effects these conditions will ultimately have on our operations due to uncertainties relating to variants of the virus, vaccine effectiveness against the variants, the duration of any future outbreak and the pandemic itself, and the length of the travel restrictions and business closures imposed by the governments of impacted countries. Our financial results will also depend on variables including reduced demand from our customers, the degree that the supply chain may be constrained which could impact our delivery of products and services and the potential negative impact on our operations if there is an outbreak among our employees, as well as the amount of incremental demand caused by research and treatments in the areas of COVID-19 or related threats.

Information Related to Forward-Looking Statements

This Quarterly Report on Form ~~10‑Q~~10-Q contains statements that are, or may be considered to be, forward-looking statements within the meaning of The Private Securities Litigation Reform Act of 1995, as amended, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as ~~amended.~~amended, or the Exchange Act. All statements that are not historical facts, including statements about our beliefs or expectations, are forward-looking statements. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “likely” or similar statements or variations of such terms. Forward-looking statements include, but are not limited to, statements that relate to our future revenue, margins, costs, earnings, profitability, product development, demand, acceptance and market share, competitiveness, market opportunities and performance, levels of research and development, the success of our marketing, sales and service efforts, outsourced activities, operating expenses, anticipated manufacturing, customer and technical requirements, the ongoing viability of the solutions that we offer and our customers’ success, tax expenses, our management’s plans and objectives for our current and future operations and business focus, our ability to retain, hire and integrate skilled personnel, the impact of the COVID-19 pandemic on our operations and results, including as a result of local mandates, any prolonged lock downs, or series of temporary closures, our ability to identify and address increased cybersecurity risks, including as a result of employees working remotely, the expected benefits and other statements relating to our divestitures and acquisitions, including sale of the semiconductor automation business and the semiconductor cryogenics business, the adequacy, effectiveness and success of our business transformation initiatives, our ability to continue to identify acquisition targets and successfully acquire and integrate desirable products and services and realize expected revenues and revenue synergies, our adoption of ~~the~~ newly issued accounting guidance, the levels of customer spending, our dependence on key suppliers or vendors to obtain services for our business on acceptable terms, including the impact of supply chain disruptions, general economic conditions, the sufficiency of financial resources to support future operations, and capital ~~expenditures and future acquisitions, divestitures and other strategic transactions.~~expenditures. Such statements are based on current expectations and involve risks, uncertainties and other factors which may cause the actual results, our performance or our achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include the Risk Factors which are set forth in our Annual Report on Form ~~10‑K~~10-K for the fiscal year ended September 30, ~~2017~~2021, or the 2021 Annual Report on Form 10-K, filed with the U.S. Securities and ~~which are incorporated herein by reference.~~Exchange Commission, or SEC, on November 24, 2021, as updated and/or supplemented in subsequent filings with the SEC, including under Item 1A “Risk Factors” in Part II of our Quarterly Report on Form 10-Q for the quarter ended December 31, 2021 as filed with the SEC on February 9, 2022 or the First Quarter Form 10-Q, and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2022 as filed with the SEC on May 16, 2022, or the Second Quarter Form 10-Q. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based on information currently and reasonably known to us. We do not undertake any obligation to release revisions to these forward-looking statements ~~which may be made~~ to reflect events or circumstances that occur after the date of this Quarterly Report on Form ~~10‑Q~~10-Q or to reflect the occurrence or effect of

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anticipated or unanticipated events. Precautionary statements made herein should be read as being applicable to all related forward-looking statements wherever they appear in this Quarterly Report on Form ~~10‑Q.~~10-Q. Any additional precautionary statements made in our ~~2017~~2021 Annual Report on Form ~~10‑K~~10-K should be read as being applicable to all related forward-looking statements whenever they appear in this Quarterly Report on Form ~~10‑Q.~~10-Q.

Unless the context indicates otherwise, references in this Quarterly Report on Form ~~10‑Q~~10-Q to ~~"we"~~“we”, ~~"us"~~“us”, ~~"our"~~“our” and ~~"the Company"~~“the Company” refer to ~~Brooks Automation,~~Azenta, Inc. and its consolidated subsidiaries.

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OVERVIEW

We are a leading global provider of ~~automation~~life science sample exploration and ~~cryogenic~~management solutions for ~~multiple applications~~the life sciences market. We support our customers from research to clinical development with our sample management, automated storage, and ~~markets.~~genomic services expertise to help our customers bring impactful therapies to market faster. We ~~primarily serve~~understand the ~~semiconductor capital equipment market~~importance of sample integrity and offer a broad portfolio of products and services spanning across the life cycle of samples from procurement and sourcing, automated storage platforms, genomic services and a broad range of consumables, informatics and data software, and sample management ~~market for life sciences.~~solutions. Our expertise and leadership ~~position and global support structure in each of these markets makes~~positions make us a ~~valued business~~trusted partner to ~~the some of the world’s largest semiconductor capital equipment and device makers, as well as~~ pharmaceutical, biotechnology, and life ~~science~~sciences research institutions globally. In total, our life sciences business employs approximately 2,900 full-time employees, part-time employees and contingent workers worldwide and have sales in ~~the world. Our offerings~~approximately 80 countries. We are ~~also applied to industrial capital equipment~~headquartered in Chelmsford, Massachusetts and ~~other adjacent technology markets.~~

~~In the semiconductor capital equipment market, equipment productivity~~have operations in North America, Asia, and availability are critical factors for our customers who typically operate equipment under demanding temperature and/or pressure environments. Our automation and cryogenics capabilities are demonstrated in our various robotic automation and cryogenic vacuum pump offerings, both of which are used by semiconductor manufacturers in the processing of silicon wafers into integrated circuits. Although the demand for semiconductors and semiconductor manufacturing equipment is cyclical, resulting in periodic expansions and contractions of this market, we expect the semiconductor equipment market to remain one of our principal markets as we continue making investments to maintain and grow our semiconductor product and service offerings. We invest in research and development initiatives within the Brooks Semiconductor Solutions Group segment to maintain continued leadership positions in the markets we serve. A majority of our research and development spending advances our current product lines and drives innovations for new product offerings.Europe.

In the life sciences sample management market, we utilize our core technology competencies and capabilities in automation and cryogenics to provide comprehensive bio-sample management solutions to a broad range of end markets within the life sciences industry. Our offerings include automated ultra-cold storage freezers, ~~consumable~~ sample storage containers, instruments which assist in the workflow of sample management, genomic services and both ~~complete~~ on-site and off-site full sample management services. We expect the life sciences sample management market to remain one of our principal markets for our product and service offerings and provide favorable opportunities for the growth of our overall business. Over the past several years, we have acquired and developed essential capabilities required to strategically address the sample management needs across multiple end markets within the life sciences industry. ~~In October 2017,~~

Our life sciences portfolio includes products and services that we acquired ~~all~~to bring together a comprehensive capability to service our customers’ needs in the sample-based services arena. We continue to develop the acquired products and services offerings through the combined expertise of the ~~outstanding capital stock of 4titude Limited, or 4titude, a U.K.-based manufacturer of scientific consumables for biological sample materials used in a variety of genomic~~newly acquired teams and ~~DNA analytical applications, for a total purchase price of $65.2 million, net of cash acquired. The acquisition will expand~~ our existing ~~offerings~~research and development resources. We believe our approach of ~~consumables~~acquisition, investment, and ~~instruments within~~integration has allowed us to accelerate our internal development and that of the ~~Brooks Life Sciences segment. Please refer~~acquired entity, significantly decreasing our time to Note 4, “Acquisitions” in the Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of this Quarterly Report on Form 10‑Q for further information on this transaction. Since entering the life sciences industry, wemarket.

We have also strengthened and broadened our product portfolio and market reach by investing in internal product development. During fiscal years 2017 and 2016, more than 23% of our cumulative research and development spending was focused on innovating and advancing solutions in the life sciences sample management market. In fiscal year 2016, we commercialized the internally developed Biostore III Cryo, an automated system which incorporates sample retrieval, archiving, monitoring, tracking, inventory control, and related enterprise systems connectivity with the industry’s leading cryogenic sample storage freezers. In fiscal year 2017, we launched BioStudies, a bioinformatics sample intelligence software platform that enables customers to manage their global samples. We expect to continue investing in research and development and making strategic acquisitions ~~and other investments~~ with the objective of expanding our offerings in the life sciences ~~sample management~~ market.

~~We report~~Within our ~~financial results for two operating and reportable segments which consist of Brooks Semiconductor Solutions Group segment and the Brooks~~ Life Sciences ~~segment.~~Products segment, we have developed and continue to develop automated biological sample storage solutions for operating in ultra-low temperature environments. We have a complete line up of automated stores from ambient temperatures to -190°. Our BioStore’s ™ unique design allows controlled temperature storage down to -80°C with the industry’s highest throughput of sample retrieval.

Within our Life Sciences Services segment, our genomics services business advances research and development activities by gene sequencing, synthesis, editing and related services. We offer a comprehensive, global portfolio that has both broad appeal in the life sciences industry as well as enable customers to select the best solution for their research challenge. This portfolio also offers unique solutions for key markets such as cell and gene therapy, antibody development, and biomarker discovery by addressing genomic complexity and throughput challenges. Our sample repository solutions business is a global leader in sample storage and management, and provides a full suite of reliable cold and ultra-cold chain solutions.

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Business and Financial Performance

Our performance for the three and nine months ended June 30, 2022 and 2021 are as follows:


	Three Months Ended June 30,				Nine Months Ended June 30,
Dollars in thousands	2022		2021		2022		2021
Revenue	$	132,735	$	129,087	$	417,931	$	376,764
Cost of revenue		73,135		66,656		220,462		199,098
Gross profit		59,600		62,431		197,469		177,666
Operating expenses
Research and development		6,515		5,489		19,895		15,813
Selling, general and administrative		58,133		57,825		187,361		171,648
Restructuring charges		25		-		319		53
Total operating expenses		64,673		63,314		207,575		187,514
Operating loss		(5,073)		(883)		(10,106)		(9,848)
Interest income		6,822		409		9,933		503
Interest expense		(2,101)		(477)		(4,111)		(1,485)
Loss of extinguishment of debt		—		—		(632)		—
Other income (expense), net		631		(1,651)		(1,617)		(263)
Loss before income taxes		279		(2,602)		(6,533)		(11,092)
Income tax benefit (provision)		7,293		(760)		(560)		(4,620)
Loss from continuing operations	$	(7,014)	$	(1,842)	$	(5,973)	$	(6,472)
Income from discontinued operations, net of tax		(2,555)		41,008		2,159,597		95,414
Net income	$	(9,569)	$	39,166	$	2,153,624	$	88,942

Three Months Ended ~~December 31, 2017~~June 30, 2022 Compared to Three Months Ended ~~December 31, 2016~~June 30, 2021

Results of Operations- – Revenue increased 3% as compared to the prior fiscal year period driven by a 6% increase in our Life Sciences Services segment, partially offset by a 3% decrease in our Life Sciences Products segments. Gross margin was 44.9% for the three months ended ~~December 31, 2017 increased to $189.3 million, or by 18%,~~June 30, 2022, as compared to ~~the corresponding period of the prior fiscal year. Gross margin was 39.7% for the first quarter of fiscal year 201~~8 as compared to 35.6% for the first quarter of fiscal year 2017, which resulted in an increase in gross profit of $18.3 million. Operating expenses were $54.4 million during the first quarter of fiscal year 2018 as compared to $43.8 million during the first quarter of fiscal year 2017~~, an increase of $10.6 million. Operating income was $20.8 million during the first quarter of fiscal year 2018 as compared to $13.2 million~~48.4% for the corresponding period of the prior fiscal year. ~~Revenue growth~~Operating expenses increased $1.4 million compared to the three months ended June 30, 2021, driven by increases in both research and ~~gross margin improvement drove higher gross profits~~development expenses and selling, general and administrative expenses. We reported an operating loss of ~~$18.3 million, partially offset by an increase in operating expenses. Net income was $16.5~~$5.1 million for the three months ended ~~December 31, 2017~~June 30, 2022, as compared to ~~$13.9~~operating loss of $0.9 million for the corresponding prior fiscal year period due to a decrease in gross profit and operating expenses. Loss from continuing operations was $7.0 million as compared to $1.8 million for the three months ended June 30, 2021. During the three months ended June 30, 2022, we recorded a $2.6 million net loss from discontinued operations.

Nine Months Ended June 30, 2022 Compared to Nine Months Ended June 30, 2021

Results of Operations – Revenue increased 11% as compared to the prior fiscal ~~year. The increase of $2.6 million~~year period driven by both our Life Sciences Services and Life Products segments which increased 16% and 3%, respectively. Gross margin was ~~primarily attributable to~~47.2% for both the ~~increase in operating income of $7.7 million, as noted above, partically offset by the impact of non-operating~~nine months ended June 30, 2022 and 2021. Operating expenses ~~which reduced net income by $5.3~~increased $20.1 million compared to the ~~corresponding period~~nine months ended June 30, 2021, driven by increases in both research and development expenses and selling, general and administrative expenses. We reported an operating loss of $10.1 million for the nine months ended June 30, 2022, as compared to an operating loss of $9.8 million for the corresponding prior fiscal ~~year.~~year period due to an increase in operating expenses. Loss from continuing operations was $6.0 million and $6.5 million, respectively, for the nine months ended June 30, 2022 and 2021. During the nine months ended June 30, 2022, we recorded a net gain on the sale of our semiconductor automation business of $2.1 billion, which is included within net income from discontinued operations.

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June 30, 2022 Compared to September 30, 2021

Cash Flows and ~~Liquidity-~~ Liquidity - Cash and cash equivalents and ~~marketable securities~~restricted cash as presented on our Consolidated Statements of Cash Flows is on a total company basis and were ~~$231.9 million at December 31, 2017~~$1.5 billion as of June 30, 2022 compared to ~~$104.3~~$285.3 million atas of September 30, ~~2017.~~2021. The increase ~~in cash and cash equivalents and marketable securities~~ of ~~$127.6 million~~$1.2 billion was ~~primarily~~ attributable to $2.9 billion of cash inflows ~~of $197.6 million~~ related to ~~proceeds from~~ the ~~term loan and cash inflows~~sale of ~~$3.2 million generated from~~ our ~~operating activities,~~semiconductor automation business, partially offset by $431.6 million of taxes paid related to the sale of the automation semiconductor business, cash outflows for the net change in operating assets and liabilities of $83.7 million, $1.5 billion related to ~~acquisition payments~~purchases of ~~$65.1~~marketable securities, $59.7 million ~~dividend payments of $7.1 million made to our shareholders during the first quarter of fiscal year 2018, as well as~~for capital expenditures, of $2.7 million. Cash inflows of $3.2 million generated from operating activities during the three months ended December 31, 2017 were comprised primarily of earnings of $27.1 million, including net income of $16.5 million and the impact of non-cash related charges of $10.6 million, partially offset by uses of cash of $23.9$1.0 million related to the ~~changes in our operating assests~~acquisition of technology intangible assets and ~~liabilities, net~~financing activities of ~~acquisitions. Please refer to "Liquidity and Capital Resources" section below for a detailed discussion of our liquidity and changes in cash flows~~$64.3 million. Financing activities include $49.7 million for the ~~three months ended December 31, 2017 compared~~extinguishment of debt and $10.4 million related to the ~~three months ended December 31, 2016.~~payments of acquisition related contingent consideration. The effects of foreign exchange reduced our cash balance by $99.0 million. The net proceeds from the sale of the semiconductor automation business was approximately $2.5 billion after payment of taxes and other expenses.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

Our unaudited consolidated financial statements are prepared in accordance with Generally Accepted Accounting Principles, or GAAP. The preparation of the interim consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. WeOn an ongoing basis, we evaluate our estimates, ~~on an ongoing basis,~~ including those related to revenue, ~~bad debts, inventories, long-lived assets, derivative instruments, goodwill,~~ intangible assets, ~~other than~~ goodwill, inventories, income taxes, ~~warranty obligations, pensions~~ and stock-based compensation. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances. We evaluate current and anticipated worldwide economic conditions, both in general and specifically in relation to the semiconductor and life science industries, that serve as a basis for making judgments about the carrying values of assets and liabilities that are not readily determinable based on information from other sources. Actual results may differ from these estimates under different assumptions or conditions that could have a material impact on our financial condition and results of operations.

For further information with regard to our significant accounting policies and estimates, please refer to Note 2, "Summary of Significant Accounting Policies" in the Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of this ~~Quartely~~Quarterly Report on Form ~~10‑Q~~10-Q and in the Notes to our audited consolidated financial statements included in Part II, Item 8 “Financial Statements and Supplementary Data” in our ~~2017~~2021 Annual Report on Form ~~10‑K.~~

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10-K.

Recently Issued and Adopted Accounting Pronouncements

For a summary of recently issued and adopted accounting pronouncements applicable to our unaudited consolidated financial statements, please refer to Note 2, "Summary of Significant Accounting Policies" in the Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of this ~~Quartely~~Quarterly Report on Form ~~10‑Q.~~10-Q.

RESULTS OF OPERATIONS

Please refer to the commentary provided below for further discussion and analysis of the factors contributing to our results from operations for the three and nine months ended June 30, 2022 as compared to the three and nine months ended June 30, 2021.

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Revenue

Our revenue performance for the three and nine months ended June 30, 2022 and 2021 is as follows:


	Three Months Ended June 30,						Nine Months Ended June 30,
Dollars in thousands	2022		2021		% Change		2022		2021		% Change
Life Sciences Products	$	47,369	$	48,625	(3)	%	$	150,861	$	146,520	3	%

Life Sciences Services	$	85,366	$	80,462	6	%	$	267,070	$	230,244	16	%

Total revenue	$	132,735	$	129,087	3	%	$	417,931	$	376,764	11	%

Three ~~Months Ended December 31, 2017 Compared~~months ended June 30, 2022 compared to ~~Three Months Ended December 31, 2016~~three months ended June 30, 2021

Revenue increased 3% driven by a 6% increase in our Life Sciences Services segment, partially offset by a 3% decline in our Life Sciences Products segment during the three months ended June 30, 2022 as compared to the corresponding prior year period.

~~We reported~~Our Life Sciences Products segment revenue decreased 3% driven by decreased demand for our consumables and instruments; partially offset by increased revenue in our automated cold sample management systems.

Our Life Sciences Service segment revenue increased 6% driven by increased revenue in both our sample repository solutions and genomics services businesses. Sample repository solutions revenue increased 19% due to growth in our storage services. Genomic services revenue increased 1% due to an increase in our Next Generation Sequencing, or NGS, business.

Revenue generated outside the United States was $44.8 million, or 34% of ~~$189.3 million~~total revenue, for the three months ended ~~December 31, 2017,~~June 30, 2022, as compared to ~~$160.0~~$46.2 million, or 36% of total revenue, for the corresponding period of the prior fiscal year. No individual customer that accounted for more than 10% of our consolidated revenue for the three months ended June 30, 2022 or 2021.

Nine months ended June 30, 2022 compared to nine months ended June 30, 2021

Revenue increased 11% driven by increases in both our Life Sciences Products and our Life Sciences Services segments during the nine months ended June 30, 2022 as compared to the corresponding prior year period.

Our Life Sciences Products segment revenue increased 3% driven by increased revenue in our automated cold sample management systems and infrastructure services, partially offset by a decrease in demand for our consumables and instruments.

Our Life Sciences Service segment revenue increased 16% driven by increased revenue in both our sample repository solutions and genomics services businesses. Sample repository solutions revenue increased 22% due to growth in our storage, logistics services, informatics and sample procurement services. Genomic services revenue increased 14% due to an increase ~~of $29.4~~in demand across all service lines.

Revenue generated outside the United States was $134.6 million, or ~~18%.~~ 32% of total revenue, for the nine months ended June 30, 2022, as compared to $142.4 million, or 38% of total revenue, for the corresponding period of the prior fiscal year. No individual customer that accounted for more than 10% of our consolidated revenue for the nine months ended June 30, 2022 or 2021.

The COVID-19 pandemic has had varying impacts on our business for the three and nine months ended June 30, 2022. We estimate that the COVID-19 pandemic had a positive net impact of approximately $1 million and $13 million,

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respectively, on our revenue for the three months ended June 30, 2022 and 2021 and approximately $21 million and $39 million, respectively, on our revenue for the nine months ended June 31, 2022 and 2021.

Operating Loss

Our operating income performance for the three and nine months ended June 30, 2022 and 2021 is as follows:


	Three Months Ended June 30,						Nine Months Ended June 30,
Dollars in thousands		2022			2021			2022			2021
Revenue:
Life Sciences Products	$	47,369		$	48,625		$	150,861		$	146,520
Life Sciences Services		85,366			80,462			267,070			230,244
Total revenue	$	132,735		$	129,087		$	417,931		$	376,764

Operating income:
Life Sciences Products	$	2,216		$	5,060		$	11,895		$	16,492
Life Sciences Products adjusted operating margin		5	%		10	%		8	%		11	%
Life Sciences Services	$	2,251		$	5,774		$	14,997		$	18,316
Life Sciences Services adjusted operating margin		3	%		7	%		6	%		8	%
Segment adjusted operating income	$	4,467		$	10,834		$	26,892		$	34,808
Total segment adjusted operating margin		3	%		8	%		6	%		9	%

Amortization of completed technology		1,811			2,173			5,424			6,200
Amortization of acquired intangible assets		5,745			7,396			18,064			21,657
Restructuring charges		23			—			319			53
Tariff adjustment		—			—			(486)			5,414
Other unallocated corporate expenses		1,961			2,148			13,677			11,332
Total operating loss	$	(5,073)		$	(883)		$	(10,106)		$	(9,847)
Total operating margin		(4)	%		(1)	%		(2)	%		(3)	%

Three months ended June 30, 2022 compared to three months ended June 30, 2021

We reported ~~revenue growth~~an operating loss of $5.1 million during the three month period ending June 30, 2022, compared to an operating loss of $0.9 million in the prior fiscal year period. The increase in operating loss was due to a decrease in gross profit of $2.8 million and an increase in operating expenses of $1.4 million. Within operating expenses, research and development expenses increased $1.0 million and selling, general, and administrative expenses increased $0.3 million.

Life Sciences Products segment adjusted operating income decreased $2.8 million and adjusted operating margin decreased 5.7 percentage points compared to the prior fiscal year period. The decrease in adjusted operating income was driven by a decrease in gross profit of $1.8 million and higher operating expenses of $1.0 million. Adjusted operating income for our Life Sciences Products segment excludes charges for amortization related to completed technology of $0.3 million and $0.4 million for both the three months ended June 30, 2022 and 2021. Please refer to Note 14, “Segment Information” in the Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of this Quarterly Report on Form 10-Q.

Life Sciences Services segment adjusted operating income decreased $3.5 million and adjusted operating margin decreased 4.5 percentage points compared to the prior fiscal year period. The decrease in adjusted operating income was driven by higher operating expenses of $2.2 million and a decrease in gross profit of $1.3 million. Adjusted operating income for our Life Sciences Services segment excludes charges for amortization related to completed technology of $1.6 million and $1.7 million for the three months ended June 30, 2022 and 2021, respectively. Please refer to Note 14, “Segment Information” in the Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of this Quarterly Report on Form 10-Q.

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Nine months ended June 30, 2022 compared to nine months ended June 30, 2021

We reported an operating loss of $10.1 million during the nine month period ending June 30, 2022, compared to an operating loss of $9.8 million in the prior fiscal year period. The increase in operating loss was due to an increase in operating expenses of $20.0 million; partially offset by an increase in gross profit of $19.8 million. Within operating expenses, selling, general, and administrative expenses increased $15.7 million, and research and development expenses increased $4.1 million. Restructuring charges increased $0.3 million. Operating income for the nine months ended June 30, 2021 included $5.4 million of cost accrued for tariff liabilities on intercompany import activity in fiscal years 2016 through 2020 and $0.7 million of tariff liabilities related to activity during the three and nine months ended June 30, 2021. During the nine months ended June 30, 2022, upon the completion of an independent study, we recorded a benefit of $0.5 million related to the accrual for the fiscal years 2016 through 2020, as described above.

Life Sciences Products segment adjusted operating income decreased $4.6 million and adjusted operating margin decreased 3.4 percentage points compared to the prior fiscal year period. The decrease in adjusted operating income was driven by higher operating expenses of $7.1 million; partially offset by an increase in gross profit of $2.5 million. Adjusted operating income for our Life Sciences Products segment excludes charges for amortization related to completed technology of $0.7 million and $1.0 million for the nine months ended June 30, 2022 and 2021, respectively. Please refer to Note 14, “Segment Information” in the Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of this Quarterly Report on Form 10-Q.

Life Sciences Services segment adjusted operating income decreased $3.3 million and adjusted operating margin decreased 2.3 percentage points. The decrease in adjusted operating income was driven by an increase in operating expenses of $14.0 million, partially offset by an increase in gross profit of $10.6 million and excludes charges for amortization related to completed technology of $4.7 million and $5.2 million for the nine months ended June 30, 2022 and 2021, respectively. Adjusted operating income also excludes a benefit of $0.5 million and a charge of $5.5 million, respectively for the nine months ended June 30, 2022 and 2021 related to tariff charges for the fiscal years 2016 through 2020, as described above. Please refer to Note 14, “Segment Information” in the Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of this Quarterly Report on Form 10-Q.

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Gross Margin

Our gross margin performance for the three and nine months ended June 30, 2022 and 2021 is as follows:


	Life Science Products						Life Science Services						Azenta Total
	Three Months Ended June 30,						Three Months Ended June 30,						Three Months Ended June 30,
Dollars in thousands	2022			2021			2022			2021			2022			2021
Revenue	$	47,369		$	48,625		$	85,366		$	80,462		$	132,735		$	129,087
Gross profit		21,026			22,655			38,573			39,772			59,600			62,431
Gross margin		44.4	%		46.6	%		45.2	%		49.4	%		44.9	%		48.4	%
Adjustments:
Amortization of completed technology		251			432			1,560			1,742			1,811			2,174
Tariff adjustment		—			—			—			(83)			—			(83)
Adjusted gross profit	$	21,277		$	23,087		$	40,133		$	41,431		$	61,411		$	64,522
Adjusted gross margin		44.9	%		47.5	%		47.0	%		51.5	%		46.3	%		50.0	%

	Life Science Products						Life Science Services						Azenta Total
	Nine Months Ended June 30,						Nine Months Ended June 30,						Nine Months Ended June 30,
Dollars in thousands	2022			2021			2022			2021			2022			2021
Revenue	$	150,861		$	146,520		$	267,070		$	230,244		$	417,931		$	376,764
Gross profit		70,006			67,232			127,475			110,431			197,469			177,666
Gross margin		46.4	%		45.9	%		47.7	%		48.0	%		47.2	%		47.2	%
Adjustments:
Amortization of completed technology		722			985			4,702			5,215			5,424			6,200
Tariff adjustment		—			—			(486)			5,414			(486)			5,414
Adjusted gross profit	$	70,728		$	68,217		$	131,691		$	121,060		$	202,407		$	189,280
Adjusted gross margin		46.9	%		46.6	%		49.3	%		52.6	%		48.4	%		50.2	%

Three months ended June 30, 2022 compared to three months ended June 30, 2021

Total gross margin increased 3.5 percentage points to 44.9% compared to the prior three month fiscal year period driven by decreased gross margin in both ~~the Brooks Semiconductor Solutions Group~~our Life Sciences Products segment and ~~the Brooks~~our Life Sciences Services segment.

Life Sciences Products segment gross margin decreased 2.2 percentage points. The decrease was primarily driven by the mix of products sold in our consumables and instruments business, one time inventory adjustments and higher logistics costs. Cost of revenue included $0.3 million and $0.4 million of charges for amortization related to completed technology for the three months ended June 30, 2022 and 2021, respectively. Excluding the impact of ~~changes in foreign currency exchange rates favorably affected revenue by $2.4 million~~the amortization of completed technology, margins decreased 2.6 percentage points during the three months ended ~~December 31, 2017 when~~June 30, 2022, as compared to the corresponding period of the prior fiscal year.

~~Our Brooks Semiconductor Solutions Group~~Life Sciences Services segment ~~reported revenue~~gross margin decreased 4.2 percentage points driven by decreased gross margin in both the genomic services business and sample repository solutions business. The decrease in the genomic services business was due to the impact of ~~$141.9 million for~~lower sales as well as mandated COVID related measures in China that reduced customer orders and production at our Suzhou, China location. The decrease in gross margin in the ~~three months ended December 31, 2017 compared to $126.6 million for~~sample repository solutions business is mainly driven by higher labor costs in the ~~corresponding period~~storage solutions business. Excluding the impact of the ~~prior fiscal year. The increase~~amortization of $15.3 million, or 12%, reflects increases in sales of cryogenic pump products, robotic automation products and services and related spare parts, partially offset by a decline in sales of contamination controls systems. The increase in revenue includes the favorable impact of changes in foreign currency exchange rates of $1.9 millioncompleted technology, Life Sciences Services margins decreased 4.5 percentage points during the three months ended December 31, 2017. The semiconductor markets are cyclical, and often fluctuate significantly from quarter to quarter. Demand for our Brooks Semiconductor Solution Group products is affected by these cycles.

Our Brooks Life Sciences segment reported revenue of $47.4 million for the three months ended December 31, 2017 compared to $33.3 million for the corresponding period of the prior fiscal year. The increase of $14.1 million, or 42%, was primarily from internal growth of $7.7 million, principally in sample storage services, automated storage systems, consumables and instruments, and software. Additionally, the acquisitions of 4titude, Pacific Bio-Material Management, Inc. and Novare, LLC, or PBMMI, and Cool Lab, LLC, or Cool Lab, contributed incremental revenue of $6.4 million. Brooks’ Life Sciences internal revenue growth was favorably affected by foreign currency exchange rates which increased revenue by $0.5 million during the three months ended December 31, 2017June 30, 2022, as compared to the corresponding period of the prior fiscal year.

~~Revenue generated outside the United States amounted to $117.2 million, or 62%~~

Table of ~~total revenue, for the three~~Contents

Nine months ended ~~December 31, 2017~~June 30, 2022 compared to ~~$106.8 million, or 67% of total revenue, for the corresponding period of~~nine months ended June 30, 2021

Total gross margin increased 0.1 percentage points to 47.2% compared to the prior nine month fiscal ~~year. We have one customer within the Brooks Semiconductor Solutions Group~~year period driven by decreased gross margin in our Life Sciences Services segment; partially offset by an increase in gross margin in our Life Sciences Products segment.

Life Sciences Products segment ~~that accounted for approximately 11% of our consolidated revenue during each of the three months ended December 31, 2017 and 2016.~~

~~Gross Margin~~

~~We reported~~ gross ~~margins of 39.7% for the three months ended December 31, 2017 compared to 35.6% for the corresponding period of the prior fiscal year. Gross~~ margin increased ~~in the Brooks Semiconductor Solutions Group segment~~0.5 percentage points. The increase was primarily driven by ~~6.0 percentage points~~cost reduction initiatives within our automated storage systems business and ~~declined in the Brooks Life Sciences segment by 1.2 percentage points.~~increased productivity. Cost of revenue ~~for the three months ended December 31, 2017 and 2016~~ included ~~$0.9~~$0.7 million and $1.0 million, respectively, of charges for amortization related to completed technology ~~as well as $1.2 million~~for the nine months ended June 30, 2022 and ~~$0.1 million, respectively, of charges related to the sale of inventories obtained in acquisitions to which a step-up in value was applied in purchase accounting.~~2021. Excluding the ~~purchasing accounting~~ impact ~~and~~of the amortization of completed technology, margins expanded ~~4.6~~0.3 percentage ~~points.~~

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~~Our Brooks Semiconductor Solutions Group segment reported gross margins of 41.9% for~~points during the ~~three~~nine months ended December 31, 2017 as compared to 35.9% for the corresponding period of the prior fiscal year. The increase is driven by a favorable mix, volume leverage, lower costs related to materials and our service operations and a favorable impact of

changes in foreign currency exchange rates. Cost of revenue during the three months ended December 31, 2017 and 2016 included $0.5 million and $0.6 million, respectively, of amortization related to completed technology. Excluding the amortization of completed technology, margins expanded 5.9 percentage points.

Our Brooks Life Sciences segment reported gross margins of 33.2% for the three months ended December 31, 2017 as compared to 34.4% for the corresponding period of the prior fiscal year. The decrease was a result of higher production costs and higher charges related to the sale of inventories obtained in acquisitions to which a step-up in value was applied in purchase accounting. Such charges were $1.2 million during the three months ended December 31, 2017 compared to $0.1 million during the corresponding period of the prior fiscal year. These increases were partially offset by a more favorable mix of products and services, volume leverage and higher margins on automated storage systems, consumables, and sample storage services. Cost of revenue during each of the three months ended December 31, 2017 and 2016 also included $0.4 million of amortization related to completed technology. Excluding the purchasing accounting impact and the amortization of completed technology, margins expanded 0.7 percentage points.

~~Research and Development~~

Research and development expenses were $13.2 million during the three months ended December 31, 2017 as compared to $10.8 million during the corresponding period of the prior fiscal year. The increase of $2.4 million reflects higher costs of $1.4 million within the Brooks Semiconductor Solutions Group segment and $1.0 million within the Brooks Life Sciences segment which were primarily attributable to higher employee-related costs and project spending to support new product development and the growth of our business.

~~Selling, General and Administrative~~

Selling, general and administrative expenses were $41.2 million for the three months ended December 31, 2017 as compared to $32.0 million for the corresponding period of the prior fiscal year. The increase of $9.2 million was primarily attributable to: (i) higher employee-related costs driven by increased incentive bonuses and higher salaries resulting from hiring additional personnel to support the growth of our business, (ii) higher stock-based compensation expense driven mostly by higher estimates of the expected payout related to the achievement of performance goals for our performance-based awards, as well as (iii) higher expenses related to the acquisitions of PBMMI and 4titude. Amortization expense related primarily to customer relationships was $4.6 million during the first quarter of fiscal year 2018 as compared to $3.1 million during the corresponding period of the prior fiscal year. Merger-related costs were $0.6 million and $0.2 million, respectively, during the three months ended December 31, 2017 and 2016.

June 30,

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~~Restructuring Charges~~

There were no restructuring charges recorded during the three months ended December 31, 2017. During the three months ended December 31, 2016, we recorded restructuring charges of $1.0 million which were related to severance and comprised of: (i) $0.7 million of costs related to the Company-wide restructuring action, (ii) $0.2 million of costs attributable to the Brooks Semiconductor Solutions Group segment related to the integration of Contact Co., Ltd. ~~which we acquired in fiscal year 2015~~, and (iii) $0.1 million of costs attributable to the Brooks Life Sciences segment related to streamlining the segment's management structure, integrating acquisitions and improving profitability. Please refer to Note 15, “Restructuring and Other Charges” to our consolidated financial statements and “Restructuring Charges” to our consolidated financial statements included under Item 8, “Financial Statements and Supplementary Data” included in our 2017 Annual Report on Form 10-K for further information on these restructuring actions.

~~Non-Operating Income (Expenses)~~

~~Gain on Settlement of Equity Method Investment-~~ During the three months ended December 31, 2016, we recognized a gain of $1.8 million on the settlement of the equity method investment in BioCision which was included as a part of the non-cash consideration for an acquisition of Cool Lab in November 2016. Please refer to Note 3, “Acquisitions” to our consolidated financial statements included in our 2017 Annual Report on Form 10-K for further information on this transaction.

~~Interest Expense~~- During the three months ended December 31, 2017, we recorded interest expense of $2.2 million which was primarily related to the term loan originated on October 4, 2017. Please refer to the “Liquidity and Capital Resources” section below for further information on the term loan.

~~Other expenses, net~~. During the three months ended December 31, 2017 and 2016, we recorded other expenses, net of $1.7 million and $0.3 million respectively. The increase of $1.4 million was primarily attributable to an increase in foreign currency exchange losses during the three months ended December 31, 2017 2022, as compared to the corresponding period of the prior fiscal year. ~~Please refer to Item 3. “Quantitative and Qualitative Disclosures About Market Risk – Currency Rate Exposure”~~

Life Sciences Services segment gross margin decreased 0.2 percentage points driven by the sample repository solutions business, partially offset by an increase in ~~this Quartely Report on Form 10-Q for additional information about these currency exchange losses. Additionally, we recognized higher losses of $0.2 million during~~gross margin in the ~~first quarter of fiscal year 2017~~genomic services business. The decrease in gross margin in the sample repository solutions business primarily related to ~~fair value measurement of convertible debt securities in BioCision. Please refer to Note 3, “Acquisitions” to~~increased employee related costs within our ~~consolidated financial statements included on the 2017 Annual Report~~storage solutions business. The increase in the ~~Form 10-K for further information on this transaction.~~

~~Income Tax Provision~~

During the three months ended December 31, 2017 and 2016, we recorded an income tax provision of $2.9 million and $2.8 million, respectively. The tax provision for the three months ended December 31, 2017genomic services gross margin was primarily driven by ~~the foreign income generated~~$6.1 million accrued for tariff liabilities during the ~~current quarter. This provision is partially offset by $0.3~~nine months ended June 30, 2021 as discussed in the “Operating Income (Loss)” section above, as compared to the nine months ended June 30, 2022, in which we recorded a benefit of $0.5 million ~~of tax benefits~~ related to the reduction of reserves for unrecognized tax benefits and $0.7 million of tax benefits related to the re-measurement of net U.S. deferred tax liabilities at the reduced 21 percent federal income tax rate. The income tax provisionaccrual for the ~~three months ended December 31,~~fiscal years 2016 was primarily driven by foreign income generated during the quarter, partially offset by $0.7 million of tax benefits related to the reduction of reserves for unrecognized tax benefits. For additional discussion of the calculation of our income tax liabilities, please refer to Note 9, "Income Taxes", in the Notes to the unaudited Consolidated Financial Statements included in Item 1 "Consolidated Financial Statements" of this Form 10-Q.

During the three months ended December 31, 2017, the Tax Cuts and Jobs Act (“Tax Reform”) was enacted in the U.S., making significant tax law changes affecting us. The SEC has issued Staff Accounting Bulletin 118 (“SAB 118”), which has provided guidance for companies that have not completed the accounting for the income tax effects of Tax Reform. Under SAB 118, a company may report provisional amountsthrough 2020 based on ~~reasonable estimates where~~ the ~~accounting is incomplete. These amounts are subject to adjustments during a measurement period of up to one year beginning in the reporting period of the enactment date.~~

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~~Upon the enactment of Tax Reform, we are subject to a toll charge in the U.S. on our previously untaxed accumulated foreign earnings. The toll charge is treated as~~results from an inclusion of our accumulated foreign earnings in U.S. taxable income during the tax year ended September 30, 2018. Any taxes due associated with the toll charge will be payable over an eight year period. We have estimated that our accumulated foreign earnings are $120 million, which is a provisional amount subject to the measurement period described in Staff Accounting Bulletin 118. There are still incomplete components related to the accumulated foreign earnings calculations for older tax years that require additional time to complete the calculations. We also have a history of foreign mergers and acquisitions, and proper determination of the impact on the accumulated earnings is complex. We have not recorded any provision for currently estimated tax inclusion associated with the toll charge as sufficient previously un-benefited tax attributes, with valuation allowances, exist to offset the inclusion income or resulting tax.

As a result of Tax Reform, we calculated its U.S. tax provision for the three months ended December 31, 2017 using a blended U.S. statutory tax rate of 24.5%, which is a prorated allocation of the 35% rate which was in effect prior to tax reform through December 31, 2017 and the 21% rate which will be in effect for the remainder of the fiscal year. The Company recorded a discrete benefit of $0.7 million in the three months ended December 31, 2017 due toindependent study. Excluding the impact of the ~~U.S. rate change on its net U.S. deferred tax liabilities.~~

~~Equity in Earnings~~amortization of ~~Equity Method Investments~~

~~During~~completed technology and the ~~three~~tariff adjustment, margins decreased 3.3 percentage points during the nine months ended December 31, 2017, we recorded income of $2.2 million from our equity method investments as compared to $1.9 million during the corresponding period of the prior fiscal year. The increase of $0.2 million was primarily attributable to higher income generated from ULVAC Cryogenics, Inc., or UCI, during the first quarter of fiscal year 2018June 30, 2022, as compared to the corresponding period of the prior fiscal ~~year.~~year due to higher labor costs and the product mix in our sample repository solutions business.

~~During~~

Research and Development Expenses

Our research and development expense for the three and nine months ended June 30, 2022 and 2021 is as follows:


	Three Months Ended June 30,							Nine Months Ended June 30,
Dollars in thousands	2022			2021				2022			2021
Life Sciences Products	$	3,314		$	2,724			$	10,543		$	7,422
Percent Revenue		2.5	%		2.1	%	%		2.5	%		2.0	%

Life Sciences Services	$	3,200		$	2,765			$	9,352		$	8,391
Percent Revenue		2.4	%		2.1	%			2.2	%		2.2	%

Total research and development expense	$	6,514		$	5,489			$	19,895		$	15,813
Percent Revenue		4.9	%		4.3	%			4.8	%		4.2	%

Research and development expenses for the three months ended ~~December 31, 2016,~~June 30, 2022 increased $1.0 million as compared to the three months ended June 30, 2021, driven by a $0.6 million increase in our Life Sciences Products segment and a $0.4 million increase in our Life Sciences Services segment. Research and development expenses for the nine months ended June 30, 2022 increased $4.1 million as compared to the three months ended June 30, 2021, driven by a $3.1 million increase in our Life Sciences Products segment and a $1.0 million increase in our Life Sciences Services segment. The increase for the three and nine months ended June 30, 2022, in Life Sciences Products was driven by continued investment in automated stores, cryogenic stores, and instruments. The increase for the three and nine months ended June 30, 2022, in Life Sciences Services was primarily related to continued development of our services lines.

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Selling, General and Administrative Expenses

Our selling, general and administrative expenses for the three and nine months ended June 30, 2022 and 2021 is as follows:


	Three Months Ended June 30,						Nine Months Ended June 30,
Dollars in thousands	2022			2021			2022			2021
Life Sciences Products	$	15,746		$	15,284		$	48,289		$	44,298
Percent Revenue		11.9	%		11.8	%		11.6	%		11.8	%

Life Sciences Services	$	34,677		$	32,892		$	107,342		$	94,318
Percent Revenue		26.1	%		25.5	%		25.7	%		25.0	%

Corporate	$	7,710		$	9,649		$	31,730		$	33,032
Percent Revenue		5.8	%		7.5	%		7.6	%		8.8	%

Total selling, general and administrative expense	$	58,133		$	57,825		$	187,361		$	171,648
Percent Revenue		43.8	%		44.8	%		44.8	%		45.6	%

Total selling, general and administrative expenses increased $0.3 million and $15.7 million, respectively, for the three and nine months ended June 30, 2022 as compared to the three and nine months ended June 30, 2021, driven by increases in both our segments and an increase in unallocated corporate expenses.

Within our segment expenses discussed below, we ~~incurred losses of~~allocate certain corporate general and administrative expenses including costs related to shared corporate functions which include finance, information technology, human resources, legal, executive, governance, logistics and compliance. In total, corporate general and administrative expense allocated to segments decreased $1.5 million for the three months ended June 30, 2022, due to lower variable compensation expense and increased $4.6 million for the nine months ended June 30, 2022, due to staffing and labor cost increases to support the standalone Life Sciences company.

Life Sciences Products segment selling, general and administrative expenses increased $0.5 million and $4.0 million, respectively, for the three and nine months ended primarily related to higher allocated costs.

Life Sciences Services segment selling, general and administrative expenses increased $1.8 million and $13.0 million, respectively, for the three and nine months ended June 30, 2022 related to investments in the commercial organization and lab support personnel. In addition, bad debt expense was higher for the nine months ended June 30, 2022 due to a reversal that occurred in the first fiscal quarter of 2021.

Unallocated corporate expenses decreased $1.9 million for the three months ended June 30, 2022 as compared to the comparable prior year period primarily due to lower merger and acquisition costs and costs related to the separation of our company as well as lower amortization of intangible assets. During the fourth fiscal quarter of 2021, we impaired tradename intangibles due to the rebranding of our company. Partially offsetting these decreases were charges related to transformation and rebranding efforts during the three months ended June 30, 2022, which were not present in the prior fiscal year period. Unallocated corporate expenses decreased $1.3 million for the nine months ended June 30, 2022 as compared to the comparable prior year period, primarily due to lower merger and acquisition costs and costs related to the separation of the Company as well as lower amortization of intangible assets. These decreases were partially offset by costs related to transformation and rebranding efforts, which were not present in the prior fiscal year period.

Restructuring Charges

Restructuring charges increased by less than $0.1 million and $0.3 million, respectively, for the three and nine months ended June 30, 2022 as compared to the three and nine months ended June 30, 2021. The three and nine months ended June 30, 2022 includes charges for actions taken related to the transformation of our business. Costs savings from these actions are expected to be realized in future periods.

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Non-Operating Income (Expenses)

Interest income – We recorded interest income of $6.8 million and $9.9 million, respectively, for the three and nine months ended June 30, 2022, as compared to $0.4 million and $0.5 million, respectively, for the corresponding periods of the prior fiscal year. The increase in interest income in the three and nine month periods ended June 30, 2022 as compared to the same periods in the prior fiscal year is due to interest earned on the proceeds from the sale of the semiconductor automation business, including interest accrued on a net investment hedge, during the three and nine month periods ended June 30, 2022. Please refer to the Derivative Instruments section of Note 2, “Summary of Significant Accounting Policies” in the Notes to the unaudited consolidated financial statements included in Item 1 “Consolidated Financial Statements” of this Quarterly Report on Form 10-Q.

Interest expense – During the three and nine months ended June 30, 2022 we recorded interest expense of $2.1 million and $4.1 million, respectively, as compared to $0.5 million and $1.5 million, respectively, during the corresponding periods of the prior fiscal year. Interest expense for the three and nine months ended June 30, 2022, is primarily related to interest on cash held in one of our ~~investment~~German subsidiaries that is denominated in ~~BioCision~~EUR, which carries a negative interest rate. Interest expense for the three and nine months ended June 30, 2021, is primarily related to interest expense on our term loan. The term loan was settled on February 1, 2022 using the proceeds from the sale of the semiconductor automation business.

Other income (expenses), net – We recorded other income of $0.6 million for the three months ended June 30, 2022 and we recorded other expense of $1.6 million for the nine months ended June 30, 2022, as compared to other expense of $1.7 million and $0.3 million, respectively, for the three and nine months ended June 30, 2021. The change for the three months ended June 30, 2022 as compared to the corresponding prior fiscal year period is primarily due to foreign exchange gains. The change for the nine months ended June 30, 2022 from the corresponding prior fiscal year period is primarily due to foreign currency exchange losses.

Income Tax Provision / Benefit

We recorded an income tax provision of $7.3 million for the three months ended June 30, 2022 and income tax benefit of $0.6 million during the ~~first~~nine months ended June 30, 2022. The tax provision for the three months ended June 30, 2022 was primarily drivenbyatrue-upoftheeffectivetaxrateonayear-to-datebasis.Thesechangesweretheresultoffluctuationsin expected global income from operations.The tax benefit for the nine months ended June 30, 2022, was driven by the pre-tax loss and a $4.6 million discrete stock compensation windfall benefit for tax deductions that exceeded the associated book compensation expense. The tax benefit for the nine months ended June 30, 2022, was partially offset by a $0.7 million charge to increase the deferred tax liability to reflect a change in the blended state income tax rate that results from the sale of the semiconductor business assets.

We recorded an income tax benefit of $0.8 million and $4.6 million, respectively during the three and nine months ended June 30, 2021. The tax benefit for the three months ended June 30, 2021, was primarily driven by the benefit on loss from operations during the period and $ 1.5 million overall benefit from multiple releases of unrecognized tax benefits and accrued interest due to the status of limitation expirations. The tax benefit for the nine months ended June 30, 2021, was further increased by a $2.0 million discrete stock compensation windfall benefit for tax deductions that exceeded the associated book compensation expense.

Discontinued Operations

Discontinued operations for the three and nine months ended March 31, 2022 and 2021 include our semiconductor automation business. In the fourth quarter of fiscal year ~~2017~~2021, we entered into a definitive agreement to sell our semiconductor automation business to THL for $3 billion in cash, subject to net working capital and other adjustments. On February 1, 2022, we completed the sale of our semiconductor automation business to THL for $2.9 billion in cash, subject to net working capital and other adjustments. Net cash proceeds from the divestiture are expected to be $2.5 billion after estimated taxes payable.The nine months ended June 30, 2021 include an adjustment recorded in the first fiscal quarter of 2021 to our previously recorded gain on sale from our semiconductor cryogenics business, which was completed on July 1, 2019.

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Revenue from discontinued operations was $264.4 million for the nine months ended June 30, 2022, we did not have revenue from discontinued operations for the three months ended June 30, 2022. Revenue from discontinued operations was $186.3 million and $474.7 million, respectively, for the three and nine months ended June 30, 2021. Net loss from discontinued operations was $2.6 million for the three months ended June 30. 2022 and net income from discontinue operations was $2.2 billion for the nine months ended June 30, 2022. Net income from discontinued operations was $41.0 million and $96.6 million, respectively, for the three and nine months ended June 30, 2021. Net income from discontinued operations for the three and nine months ended June 30, 2022 includes the net gain on the sale of the semiconductor automation business of $2.1 billion. The income from discontinued operations only includes direct operating expenses incurred that (1) are clearly identifiable as acosts being disposed of upon completion of the sale and (2) will not be continued by our company on an ongoing basis. Indirect expenses which supported the semiconductor automation business and which remained as part of the ~~non-cash consideration for the acquisition of Cool Lab~~continuing operations, are not reflected in November 2016. Please refer to Note 3, “Acquisitions” to our consolidated financial statements and “Equity in Earnings of Equity Method Investments” section of Item 7, “Management Discussion and Analysis of Financial Condition and Results of Operations” included in our 2017 Annual Report on Form 10-K for further information on this transaction.income from discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES

~~A considerable portion of our revenue is dependent on the demand for semiconductor capital equipment which historically has experienced periodic downturns.~~ We believe that we have adequate resources to ~~fund~~satisfy our ~~currently planned~~ working capital, financing activities, debt service and capital expenditure requirements ~~as well as to service debt and pay interest~~ for the next twelve months. The ~~cyclical nature of our served markets and uncertainty in the~~ current global economic environment, including the uncertainty related to the COVID-19 pandemic, make it difficult for us to predict longer-term liquidity requirements with sufficient 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 to us on acceptable terms or otherwise, we may be unable to successfully develop or enhance products and services, respond to competitive pressure or take advantage~~

The discussion of ~~acquisition opportunities, any of which could have a material adverse effect on~~ our ~~business, financial condition and operating results.~~

Our cash balances are held in numerous locations throughout the world, with substantial majority of those amounts located in the United States. As of December 31, 2017, we had cash and cash equivalents of $202.3 million, of which $81.2 million was held outside of the United States. If these funds are needed for U.S. operations, we would be required to accrue withholding tax liabilities to repatriate these funds. As a result of recent changes in U.S. tax legislation, any repatriation in the future would not result in U.S. federal income tax. Our intent is to permanently reinvest these funds outside of the United States and our current operating plans do not demonstrate a need to repatriate these funds for our U.S. operations. At December 31, 2017 and September 30, 2017, we had marketable securities of $29.5 million and $2.7 million, respectively, which were held in the United States. Our marketable securities are generally readily convertible to cash without an adverse impact. We believe that our current cash balance, marketable securities portfolio, access to the revolving line of credit, as well as to debt and capital markets along with cash flows ~~from operations will satisfy working capital, financing activities, debt service~~ and ~~capital expenditure requirements for~~liquidity that follows stated on a total company consolidated basis and excludes the ~~next twelve months.~~

~~Table~~impact of ~~Contents~~discontinued operations.

On October 4, 2017, we entered into a $200.0 million Senior Secured Term Loan Facility, or the term loan, with Morgan Stanley Senior Funding, Inc., JPMorgan Chase Bank, N.A. and Wells Fargo Securities, LLC, or collectively, the lenders. The term loan was issued at $197.6 million, or 98.8% of its par value, resulting in a discount of $2.4 million, or 1.2%, which represented loan origination fees paid at the closing. We incurred additional deferred financing costs of $0.4 million during the three months ended December 31, 2017. At December 31, 2017, the outstanding term loan principal balance was $200.0 million, net of unamortized deferred financing costs of $2.7 million. The loan proceeds will be used for acquisitions and general corporate purposes. As of December 31, 2017, we had approximately $51.1 million available for borrowing under the line of credit. There were no amounts outstanding pursuant to the line of credit as of December 31, 2017 and September 30, 2017. The amount of funds available for borrowing under the line of credit arrangement may fluctuate each period based on our borrowing base availability. Please refer to the “Capital Resources” section below for further information on the term loan and the line of credit.

Overview of Cash Flows and Liquidity

Our cash and cash equivalents, restricted cash and marketable securities as of ~~December 31, 2017~~June 30, 2022 and September 30, ~~201~~72021 consist of the following (in thousands):


	December 31, 2017		September 30, 2017


					June 30, 2022		September 30, 2021
Cash and cash equivalents	$	202,339	$	101,622	$	1,474,189	$	227,427
Restricted cash						12,047		12,906
Cash and cash equivalents and restricted cash						1,486,236		240,333
Short-term marketable securities		15,658		28		709,063		81
Long-term marketable securities		13,885		2,642		312,027		3,598
	$	231,882	$	104,292
					$	2,507,326	$	244,012

Cash, cash equivalents and restricted cash					$	1,486,236	$	240,333
Cash and cash equivalents included in assets held for sale						—		45,000
					$	1,486,236	$	285,333

~~Three~~Our cash and cash equivalents, restricted cash and marketable securities were $2.5 billion as of June 30, 2022. As of June 30, 2022, we had cash, cash equivalents and restricted cash of $1.5 billion, of which $1.1 billion was held outside of the United States. If these funds are needed for the United States operations, we would need to repatriate these funds. As a result of changes in U.S. tax legislation, any repatriation in the future would likely not result in U.S. federal income tax. During the quarter ended September 30, 2021 we repatriated foreign cash to the U.S. in planning for the sale of the discontinued operation and recognized all related tax costs. Aside from these actions, our intent is to reinvest the remaining foreign cash outside of the United States and our current operating plans do not demonstrate a need to repatriate these funds for our U.S. operations. We had marketable securities of $1.0 billion and $3.7 million as of June 30, 2022 and September 30, 2021, respectively. Our marketable securities are generally readily convertible to cash without a material adverse impact.

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Nine Months Ended ~~December 31, 2017~~June 30, 2022 Compared to ~~Three~~Nine Months Ended ~~December 31, 2016~~ June 30, 2021

Overview

Cash Flows and Liquidity - Cash and cash equivalents and restricted cash as presented on our Consolidated Statements of Cash Flows is on a total company basis and were $1.5 billion as of June 30, 2022 compared to $285.3 million as of September 30, 2021. The increase of $1.2 billion was attributable to $2.9 billion of cash inflows related to the sale of our semiconductor automation business, partially offset by $431.6 million of taxes paid related to the sale of the automation semiconductor business, cash outflows for the net change in operating assets and liabilities of $83.7 million, $1.5 billion related to purchases of marketable securities, ~~were $231.9~~$59.7 million at December 31, 2017 as compared to $104.3 million at September 30, 2017. The increase in cash and cash equivalents and marketable securities of $127.6 was primarily attributable to cash inflows of $197.6for capital expenditures, $1.0 million related to the acquisition of technology intangible assets and financing activities of $64.3 million. Financing activities include $49.7 million for the extinguishment of debt and $10.4 million related to the payments of acquisition related contingent consideration. The effects of foreign exchange reduced our cash balance by $99.0 million. The net proceeds from the ~~term loan~~sale of the semiconductor automation business was approximately $2.5 billion after payment of taxes and other expenses.

Divestiture and Extinguishment of Debt

On February 1, 2022, we completed the sale of our semiconductor automation business for $2.9 billion in cash, ~~inflows~~subject to net working capital and other adjustments. Net cash proceeds from the divestiture are expected to be $2.5 billion after estimated taxes payable and other items, such as closing costs. Upon closure of ~~$3.2~~the sale on February 1, 2022, we utilized $49.7 million ~~generated from our operating activities, partially offset by cash outflows~~of proceeds to extinguish outstanding debt related to ~~acquisitions~~our term loan. We also terminated our revolving line of ~~$65.1 million, dividend payments~~credit, which had no borrowings outstanding. As of ~~$7.1 million made to~~June 30, 2022, we have no outstanding debt on our ~~shareholders during the first quarter of fiscal year 2018, as well as capital expenditures of $2.7 million.~~balance sheet.

Operating Activities

Cash flows from operating activities can fluctuate significantly from period to period as earnings, working capital needs and the timing of payments for income taxes, restructuring activities and other operating charges impact reported cash flows.

Cash ~~flows provided by~~outflows from operating activities ~~were $3.2~~of $475.7 million ~~during~~for the ~~three~~nine months ended ~~December 31, 2017, comprised primarily of earnings of $27.1 million, including~~June 30, 2022, resulted from net income of ~~$16.5 million and~~$2.2 billion, adjusted to exclude the ~~impact~~effect of non-cash operating adjustments of $2.1 billion which includes $2.1 billion on the net gain on sale of the semiconductor automation business, transaction fees paid related to the sale of $52.5 million; partially offset by a usage of cash from changes in our net operating assets and liabilities of $83.7 million, primarily driven by increases in inventory for both the continuing operations and discontinuing operations business and increased in accounts receivable and prepaid expenses and other assets; partially offset by an increase in accrued expenses and other liabilities and accrued compensation. Additionally, the company paid $431.6 million in cash taxes related to the sale of the semiconductor automation business during the nine months ended June 30, 2022.

Cash flows from operating activities of $122.7 million for the nine months ended June 30, 2021, resulted from net income $88.9 million, adjusted to exclude the effect of non-cash operating charges of ~~$10.6~~$60.0 million, partially offset by ~~the uses of cash of $23.9 million related to the changes~~an increase in ~~our~~net operating assets ~~and liabilities.~~ of $26.2 million. The ~~changes~~net increase in operating assets and liabilities ~~that resulted in a use of cash~~ consisted primarily of ~~an increase~~increases in accounts receivable ~~as a result of higher revenue~~ and ~~timing of billings, a decrease in~~inventory, partially offset by increases to accrued expenses and other liabilities, accrued compensation and ~~tax withholdings as~~accounts payable.

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Discontinued operations contributed $2.2 billion and $95.4 million of net income to the nine months ended June 30, 2022 and 2021, respectively. Net income from discontinued operations for the nine months ended June 30, 2022 includes a ~~result~~gain on the sale of ~~year-end cash incentive bonus payments and an increase in inventory levels to support~~ the ~~growth~~semiconductor automation business of ~~our business. These uses of cash were partially offset by sources of cash related primarily to increases in accounts payable and prepaid expenses and other current assets.~~$2.1 billion.

Investing Activities

Cash flows provided by operating activities were $18.7 million during the three months ended December 31, 2016 and comprised primarily of earnings of $18.9 million, including net income of $13.9 million and the impact of non-cash related charges of $5.0 million, partially offset by the uses of cash of $0.2 million related to the changes in our operating assets and liabilities. The changes in operating assets and liabilities that resulted in a use of cash were comprised primarily of an increase in accounts receivable as a result of higher revenue and timing of billings and decreased accrued

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compensation and tax withholdings as a result of year end incentive bonus payments. These uses of cash were partially offset by sources of cash related primarily to increases in accounts payable and deferred revenue due to the timing of customer billings.

~~Investing Activities~~

~~Cash flows from~~ investing activities consist primarily of proceeds from divestitures, cash used for acquisitions, capital expenditures and purchases of marketable securities as well as cash proceeds generated from sales and maturities of marketable securities.

Cash provided by investing activities was $1.8 billion during the nine months ended June 30, 2022 and included $2.9 billion of proceeds from the sale of the semiconductor automation business, net of cash transferred; partially offset by cash outflows for the purchase of marketable securities of $1.5 billion, capital expenditures of $59.7 million, and the acquisition of technology intangible assets of $4.0 million. Cash used in investing activities was ~~$94.3~~$128.8 million during the ~~three~~nine months ended ~~December 31, 2017 as compared to $9.3~~June 30, 2021, and included capital expenditures of $34.6 million and acquisitions of $92.4 million.

Financing Activities

Cash outflows for financing activities were $64.5 million during the ~~corresponding period~~nine months ended June 30, 2022 which primarily consisted of cash outflows of $49.7 million to extinguish the ~~prior fiscal year. Cash used in investing activities of $94.3 million during the first quarter of fiscal year 2018 included cash payments of $65.1~~term loan, $10.4 million for the ~~acquisitions, $26.9 million for the purchases~~payments of ~~marketable securities~~acquisition related contingent consideration and ~~$2.7 million of capital expenditures.~~

Cash used in investing activities of $9.3 million during the three months ended December 31, 2016 included a cash payment of $5.3 million for the acquisitions and $3.8 million of capital expenditures.

Capital expenditures are made primarily for increasing capacity, replacing equipment, supporting new product development and improving information technology infrastructure. Capital expenditures were $2.7 million during the first quarter of fiscal year 2018 as compared to $3.8 million during the corresponding period of the prior fiscal year. The decrease of $1.1 million was primarily attributable to lower investments made in our capital asset infrastructure during the first quarter of fiscal year 2018 compared to the corresponding period of the prior fiscal year.

~~Financing Activities~~

Cash provided by financing activities was $190.2 million during the three months ended December 31, 2017 as compared to cash of $7.0 million used in financing activities during the corresponding period of the prior fiscal year. Cash provided by financing activities was $190.2 million during the first quarter of fiscal year 2018 and included cash inflows of $197.6$7.5 million related to ~~proceeds from the term loan originated in October 2017, partially offset by cash~~ dividend ~~payments of $7.1 million.~~

payments.Cash used in financing activities was ~~$7.0~~$21.4 million during the ~~first~~nine months ended June 30, 2021, which primarily consisted of cash outflows for cash dividend payments of $22.3 million.

China Facility

In April 2019, we committed to construct a facility in Suzhou China, to consolidate the multiple locations in Suzhou, China related to the genomics business and provide infrastructure to support future growth. The facility is being constructed in two phases. During the third fiscal quarter of ~~fiscal year 2017 related to cash dividend payments.~~2022, we completed the construction of phase one of the facility. The total cost transferred from construction in progress at June 30, 2022, was $42.4 million, which included $7.1 million of costs incurred for the nine months ended June 30, 2022.

Capital Resources

~~Senior Secured~~ Term Loan ~~Facility~~and Line of Credit

On October 4, 2017, we entered into ~~the~~a $200.0 million term loan with Morgan Stanley Senior Funding, Inc., JPMorgan Chase Bank, N.A. and Wells Fargo Securities, LLC pursuant to the terms of a credit agreement with the lenders. The term loan was issued at $197.6 million, or 98.8% of its par value, resulting in a discount of $2.4 million, or 1.2%, which represented loan origination fees paid at the closing. ~~We incurred additional deferred financing costs of $0.4 million during~~

On February 1, 2022, we settled the ~~three months ended December 31, 2017. The loan~~Term Loan using proceeds ~~are used for acquisitions and general corporate purposes. Please refer to Note 8, "Debt" in~~from the ~~Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" on this Form 10-Q for further information on the terms and conditions~~sale of the ~~term loan.~~

At December 31, 2017, the outstanding term loan principal balance was $200.0 million, excluding unamortized deferred financing costs of $2.7 million. The term loan matures and becomes fully payable on October 4, 2024. Installment principal payments equal to 0.25% of the initial principal amount of the term loan are payable on the last day of each quarter, with any remaining principal amount becoming due and payable on the maturity date. We will begin making principal payments under the term loan starting with the second quarter of fiscal year 2018. Subject to certain conditions stated in the term loan agreement, we may redeem the term loan at any time at our option without a significant premium or penalty, except for a repricing transaction,semiconductor automation business as defined in the term loan agreement. We would also be required to redeem the term loan at the principal amount then outstanding upon occurrence of certain events, as set forth in the term loan agreement. Commencing on December 31, 2018, we will be required to make principal payments

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equal to the excess cash flow amount, as defined in the term loan agreement. Please refer to Note 8, "Debt" in the Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" on this Form 10-Q for further information on future minimum principal payment obligations under the term loan as of December 31, 2017.

Borrowings under the term loan bear variable interest rates, at our option, based on either LIBOR, the federal funds effective rate, as well as the prime rate plus an applicable percentage. As a result, we may experience exposure to interest rate risk due to the potential volatility associated with the variable interest rates on the term loan. If rates increase, we may be subject to higher costs of servicing the loan which could reduce our profitability and cash flows. The applicable interest rate was initially set at 4% upon the term loan issuance and established based on the six-month LIBOR rate applicable at that time plus a margin of 2.50%. During the three months ended December 31, 2017, the weighted average stated interest rate on the term loan was 4% which will remain in effect until March 4, 2018. During the three months ended December 31, 2017, we incurred interest expense of $2.0 million on the term loan which will be paid in the second quarter of fiscal year 2018. Our debt service requirements are expected to be funded through our existing sources of liquidity and operating cash flows.

discussed above.

The term loan agreement contains certain customary representations and warranties, covenants and events of default. As of December 31, 2017, we were in compliance with all covenants and conditions under the term loan agreement.

~~Line of Credit Facility~~

~~We maintain~~Company also maintained a revolving line of credit with Wells Fargo Bank, N.A. and JPMorgan Chase Bank, ~~N.A~~N.A. that ~~provides~~provided for a revolving credit ~~financing~~facility of up to $75.0 million, subject to borrowing base availability, as defined in the line of credit agreement. The line of credit matures on October 4, 2022. The proceeds from the line of credit are available for permitted acquisitions and general corporate purposes. Please refer to Note 7, "Line of Credit" in the Notes to the unaudited consolidated financial statements included in Itemmillion. On February 1, ~~"Consolidated Financial Statements" on this Form 10-Q for further information on the terms and conditions of the line of credit.~~

~~As of December 31, 2017,~~2022, we had approximately $51.1 million available for borrowing under the line of credit. There were no amounts outstanding pursuant to the line of credit as of December 31, 2017 and September 30, 2017. The amount of funds available for borrowing under the line of credit arrangement may fluctuate each period based on our borrowing base availability. The line of credit contains certain customary representations and warranties, a financial covenant, affirmative and negative covenants, as well as events of default. We were in compliance with the line of credit covenants as of December 31, 2017 and September 30, 2017. We believe we will be able to generate sufficient cash in the United States and foreign jurisdictions to fund future operating costs. We securedalso terminated the revolving line of credit, as an additional assurance for maintaining liquidity in the United States during potentially severe downturns of the cyclical semiconductor market, as well as for strategic investments and acquisitions.

~~Shelf Registration Statement~~

On July 27, 2016, we filed a registration statement on Form S-3 with the SEC to sell securities, including common stock, preferred stock, warrants, debt securities, depository shares, purchase contracts and purchase units in amounts to be determined at the time of an offering. Any such offering, if it does occur, may happen in one or more transactions. The specific terms of any securities to be sold will be described in supplemental filings with the SEC. This registration statement will expire on July 27, 2019.

~~Dividends~~

On January 31, 2018, our Board of Directors approved a cash dividend of $0.10 per share of our common stock. The total dividend of approximately $7.0 million will be paid on March 23, 2018 to shareholders of record at the close of business on March 2, 2018. Dividends are declared at the discretion of our Board of Directors and depend on actual cash

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flow from operations, our financial condition, debt service and capital requirements, as well as 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 we serve. We may reduce, delay or cancel a quarterly cash dividend based on the severity of a cyclical downturn.which had no borrowings outstanding.

Share Repurchase Program

On September 29, 2015, our Board of Directors approved a share repurchase program for up to ~~$50~~$50.0 million worth of our common stock. The timing and amount of any shares repurchased will be based on market and business conditions, legal requirements and other factors and repurchases may be commenced or suspended at any time at our discretion. There were no shares repurchased under this program during the ~~three~~nine months ended ~~December 31, 2017.~~June 30, 2022 and there have been no shares repurchased under this program since its inception.

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Contractual Obligations and Requirements

~~Our~~At June 30, 2022, we had non-cancellable commitments of $78.6 million, comprised primarily of purchase orders for inventory ~~purchase~~of $65.0 million, information technology related commitments ~~were $128.6~~of $13.1 million, and ~~$122.0 million, respectively, at December 31, 2017 and September 30, 2017. Except as disclosed below regarding letters~~China facility commitments of credit, there have been no material changes to our contractual obligations set forth under the heading “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” in our ~~2017~~ ~~Annual Report on Form 10‑K.~~

At December 31, 2017, we had approximately $3.5 million of letters of credit outstanding related primarily to customer advances and other performance obligations. These arrangements guarantee the refund of advance payments received from our customers in the event that the product is not delivered or warranty obligations are not fulfilled in accordance with the contract terms. These obligations could be called by the beneficiaries at any time before the expiration date of the particular letter of credit if we fail to meet certain contractual requirements. None of these obligations were called during the three months ended December 31, 2017, and we currently do not anticipate any of these obligations to be called in the near future.$0.4 million.

Off-Balance Sheet Arrangements

As of ~~December 31, 2017,~~June 30, 2022, we ~~did not have any~~had no obligations, assets or liabilities which would be considered off-balance sheet ~~arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.~~arrangements.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are exposed to a variety of market risks, including fluctuations in foreign currency exchange rates and changes in interest rates affecting ~~interest payments on our term loan and~~ investment return on our cash and cash equivalents, restricted cash and ~~marketable securities.~~short-term and long-term investments.

Interest Rate Exposure

Our cash and cash equivalents and restricted cash consist principally of money market securities that are short-term in nature. At June 30, 2022, our total short-term and long-term investments were $1 billion, consisting mostly of short term Treasury securities, highly rated corporate debt securities and other debt securities. At June 30, 2022, we had $7.4 million amount of securities in an unrealized loss position. A hypothetical 100 basis point change in interest rates would result in an approximate $8 million increase in interest income earned during the nine months ended June 30, 2022.

On February 1, 2022, in connection with the completion of the sale of its semiconductor automation business, the Company used $49.7 million of the cash proceeds from the sale of the semiconductor automation business to extinguish the total remaining outstanding balance of its term loan. The Company also closed its revolving credit facility of which had no borrowings. During the nine months ended June 30, 2022, we incurred cash interest expense of $0.7 million on the term loan. The term loan ~~bears~~had a variable interest ~~rates~~rate which ~~subjects~~subjected us to interest rate risk. Our primary interest rate risk exposure ~~results~~resulted from changes in the short-term LIBOR rate, the federal funds effective rate and the prime rate. ~~As of December 31, 2017, the weighted average stated interest rate on the term loan was 4%.~~ ~~At December 31, 2017, the outstanding term loan principal balance was $200.0~~ ~~million,~~ ~~excluding~~ ~~unamortized deferred financing costs of $2.7 million. During the three months ended December 31, 2017, we incurred interest expense of $2.0 million on the term loan. A~~ ~~hypothetical 100 basis point change in interest rates would result in a $0.5 million change in interest expense incurred during the three months ended December 31, 2017.~~

Our cash and cash equivalents consist principally of money market securities that are short-term in nature. Our short-term and long-term investments consist mostly of highly rated corporate debt securities, U.S. Treasury securities, and obligations of U.S. Government Agencies and other municipalities. At December 31, 2017, $20.3 million of marketable securities were in net unrealized loss positions which were included in "Accumulated Other Comprehensive Income" in the unaudited Consolidated Balance Sheets included elsewhere in this Quarterly Report on Form 10 Q. A hypothetical 100 basis point change in interest rates would result in $0.3 million increase in interest income earned during the three months ended December 31, 2017.

Currency Rate Exposure

We have transactions and balances denominated in currencies other than the U.S. dollar. Most of these transactions or balances are denominated in Euros, British Pounds and a variety of Asian currencies. Sales in currencies other than the U.S. dollar were approximately ~~29%~~37% and ~~37%~~42% of our total sales, respectively, during the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2022 and ~~2016.~~2021. These sales were made primarily by our foreign subsidiaries, which have cost structures that substantially align with the currency of sale.

In the normal course of our business, we have liquid assets denominated in non-functional currencies which include cash, short-term advances between our legal entities and accounts receivable which are subject to foreign currency exposure. Such balances were approximately ~~$129.5~~$88.4 million and ~~$51.6~~$119.4 million, respectively, at ~~December 31, 2017~~June 30, 2022 and September 30, ~~201~~7,2021, and related to the Euro, British Pound and a variety of Asian currencies. We mitigate the impact of potential currency translation losses on these short-term intercompany advances by the timely settlement of each transaction, generally within 30 days. We also utilize forward contracts to mitigate our exposures to currency movement. We incurred foreign currency gains and losses of ~~$2.0~~$1.9 million and ~~$0.5~~$7.3 million ~~respectively,~~ during the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2022 and ~~2016,~~2021, respectively, which related to the currency fluctuation on these balances between the time the transaction occurred and the ultimate settlement of the transaction. A hypothetical 10% change in foreign exchange rates at ~~December 31, 2017~~June 30, 2022 and ~~2016~~2021 would result in an approximate change of ~~$0.6~~$0.1 million and ~~$0.3~~less than $2.7 million, respectively, in our net income during the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2022 and ~~2016.~~2021.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. As of the end of the period covered by this report, and pursuant to Rules ~~13a‑15(e)~~13a-15(e) and ~~15d‑15(e)~~15d-15(e) under the ~~Securities~~ Exchange Act, ~~of 1934,~~ the Company’s management, including our chief executive officer and chief financial officer, has concluded that our disclosure controls and procedures are effective.

Change in Internal Controls. There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to various legal proceedings, both asserted and unasserted, that arise in the ordinary course of business. We cannot predict the ultimate outcome of such legal proceedings or in certain instances provide reasonable ranges of potential losses. However, as of the date of this Quarterly Report on Form ~~10‑Q,~~10-Q, we believe that none of these claims will have a material adverse effect on our consolidated financial condition or results of operations. In the event of unexpected subsequent developments and given the inherent unpredictability of these legal proceedings, there can be no assurance that our assessment of any claim will reflect the ultimate outcome and an adverse outcome in certain matters could, from ~~time-to-time,~~time to time, have a material adverse effect on our consolidated financial condition or results of operations in particular quarterly or annual periods.

Item 1A. Risk Factors

You should carefully review and consider the information regarding certain factors that could materially affect our business, consolidated financial condition or results of operations set forth under Item 1A. Risk Factors in our ~~2017~~2021 Annual Report on Form ~~10‑K.~~10-K as updated under Part II, Item 1A. Risk Factors in our First Quarter Form 10-Q and our Second Quarter 10-Q. There have been no material changes from the risk factors disclosed in our ~~2017~~2021 Annual Report on Form ~~10‑K.~~ 10-K, First Quarter Form 10-Q and Second Quarter Form 10-Q. We may disclose changes to risk factors or additional factors from time to time in our future filings with the SEC.

~~Item 2.~~ ~~Unregistered Sales of Equity Securities and Use of Proceeds~~

~~Share Repurchase Program~~

On September 29, 2015, our Board of Directors approved a share repurchase program for up to $50 million worth of our common stock. The timing and amount of any shares repurchased are based on market and business conditions, legal requirements and other factors and may be commenced or suspended at any time at our discretion. There were no shares repurchased under this program during the three months ended December 31, 2017.

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Item 6. Exhibits

The following exhibits are included herein:


Exhibit No.		Description
~~Exhibit~~ ~~No.~~		~~Description~~
3.1
~~3.01~~		~~Restated Certificate~~Agreement on the Sale and Transfer of ~~Incorporation~~Shares, dated as of ~~the Company~~June 7, 2022, by and among Azenta Germany GmbH, Thomas Barkey, Swissfinity I Beteiligungs and Christian Barkey (incorporated ~~herein~~ by reference to Exhibit ~~3.01~~2.1 to the ~~Company’s registration statement on Form S-3 (Reg. No. 333-189582), filed on June 25, 2013.~~

~~3.02~~		~~Amended and Restated Bylaws of the Company (incorporated herein by reference to Exhibit 3.01 of the Company’s current report~~Current Report on Form 8-K filed on ~~February 11, 2008)~~June 8, 2022).

~~3.03~~		Amendment to Amended and Restated Bylaws of the Company, dated August 1, 2017 (incorporated herein by reference to Exhibit 3.02 of the Company’s quarterly report on Form 10-Q, filed on August 4, 2017).

~~4.01~~		~~Brooks Automation, Inc. Amended and Restated Deferred Compensation Plan (incorporated herein by reference to Exhibit 10.21 to the Registrant’s Form 10-K, filed on November 17, 2017).~~

~~10.01~~		Consent and First Amendment to Credit Agreement, dated October 4, 2017, by and among Wells Fargo Bank, National Association, as Administrative Agent, Brooks Automation, Inc. and BioStorage Technologies Inc. (incorporated herein by reference to Exhibit 10.24 of the Company’s annual report on Form 10-K filed on November 17, 2017).

~~10.02~~		Credit Agreement dated October 4, 2017 by and among Brooks Automation, Inc., Morgan Stanley Senior Funding, Inc., and the lenders party thereto (incorporated herein by reference to Exhibit 10.25 of the Company’s annual report on Form 10-K filed on November 17, 2017).

~~10.03~~		Guarantee and Security Agreement dated October 4, 2017 by and among Brooks Automation, Inc., BioStorage Technologies, Inc., Morgan Stanley Senior Funding, Inc., as Administrative Agent for the lenders (incorporated herein by reference to Exhibit 10.26 of the Company’s annual report on Form 10-K filed on November 17). 2017).

~~10.04~~		Sales and Purchase Agreement dated October 5, 2017 by and among Brooks Automation Limited and the shareholders of 4titude Ltd. (incorporated herein by reference to Exhibit 10.27 of the Company’s annual report on Form 10-K filed on November 17).

31.01		Certification of the Company’s Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.02		Certification of the Company’s Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32		Certification of the Company’s Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101		The following material from the Company’s Quarterly Report on Form ~~10‑Q,~~10-Q, for the quarter ended ~~December 31, 2017,~~June 30, 2022, formatted in ~~XBRL (eXtensible~~iXBRL (Inline eXtensible Business Reporting Language): (i) the unaudited Consolidated Balance Sheets; (ii) the unaudited Consolidated Statements of Operations; (iii) the unaudited Consolidated Statements of Comprehensive Income; (iv) the unaudited Consolidated Statements of Cash Flows; (v) the unaudited Consolidated Statements of Changes in Stockholders Equity; and ~~(v)~~(vi) the Notes to the unaudited Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because XBRL tags are embedded in the iXBRL document.

104		Cover Page Interactive Data File (formatted as iXBRL and contained in Exhibit 101).

*		Certain schedules and exhibits have been omitted from this Exhibit pursuant to Item 601(a)(5) of Regulation S-K. Azenta, Inc. will furnish a copy of any omitted schedule or exhibit to the U.S. Securities and Exchange Commission or its staff upon request.

4052

Table of Contents

~~SIGNATURES~~

SIGNATURES

Pursuant to the requirements 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,~~AZENTA, INC.

Date: ~~February 5, 2018~~August 9, 2022	/s/ Lindon G. Robertson
	Lindon G. Robertson
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

Date: ~~February 5, 2018~~August 9, 2022	/s/ ~~David Pietrantoni~~Vandana Sriram
	~~David Pietrantoni~~Vandana Sriram
	Vice President-Finance and Corporate Controller
	(Principal Accounting Officer)

4153

	PAGE NUMBER

PART I. FINANCIAL INFORMATION	3
Item 1. Consolidated Financial Statements	3
Consolidated Balance Sheets as of ~~December 31, 2017 (unaudited)~~June 30, 2022 and September 30, ~~2017~~ 2021 (unaudited)	3
Consolidated Statements of Operations for the three and nine months ended ~~December 31, 2017~~June 30, 2022 and ~~2016~~2021 (unaudited)	4
Consolidated Statements of Comprehensive (Loss) Income for the three and nine months ended ~~December 31, 2017~~June 30, 2022 and ~~2016~~2021 (unaudited)	5
Consolidated Statements of Cash Flows for the ~~three~~nine months ended ~~December 31, 2017~~June 30, 2022 and ~~2016~~2021 (unaudited)	6
Consolidated Statements of Changes in Stockholders Equity for the three and nine months ended June 30, 2022 and 2021 (unaudited)	7
Notes to Consolidated Financial Statements (unaudited)	7 8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	26 35
Item 3. Quantitative and Qualitative Disclosures ~~about~~About Market Risk	37 50
Item 4. Controls and Procedures	38 51
PART II. OTHER INFORMATION	39
Item 1. Legal Proceedings	39 52
Item 1A. Risk Factors	39 52
Item ~~2. Unregistered Sales of Equity Securities and Use of Proceeds~~6. Exhibits	39 52
~~Item 6. Exhibits~~Signatures	40
~~Signatures~~53	41


	Three Months Ended
	December 31,
	2017		2016

Revenue
Products	$	142,184	$	122,114
Services		47,144		37,841
Total revenue		189,328		159,955
Cost of revenue
Products		84,177		75,679
Services		29,936		27,333
Total cost of revenue		114,113		103,012
Gross profit		75,215		56,943
Operating expenses
Research and development		13,200		10,845
Selling, general and administrative		41,175		31,962
Restructuring charges		—		975
Total operating expenses		54,375		43,782
Operating income		20,840		13,161
Interest income		149		68
Interest expense		(2,181)		(96)
Gain on settlement of equity method investment		—		1,847
Other expenses, net		(1,652)		(251)
Income before income taxes and earnings of equity method investments		17,156		14,729
Income tax provision		2,850		2,800
Income before equity in earnings of equity method investments		14,306		11,929
Equity in earnings of equity method investments		2,180		1,942
Net income	$	16,486	$	13,871
Basic net income per share	$	0.23	$	0.20
Diluted net income per share		0.23		0.20
Dividend declared per share		0.10		0.10
Weighted average shares used in computing net income per share:
Basic		70,183		69,181
Diluted		70,864		69,870


			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Losses		Gains		Fair Value
December 31, 2017 :
U.S. Treasury securities and obligations of U.S. government agencies	$	14,911	$	(10)	$	—	$	14,901
Bank certificates of deposits		6,158		—		3		6,161
U.S. corporate securities		4,749		(1)		—		4,748
Municipal securities		3,710		(6)		—		3,704
Other debt securities		29		—		—		29
	$	29,557	$	(17)	$	3	$	29,543
September 30, 2017 :
Corporate securities	$	2,642	$	—	$	—	$	2,642
Other debt securities		28		—		—		28
	$	2,670	$	—	$	—	$	2,670


	Fair Value of
	Assets and
	Liabilities
Accounts receivable (approximates contractual value)	$	1,581
Inventories		2,667
Prepaid expenses and other current assets		140
Property, plant and equipment		1,555
Intangible assets		27,212
Goodwill		38,033
Accounts payable		(286)
Accrued liabilities		(624)
Deferred tax liabilities		(5,090)
Total purchase price, net of cash acquired	$	65,188


	Brooks
	Semiconductor
	Solutions		Brooks
	Group		Life Sciences		Other		Total
Gross goodwill, at September 30, 2017	$	655,762	$	166,820	$	26,014	$	848,596
Accumulated goodwill impairments		(588,944)		—		(26,014)		(614,958)
Goodwill, net of accumulated impairments, at September 30, 2017		66,818		166,820		—		233,638
Acquisitions and adjustments		(15)		39,101		—		39,086
Gross goodwill, at December 31, 2017		655,747		205,921		26,014		887,682
Accumulated goodwill impairments		(588,944)		—		(26,014)		(614,958)
Goodwill, net of accumulated impairments, at December 31, 2017	$	66,803	$	205,921	$	—	$	272,724


Fiscal year ended September 30,
2018	$	16,454
2019		20,810
2020		19,021
2021		13,240
2022		10,553
Thereafter		25,679
	$	105,757


	Amount
Fiscal year ended September 30,
2018	$	1,496
2019		1,978
2020		1,958
2021		1,938
2022		1,919
Thereafter		190,711
Total outstanding principal balance		200,000
Unamortized deferred financing costs		(2,731)
		197,269
Term loan, current portion		1,993
Term loan, long-term portion	$	195,276


	Three Months Ended December 31,
	2017		2016
Restricted stock	$	4,602	$	2,365
Employee stock purchase plan		207		133
Total stock-based compensation expense	$	4,809	$	2,498


		Time-Based		Performance-
	Total Units	Units	Stock Grants	Based Units
Three months ended December 31, 2017	471,151	190,266	546	280,339
Three months ended December 31, 2016	951,266	362,113	815	588,338


		Weighted
		Average
		Grant-Date
	Shares	Fair Value
Outstanding at September 30, 2017	2,474,011	$	12.34
Granted	471,151		34.25
Vested	(586,352)		12.42
Forfeited	(14,737)		16.48
Outstanding at December 31, 2017	2,344,073	$	16.75