~~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, ~~2018~~2019

	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

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	BRKS	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 every Interactive Data File required to be submitted 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 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	☐	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 ~~31, 2019:~~27, 2020: common stock, $0.01 par value and ~~70,960,094~~73,619,648 shares outstanding.

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

BROOKS AUTOMATION, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

(In thousands, except share and per share data)


	December 31,		September 30,
	2019		2019
	(In thousands, except share and per share data)
Assets
Current assets
Cash and cash equivalents	$	335,319	$	301,642
Marketable securities		11,233		34,124
Accounts receivable, net		165,176		165,602
Inventories		105,181		99,445
Prepaid expenses and other current assets		46,560		46,332
Total current assets		663,469		647,145
Property, plant and equipment, net		105,296		100,669
Long-term marketable securities		3,039		2,845
Long-term deferred tax assets		6,004		5,064
Goodwill		490,370		488,602
Intangible assets, net		242,248		251,168
Other assets		48,532		20,506
Total assets	$	1,558,958	$	1,515,999
Liabilities and Stockholders' Equity
Current liabilities
Current portion of long-term debt	$	827	$	829
Accounts payable		65,306		58,919
Deferred revenue		29,042		29,435
Accrued warranty and retrofit costs		7,493		7,175
Accrued compensation and benefits		25,810		31,375
Accrued restructuring costs		844		1,040
Accrued income taxes payable		100,451		99,263
Accrued expenses and other current liabilities		53,179		44,234
Total current liabilities		282,952		272,270
Long-term debt		49,918		50,315
Long-term tax reserves		18,543		18,274
Long-term deferred tax liabilities		13,636		20,636
Long-term pension liabilities		5,397		5,338
Long-term operating lease liabilities		20,526		—
Other long-term liabilities		9,291		10,212
Total liabilities		400,263		377,045
Commitments and contingencies (Note 17)
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, 87,080,017 shares issued and 73,618,148 shares outstanding at December 31, 2019, 85,759,700 shares issued and 72,297,831 shares outstanding at September 30, 2019		871		857
Additional paid-in capital		1,926,350		1,921,954
Accumulated other comprehensive income		13,154		3,511
Treasury stock, at cost- 13,461,869 shares		(200,956)		(200,956)
Accumulated deficit		(580,724)		(586,412)
Total stockholders' equity		1,158,695		1,138,954
Total liabilities and stockholders' equity	$	1,558,958	$	1,515,999

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

December 31,

September 30,

2018

2018
Assets




Current assets




Cash and cash equivalents

$
135,791

$
197,708
Marketable securities

28

46,281
Accounts receivable, net

164,516

125,192
Inventories

110,070

96,986
Prepaid expenses and other current assets

42,063

31,741
Current assets held for sale

68,334

66,148
Total current assets

520,802

564,056
Property, plant and equipment, net

96,124

59,988
Long-term marketable securities

2,489

7,237
Long-term deferred tax assets

23,287

43,798
Goodwill

490,525

255,876
Intangible assets, net

279,233

99,956
Other assets

22,304

5,294
Non-current assets held for sale

61,967

59,052
Total assets

$
1,496,731

$
1,095,257
Liabilities and Stockholders' Equity




Current liabilities




Current portion of long term debt

$
9,527

$
2,000
Accounts payable

70,814

55,873
Deferred revenue

31,091

25,884
Accrued warranty and retrofit costs

6,851

6,340
Accrued compensation and benefits

20,799

29,322
Accrued restructuring costs

464

659
Accrued income taxes payable

6,131

6,746
Accrued expenses and other current liabilities

37,068

30,405
Current liabilities held for sale

8,335

7,388
Total current liabilities

191,080

164,617
Long-term debt

531,282

194,071
Long-term tax reserves

14,635

1,102
Long-term deferred tax liabilities

15,555

7,135
Long-term pension liabilities

4,499

4,255
Other long-term liabilities

8,979

5,547
Non-current liabilities held for sale

506

698
Total liabilities

766,536

377,425
Commitments and contingencies (Note 22)




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, 85,417,038 shares issued and 71,955,169 shares outstanding at December 31, 2018, 84,164,130 shares issued and 70,702,261 shares outstanding at September 30, 2018

854

841
Additional paid-in capital

1,902,888

1,898,434
Accumulated other comprehensive income

15,134

13,587
Treasury stock, at cost- 13,461,869 shares

(200,956)

(200,956)
Accumulated deficit

(987,725)

(994,074)
Total stockholders' equity

730,195

717,832
Total liabilities and stockholders' equity

$
1,496,731

$
1,095,257

Table of Contents

BROOKS AUTOMATION, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(In thousands, except per share data)


	Three Months Ended
	December 31,
	2019		2018

Revenue
Products	$	131,862	$	125,375
Services		78,638		53,993
Total revenue		210,500		179,368
Cost of revenue
Products		79,971		74,574
Services		45,543		32,713
Total cost of revenue		125,514		107,287
Gross profit		84,986		72,081
Operating expenses
Research and development		14,401		13,148
Selling, general and administrative		59,343		53,541
Restructuring charges		576		59
Total operating expenses		74,320		66,748
Operating income		10,666		5,333
Interest income		699		423
Interest expense		(737)		(5,290)
Other expenses, net		(417)		(30)
Income before income taxes		10,211		436
Income tax benefit		(2,963)		(5,830)
Income from continuing operations		13,174		6,266
(Loss) income from discontinued operations, net of tax		(117)		8,149
Net income	$	13,057	$	14,415
Basic net income per share:
Income from continuing operations	$	0.18	$	0.09
(Loss) income from discontinued operations, net of tax		(0.00)		0.11
Basic net income per share	$	0.18	$	0.20
Diluted net income per share:
Income from continuing operations	$	0.18	$	0.09
(Loss) income from discontinued operations, net of tax		(0.00)		0.11
Diluted net income per share	$	0.18	$	0.20
Weighted average shares used in computing net income per share:
Basic		72,972		71,450
Diluted		73,645		72,165

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

BROOKS AUTOMATION, INC.

CONSOLIDATED STATEMENTS OF ~~OPERATIONS~~COMPREHENSIVE INCOME

(unaudited)

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

Three Months Ended

December 31,


2018

2017


Revenue





Products

$
141,732

$
105,772

Services

37,636

36,827

Total revenue

179,368

142,599

Cost of revenue





Products

83,481

63,529

Services

23,806

24,811

Total cost of revenue

107,287

88,340

Gross profit

72,081

54,259

Operating expenses





Research and development

13,148

11,405

Selling, general and administrative

53,541

37,929

Restructuring charges

59

—

Total operating expenses

66,748

49,334

Operating income

5,333

4,925

Interest income

423

149

Interest expense

(5,290)

(2,181)

Other expenses, net

(30)

(1,924)

Income before income taxes

436

969

Income tax benefit

(5,830)

(650)

Income from continuing operations

6,266

1,619

Income from discontinued operations, net of tax

8,149

14,867

Net income

$
14,415

$
16,486

Basic net income per share attributable to Brooks Automation, Inc. common stockholders:





Income from continuing operations

$
0.09

$
0.02

Income from discontinued operations, net of tax

0.11

0.21

Basic net income per share

$
0.20

$
0.23

Diluted net income per share attributable to Brooks Automation, Inc. common stockholders:





Income from continuing operations

$
0.09

$
0.02

Income from discontinued operations, net of tax

0.11

0.21

Diluted net income per share

$
0.20

$
0.23

Weighted average shares used in computing net income per share:





Basic

71,450

70,183

Diluted

72,165

70,864


	Three Months Ended
	December 31,
	2019		2018

Net income	$	13,057	$	14,415
Other comprehensive income, net of tax:
Foreign currency translation adjustments		9,645		1,677
Unrealized gains (losses) on marketable securities, net of tax effects of $0 and ($38) during the three months ended December 31, 2019 and 2018		10		(121)
Actuarial losses, net of tax effects of $1 and $2 during the three months ended December 31, 2019 and 2018		(12)		(9)
Total other comprehensive income, net of tax		9,643		1,547
Comprehensive income	$	22,700	$	15,962

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

BROOKS AUTOMATION, INC.

CONSOLIDATED STATEMENTS OF ~~COMPREHENSIVE INCOME~~ CASH FLOWS

(unaudited)

(In thousands)

Three Months Ended

December 31,


2018

2017


Net income

$
14,415

$
16,486

Other comprehensive income, net of tax:





Cumulative foreign currency translation adjustments

1,677

4,131

Unrealized gains (losses) on marketable securities, net of tax effects of ($38) and $0 during the three months ended December 31, 2018 and 2017

(121)

—

Actuarial gains (losses), net of tax effects of $2 and ($2) during the three months ended December 31, 2018 and  2017

(9)

(9)

Total other comprehensive income, net of tax

1,547

4,122

Comprehensive income

$
15,962

$
20,608


	Three Months Ended
	December 31,
	2019		2018
Cash flows from operating activities
Net income	$	13,057	$	14,415
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		16,477		11,838
Stock-based compensation		4,410		4,467
Amortization of premium on marketable securities and deferred financing costs		67		235
Earnings of equity method investments		—		(1,772)
Deferred income taxes		(8,183)		(7,682)
Other losses on disposals of assets		126		6
Loss on sale of divestiture, net of tax		319		—
Changes in operating assets and liabilities, net of acquisitions and divestiture:
Accounts receivable		1,503		(13,826)
Inventories		(4,335)		(12,260)
Prepaid expenses and other assets		6,120		1,029
Accounts payable		5,255		7,932
Deferred revenue		(720)		6,385
Accrued warranty and retrofit costs		221		572
Accrued compensation and tax withholdings		(5,755)		(13,842)
Accrued restructuring costs		(203)		(181)
Accrued expenses and other liabilities		(2,616)		8,948
Net cash provided by operating activities		25,743		6,264
Cash flows from investing activities
Purchases of property, plant and equipment		(9,614)		(3,560)
Purchases of marketable securities		(10,742)		(1,290)
Sales of marketable securities		—		48,904
Maturities of marketable securities		33,584		2,557
Acquisitions, net of cash acquired		—		(445,210)
Net cash provided by (used in) investing activities		13,228		(398,599)
Cash flows from financing activities
Proceeds from term loans, net of discount		—		340,540
Principal payments on debt		(414)		(1,789)
Payments of capital leases		(319)		(121)
Common stock dividends paid		(7,369)		(7,208)
Net cash provided by (used in) financing activities		(8,102)		331,422
Effects of exchange rate changes on cash and cash equivalents		2,808		(1,004)
Net increase (decrease) in cash, cash equivalents and restricted cash		33,677		(61,917)
Cash, cash equivalents and restricted cash, beginning of period		305,171		197,708
Cash, cash equivalents and restricted cash, end of period	$	338,848	$	135,791
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property, plant and equipment included in accounts payable	$	2,622	$	1,717
Deferred financing costs included in accounts payable		—		1,750

Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents	$	335,319	$	135,741
Restricted cash included in prepaid expenses and other current assets		3,529		50
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$	338,848	$	135,791

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

BROOKS AUTOMATION, INC.

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

(unaudited)

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

Three Months Ended

December 31,


2018

2017


Cash flows from operating activities





Net income

$
14,415

$
16,486

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





Depreciation and amortization

11,838

8,521

Stock-based compensation

4,467

4,809

Amortization of premium on marketable securities and deferred financing costs

235

122

Earnings of equity method investments

(1,772)

(2,180)

Deferred income tax benefit

(7,682)

(689)

Other gains on disposals of assets

6

—

Changes in operating assets and liabilities, net of acquisitions:





Accounts receivable

(13,826)

(16,157)

Inventories

(12,260)

(5,518)

Prepaid expenses and other assets

1,029

3,285

Accounts payable

7,932

4,449

Deferred revenue

6,385

1,376

Accrued warranty and retrofit costs

572

87

Accrued compensation and tax withholdings

(13,842)

(11,145)

Accrued restructuring costs

(181)

(592)

Accrued expenses and other liabilities

8,948

362

Net cash provided by operating activities

6,264

3,216

Cash flows from investing activities





Purchases of property, plant and equipment

(3,560)

(2,700)

Purchases of marketable securities

(1,290)

(26,875)

Sales of marketable securities

48,904

—

Maturities of marketable securities

2,557

100

Acquisitions, net of cash acquired

(445,210)

(65,074)

Proceeds from sales of property, plant and equipment

—

200

Net cash used in investing activities

(398,599)

(94,349)

Cash flows from financing activities





Proceeds from term loan

340,540

197,554

Payment of deferred financing costs

—

(318)

Repayment of term loan

(1,789)

—

Payment of capital lease

(121)

Common stock dividends paid

(7,208)

(7,057)

Net cash provided by financing activities

331,422

190,179

Effects of exchange rate changes on cash and cash equivalents

(1,004)

1,671

Net increase (decrease) in cash and cash equivalents

(61,917)

100,717

Cash and cash equivalents, beginning of period


197,708


101,622


Cash and cash equivalents, end of period

$
135,791

$
202,339


Supplemental disclosure of non-cash investing and financing activities:



Purchases of property, plant and equipment included in accounts payable

$
1,717

$
865

Deferred financing costs included in accounts payable

1,750

143




		Common				Accumulated
	Common	Stock at		Additional		Other
	Stock	Par		Paid-In		Comprehensive		Accumulated		Treasury		Total
	Shares	Value		Capital		Income		Deficit		Stock		Equity
	(In thousands, except share data)
Balance September 30, 2018	84,164,130	$	841	$	1,898,434	$	13,587	$	(994,074)	$	(200,956)	$	717,832
Shares issued under restricted stock and purchase plans, net	1,252,908		13		(13)								—
Stock-based compensation					4,467								4,467
Common stock dividends declared, at $0.10 per share									(7,208)				(7,208)
Foreign currency translation adjustments							1,677						1,677
Changes in unrealized gains on marketable securities, net of tax effects of ($38)							(121)						(121)
Actuarial losses, net of tax effects of $2							(9)						(9)
Net income									14,415				14,415
Cumulative effect of adoption of ASC 606									(858)				(858)
Balance December 31, 2018	85,417,038	$	854	$	1,902,888	$	15,134	$	(987,725)	$	(200,956)	$	730,195

Balance September 30, 2019	85,759,700	$	857	$	1,921,954	$	3,511	$	(586,412)	$	(200,956)	$	1,138,954
Shares issued under restricted stock and purchase plans, net	1,320,317		14		(14)								—
Stock-based compensation					4,410								4,410
Common stock dividends declared, at $0.10 per share									(7,369)				(7,369)
Foreign currency translation adjustments							9,645						9,645
Changes in unrealized losses on marketable securities, net of tax effects of $0							10						10
Actuarial losses, net of tax effects of $1							(12)						(12)
Net income									13,057				13,057
Balance December 31, 2019	87,080,017	$	871	$	1,926,350	$	13,154	$	(580,724)	$	(200,956)	$	1,158,695

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

BROOKS AUTOMATION, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. Basis of Presentation

The unaudited consolidated financial statements of Brooks Automation, Inc. and its subsidiaries (“Brooks”, or the “Company”) included herein have been prepared in accordance with accounting principles generally accepted in the United States ~~("GAAP"~~(“GAAP”). All intercompany accounts and transactions have been eliminated in consolidation. In the opinion of management, all material adjustments, which are of a normal and recurring nature and necessary for a fair statement of the financial position and results of operations and cash flows for the periods presented, have been reflected in the accompanying unaudited consolidated financial statements. The results of operations for the interim periods are not necessarily indicative of the results of operations to be expected for the full fiscal year.

In the fourth quarter of fiscal year 2018, the Company entered into a definitive agreement to sell its semiconductor cryogenics business to Edwards Vacuum LLC (a member of the Atlas Copco Group), (the “Disposition”). The Company determined that the cryogenics 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 December 31, 2018. 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 cryogenics 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. Please refer to Note 3, “Discontinued Operations” for further information.

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 in 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, ~~2018~~2019 (the ~~"2018~~"2019 Annual Report on Form ~~10‑K"~~10-K"). The accompanying Consolidated Balance Sheet as of September 30, ~~2018~~2019 was derived from the audited annual consolidated financial statements as of the period then ended.

Discontinued Operations

In the fourth quarter of fiscal year 2018, the Company entered into a definitive agreement to sell its semiconductor cryogenics business (the “Disposition”) to Edwards Vacuum LLC (a member of the Atlas Copco Group) (“Edwards”). The Company determined that the semiconductor cryogenics 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, 2018. 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 cryogenics 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. Please refer to Note 3, “Discontinued Operations” for further information.

On July 1, 2019, the Company completed the sale of the semiconductor cryogenics business for $661.1 million, which excludes $6.3 million retained by Edwards at closing as a result of the initial net working capital adjustments. Net cash proceeds from the sale were $553.1 million, after deducting estimated taxes payable and closing costs, which remains subject to adjustment for the final determination of working capital and other items.

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 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 ~~on an over time~~in accordance with the percentage of completion method, ~~pension obligations~~ and stock-based compensation expense. The Company bases its estimates on historical experience and various other assumptions, including in certain circumstances future projections that management believes to be

Table of Contents

reasonable under the circumstances. Although the Company regularly assesses these estimates, actual results could differ from those estimates. Changes in estimates are recorded in the period in which they occur and become known.

Foreign Currency Translation

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

Foreign currency exchange losses generated from the settlement and remeasurement of these transactions are recognized in earnings and presented within “Other expenses, net” in the Company’s unaudited Consolidated Statements

~~Table of Contents~~

of Operations. Net foreign currency transaction and remeasurement losses totaled $~~0.1~~$0.7 million and ~~$2.0~~$0.1 million, respectively, during the three months ended December 31, ~~2018~~2019 and ~~2017.~~2018.

Derivative Instruments

The Company has transactions and balances denominated in currencies other than the U.S. dollar. Most of these transactions or balances are denominated in Euros, British Pounds and a variety of Asian currencies. 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 do not qualify for hedge accounting. Net gains and losses related to these contracts are recorded as a component of "Other expenses, net" in the accompanying unaudited Consolidated Statements of Operations and are as follows for the three months ended December 31, ~~2018~~2019 and ~~2017~~2018 (in thousands):

Three Months Ended

December 31,


2018

2017

Realized gains (losses) on derivatives not designated as hedging instruments

$
2,977

$
(1,673)


	Three Months Ended
	December 31,
	2019		2018
Realized gains (losses) on derivatives not designated as hedging instruments	$	(3,668)	$	2,977

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.

Fair Value Measurements

The Company measures at fair value certain financial assets and liabilities, including cash equivalents and available for sale securities. FASB 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 fair value:

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

Level 2 Inputs: Observable inputs other than prices included in Level 1, including quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

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

As of December 31, ~~2018,~~ the Company had no0 assets or liabilities measured and recorded at fair value on a recurring basis using Level 3 inputs.

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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 finance and the determination of the right-of-use asset (ROU asset) and lease liability are determined at lease inception. The ROU asset represents the Company’s right to use an underlying asset for the 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 commencement date 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 lease payments at commencement date. Lease terms may include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. Lease expense is recognized on a straight-line basis over the lease term.

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 combined with lease payments and accounted for as a single lease component which increases the amount of the 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 on the Consolidated Balance Sheets. The short-term lease liabilities for both operating leases and finance leases are included within Accrued expenses and other current liabilities. 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, on the Consolidated Balance Sheets.

Recently Issued Accounting Pronouncements

In December 2019, the FASB issued ASU 2019-12: Simplifying the Accounting for Income Taxes (Topic 740), which removes certain exceptions to the general principles in Topic 740 and improves consistent application of and simplifies GAAP for other areas of Topic 740 clarifying and amending existing guidance. This ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2020. Early adoption is permitted. The Company is evaluating the impact of this ASU.

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. The amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software (and hosting arrangements that include an internal-use software license). The accounting for the service element of a hosting arrangement that is a service contract is not affected by these amendments. The provisions may be adopted prospectively or retrospectively. This ASU is effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact of this ASU.

In August 2018, the FASB issued ASU 2018-14, Disclosure Framework — Changes to the Disclosure Requirements for Defined Benefit Plans, which amends ASC 715 to add, remove, and clarify disclosure requirements related to defined benefit pension and other postretirement plans. The amendments require additional disclosure for 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 removes disclosure requirement for accumulated other comprehensive income expected to be recognized over the next year, information

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about plan assets to be returned to the entity, and the effects of a one-percentage-point change on the assumed health care costs and the effect of this change in rates on service cost, interest cost, and the benefit obligation for postretirement health care benefits. The ASU is effective for fiscal years ending after December 15, 2020. Early adoption is permitted. The ASU does not amend the interim disclosure requirements of ASC 715-20. The Company is currently evaluating the impact of this ASU.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which amends ASC 820 to add and remove

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disclosure requirements related to fair value measurement. The amendments include new disclosure requirement for changes in unrealized gains or losses included in other comprehensive income ~~(OCI)~~ for recurring Level 3 fair value measurements held at the end of the reporting period and the range and weighted average used to develop significant unobservable inputs for Level 3 fair value measurements. The amendments eliminated disclosure requirements for amount of and reasons for transfers between Level 1 and Level 2, valuation processes for Level 3 fair value measurements, and policy for timing of transfers between levels of the fair value hierarchy. In addition, the amendments modified certain disclosure requirement to provide clarification or to promote appropriate exercise of discretion by entities. ASU 2018-13 is effective for fiscal years beginning after December 15, 2019, including interim periods therein. Early adoption is permitted. The Company is currently evaluating the impact of this ASU.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments. ASU 2016-13 provides guidance for recognizing credit losses on financial instruments based on an estimate of current expected credit losses model. The FASB subsequently issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments - Credit Losses, Topic 815, Derivatives and Hedging, and Topic 825, Financial Instruments and ASU 2019-11, Codification Improvements to Topic 326, Financial Instruments - Credit Losses to clarify and address certain items related to the amendments in ASU 2016-13. ASU 2019-05, Financial Instruments - Credit Losses (Topic 326): Targeted Transition Relief, was issued to provide entities that have certain instruments within the scope of ASC 326 with an option to irrevocably elect the fair value option under ASC 825-10, Financial Instruments - Overall, applied on an instrument-by-instrument basis for eligible instruments. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. Early adoption is permitted. The Company is currently evaluating the impact of this ASU.

Recently Adopted Accounting Pronouncements

In July 2019, the FASB issued ASU 2019-07, Codification Updates to SEC Sections - Amendments to SEC Paragraphs Pursuant to SEC Final Rule Releases No. 33-10532, Disclosure Update and Simplification, and Nos. 33-10231 and 33-10442, Investment Company Reporting Modernization and Miscellaneous Updates (SEC Update). ASU 2019-07 aligns the guidance in various SEC sections of the Codification with the requirements of certain SEC final rules. ASU 2019 -07 was effective immediately during the Company’s third quarter of fiscal 2020 and the adoption did not have any impact on our consolidated financial statements and related disclosures.

In March 2018, the FASB issued ASU 2018-02, Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income, which amends ASC 220 to add, remove, and clarify disclosure requirements related to reporting comprehensive income. This ASU gives entities the option to reclassify tax effects recorded in accumulated other comprehensive income as a result of tax reform to retained earnings. The entities have the option to apply the guidance retrospectively or in the period of adoption. The guidance requires entities to make new disclosures, regardless of whether they elect to reclassify tax effects. The guidance is effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption in any period is permitted. The Company ~~expects to adopt~~adopted the guidance during the first quarter of fiscal year ~~2020 and~~2020. There is ~~evaluating~~no accounting impact on the ~~effect that ASU 2018-02 will have on its~~Company’s consolidated financial statements and related ~~disclosures.~~

~~In June 2016,~~disclosures because the ~~FASB issued ASU 2016-13,~~ ~~Financial Instruments—Credit Losses (Topic 326), which amends ASC 326 to add, remove, and clarify disclosure requirements related to credit losses of financial instruments~~. ~~The new guidance introduces~~Company does not have stranded tax effects in accumulated other comprehensive income as a new "expected loss" impairment model which 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 portionresult of the ~~unrealized loss on such debt security is a credit loss. The guidance is effective for fiscal years,~~Tax Cuts 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.Jobs Act.

In February 2016, the FASB issued ASU 2016-02, Leases ~~(Topic~~(Topic 842), an amendment of the FASB ~~ASC.~~ ~~In accordance with the provisions of the newly issued guidance,~~ASC 840. Under Topic 842, lessees are required to recognize a ~~lessee should recognize at the inception of the arrangement a right-of-use~~ROU asset and ~~a corresponding~~ lease liability ~~initially measured at~~on 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~~balance sheet for ~~operating leases, total lease costs are recorded on a straight-line basis over the lease term. For~~all leases with ~~a term of~~terms beyond twelve ~~months or less, a lessee is permitted~~months. The new standard also requires enhanced disclosures that provide more transparent information to ~~make an accounting policy election by class of underlying assets to forgo a recognition of right-of-use assets and corresponding~~financial statement users about 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

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~~provisions of ASC Topic 606,~~ ~~Revenue from Contracts with Customers~~. The guidance is effective for fiscal years, and interim periods within those years, 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. The Company expects to adopt the guidance during the first quarter of fiscal year 2020 and is currently evaluating the impact of this guidance on its financial position and results of operations.

~~In May 2014, the FASB issued new accounting guidance for reporting revenue recognition, ASC 606~~ ~~Revenue from Contracts with Customers~~ (“ASC 606”). 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. In addition, the guidance requires disclosure of the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. The guidance also specifies the accounting for certain costs to obtain and fulfill a contract, as codified in ASC 340-40 ~~Accounting for Other Assets and Deferred Costs~~ ~~(“ASC 340-40”).~~

portfolios. The Company adopted ~~this standard~~Topic 842 effective October 1, ~~2018,~~2019 using the modified retrospective ~~method and has only~~ approach. The Company applied ~~this method~~Topic 842 to ~~contracts that were not completed~~all its leases as of ~~the effective date and all new contracts initiated on or after the effective date. Results for reporting periods beginning on or after~~ October 1, ~~2018 are presented under ASC 606, while~~2019 with comparative prior ~~period amounts have not been restated and continue~~periods continuing to be reported ~~in accordance with~~under Topic 840. With the ~~governing revenue recognition standards applicable~~adoption of Topic 842, the Company assumed the assessment determined under Topic 840 of whether contracts contain leases, the classification of leases as operating or finance and the remaining lease term of each lease. Certain leases contain both lease and non-lease components, which the Company has elected to ~~that period.~~

~~The impact of the cumulative effect of adopting ASC 606 effective~~treat as a single lease component. On October 1, ~~2018 on the Company’s Consolidated Balance Sheet is as follows:~~

As Reported

Impact of Adopting

As Adopted

September 30, 2018

ASC 606

October 1, 2018
Prepaid expenses and other current assets

$
31,741

$
350

$
32,091
Prepaid expenses and other current assets - discontinued operations

343

235

578

Other assets

5,294

1,483

6,777

Long-term deferred tax assets

43,798

403

44,201

Deferred revenue

25,884

2,850

28,734
Deferred revenue - discontinued operations

1,052

480

1,532

Accumulated deficit

(994,074)

(859)

(994,933)

~~Upon adoption~~2019, the Company recorded a ~~cumulative effect adjustment~~ROU asset related to its operating leases of ~~$0.9~~$28.1 million ~~net~~and a lease liability related to its operating leases of ~~tax adjustment of $0.4~~$27.1 million ~~which resulted in an increase to the opening accumulated deficit balance~~ on ~~the~~its Consolidated Balance Sheet, primarily driven by deferral of previously recognized revenue within the Brooks Life Sciences segment, offset by deferral of previously recognized commission expense within the Brooks Life Sciences segment and acceleration of revenue within the Brooks Semiconductor Solutions Group segment.

A portion of the adjustment related to the acceleration of revenue within the Brooks Semiconductor Solutions Group segment results from the change in the revenue recognition rules. Upon the adoption of ASC 606, the Company isSheets. There was no longer required to defer revenue in accordance with billing constraints defined in the contract with the customer. The change impacted the Company’s semiconductor contamination control solutions revenue stream as the Company is now permitted to recognize revenue in an amount equivalent to the transfer of control that has occurred. (Please refer to Note 13, “Revenue” for further information on when control is transferred). As a result, revenue previously deferred due to the contractual billing restraints that otherwise met the revenue recognition requirements was accelerated into the opening accumulated deficit balance resulting in an increase to accumulated deficit of $0.9 million as of October 1, 2018.

A portion of the adjustment related to the deferral of previously recognized revenue within the Brooks Life Science segment related to fees associated with registration of biological samples. This adjustment is derived from the new

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requirement to recognize revenue associated with certain sample life cycle management solutions transactions over time under ASC 606, while historically these transactions have been recorded at a point in time. Registration fees for these samples were previously recognized as revenue at a point in time upon completion of the registration and are now required to be recognized ratably over the period of benefit under ASC 606. As a result, upon adopting the standard the Company deferred previously recognized registration fee revenue for contracts not completed as of the effective date. The period of benefit associated with registration fees has been determined to be approximately 24 months resulting in the deferral of revenue historically recognized at a point in time over this period. This change resulted in a decrease to accumulated deficit of $3.1 million as of October 1, 2018.

A portion of the adjustment is related to the deferral of previously recognized commission expense within the Brooks Life Science segment. This portion of the adjustment is derived from the new requirement to recognize the cost to obtain certain transactions over time under ASC 340-40, while historically this expense has been recognized at a point in time. The standard requires certain costs incurred to obtain a contract to be recorded as an asset when incurred and expensed as the transfer of control of the underlying performance obligations occur or over the estimated customer life, depending on the nature of the underlying contract. As a result, upon adopting the standard the Company deferred previously recognized costs for contracts not completed as of the effective date. The estimated customer life has been determined to be approximately 60 months resulting in the deferral of costs historically expensed at a point in time over this period. This change resulted in an increase to accumulated deficit of $1.5 million as of October 1, 2018.

~~Additional changes~~impact to the Company’s ~~accumulated deficit were made as the result~~finance ROU asset and

Table of ~~adopting ASC 606. These changes, which resulted in a cumulative decrease to accumulated deficit of $0.2 million as of~~Contents

liability on October 1, 2018, were driven by the identification of additional performance obligations as well as changes in the transfer of control of certain performance obligations across both the Brooks Semiconductor Solutions Group and Brooks Life Science segments.2019. The ~~additional changes to the Company’s accumulated deficit included a cumulative decrease to accumulated deficit of $0.2 million from discontinued operations.~~

~~As the Company has adopted ASC 606 using the modified retrospective method, the standard requires disclosure of impact from~~ adoption of the standard ~~to each financial statement line item in~~does not impact the ~~current reporting period. The impact~~Consolidated Results of ~~adoption of ASC 606 on the Company’s~~Operations or Consolidated Statement of ~~Operations and Consolidated Balance sheet was as follows:~~

Three Months Ended December 31, 2018

Without adoption of

Effect of Change

As Reported

ASC 606

Higher/(Lower)

Revenue

$
179,368

$
179,769

$
(401)
Cost of revenue

107,287

107,799

(512)
Gross profit

72,081

71,970

111
Operating expenses

66,748

66,544

204
Operating income

$
5,333

$
5,426

$
(93)

December 31, 2018

Without adoption of

Effect of Change

As Reported

ASC 606

Higher/(Lower)
Prepaid expenses and other current assets

$
42,063

$
37,292

$
4,771

Other assets

22,304

21,025

1,279

Deferred revenue

31,091

28,944

2,147

Accumulated deficit

(987,725)

(991,628)

3,903

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The difference between the reported results and the results without the adoption of ASC 606 was primarily driven from the elimination of revenue constraints due to billing limitations that resulted in acceleration of revenue within the Brooks Semiconductor Solutions Group segment and the deferral of fees associated with the registration of biological samples within the Brooks Life Science segment. Amortization of costs to obtain a contract capitalized through the cumulative effect adjustment described above have resulted in additional expense in the current period under ASC 606. Except as disclosed above, the adoption of ASC 606 did not have a significant impact on the Company’s Consolidated Statement of Operations and Consolidated Balance SheetCash Flows. See Note 9, “Leases” for ~~the three months ended December 31, 2018.~~

further information.

Other

For further information with regard to the Company’s significant accounting policies, please refer to Note 2 "Summary of Significant Accounting Policies" to the Company’s consolidated financial statements included in the ~~2018~~2019 Annual Report on Form ~~10‑K.~~10-K.

3. Discontinued Operations

On August 27, 2018, the Company entered into a definitive agreement to sell its semiconductor cryogenics business to Edwards ~~Vacuum LLC (a member of the Atlas Copco Group)~~ for $675.0 million in ~~cash. The purchase price is~~cash, subject to ~~adjustments~~adjustments. On July 1, 2019, the Company completed the sale of the semiconductor cryogenics business for $661.1 million, which excludes $6.3 million retained by Edwards at closing based on the initial adjustment for net working capital. Net proceeds from the sale were approximately $553.1 million, after deducting estimated taxes payable and closing costs, which remains subject to adjustment for the final determination of working capital and other items. ~~The Company anticipates closing of the transaction in the third fiscal quarter of 2019 upon satisfaction of various closing conditions and regulatory approvals.~~

The semiconductor cryogenics business consists of the CTI pump business, Polycold chiller business, the related services business and the Company's 50% share in Ulvac Cryogenics, Inc., a joint venture based in Japan. The semiconductor cryogenics business was originally acquired by the Company in its 2005 merger with Helix Technology ~~Corporation and is~~Corporation. The operating results of the semiconductor cryogenics business had been included in the Brooks Semiconductor Solutions Group segment ~~as part~~before the plan of ~~the segment.~~disposition.

In connection with the closing of the Disposition on July 1, 2019, the Company and Edwards ~~have agreed to enter~~entered into a transition service agreement, a supply agreement, and lease agreements. The transition service agreement outlines the information technology, people, and facility support the Company ~~expects to~~will provide to Edwards for a period up to 9 months after transaction closing date. The supply agreement allows the Company to purchase CTI and Polycold goods at cost from Edwards up to an aggregate amount equal to $1.0 million during the one-year term after closing of the Disposition. The lease agreements ~~will~~ provide facility space to Edwards free of charge for three years after the transaction closing date. Edwards will have the option to renew each lease at the then current market rates after the initial three-year lease term has ended. This Disposition is consistent with the Company’s long-standing strategy to increase shareholder value by accelerating the growth of its Life Sciences business with further acquisitions and strengthening its semiconductor automation business with opportunistic acquisitions.

The Disposition met the "held for sale" criteria and the “discontinued operation” criteria in accordance with FASB ASC 205 as of September 30, 2018. As such, its operating results have been reported as a discontinued operation for all periods presented.

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The following table presents the financial results of discontinued operations (in thousands):

Three Months Ended December 31,


2018

2017
Revenue


Products

$
28,786

$
36,412
Services

10,538

10,317
Total revenue

39,324

46,729
Cost of revenue

Products

16,516

20,648
Services

6,049

5,125
Total cost of revenue

22,565

25,773
Gross profit

16,759

20,956
Operating expenses

Research and development

2,158

1,794
Selling, general and administrative

7,203

3,247
Total operating expenses

9,361

5,041
Operating income

7,398

15,915
Other (expense) income, net

289

272
Income before income taxes and earnings of equity method investment

7,687

16,187
Income tax provision

1,310

3,500
Income before equity in earnings of equity method investment

6,377

12,687
Equity in earnings of equity method investment

1,772

2,180
Net income

$
8,149

$
14,867



	Three Months Ended December 31,
	2019		2018
Revenue
Products	$	-	$	28,786
Services		-		10,538
Total revenue		-		39,324
Cost of revenue
Products		-		16,516
Services		-		6,049
Total cost of revenue		-		22,565
Gross profit		-		16,759
Operating expenses
Research and development		-		2,158
Selling, general and administrative		(257)		7,203
Total operating expenses		(257)		9,361
Operating income		257		7,398
Other (loss) income, net		(410)		289
(Loss) income before income taxes and earnings of equity method investment		(153)		7,687
Income tax provision		(36)		1,310
(Loss) income before equity in earnings of equity method investment		(117)		6,377
Equity in earnings of equity method investment		-		1,772
Net (loss) income	$	(117)	$	8,149

The table above reflects revenue for the three months ended December 31, 2018 in accordance with ASC ~~606, while results for the three months ended December 31, 2017 have not been restated and are reported in accordance with the governing revenue recognition standards applicable to that period.~~606. Results for the three months ended December 31, 2018 were not significantly impacted by the adoption of ASC 606.

The Company performed its annual goodwill impairment analysis in April 2018. This analysis was updated upon announcement of the Disposition for the year ended September 30, 2018. The Company has concluded that there is no impairment indicator related to the goodwill of the Disposition group at either date the impairment analysis was performed.

The following table presents the summarized financial information for Ulvac Cryogenics, Inc., the unconsolidated subsidiaries accounted for based on the equity method (in thousands):

December 31,

September 30,


2018

2018
Balance Sheets:




Current assets

$
71,538

$
69,302
Non-current assets

21,568

21,338
Current liabilities

30,467

26,006
Non-current liabilities

8,588

8,397


	Three Months Ended December 31,
	2018
Statements of Operations:
Total revenue	$	22,299
Gross profit		8,928
Operating Income		5,124
Net income		3,496

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Three Months Ended December 31,


2018

2017
Statements of Operations:




Total revenue

$
22,299

$
22,878
Gross profit

8,928

9,226
Operating Income

5,124

5,343
Net income

3,496

4,285

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

Three Months Ended December 31,

2018

2017
Depreciation and amortization

$
2

$
195
Capital expenditures

308

26
Stock-based compensation

291

246
Earnings of equity method investment

(1,772)

(2,180)

The carrying value of the assets and liabilities of the discontinued operations on the Consolidated Balance Sheet as of December 31, 2018 and September 30, 2018 were as follows (in thousands). Balances as of December 31, 2018 are presented under ASC 606, while balances as of September 30, 2018 have not been restated and are reported in accordance with the governing revenue recognition standards applicable to that period. The carrying value of the assets and liabilities associated with discontinued operations as of December 31, 2018 was not significantly impacted by the adoption of ASC 606:

December 31,

September 30,

2018

2018
Assets

Accounts receivable, net

$
28,327
$
27,852
Inventories

39,884

37,953
Other current assets

123

343
Total current assets of discontinued operation

$
68,334

$
66,148

Property, plant and equipment, net

$
1,397

$
1,081
Goodwill

26,485

26,485
Intangibles, net

14

14
Equity method investment

34,053

31,472
Other assets

18

-
Total long-term assets of discontinued operation

$
61,967

$
59,052

Liabilities

Deferred revenue

$
1,907

$
1,052
Accrued warranty and retrofit costs

2,400

2,464
Accrued compensation and benefits

3,325

3,648
Other current liabilities

703

224
Total current liabilities of discontinued operation

$
8,335

$
7,388

Long-term liabilities of discontinued operation

$
506

$
698


	Three Months Ended December 31,
	2018
Depreciation and amortization	$	2
Capital expenditures		308
Stock-based compensation		291
Earnings of equity method investment		(1,772)

1413

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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 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 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 relying on the securities’ relationship to other benchmark quoted prices.

Unrealized gains and losses are excluded from earnings and reported as a separate component of accumulated other comprehensive income until the security is sold or matures. Gains or losses realized from sales of marketable securities are computed based on the specific identification method and recognized as a component of "Other expenses, net" in the accompanying unaudited Consolidated Statements of Operations. There were ~~no sales of~~0 marketable securities sales during the three months ended December 31, ~~2017.~~2019. During the three months ended December 31, 2018, the Company sold marketable securities with a fair value and amortized cost of $49.4 million and $49.5 million, respectively, and recognized net losses of $0.1 million. As a result, during this period, the Company collected cash proceeds of $48.9 million from the sale of marketable securities and reclassified net unrealized holding losses of $0.1 million from accumulated other comprehensive income into ~~"Other~~“Other expenses, ~~net"~~net” in the accompanying unaudited Consolidated Statements of Operations as a result of these transactions.

The following is a summary of the amortized cost and the fair value, including accrued interest receivable and unrealized holding gains (losses) on the short-term and long-term marketable securities as of December 31, ~~2018~~2019 and September 30, ~~2018~~2019 (in thousands):


			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Losses		Gains		Fair Value
December 31, 2019:
U.S. Treasury securities and obligations of U.S. government agencies	$	6,696	$	—	$	1	$	6,697
Bank certificates of deposits		500		—		—		500
Corporate securities		4,519		—		—		4,519
Municipal securities		2,515		—		—		2,515
Other debt securities		41		—		—		41
	$	14,271	$	—	$	1	$	14,272
September 30, 2019:
U.S. Treasury securities and obligations of U.S. government agencies	$	31,863	$	(2)	$	5	$	31,866
Bank certificates of deposits		750		—		—		750
Corporate securities		4,317		—		1		4,318
Other debt securities		35		—		—		35
	$	36,965	$	(2)	$	6	$	36,969

Gross

Gross


Amortized

Unrealized

Unrealized

Cost

Losses

Gains

Fair Value
December 31, 2018:








Corporate securities

$
2,489

$
—

$
—

$
2,489
Other debt securities

28

28

$
2,517

$
—

$
—

$
2,517
September 30, 2018:








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

$
30,142

$
(65)

$
—

$
30,077
Bank certificates of deposits

5,148

—

1

5,149
Corporate securities

14,763

(30)

—

14,733
Municipal securities

2,797

(17)

—

2,780
Other debt securities

779

—

—

779

$
53,629

$
(112)

$
1

$
53,518

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The fair values of the marketable securities by contractual maturities at December 31, ~~2018~~2019 are presented below (in thousands):


	Fair Value

			Fair Value
Due in one year or less	$	28	$	11,233
Due after one year through five years		—		—
Due after five years through ten years		—		—
Due after ten years		2,489		3,039
Total marketable securities	$	2,517	$	14,272

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

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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 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. There were no0 securities in an unrealized loss position as of December 31, ~~2018.~~2019. The aggregate fair value of the marketable securities in an unrealized loss position was ~~$43.0~~$12.0 million as of September 30, ~~2018.~~2019. Aggregate unrealized losses for these securities were insignificant as of September 30, ~~2018~~2019 and are presented in the table above. ~~As of September 30, 2018, marketable securities in an unrealized loss position was comprised primarily of U.S. Treasury securities, corporate securities, and municipal securities.~~ The securities in an unrealized loss position as of September 30, ~~2018~~2019 were not considered other-than-temporarily impaired and, as such, the Company did not recognize impairment losses during the period then ended. The unrealized losses were attributable to changes in interest rates that impacted the value of the investments.

Cash equivalents of ~~less than $0.1~~$6.2 million ~~and $50.6 million, respectively,~~ at ~~December 31, 2018 and~~ September 30, ~~2018~~2019 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. Cash equivalents of ~~less than $0.1~~$37.2 million atand $10.0 million, respectively, as of December 31, ~~2018~~and September 30, 2019 consist primarily of ~~bank~~ ~~certificates of deposits with original maturities of less than 90 days~~treasury bills and agency bonds and are classified within Level 2 of the fair value hierarchy because they are not actively traded. Cash equivalents from level 1 and level 2 are recorded in “Cash and cash equivalents” within the accompanying unaudited Consolidated Balance Sheet.

5. Acquisitions

Acquisition Completed in Fiscal Year 2019

Acquisition of the GENEWIZ Group

On November 15, 2018, the Company acquired all the outstanding capital stock of GENEWIZ Group (“GENEWIZ”), a leading global genomics service provider headquartered in South Plainfield, New Jersey. GENEWIZ provides genomics services that enable research scientists to advance their discoveries within the pharmaceutical, academic, biotechnology, agriculture and other markets. It provides gene sequencing and synthesis services for more than 4,000 institutional customers worldwide supported by their global network of laboratories spanning the United States, China, Japan, Germany and the United Kingdom. This transaction has added a new and innovative platform which further enhances the ~~Company expects to leverage, along with its~~Company’s core capabilities, ~~to add~~and added even more value to samples that are under the Company’s care.

The total cash purchase price for the acquisition was ~~$442.4~~$442.7 million, net of cash ~~acquired. The total purchase price is subject to~~acquired, which included a working capital ~~and other adjustments, e.g., adjustment for cash and debt.~~ settlement of $0.4 million. The Company used the proceeds of the incremental term loan described in Note 8, “Debt” to pay a portion of the purchase price.

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On the acquisition date, the Company paid $32.3 million to escrow accounts related to the satisfaction of the seller's indemnification obligations with respect to their representations and warranties and other indemnities. The Company also retained an amount equal to $1.5 million ~~(adjustment holdback)~~ as collateral for any adjustment shortfall ~~in determining~~based on the final merger ~~consideration. The~~consideration calculation. During the fiscal year 2019, the final ~~settlement of the adjustment hold back is expected~~merger consideration was calculated to be ~~determined during~~$4.0 million less than the ~~second quarter~~merger consideration paid at closing. To satisfy the shortfall, the Company reversed the $1.5 million liability associated with the holdback, received approval from the former shareholders to retain $0.7 million of funds the ~~Company’s 2019 fiscal year.~~Company received on their behalf, and collected $1.8 million from the escrow accounts.

The Company recorded the ~~following~~ assets acquired and liabilities assumed related to GENEWIZ at their fair values as of the acquisition date, from a market participant’s perspective (in thousands). While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value the assets acquired and liabilities assumed on the acquisition date, its estimates and assumptions are subject to refinement.perspective. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company’s results of operations. The ~~finalization~~following table presents the net purchase price and the fair values of the ~~assignment~~assets and liabilities of ~~fair values will be completed within one year.~~GENEWIZ (in thousands):


	Fair Value of
	Assets and
	Liabilities
Accounts receivable (approximates contractual value)	$	28,566
Inventories		4,370
Prepaid expenses and other current assets		11,635
Property, plant and equipment		36,379
Goodwill		235,160
Intangible assets		189,129
Other assets		15,998
Current portion of long-term debt		(3,170)
Accounts payable		(6,522)
Deferred revenue		(67)
Accrued compensation and benefits		(5,145)
Other current liabilities		(10,073)
Long-term debt		(2,482)
Long-term tax reserves		(13,400)
Long-term deferred tax liabilities		(34,993)
Other long-term liabilities		(2,681)
Total purchase price, net of cash acquired	$	442,704

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Fair Value of

Assets and

Liabilities
Accounts receivable, net

$
26,952
Inventories

4,370
Prepaid expenses and other current assets

11,210
Property, plant and equipment, net

36,379
Goodwill

236,504
Intangible assets, net

188,524
Other assets

15,998
Current portion of long-term debt

(3,170)
Accounts payable

(6,522)
Deferred revenue

(67)
Accrued compensation and benefits

(5,145)
Other current liabilities

(6,771)
Long-term debt

(2,482)
Long-term tax reserves

(13,400)
Long-term deferred tax liabilities

(37,415)
Other long-term liabilities

(2,602)
Total purchase price, net of cash acquired

$
442,363

The Company applied variations of the income approach to estimate the fair values of the ~~intangibles~~intangible assets acquired. The identifiable intangible assets include customer relationships (excess earnings method) of ~~$125.4~~$125.5 million with a useful life of 14 years, completed technology (relief from royalty method) of ~~$44.1~~$44.5 million with useful lives from 10 to 15 years and trademarks (relief from royalty method) of ~~$19.0~~$19.1 million with a useful life of 13 years. The intangible assets acquired are amortized over the total weighted average period of 13.3 years using methods that approximate the pattern in which the economic benefits are expected to be realized.

Goodwill of ~~$236.5~~$235.2 million largely reflects the potential synergies and expansion of the Company’s core technologies and offerings in the Life Sciences business. The goodwill from this acquisition is reported within the Brooks Life Sciences segment and is not tax deductible.

The revenues and net income from GENEWIZ ~~included~~recognized in the Company's consolidated results of operations were $40.0 million and $0.8 million, respectively for the ~~reporting period since acquisition~~three months ended December 31, 2019. The revenues and net income from GENEWIZ recognized in the Company’s consolidated results of operations were $16.4 million and $0.9 million, ~~respectively.~~respectively during the period from the acquisition date to December 31, 2018. During the three months ended December 31, ~~2018,~~2019, and the comparable reporting period since acquisition in fiscal year 2019, net income included $5.1 million and $1.6 million, respectively, related to amortization expense of acquired intangible assets. ~~The Company incurred $10.0 million in transaction costs related to the acquisition of which $6.3 million was incurred during~~During the three months ended December 31, ~~2018.~~ 2019 and 2018, the Company incurred less than $0.1 million and $6.3 million, respectively,

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in transaction costs, which were recorded in "Selling, general and administrative" expenses within the accompanying unaudited Consolidated Statements of Operations.

The following unaudited pro forma information reflects ~~our~~the Company’s consolidated results of operations as if the acquisition had taken place on October 1, 2017. The unaudited pro forma information is not necessarily indicative of the results of operations that wethe Company would have reported had the transaction actually occurred at the beginning of these periods nor is it necessarily indicative of future results. The unaudited pro forma financial information does not reflect the impact of future events that may occur after the acquisition, including, but not limited to, anticipated costs savings from synergies or other operational improvements (in thousands). The pro forma amounts in below table were adjusted to reflect a correction made during the 2019 fiscal year, see the 2019 Annual Report on Form 10-K Note 4, “Acquisitions” for further information.

Three Months Ended December 31, 2018

Three Months Ended December 31, 2017

Revenue
$
196,021

170,033
Net income (loss)

(35,325)

(8,714)


		Three Months Ended December 31, 2018
	(pro forma)

Revenue	$	196,021
Net income from continuing operations		6,795

The unaudited pro forma financial information presented in the table above ~~has been adjusted to give effect to~~includes adjustments ~~that are (1) directly related to the acquisition; (2) factually supportable; and (3) expect to have a continuing~~

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~~impact. These adjustments include, but are not limited to,~~for the application of ~~our~~the Company’s accounting policies, elimination of related party transactions, depreciation and amortization related to fair value adjustments to property, plant and equipment and intangible assets, and transaction costs, and interest expense on acquisition related debt.

Revenue for the three months ended December 31, 2018 is recognized in accordance with ASC 606, while results for the three months ended December 31, 2017 have not been restated and are reported in accordance with the governing revenue recognition standards applicable to that period. Pro forma revenue for the three months ended December 31, 2018 has been decreased by $0.4 million for the adoption of ASC 606.

To present ~~our~~the Company’s consolidated results of operations as if the acquisition had taken place on October 1, 2017, the unaudited pro forma earnings for the ~~period from October 31, 2018 to December 31, 2018 and the~~ three months ended December 31, ~~2017 have~~2018 has been adjusted to include the following additional expenses related to the acquisition: $1.6 million ~~and $3.3 million, respectively, of~~ property, plant, and equipment, leases, and intangible asset step-up depreciation and amortization expense, ~~and~~ $2.0 million ~~and $4.8 million, respectively, of~~ interest expense related to financing ~~activities. The net loss of $35.3~~activities and $42.1 million ~~for the quarter ended December 31, 2018 is mainly due to the one-time option, bonus,~~non-recurring compensation expenses and transaction ~~costs of $43.9 million incurred by GENEWIZ and one-time transaction costs of $6.3 million incurred by Brooks.~~

~~Acquisitions Completed in Fiscal Year 2018~~

~~Acquisition of~~ ~~Tec-Sem~~

On April 6, 2018, the Company acquired approximately 93% of the outstanding capital stock of Tec-Sem Group AG (“Tec-Sem”), a Switzerland-based manufacturer of semiconductor fabrication automation equipment with a focus on reticle management. During the fourth quarter of fiscal year 2018, the Company acquired the remaining 7% noncontrolling interest upon the completion of certain procedural steps. The total cash payment to acquire the business was $15.6 million, net of cash acquired and subject to working capital adjustments. The acquisition of Tec-Sem has expanded the Company’s contamination control solutions business within the Brooks Semiconductor Solutions Group segment.

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

Fair Value of Assets
and Liabilities
Accounts receivable (approximates contractual value)

$
988
Inventories

4,297
Prepaid expenses and other current assets

4,038
Property, plant and equipment

85
Intangible assets

10,694
Goodwill

7,665
Accounts payable

(1,049)
Accrued liabilities

(6,962)
Deferred tax liabilities

(1,391)
Accrued pension liability

(2,800)
Total purchase price, net of cash acquired

$
15,565

The Company applied variations of the income approach to estimate the fair values of the intangibles assets acquired. The identifiable intangible assets include completed technology (excess earnings method) of $8.4 million with a useful life of 10 years, backlog (excess earnings method) of $1.6 million with a useful life of 1 year, and customer relationships (distributor method) of $0.7 million with a useful life of 9 years. The intangible assets acquired are amortized over the total weighted average period of 8.6 years using methods that approximate the pattern in which the economic benefits are expected to be realized.

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Goodwill of $7.7 million largely reflects the potential synergies and expansion of technical capabilities to the Company's existing contamination control solutions business. The goodwill from this acquisition is reported within the Brooks Semiconductor Solutions Group segment and is not tax deductible.

As part of the acquisition, the Company assumed all the assets and liabilities of Tec-Sem’s Swiss defined benefit plan, which covered substantially all its full-time employees. At acquisition date, the plan was fully funded for each employee’s pension contribution plus an expected rate of return equal to the statutory discount rate. Total plan assets and plan liability were $5.1 million and $7.9 million, respectively, at acquisition date. The Company recorded a liability of $2.8 million for the unfunded projected benefit obligation related to each plan participant’s future services.

The Company reports the results of operations for Tec-Sem in the Brooks Semiconductor Solutions Group segment starting from the acquisition date. The revenues and net income from Tec-Sem included in the Company's consolidated results for the three months ended December 31, 2018 were $9.3 million and $1.7 million, respectively. During the three months ended December 31, 2018, the net income included $0.2 million related to the step-up in value of the acquired inventories and $0.9 million related to amortization expense of acquired intangible assets.

The escrow at closing had a balance of $2.6 million which consisted of $1.8 million related to satisfaction of the sellers' indemnification obligations with respect to their representations and warranties and other indemnities. The remaining $0.8 million of the escrow balance is related to a performance obligation that the Company assumed at the acquisition date for the transfer of non-core wafer stocker technology to an unrelated third party. Upon successful delivery of such technology, the Company expects to collect a portion of the $0.8 million which will represent reimbursement of costs incurred to complete development.

The Company did not present a pro forma information summary for its consolidated results of operations for the three months ended December 31, 2018 and 2017 as if the acquisition of Tec-Sem occurred on October 1, 2016 because such results were immaterial.

~~Acquisition of 4titude Limited~~

~~On October 5, 2017, the Company acquired~~ all 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 $65.1 million, net of cash acquired, consisted primarily of a cash payment of $64.8 million subject to working capital adjustments and the assumption of the seller’s liabilities of $0.4 million.

~~The Company used a market participant approach to record the assets acquired and liabilities assumed in the 4titude acquisition 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

38,185
Accounts payable

(286)
Accrued liabilities

(845)
Deferred tax liabilities

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

$
65,119

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The Company applied variations of the income approach to estimate the fair values of the intangibles assets acquired. The identified intangible assets include customer relationships (excess earnings method) of $21.4 million with a useful life of 10 years, completed technology (relief from royalty method) of $5.2 million with a useful life of 13 years, backlog (excess earnings method) of $0.4 million with a useful life of 1 year and trademarks (excess earnings method) of $0.2 million with a useful life of 1 year. 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.

Goodwill represents the excess of the consideration paid 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. During the three months ended December 31, 2018, revenue and net income from 4titude recognized in the Company’s results of operations were $3.9 million and less than $0.1 million, respectively. During the three months ended December 31, 2017, revenue and net loss from 4titude recognized in the Company’s results of operations were $3.4 million and $1.1 million, respectively. During the three months ended December 31, 2018 and 2017, the net income or loss included recurring charges of $0.9 million and $1.0 million, respectively, related to amortization expense of acquired intangible assets. During the three months ended December 31, 2017, the net loss also included non-recurring charges of $1.2 million related to the step-up in value of the acquired inventories.

During the three months ended December 31, 2017, the Company incurred $0.5 million in non-recurring transaction costs with respect to the 4titude acquisition, which were recorded in "Selling, general and administrative" expenses within the accompanying unaudited Consolidated Statements of Operations. There were no transaction costs related to the 4titude acquisition during the three months ended December 31, 2018.

The Company did not present a pro forma information summary for its consolidated results of operations for the three months ended December 31, 2018 and 2017 as if the acquisition of 4titude occurred on October 1, 2016 because such results were immaterial.

~~Other~~

On April 20, 2018, the Company acquired BioSpeciMan Corporation (“BioSpeciMan”), a Canadian provider of storage services for biological sample materials. BioSpeciMan, founded in 2002, provides temperature controlled biological sample storage services to an attractive mix of pharma, biotech and contract lab customers. This acquisition has expanded customer relationships and geographic reach within its growing sample management storage services business in the Brooks Life Sciences segment. The total cash payment made by the Company was $5.2 million, net of cash acquired and subject to working capital adjustments.

The Company allocated the purchase price of $5.2 million based on the fair value of the assets and liabilities acquired as of the acquisition date, which included $0.3 million of accounts receivable, $2.6 million of customer relationships, $2.7 million of goodwill and $0.7 million of assumed liabilities. The Company applied the excess earnings method, a variation of the income approach to determine the fair value of the customer relationship intangible asset. The purchase price allocation was based on a preliminary valuation which is subject to further adjustments within the measurement period when additional information becomes available. The goodwill from this acquisition is reported within the Brooks Life Sciences segment and is not tax deductible.

At the acquisition date, a cash payment of $0.5 million was held back for potential working capital adjustments and the sellers' satisfaction of general representations and warranties. These holdback payments were ascribed to the purchase price.

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The operating results of the acquisition have been reflected in the results of operations for the Brooks Life Sciences segment from the date of the acquisition. The Company did not present a pro forma information summary for its consolidated results of operations for the three months ended December 31, 2018 and 2017 as if the acquisition of BioSpeciMan occurred on October 1, 2016 because such results were immaterial.

costs.

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. 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 months ended December 31, ~~2018.~~2019. Please refer to Note 7, "Goodwill and Intangible Assets" to the Company's consolidated financial statements included in

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the ~~2018~~2019 Annual Report on Form 10-K for further information on the goodwill impairment testing performed during fiscal year ~~2018.~~2019.

The ~~components of~~changes in the Company’s goodwill by ~~operating~~reportable segment ~~at December 31, 2018 and~~since September 30, ~~2018~~2019 are as follows (in thousands):

Brooks






Semiconductor

Solutions

Brooks

Group

Life Sciences

Other

Total
Gross goodwill, at September 30, 2018

$
636,907

$
207,913

$
26,014

$
870,834
Accumulated goodwill impairments

(588,944)

—

(26,014)

(614,958)
Goodwill, net of accumulated impairments, at September 30, 2018

47,963

207,913

—

255,876
Acquisitions and adjustments

(167)

234,816

—

234,649
Gross goodwill, at December 31, 2018

636,740

442,729

26,014

1,105,483
Accumulated goodwill impairments

(588,944)

—

(26,014)

(614,958)
Goodwill, net of accumulated impairments, at December 31, 2018

$
47,796

$
442,729

$
—

$
490,525


	Brooks
	Semiconductor
	Solutions		Brooks
	Group		Life Sciences		Other		Total
Gross goodwill, at September 30, 2019	$	636,791	$	440,755	$	26,014	$	1,103,560
Accumulated goodwill impairments		(588,944)		—		(26,014)		(614,958)
Goodwill, net of accumulated impairments, at September 30, 2019		47,847		440,755		—		488,602
Acquisitions and adjustments		35		1,733		—		1,768
Gross goodwill, at December 31, 2019		636,826		442,488		26,014		1,105,328
Accumulated goodwill impairments		(588,944)		—		(26,014)		(614,958)
Goodwill, net of accumulated impairments, at December 31, 2019	$	47,882	$	442,488	$	—	$	490,370

During the three months ended December 31, ~~2018,~~2019, the Company recorded a goodwill increase of ~~$234.6~~$1.8 million primarily related to the ~~acquisition~~impact of GENEWIZ which represented the excess of the consideration transferred over the fair value of the net assets acquired. Please refer to the Note 5 "Acquisitions" for further information on this transaction.foreign currency translation adjustments.

The components of the Company’s identifiable intangible assets as of December 31, ~~2018~~2019 and September 30, ~~2018~~2019 are as follows (in thousands):


	December 31, 2018						September 30, 2018
			Accumulated		Net Book				Accumulated		Net Book
	Cost		Amortization		Value		Cost		Amortization		Value

													December 31, 2019						September 30, 2019
															Accumulated		Net Book				Accumulated		Net Book
													Cost		Amortization		Value		Cost		Amortization		Value
Patents	$	5,302	$	4,401	$	901	$	5,302	$	4,325	$	977	$	5,302	$	4,702	$	600	$	5,302	$	4,628	$	674
Completed technology		88,475		30,790		57,685		44,829		28,934		15,895		88,819		41,548		47,271		88,288		38,778		49,510
Trademarks and trade names		25,316		3,444		21,872		6,298		2,953		3,345		25,424		6,689		18,735		25,340		5,807		19,533
Customer relationships		266,425		67,650		198,775		142,489		62,750		79,739		267,087		91,474		175,613		265,450		84,047		181,403
	$	385,518	$	106,285	$	279,233	$	198,918	$	98,962	$	99,956
Other intangibles														233		204		29		231		183		48
													$	386,865	$	144,617	$	242,248	$	384,611	$	133,443	$	251,168

Amortization expense for intangible assets was ~~$7.8~~$10.6 million and ~~$5.5~~$7.8 million, respectively, during the three months ended December 31, ~~2018~~2019 and ~~2017.~~

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2018.

Estimated future amortization expense for the intangible assets for the remainder of fiscal year ~~2019,~~2020, the subsequent four fiscal years and thereafter is as follows (in thousands):



Fiscal year ended September 30,
2019	$	26,976
2020		41,340	$	30,729
2021		37,547		37,494
2022		34,545		34,390
2023		31,589		31,267
2024				26,500
Thereafter		107,236		81,868
	$	279,233
			$	242,248

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7. Line of Credit

The Company maintains a revolving line of credit under a credit agreement with Wells Fargo Bank, N.A. and JPMorgan Chase Bank, ~~N.A~~N.A. that provides for revolving credit ~~financing~~facility of up to $75.0 million, subject to borrowing base availability, as defined in the 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 credit agreement for the term loan ~~agreement,~~discussed in Note 8, “Debt” below, 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.~~agreement. Based on the amended terms of the credit agreement, the line of credit continues to provide for a revolving credit ~~financing~~facility of up to $75.0 million, subject to borrowing base availability. Borrowing base availability under the amended ~~line of~~ credit agreement 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 sub-limits 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 Brooks Life Sciences, Inc. (fka BioStorage Technologies, Inc.), ~~its~~the Company’s 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~~. transaction.

As of December 31, 2019, the Company had approximately $43.6 million available for borrowing under the line of credit. There were no0 amounts outstanding under the line of credit as of December 31, ~~2018~~2019 and September 30, ~~2018.~~2019. The Company records commitment fees and other costs directly associated with obtaining line of credit ~~financing~~facility as deferred financing costs which are presented within "Other assets" in the accompanying unaudited Consolidated Balance Sheets. Deferred financing costs were ~~$0.5~~$0.3 million and $0.4 million, respectively, at ~~both~~ December 31, ~~2018~~2019 and September 30, ~~2018.~~2019. Such costs are amortized over the term of the related ~~financing~~facility 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 and 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, ~~2018~~2019 and September 30, ~~2018.~~2019.

8. Debt

Term Loans

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.

On November 15, 2018, the Company entered into an incremental ~~Amendment~~amendment (the ~~“Amendment”~~“First Amendment”) to the existing credit agreement. Under the First Amendment, the Company obtained an incremental term loan in an aggregate principal amount of $350.0 million. The proceeds of the incremental term loan were used to finance a portion of the purchase price for the Company’s acquisition of GENEWIZ. The incremental term loan was issued at $340.5 million, or 97.3% of its par value, resulting in a discount of $9.5 million, or 2.7%, which represented financing cost of the incremental term loan.

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Except as provided in the First Amendment, the incremental term loan iswas subject to the same terms and conditions as set forth in the existing credit agreement.

On February 15, 2019, the Company entered into the second amendment to the credit agreement (the “Second Amendment”) and syndicated the incremental term loan to a group of new lenders which met the criteria of a debt extinguishment. The Company wrote off the carrying value of the incremental term loan of $340.1 million as of February 15, 2019 and recorded the syndicated incremental term loan at its present value for $349.1 million and a loss on debt extinguishment for $9.1 million. The syndicated incremental term loan was issued at $345.2 million, or 98.9% of

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its par value resulting in a discount of $4.0 million which represented financing costs which are presented as a reduction of the incremental term loan principal balance in the accompanying unaudited Consolidated Balance Sheets and was accreted over the life of the incremental term loan. Except as provided in the Second Amendment with respect to an increase of the applicable interest rates, the syndicated incremental term loan was subject to the same terms and conditions as the initial incremental term loan.

On July 1, 2019, the Company completed the sale of its semiconductor cryogenics business and used $348.3 million of the proceeds from the Disposition to extinguish the outstanding balance of the incremental term loan. In addition, the Company used $147.0 million of the proceeds from the Disposition to extinguish a portion of the outstanding balance of the term loan. The Company recorded a loss on debt extinguishment of $5.2 million for the 2 term loans.

The Company’s obligations under the term loan are also guaranteed by Brooks Life Sciences, Inc. (fka BioStorage Technologies, Inc.) as the guarantor, subject to the terms and conditions of the credit 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 loan principal amount under the credit agreement may be increased by an aggregate amount equal to $75.0 million plus any voluntary repayments of the term loans plus any additional amount such that the secured leverage ratio of the Company is less than 3.00 to 1.00.

Under the terms of the Amendment, the Company may elect that the borrowings comprising the incremental loan bear interest at a rate per annum equal to (a) the Alternate Base Rate (the “ABR”) plus 1.50%; or (b) the Adjusted LIBOR plus 2.50%. ABR is equal to the highest of (a) the federal funds effective rate plus 0.50%, (b) the prime rate, or (c) one-month LIBOR rate plus 1.00%. The LIBOR ~~is equal to the rate for eurodollar deposits in the London interbank market for a period of one, two, three or six months, in each case selected by the Company~~.~~“Adjusted LIBOR” is the LIBOR as adjusted for statutory reserve requirements for eurodollar liabilities.~~

The Company’s obligations under the term loan are also guaranteed by BioStorage Technologies, Inc. as 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, commencing on March 31, 2018, with any remaining amount of principal becoming due and payable on the maturity date. All accrued and unpaid interest on Borrowings shall be due on the last day of each interest period elected by the Company for such 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~~credit 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~~credit agreement. The Company ~~would be~~is 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 the 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~~was required to make principal payments equal to the excess cash flow amount, as defined in the ~~term loan~~credit 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 are 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, ~~2018,~~2019, deferred financing costs were ~~$11.6~~$0.5 million.

The ~~term loan~~credit 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 the ~~term loan~~credit agreement will bear an annual interest rate at 2.00% above the rate otherwise applicable under the terms and conditions of such agreement. The ~~term loan~~credit agreement does not contain financial maintenance covenants. As of December 31, ~~2018~~,2019, the Company was in compliance with all covenants and conditions under the ~~term loan~~credit agreement.

In connection with the GENEWIZ acquisition, wethe Company assumed ~~three~~3 five-year term loans for a total of $3.3 million and ~~two~~2 one-year short term loans for a total of ~~RMB 22 million or~~ $3.2 million. The ~~three~~3 five-year term loans were initiated during 2016 and mature in 2021. The principal payments are payable in ~~eight~~8 installments equal to 12.5% of the initial principal amount of the term loans on December 14th and June 14th of each ~~year, commencing in 2017.~~year. The ~~three~~3 five-year term loans were secured by GENEWIZ to fund equipment procurement and new building related payments and the interest rates ~~were~~are equal to the LIBOR plus 3.1%. The ~~two~~2 one-year term loans were ~~borrowed~~secured by GENEWIZ to fund operations. Both of the one-year term loans were initiated in

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2018 and ~~mature~~matured in 2019.~~The principal payments are due at the maturity date.~~ The interest rates of these ~~two~~2 loans were 4.56% and 4.35%. There ~~is no~~are 0 deferred financing costs related to either the five-year term loans or the one-year term loans. At December 31, ~~2018, we~~2019, the Company had an aggregate outstanding principal balance of ~~$2.1 million and $3.2~~$1.2 million for the ~~three~~3 five-year term ~~loans and two~~loans. Both of the 2 one-year short term loans ~~respectively.~~matured and were repaid in full as of September 30, 2019.

During the three months ended December 31, ~~2018,~~2019, the weighted average stated interest rate paid on all ~~oudtanding~~outstanding debt was ~~5.0%~~4.5%. During the three months ended December 31, ~~2018,~~2019, the Company incurred aggregate interest expense of ~~$5.3~~$0.6 million in connection with the borrowings, including ~~$0.4~~less than $0.1 million of deferred financing costs amortization.

AsTable of ~~December 31, 2018~~, the estimated fair value of the outstanding principal balance of the debt no our balance sheet approximates its carrying value. The fair value was determined based on observable market inputs and classified within Level 2 of the fair value hierarchy due to a lack of an active market for this term loan or a similar loan instrument.Contents

The following are the future minimum principal payment obligations under all of the Company’s outstanding debt as of December 31, ~~2018.~~

Amount
Fiscal year ended September 30,

2019

$
7,738
2020

6,327
2021

6,328
2022

5,500
2023

5,500
Thereafter

521,000
Total outstanding principal balance

552,393
Unamortized deferred financing costs

(11,584)

540,809
Current portion of long-term debt

9,527
Non-current portion of long-term debt

$
531,282

2019 (in thousands):

~~Capital~~


	Amount
Fiscal year ended September 30,
2020	$	827
2021		414
2022		—
2023		—
2024		—
Thereafter		50,000
Total outstanding principal balance		51,241
Unamortized deferred financing costs		(496)
		50,745
Current portion of long-term debt		827
Non-current portion of long-term debt	$	49,918

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9. 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 ~~Obligations~~expiration dates range between 2020 and 2039.

~~In connection with the GENEWIZ acquisition, the Company assumed five capital~~The components of operating lease ~~obligations~~expense were as follows (in thousands):


	Three Months Ended December 31, 2019

Operating lease costs	$	2,122
Finance lease costs:
Amortization of assets		311
Interest on lease liabilities		29
Total finance lease costs		340
Variable lease costs		406
Short-term lease costs		164
Total lease costs	$	3,032

Supplemental balance sheet information related to leases is as follows (in thousands, except lease term and discount rate):


	As of December 31, 2019
Operating Leases:
Operating lease right-of-use assets	$	27,439

Accrued expenses and other current liabilities	$	6,177
Long-term operating lease liabilities		20,526
Total operating lease liabilities	$	26,703

Finance Leases:
Property, plant and equipment, at cost	$	2,540
Accumulated amortization		(311)
Property, plant and equipment, net	$	2,229

Accrued expenses and other current liabilities	$	1,195
Other long-term liabilities		1,175
Total finance lease liabilities	$	2,370

Weighted average remaining lease term (in years):
Operating leases		2.02
Finance leases		7.98

Weighted average discount rate:
Operating leases		4.7	%
Finance leases		4.1	%

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


	Three Months Ended December 31, 2019
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases	$	1,807
Operating cash flows from finance leases		29
Financing cash flows from finance leases		290

Table of ~~equipment. Three of the~~Contents

Future lease payments for operating and capital leases as of September 30, 2019 were ~~initiated in 2016~~as follows (in thousands):


	Operating Leases		Capital Leases
Fiscal year ended September 30,
2020	$	6,794	$	1,276
2021		5,520		1,171
2022		3,904		363
2023		3,110		-
2024		2,934		-
Thereafter		10,499		-
Total future lease payments		32,761		2,810
Less imputed interest		(5,685)		(150)
Total lease liability balance	$	27,076	$	2,660

Future lease payments for operating and ~~mature in 2021 and two~~finance leases as of ~~them~~December 31, 2019 were ~~initiated in 2017 and mature in 2022. The outstanding principal balance~~as follows (in thousands):


	Operating Leases		Finance Leases
Fiscal year ended September 30,
2020	$	5,539	$	957
2021		5,827		1,171
2022		4,182		363
2023		3,151		-
2024		2,941		-
Thereafter		10,506		-
Total future lease payments		32,146		2,491
Less imputed interest		(5,443)		(121)
Total lease liability balance	$	26,703	$	2,370

As of ~~these obligations is included within “Other long-term liabilities”~~December 31, 2019, the Company has entered into leases that have not commenced with future lease payments of $8.2 million, excluding purchase options. These leases are not recorded on the ~~Company’s~~ Consolidated Balance Sheets. ~~See below~~Lease commencement dates for these leases range between 2020 and 2030.

10. Income Taxes

The Company recorded an income tax benefit of $3.0 million during the ~~future minimum principal payment obligations under the capital lease obligations as of~~ three months ended December 31, ~~2018~~:

Amount
Fiscal year ended September 30,

2019

$
960
2020

1,176
2021

1,126
2022

358
Total outstanding principal balance

$
3,620

2019. The tax benefit was primarily driven by a $5.8 million stock compensation windfall benefit for tax deductions that exceeded the associated compensation expense, and a $0.5 million reduction in deferred tax liabilities related to the extension of a tax rate incentive in China. These discrete benefits were partially offset by the tax provision on earnings from operations during the period.

9~~. Income Taxes~~

The Company recorded an income tax benefit of $5.8 million, ~~and $0.7 million, respectively, for~~during the three months ended December 31, ~~2018 and the three months ended December 31, 2017.~~2018. The tax benefit ~~for the three months ended December 31, 2018~~ was primarily driven by a $3.7 million discrete ~~benefits related to~~benefit for stock compensation windfalls, ~~of $3.7 million for~~

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~~tax deductions that exceeded the associated compensation expense,~~ $1.4 million of tax benefits related to the remeasurement of net U.S. deferred tax assets due to state tax rate changes, and a $1.1 million transition tax reduction. These discrete benefits were slightly offset by the tax provision on ~~foreign~~ earnings from operations during the period.

The tax benefit for the three months ended December 31, 2017 was primarily driven by discrete benefits related to the reduction of reserves for unrecognized tax benefits of $0.3 million of tax and $0.7 million of tax benefits related to the remeasurement of net U.S. deferred tax liabilities at the reduced 21 percent federal income tax rate. These discrete benefits were slightly offset by the tax provision on foreign earnings during the period.

During 2018, the Internal Revenue Service issued proposed regulations on the federal toll charge and various other aspects of the Tax Cuts and Jobs Act. The Company finalized its analysis of the toll charge and related liabilities, including uncertain tax positions, during the three months ended December 31, 2018 pursuant to U.S. Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin No. 118. As a result of the new guidance issued and additional work to complete the calculation of its federal toll charge, the Company reduced its provisional accrual for federal, state and foreign taxes by net $1.1 million during the three months ended December 31, 2018. ~~In addition, the Company also assessed its uncertain tax positions related to these taxes and accrued income and determined no tax reserves were required.~~

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The Company evaluates the realizability of its deferred tax assets by tax-paying component and assesses the need for a valuation allowance on ~~an annual and~~a quarterly basis. The Company evaluates the profitability of each tax-paying component on a historic cumulative basis and a forward-looking basis ~~in the course of~~while performing this analysis. The Company evaluated all positive and negative evidence in concluding it was appropriate to release the majority of the valuation allowance against U.S. net deferred tax assets during fiscal year 2018. The remaining portion of the Company’smaintains a U.S. valuation allowance is related to the realizability of certain state tax credits and net operating loss ~~carry-forwards. The Company continues to maintain~~carry-forwards, as well as a valuation ~~allowances~~allowance against net deferred tax assets in certain foreign tax-paying components as of December 31, ~~2018.~~

During the three months ended December 31, 2018, the Company recorded $37.4 million of deferred tax liabilities in purchase accounting in connection with the acquisition of GENEWIZ. Also, as a result of the acquisition, the Company recorded a $13.4 million reserve in purchase accounting for unrecognized tax benefits related to uncertain tax positions taken by GENEWIZ in prior years.

As of December 31, 2018, the Company has evaluated all relevant information related to U.S. tax reform under the allowable period pursuant to SEC Staff Accounting Bulletin No. 118 and has decided to maintain its indefinite reinvestment assertion. Based on this the Company has not provided income taxes on the outside basis differences of its foreign subsidiaries. The Company continues to expect its foreign earnings to be reinvested in foreign operations and acquisitions. The Company has not accrued foreign withholding tax costs on unremitted earnings.2019.

The Company maintains liabilities for uncertain tax positions. These liabilities involve judgment and estimation and are monitored based on the best information available. The Company recognizes interest related to unrecognized tax benefits as a component of the income tax ~~benefit,~~expense or benefit. The Company recognized interest expense related to its unrecognized tax benefits of ~~which $0.1~~$0.3 million ~~was recognized~~ during the three months ended December 31, 2018. During the three months ended December 31, 2017 the statute of limitations lapsed on an uncertain tax positions in a foreign jurisdiction which resulted in a $0.3 million reduction in the gross unrecognized tax benefits that impacted the effective tax rate.2019.

The Company is subject to U.S. federal income tax and state, local and international income taxes in various jurisdictions. The amount of income taxes paid is subject to the Company’s interpretation of applicable tax laws in the jurisdictions in which it files tax returns. In the normal course of business, the Company is subject to income tax audits in various global jurisdictions in which it operates. The years subject to examination vary for the U.S. and international jurisdictions, with the earliest tax year being 2011. Based on the outcome of these examinations or the expiration of statutes of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized tax benefits could change from those recorded in the Company’s unaudited Consolidated Balance Sheets. The Company currently anticipates that it is reasonably possible that the unrecognized tax benefits will be reduced by approximately ~~$0.1~~$0.2 million within the next twelve months.

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~~10.~~11. Other Balance Sheet Information

The following is a summary of accounts receivable at December 31, ~~2018~~2019 and September 30, ~~2018~~2019 (in thousands):


	December 31,		September 30,
	2018		2018

					December 31,		September 30,
					2019		2019
Accounts receivable	$	165,670	$	126,350	$	168,851	$	169,317
Less allowance for doubtful accounts		(1,114)		(1,113)		(3,592)		(3,644)
Less allowance for sales returns		(40)		(45)		(83)		(71)
Accounts receivable, net	$	164,516	$	125,192	$	165,176	$	165,602

The following is a summary of inventories at December 31, ~~2018~~2019 and September 30, ~~2018~~2019 (in thousands):


	December 31,		September 30,
	2018		2018

					December 31,		September 30,
					2019		2019
Inventories
Raw materials and purchased parts	$	67,428	$	57,527	$	70,694	$	67,176
Work-in-process		13,799		19,547		13,625		13,684
Finished goods		28,843		19,912		20,862		18,585
Total inventories	$	110,070	$	96,986	$	105,181	$	99,445

Reserves for excess and obsolete inventory were ~~$14.9~~$16.0 million and ~~$15.0~~$16.3 million, respectively, at December 31, ~~2018~~2019 and September 30, ~~2018.~~2019.

At December 31, ~~2018~~2019 and September 30, ~~2018,~~2019, the Company had cumulative capitalized direct costs of ~~$6.6~~$12.5 million and ~~$5.6~~$11.6 million, respectively, associated with the development of software for its internal use which are included within "Property, plant and equipment, net" in the accompanying unaudited Consolidated Balance Sheets. ~~The balance at December 31, 2018 included $0.9 million capitalized direct costs from the GENEWIZ acquisition.~~ During the three months ended December 31, ~~2018,~~2019, the Company capitalized direct costs of ~~$0.1~~$0.9 million 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

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levels, material usage, service delivery costs incurred in correcting a product failure and supplier warranties on parts delivered to the Company.

The following is a summary of product warranty and retrofit activity on a gross basis for the three months ended December 31, ~~2018~~2019 and ~~2017~~2018 (in thousands):


Activity -Three Months Ended December 31, 2018

Activity -Three Months Ended December 31, 2019								Activity -Three Months Ended December 31, 2019
Balance	Balance					Balance		Balance					Balance
September 30,	September 30,					December 31,		September 30,					December 31,
2018		Accruals		Costs Incurred		2018
2019								2019	Accruals		Costs Incurred		2019
$	6,340	$	2,355	$	(1,844)	$	6,851	7,175	$	2,479	$	(2,161)	$	7,493


Activity -Three Months Ended December 31, 2017

Activity -Three Months Ended December 31, 2018								Activity -Three Months Ended December 31, 2018
Balance	Balance					Balance		Balance					Balance
September 30,	September 30,					December 31,		September 30,					December 31,
2017		Accruals		Costs Incurred		2017
2018								2018	Accruals		Costs Incurred		2018
$	5,479	$	1,408	$	(1,313)	$	5,574	6,340	$	2,355	$	(1,844)	$	6,851

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~~11.~~12. 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 stock awards, restricted stock awards and deferred stock and restricted stock units ~~subject to one-year cliff vesting~~ to its directors in accordance with its director compensation program.

The following table reflects stock-based compensation expense recorded during the three months ended December 31, ~~2018~~2019 and ~~2017~~2018 (in thousands):

Three Months Ended December 31,


2018

2017

Restricted stock units

$
3,960

$
4,385

Employee stock purchase plan

216

178

Total stock-based compensation expense

$
4,176

$
4,563


	Three Months Ended December 31,
	2019		2018
Restricted stock units	$	4,092	$	3,960
Employee stock purchase plan		318		216
Total stock-based compensation expense	$	4,410	$	4,176

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 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.~~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

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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 months ended December 31, ~~2018~~2019 and ~~2017:~~

Time-Based



Performance-

Total Units

Units

Stock Grants

Based Units
Three months ended December 31, 2018

745,776

321,835

552

423,389
Three months ended December 31, 2017

471,151

190,266

546

280,339

2018:

Among the total restricted stock units granted, 28,493 shares were granted to the employees who belong to the discontinued operations during the three months ended December 31, 2017. No shares were granted to the employees who belong to the discontinued operations during the three months ended December 31, 2018.


		Time-Based	Stock	Performance-
	Total Units	Units	Grants	Based Units
Three months ended December 31, 2019	377,212	155,461	181	221,570
Three months ended December 31, 2018	745,776	321,835	552	423,389

Time-Based Grants

Restricted stock units granted with a required service period typically have 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

The stock awards granted to the members of the Company’s Board of Directors include stock awards, restricted stock awards and deferred stock and restricted stock units.

Certain members of the Board of Directors have elected to defer receiving their annual ~~awards of restricted~~ stock ~~units~~awards and related quarterly dividends until they attain a certain age or cease to provide services as the Company’s Board members. Restricted stock awards granted in fiscal years ~~2017 and~~ 2018 are subject to a one-year vesting ~~period.~~period, while the restricted stock awards granted in fiscal year 2019 were vested as of the grant date.

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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 and 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 2020, 2019 ~~2018~~ and ~~2017~~2018 allow participants to earn 100% of restricted stock units if the Company’s performance meets its target goal for each applicable financial metric, and up to a maximum of 200% if the Company’s performance for such metrics meets or exceeds the maximum or stretch goal. Performance below the minimum threshold for each financial metric results in award forfeiture. Performance goals ~~for each plan~~ will be measured over a three-year period for each ~~plan~~year’s awards and at the end of the ~~period.~~period to determine the number of units earned by recipients who continue to meet the service requirement. Around the third anniversary of each ~~plan’s~~year awards’ grant date, the Company’s Board of Directors determines the number of units earned for participants who continue to meet the service requirements on the vest date.

Restricted Stock Unit Activity

The following table summarizes restricted stock unit activity for the three months ended December 31, ~~2018~~:

Weighted

Average

Grant-Date

Shares

Fair Value
Outstanding at September 30, 2018

2,194,512

$
17.20
Granted

745,776

30.49
Vested

(851,702)

18.70
Forfeited

(9,199)

10.91
Outstanding at December 31, 2018

2,079,387

23.58

2019:


		Weighted
		Average
		Grant-Date
	Shares	Fair Value
Outstanding at September 30, 2019	1,782,726	$	24.63
Granted	377,212		47.01
Vested	(820,058)		26.35
Forfeited	(26,264)		35.60
Outstanding at December 31, 2019	1,313,616		35.07

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The weighted average grant date fair value of ~~restricted~~restricted stock units granted during the three months ended December 31, 2019 and 2018 was $47.01 and ~~2017 was~~ $30.49, ~~and $34.25,~~ respectively. The fair value of restricted stock units vested during the three months ended December 31, 2019 and 2018 ~~and 2017~~ was ~~$27.1~~$38.5 million and ~~$19.0~~$27.1 million, respectively. During the three months ended December 31, ~~2018~~2019 and ~~2017,~~2018, the Company remitted ~~$14.2~~$24.0 million and ~~$6.3~~$14.2 million, respectively, collected from employees to satisfy their tax obligations as a result of share issuances.

As of December 31, ~~2018,~~2019, the unrecognized compensation cost related to restricted stock units that are expected to vest is ~~$38.4~~$33.3 million and will be recognized over an estimated weighted average service period of approximately 2.0 years.

Employee Stock Purchase Plan

The Company maintains an 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 period, whichever is lower. There were no0 shares purchased by employees under the employee stock purchase plan during the three months ended December 31, ~~2018~~2019 and ~~2017.~~2018.

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~~12.~~13. 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 months ended December 31, ~~2018~~2019 and ~~2017~~2018 (in thousands, except per share data):


	Three Months Ended
	December 31,
	2018		2017

					Three Months Ended
					December 31,
					2019		2018
Income from continuing operations	$	6,266	$	1,619	$	13,174	$	6,266
Income from discontinued operations, net of tax		8,149		14,867
(Loss) income from discontinued operations, net of tax						(117)		8,149
Net income	$	14,415	$	16,486	$	13,057	$	14,415


Weighted average common shares outstanding used in computing basic earnings per share		71,450		70,183		72,972		71,450
Dilutive restricted stock units		715		681		673		715
Weighted average common shares outstanding used in computing diluted earnings per share		72,165		70,864		73,645		72,165

Basic net income per share attributable to Brooks Automation, Inc. common stockholders:

Basic net income per share:
Income from continuing operations	$	0.09	$	0.02	$	0.18	$	0.09
Income from discontinued operations, net of tax		0.11		0.21
Basic net income per share attributable to Brooks Automation, Inc.	$	0.20	$	0.23

Diluted net income per share attributable to Brooks Automation, Inc. common stockholders:
(Loss) income from discontinued operations, net of tax						(0.00)		0.11
Basic net income per share					$	0.18	$	0.20

Diluted net income per share:
Income from continuing operations	$	0.09	$	0.02	$	0.18	$	0.09
Income from discontinued operations, net of tax		0.11		0.21
Diluted net income per share attributable to Brooks Automation, Inc. common stockholders	$	0.20	$	0.23
(Loss) income from discontinued operations, net of tax						(0.00)		0.11
Diluted net income per share					$	0.18	$	0.20
Dividend declared per share	$	0.10	$	0.10	$	0.10	$	0.10

During the three months ended December 31, ~~2018~~2019 and ~~2017,~~2018, antidilutive restricted stock units of ~~261,384~~158,058 and ~~190,266,~~261,384, respectively, were excluded from the computation of diluted earnings per share based on the treasury stock method.

~~13. Revenue~~

~~Revenue Recognition (Performance Obligations)~~

~~The Company generates revenue from the following sources:~~

~~Products, including sales of tool automation and automated cold sample management systems, atmospheric and vacuum robots, contamination control solutions, as well as consumables and spare parts.~~

Services, including repairs, upgrades, diagnostic support, installation, as well as biological sample services such as DNA sequencing, gene synthesis, molecular biology, bioinformatics, biological sample storage and other support services.

The company recognizes revenue for the transfer of such promised products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled to in exchange for those products or services. Under ASC 606, revenue is recognized when or as the transfer of control of the underlying performance obligation

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~~occurs. To determine the amount of consideration the Company expects to be entitled to and whether transfer of control has occurred, the Company applies the following five-step model:~~

~~Identify the contract with a customer.~~ Contracts are accounted for when approval and commitment has been received from both parties, the rights of each party are identified, payment terms are identified, the contract has commercial substance and collectability of the consideration to which the Company is entitled is probable. Contracts are generally evidenced through receipt of an approved purchase order or execution of a binding arrangement. Within the Brooks Semiconductor Solutions Group segment, contracts are typically short-term with the exception of service-type warranty contracts, which generally have a stated contract term that is greater than one year. Within the Brooks Life Sciences segment, contracts are both short and long-term. Long-term contracts within this segment relate to the sale of products with attached service-type warranty contracts that generally have a stated contract term that is greater than one year. Contracts within both operating segments may contain acceptance provisions where the Company is required to obtain technical acceptance from the customer upon completion of installation services and evidence of the systems functional performance within the customer’s operating environment. The Company has concluded that acceptance criteria within its contracts can be objectively evaluated and will not impact the Company’s transfer of control assessment under ASC 606.

~~Identify the performance obligations in the contract.~~ Performance obligations include the sale of products and services. Certain customer arrangements related to the sale of automated cold sample management systems and contamination control solution products generally include more than one performance obligation and may include a combination of goods and or services, such as products with installation services or service-type warranty obligations. These contracts include multiple promises and as a result, the Company is required to evaluate each promise and determine whether the promise qualifies as a performance obligation within the contract. Contracts may contain the option to acquire additional products or services at defined prices. The Company reviews the pricing of these options to determine whether the option would exist independently of the current contract. If the pricing of contract options provides a material right to the customer that it would not receive without entering into the current contract, the Company accounts for the option as a separate performance obligation.

~~Determine the transaction price.~~ The transaction price of the Company’s contracts with its customer is generally fixed, based on the amounts to be contractually billed to the customer. Certain contracts may contain variable consideration in the form of customer allowances and rebates that consist primarily of retrospective volume based discounts and other incentive programs. Variable consideration is estimated at contract inception and included in the transaction price if it is probable that a subsequent change in the estimate would not result in a significant revenue reversal. The period between transfer of control of the performance obligations within a customer contract and timing of payment is generally within one year. As a result, the Company’s contracts typically do not include significant financing components.

~~Allocate the transaction price to the performance obligations in the contract.~~ For customer contracts that contain more than one performance obligation, the Company allocates the total transaction consideration to each performance obligation based on the relative stand-alone selling price of each performance obligation within the contract. The Company relies on either observable standalone sales or an expected cost plus margin approach to determine the standalone selling price of offerings, depending on the nature of the performance obligation. Performance obligations whose standalone selling price is estimated using an expected cost plus margin approach relate to the sale of customized automated cold sample management systems and service-type warranties within the Brooks Life Sciences segment.

~~Recognize revenue when or as the Company satisfies a performance obligation~~. The Company satisfies its performance obligations by transferring a product or service either at a point in time or over time, when the transfer of control of the underlying performance obligation has occurred. Control is evidenced by the

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customer’s ability to direct the use of, and obtain substantially all the remaining benefits from the performance obligation. Revenue from third-party sales for which the Company does not meet the criteria for gross revenue recognition is recognized on a net basis. All other revenue is recognized on a gross basis. The Company excludes from the transaction price all sales taxes assessed by governmental authorities and as a result, revenue is presented net of tax.

~~As a result of applying this five-step model under ASC 606, the Company recognizes revenues from its sale of products and services as follows:~~

~~Products:~~ Revenue from the sale of standard products is recognized upon their transfer of control to the customer, which is generally upon delivery. Delivery is considered complete at either the time of shipment or arrival at destination, based on the agreed upon terms within the contract. The Company’s payment terms for the sale of standard products are typically 30 to 60 days.

14. Revenue from ~~the sales of certain products that involve significant customization, which include primarily automated cold sample management systems is recognized over time as~~ ~~the asset created by the Company’s performance does not have alternative use to the Company and an enforceable right to payment for performance completed to date is present.~~ ~~The Company recognizes revenue as work progresses based on a percentage of actual labor hours incurred on the project to-date and total estimated labor hours expected to be incurred on the project.~~ The selection of the method to measure progress towards completion requires judgment. The Company has concluded that using the percentage of labor hours incurred to estimated labor hours needed to complete the project most appropriately depicts the Company’s efforts towards satisfaction of the performance obligation. The Company develops profit estimates for long-term contracts based on total revenue expected to be generated from the project and total costs anticipated to be incurred in the project. These estimates are based on a number of factors, including the degree of required product customization and the work required to be able to install the product in the customer’s existing environment, as well as the Company’s historical experience, project plans and an assessment of the risks and uncertainties inherent in the contract related to implementation delays or performance issues that may or may not be within the Company’s control. The Company estimates a loss on a contract by comparing total estimated contract revenue to the total estimated contract costs and recognizes a loss during the period in which it becomes probable and can be reasonably estimated. The Company reviews profit estimates for long-term contracts during each reporting period and revises the estimate based on changes in circumstances. Revenue for certain arrangements that involve significant product customization but do not provide the customerContracts with an enforceable right to payment for performance completed to date are recognized at a point in time, upon completion or substantial completion of the project, provided transfer of control has occurred. The project is considered substantially complete when the Company receives acceptance from the customer and remaining tasks are perfunctory or inconsequential and in control of the Company. Generally, the terms of long-term contracts provide for progress billings based on completion of milestones or other defined phases of work. In certain instances, payments collected from customers in advance of recognizing the related revenue are recorded and presented as contract liabilities within Deferred revenue on the Company’s Consolidated Balance Sheet. Additionally, due to certain billing constraints within contracts, the customer may retain a portion of the contract price until completion of the contract. In these contracts, revenue recognized may exceed billings, which the Company presents as a contract asset on the balance sheet, which is included within the Prepaid expenses and other current assets on the Company’s Consolidated Balance Sheet.

~~Services:~~ Service revenue is generally recognized ratably over time or on an output method, as the customer simultaneously receives and consumes the benefit of these services as they are performed. Revenue from short-term services, generally related to repair services or upgrades of customer-owned equipment is recognized upon completion of the repair effort and the shipment of the repaired product back to the customer. Payments related to service-type warranties may be made up front or proportionally over the contract term. Payment due or received from the customers prior to rendering the associated services are recorded as a contract liability.

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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 Company disaggregates revenue based on the transfer of control of the underlying performance obligations, the geographic location in which customer orders are placed and by reporting unit.

The Company transfers control of its performance obligations at a point in time or over time, depending on the nature of the product or service being provided. Revenue from contracts with customers is attributed to geographic areas based on locations in which the customer orders are placed. ~~As discussed within Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” included in the 2018 Annual Report on Form 10-K, the~~The Company reports financial results for ~~two operating and~~2 reportable segments which consist of Brooks Semiconductor Solutions Group segment and Brooks Life Sciences segment. The Company also consists of ~~five~~5 reporting units, including ~~three~~3 reporting units within the Brooks Semiconductor Solutions Group ~~reporting~~reportable segment and ~~two~~2 reporting units within the Brooks Life Sciences ~~reporting~~reportable segment. The following is a reconciliation of revenue disaggregated in a manner discussed above to segment revenue for the three ~~month period~~months ended December 31, ~~2018:~~2019 and 2018 (in thousands):


	Brooks Semiconductor		Brooks Life
	Solutions Group		Sciences		Total

Timing of Revenue Recognition

							Brooks Semiconductor		Brooks Life
							Solutions Group		Sciences		Total
Three Months Ended December 31, 2019
Point in time	$	111,916	$	23,167	$	135,083	$	116,788	$	21,320	$	138,108
Over time		791		43,494		44,285		2,023		70,369		72,392
	$	112,707	$	66,661	$	179,368
							$	118,811	$	91,689	$	210,500
Three Months Ended December 31, 2018
Point in time							$	111,916	$	23,167	$	135,083
Over time								791		43,494		44,285
							$	112,707	$	66,661	$	179,368

The following is revenue by geographic location and reporting unit for the three months ended December 31, ~~2018:~~2019 and 2018 (in thousands):


	Three Months Ended December 31, 2019		Three Months Ended December 31, 2018
Geographic Location
North America	$	80,231	$	68,897
Asia/Pacific/Other		103,539		79,460
United Kingdom		9,920		12,078
Rest of Europe		16,810		18,933
	$	210,500	$	179,368

Reporting Unit
Automation Solutions	$	64,238	$	73,675
Contamination Control Solutions		44,340		27,956
Global Semiconductor Services		10,233		11,076
Brooks Semiconductor Solutions Group		118,811		112,707
Sample Management		51,718		50,303
GENEWIZ		39,971		16,358
Brooks Life Sciences		91,689		66,661
Total	$	210,500	$	179,368

Three Months Ended
December 31, 2018
Geographic Location

North America

$
68,897
Asia/Pacific/Other

79,460
United Kingdom

12,078
Rest of Europe

18,933

$
179,368

Reporting Unit

Automation Solutions

$
73,675
Contamination Control Solutions

27,956
Global Semiconductor Services

11,076
Brooks Semiconductor Solutions Group

112,707
Sample Management

50,303
GENEWIZ

16,358
Brooks Life Sciences

66,661
Total

$
179,368

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Contract Balances

Accounts Receivable, Net. Accounts receivable represent rights to consideration in exchange for products or services that have been transferred by the Company, when payment is unconditional and only the passage of time is required

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before payment is due. Accounts receivable do not bear interest and are recorded at the invoiced amount. The Company maintains an allowance for doubtful accounts representing its best estimate of probable credit losses related to its existing accounts receivable and their net realizable value. The Company determines the allowance for doubtful accounts based on a number of factors, including an evaluation of customer credit worthiness, the age of the outstanding receivables, economic trends and historical experience. Accounts receivable, net were ~~$164.5~~$165.2 million and ~~$125.2~~$165.6 million at December 31, ~~2018~~2019 and ~~October 1, 2018,~~September 30, 2019, respectively.

Contract Assets. Contract assets represent rights to 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 within the Brooks Life Sciences segment where the right to payment is not present until completion of the contract or the achievement of specified milestones and 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~~“Prepaid expenses and other current ~~assets~~assets” on the Company’s Consolidated Balance Sheet, were ~~$12.6~~$17.0 million and ~~$8.2~~$14.0 million at December 31, ~~2018~~2019 and ~~October 1, 2018,~~September 30, 2019, respectively.

Deferred Commissions. Deferred commissions represent a direct and incremental cost of obtaining a contract. These amounts primarily relate to sales commissions within the Brooks Life Sciences segment and are deferred and amortized over a 60 month period, which represents the average period of contract performance. The Company classifies deferred commissions as noncurrent as the original amortization period of this asset is greater than one year. Deferred commissions balances are included within ~~Other assets~~“Other assets” on the Company’s Consolidated Balance Sheet. Deferred commissions were ~~$1.3~~$0.7 million and ~~$1.5~~$0.8 million at December 31, ~~2018~~2019 and ~~October 1, 2018,~~September 30, 2019, respectively. The Company recorded ~~$0.2 million of~~ amortization expense related to deferred commissions of $0.1 million and $0.2 million, respectively for the three months ended December 31, 2019 and 2018.

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 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 ~~$31.1~~$29.0 million and ~~$28.7~~$29.4 million at December 31, ~~2018~~2019 and ~~October 1, 2018,~~September 30, 2019, respectively. Revenue recognized from the contract liability balance at ~~October 1, 2018~~September 30, 2019 was ~~$12.1~~$19.1 million for the three months ended December 31, ~~2018.~~2019.

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 remaining performance obligations as of December 31, ~~2018~~2019 was ~~$36.4~~$35.4 million. The following 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 control ~~occurs:~~occurs (in thousands):

As of December 31, 2018

Less than 1 Year

Greater than 1 Year

Total
Remaining Performance Obligations

$
11,107

$
25,252

$
36,359


		As of December 31, 2019
	Less than 1 Year		Greater than 1 Year		Total
Remaining Performance Obligations	$	25,013	$	10,398	$	35,411

Cost to Obtain and Fulfill a Contract

The Company capitalizes sales commissions when incurred if they are (i) incremental costs of obtaining a contract, (ii) expected to be recovered and (iii) have an expected amortization period that is greater than one year. As part of the Company’s cumulative effect adjustment, incremental costs associated with obtaining a contract were capitalized and

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have been classified as deferred commissions within the Company’s Consolidated Balance Sheet. These amounts primarily relate to sales commissions within the Brooks Life Sciences segment and 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 three months ended December 31, ~~2018~~2019 as the amount of sales commissions that qualified for

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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,~~“Selling, general, and administration ~~expenses.~~expenses”. 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 transfer of control of the product has transferred to the customer.

~~14.~~15. Segment Information

The Company operates in ~~two~~2 reportable segments: the Brooks Semiconductor Solutions Group segment and the Brooks Life ~~Sciences.~~Sciences segment. Brooks Life Sciences consists of ~~two~~2 operating segments aggregated into one reportable segment.

The Brooks Semiconductor Solutions Group segment provides a variety of products, services and solutions that enable improved throughput and yield in controlled operating environments, as well as an extensive range of support services. The solutions include atmospheric and vacuum robots, robotic modules, tool automation systems, contamination control of wafer carrier front opening unified pods and reticle ~~management.~~storage. The support services include repair services, diagnostic support services, and installation services in support of the products, which enable ~~the~~ customers to maximize process tool uptime and productivity. This segment also provides end-user customers with spare parts and productivity enhancement upgrades to maximize tool productivity.

The Brooks Life Sciences segment provides comprehensive life cycle sample management solutions tofor life science and bioscience customers including complete end-to-end “cold chain of custody” solutions and ~~a variety of~~ sample-based ~~lab~~laboratory services such as genomic sequencing and gene synthesis to advance scientific research and support drug development. The segment’s product offerings include automated cold sample management systems for compound and biological sample storage, equipment for sample preparation and handling, consumables, and informatics that help customers manage samples throughout their research discovery and development ~~work flows.~~workflows. The segment’s service offerings include sample storage, genomic sequencing, ~~genomic~~gene synthesis, ~~lab~~laboratory processing services, ~~lab~~laboratory analysis, and other support services provided to a wide range of life science customers, including pharmaceutical companies, biotechnology companies, ~~biobanks~~biorepositories and research institutes.

~~Revenue and~~The Company considers adjusted operating income, ~~(loss) are two key metrics used by~~which excludes charges related to amortization of completed technology, the ~~CODM~~acquisition accounting impact on inventory contracts acquired and restructuring related charges as the primary performance metric when ~~assessing operating results and management performance as resources are allocated to each of~~evaluating the operating segments. The adjusted operating income (loss) for each segment includes selling, general and administrative expenses directly attributable to the segment, and corporate allocations for general and administrative support. Amortization of acquired intangible assets (excluding completed technology), restructuring and other charges, pension settlement, in-process research and development, and other unallocated corporate expenses are excluded from the segments’ adjusted operating income (loss).business. Please refer to Note ~~20,~~21, "Segment and Geographic Information" to the Company’s consolidated financial statements included in the ~~2018~~2019 Annual Report on Form ~~10‑~~10-K for further information on the operating segments’ description and accounting policies.

In conjunction with the acquisition of GENEWIZ during the quarter ended December 31, 2018, the Company reassessed ~~Brooks~~its segment reporting structure and determined that GENEWIZ represents a separate operating segment based on ASC ~~280.~~280, Segment Reporting (“ASC 280”). As permitted by ASC 280, ~~Segment Reporting,~~ the Company ~~assessed and~~ elected to aggregate the Sample Management operating segment ~~with~~and the GENEWIZ operating segment as a single reportable segment titled Brooks Life Sciences. ~~We have aggregated the two operating segments as one reporting segment~~The aggregation was based on similarities in long-term forecasted economic characteristics, particularly adjusted operating income, similarity in services they offer, the customers they serve, the nature of their service delivery models, and their regulatory environments. The Company believes that the aggregated presentation is more useful to investors and other financial users. Management formally assesses the long-term financial outlook of its operating segments on an annual basis as part of its strategic planning process and more frequently on an informal basis. The customer bases of the operating segments overlap, serving life science and bioscience customers in the pharmaceutical and bio-technology companies as well as academic and government institutions. Both of these operating segments provide services relating to the biological samples needed to advance non-clinical and clinical research, serving scientific and business operations functions. In a typical customer workflow, a biological sample is collected, processed and analyzed with results interpreted and used to make scientific judgements. Critical or valuable samples are then

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annotated and stored for many years in environments where they can be easily retrieved for additional

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study. ~~The~~These operating segments provide services across this workflow. Both of these operating segments offer services meeting the standards of Good Manufacturing Practices ~~(GMP)~~ set forth by the U.S. Food and Drug ~~Administration (FDA).~~Administration.

The following is the summary of the financial information for the Company’s ~~operating and~~ reportable segments for the three months ended December 31, 2019 and 2018 ~~and 2017 and balances as of~~ ~~December 31, 2018 and September 30, 2018(in~~(in thousands):

Brooks




Semiconductor

Brooks

Solutions Group

Life Sciences

Total

Three Months Ended December 31, 2018:






Revenue






Products

$
101,801

$
39,931

$
141,732
Services

10,906

26,730

37,636
Segment revenue

$
112,707

$
66,661

$
179,368
Gross profit

$
45,915

$
26,166

$
72,081
Segment operating income

16,141

1,590

17,731
Depreciation expense

916

2,771

3,687

Three Months Ended December 31, 2017:






Revenue






Products

$
83,791

$
21,981

$
105,772
Services

11,366

25,461

36,827
Segment revenue

$
95,157

$
47,442

$
142,599
Gross profit

$
38,494

$
15,765

$
54,259
Segment operating income (loss)

11,718

(1,396)

10,322
Depreciation expense

996

1,549

2,545

Assets:




December 31, 2018

$
288,891

$
915,944

$
1,204,835
September 30, 2018

264,452

410,581

675,033


			Three Months Ended December 31, 2019
				2019		2018
Revenue:
Brooks Semiconductor Solutions Group			$	118,811	$	112,707
Brooks Life Sciences				91,689		66,661
Total revenue			$	210,500	$	179,368

Operating income:
Brooks Semiconductor Solutions Group			$	15,000	$	17,263
Brooks Life Sciences				5,974		2,660
Reportable segment adjusted operating income				20,974		19,923
Amortization of completed technology				2,674		2,007
Acquisition accounting impact on inventory contracts acquired				—		184
Amortization of acquired intangible assets				7,910		5,769
Restructuring charges				576		59
Other unallocated corporate (income) expenses				(852)		6,571
Total operating income				10,666		5,333
Interest income				699		423
Interest expense				(737)		(5,290)
Other expenses, net				(417)		(30)
Income before income taxes			$	10,211	$	436

		Brooks
		Semiconductor		Brooks
Assets:		Solutions Group		Life Sciences		Total
December 31, 2019	$	267,221	$	932,613	$	1,199,834
September 30, 2019		259,641		909,154		1,168,795

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 Statements of Operations for the three months ended December 31, 2018 and 2017 and~~ Consolidated Balance Sheets as of December 31, ~~2018~~2019 and September 30, ~~2018~~2019 (in thousands):

Three Months Ended

December 31,


2018

2017

Segment operating income

$
17,731

$
10,322

Amortization of acquired intangible assets

5,768

4,588

Restructuring charges

59

—

Other unallocated corporate expenses

6,571

809

Total operating income

$
5,333

$
4,925


	December 31,		September 30,
	2018		2018

					December 31,		September 30,
					2019		2019
Segment assets	$	1,204,835	$	675,033	$	1,199,834	$	1,168,795
Cash, cash equivalents and marketable securities		138,308		251,226
Cash, cash equivalents, restricted cash, and marketable securities						353,120		342,140
Deferred tax assets		23,287		43,798		6,004		5,064
Assets held for sale		130,301		125,200
Total assets	$	1,496,731	$	1,095,257	$	1,558,958	$	1,515,999

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~~15.~~16. Significant Customers

The Company had one customer that accounted for 10% or more of its consolidated revenue, at 15%, during the three months ended December 31, 2019. The Company had no customer that accounted for 10% or more of its consolidated revenue during ~~each of~~ the three months ended December 31, ~~2018 and 201~~7. 2018. As of December 31, ~~2018 and September 30, 2018,~~2019, the Company had one customer that accounted for more than 10% of its accounts receivable balance of the Company’s total receivables, at

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11%. There were no customers that accounted for more than 10% ~~or more~~ of its accounts receivable balance of the Company’s total ~~receivables.~~receivables as of December 30, 2018.

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.~~17. Commitments and Contingencies

Letters of Credit

As of December 31, ~~2018,~~2019, the Company had approximately ~~$1.3~~$1.2 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~~the Company’s 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 the Company fails to meet certain contractual requirements. None of these obligations were called during the three months ended December 31, ~~2018,~~2019, and the Company currently does not anticipate any of these obligations to be called in the near future.

Purchase Commitments

~~The~~At December 31, 2019, the Company had non-cancellable ~~contracts and~~commitments of $130.2 million, including purchase orders for inventory of ~~$95.9~~$84.9 million, asinformation technology related commitments of ~~December 31, 2018.~~$25.0 million, China facility commitments of $18.6 million and other commitments of $1.7 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 reasonable ranges of potential losses. However, as of the date of this report, the Company believes that none of these claims will have a material adverse effect on its consolidated financial position or results of operations. In the event of unexpected subsequent developments and given the inherent unpredictability of these legal proceedings, there can be no assurance that the Company’s assessment of any claim will reflect the ultimate outcome, and an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company’s consolidated financial position or results of operations in particular quarterly or annual periods.

~~17.~~18. Subsequent Events

Dividend

On January ~~30, 2019,~~24, 2020, the Company’s Board of Directors declared a cash dividend of $0.10 per share payable on March ~~22, 2019~~27, 2020 to common stockholders of record as of March ~~1, 2019.~~6, 2020. Dividends are declared at the discretion of the Company’s Board of Directors and depend on the Company’s actual cash flows from operations, its financial condition and capital requirements and any other factors the Company’s Board of Directors may consider relevant. Future dividend declarations, as well as the record and payment dates for such dividends, will be determined by the Company’s Board of Directors on a quarterly basis.

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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 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 months ended December 31, ~~2018~~2019 and ~~2017.~~

2018.

●

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 months ended December 31, ~~2018~~2019 compared to the three months ended December 31, ~~2017.~~

2018.

●

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 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” below for a discussion of important factors that could cause our actual results to differ materially from our expectations.

In the fourth quarter of fiscal year 2018, we entered into a definitive agreement to sell our semiconductor cryogenics business to Edwards Vacuum LLC (a member of the Atlas Copco Group) for approximately $675.0 million in cash subject to customary adjustments. We originally acquired the semiconductor cryogenics business in 2005 as part of the acquisition of Helix Technology Corporation. ~~The closing of our~~On July 1, 2019, we completed the sale of the semiconductor cryogenics business isfor $675.0 million in cash, subject to ~~various closing conditions~~adjustments for working capital and ~~regulatory approvals.~~other items. As part of this sale, we ~~will transfer~~transferred our intellectual property, or IP, for our cryogenics pump products, but not our IP related to our semiconductor automation or life sciences businesses. The semiconductor cryogenics business has been classified as discontinued operations and, u~~nless~~unless otherwise noted, the description of our business and the results of operations in this MD&A relates solely to our continuing operations and does not include the operations of ~~our~~the semiconductor cryogenics ~~business~~. business.

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. 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, the expected benefits and other statements relating to

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our ~~divestures~~divestitures and acquisitions, the material weaknesses identified in our internal control over financial reporting, including the impact thereof and our remediation plan, our adoption of the newly issued accounting guidance, the levels of customer spending,

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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, ~~2018,~~2019, or the ~~2018~~2019 Annual Report on Form 10-K and which are incorporated herein by ~~reference.~~reference , as updated and/or supplemented in subsequent filings with the U.S. Securities and Exchange Commission, or SEC. 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 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 ~~2018~~2019 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", "us", "our" and "the Company" refer to Brooks Automation, Inc. and its subsidiaries.

OVERVIEW

We are a leading provider of semiconductor manufacturing automation solutions and life science sample-based services and solutions worldwide. In the semiconductor manufacturing market, we have been a provider of precision robotics, integrated automation systems and services for more than 40 years. In the life sciences market, we apply our automation and cryogenics expertise to offer a full suite of sample-based services and products, including a full line of cold chain management solutions for handling and storing biological and chemical compound samples used in areas such as drug development, clinical research and advanced cell therapies. We are also a global provider of ~~automation~~gene sequencing and ~~cryogenic solutions for multiple markets. We primarily serve two distinct and unrelated markets: the semiconductor capital equipment market and the life sciences sample management market.~~gene synthesis services. We believe our leadership positions and our global support capability in each of these markets ~~makes~~make us a valued business partner to the largest semiconductor capital equipment ~~and~~ device makers, and pharmaceutical and life science research institutions in the world. ~~Our offerings~~In total, we employ approximately 3,000 full-time employees worldwide and have sales in more than 50 countries. We are ~~also applied to other adjacent technology~~headquartered in Chelmsford, Massachusetts and ~~industrial markets,~~have operations in North America, Asia, and ~~we provide customer support services globally.~~ Europe.

In the semiconductor capital equipment market, equipment productivity and availability are critical factors for our customers, who typically operate equipment under demanding temperature and/or pressure environments. We are a leader in wafer handling automation and contamination controls solutions and services that are designed to improve throughput, yield, and cost of ownership of tools in semiconductor fabs. Our product offerings include vacuum and atmospheric robots, turnkey vacuum and atmospheric wafer handling systems, as well as wafer carrier cleaning and reticle storage systems. We also capture the complete life cycle of value through our global service network of expert application and field engineers who are located close to our customers. Our services include rapid refurbishment of robots to stringent specifications, upgrades to improve equipment productivity, and proactive monitoring and diagnostics for predictive risk management and improved up-time of the installed base. Although the demand for semiconductors and semiconductor manufacturing equipment is cyclical resulting in periodic expansions and contractions, 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. A majority of our research and development spending advances our current product lines and drives innovations for new product offerings. We invest in research and development initiatives within the Brooks Semiconductor Solutions Group segment to maintain continued leadership position in the markets we serve. We ~~have recently~~ launched our newest Vacuum Automation platform, MagnaTran LEAP™, for the rapidly emerging advanced technologies related to manufacturing 10 nanometer design rule semiconductor chips. MagnaTran LEAP™ is well positioned to deliver clean, accurate and fast wafer transport available for the fast-growing Deposition and Etch markets. In addition, we expect to continue to support and expand our technology and product offerings for the semiconductor market through acquisitions. In fiscal year 2018, we acquired Tec-Sem Group AG, or

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Tec-Sem, a Switzerland-based provider of semiconductor fabrication automation equipment with a focus on reticle management. The acquisition is ~~enhances~~expected to enhance our contamination controls solutions offerings.

In the life sciences ~~sample-based services~~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, and both on-site and off-site full sample management ~~services, gene sequencing services and gene synthesis~~ services. We expect the life sciences sample

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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, we acquired all 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 and DNA analytical applications. The acquisition has expanded our existing offerings of consumables and instruments within the Brooks Life Sciences segment.In April 2018, we acquired BioSpeciMan Corporation, ~~or BioSpeciMan,~~ a Canadian provider of storage services for biological sample materials. The acquisition has expanded customer relationships and geographic reach within our growing sample management storage services business. On November 15, 2018, we acquired GENEWIZ Group, or GENEWIZ, a leading global genomics service provider headquartered in South Plainfield, New Jersey. GENEWIZ is a global leader in genomics services that enable research scientists to advance their discoveries within the pharmaceutical, academic, biotechnology, agriculture and other markets. GENEWIZ provides gene sequencing and synthesis services for more than 4,000 institutional customers worldwide supported by their global network of laboratories spanning the United States, China, Japan, Germany and the United Kingdom. This transaction ~~will add~~has added a new and innovative platform which we expect to leverage, along with our core capabilities, to add even more value to samples under our care. ~~GENEWIZ is reported within the Brooks Life Sciences segment.~~ Please refer to Note 5,4, “Acquisitions” ~~in the Notes~~ to the ~~unaudited~~Company's consolidated financial statements included in ~~Item 1 "Consolidated Financial Statements" of this Quarterly~~the 2019 Annual Report on Form ~~10‑Q~~10-K for further information on these transactions. Since entering the life sciences industry, we have also strengthened and broadened our product portfolio and market reach by investing in internal product development and sales and marketing infrastructure. 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.

Business and Financial Performance

Three Months Ended December 31, ~~2018~~2019 Compared to Three Months Ended December 31, ~~2017~~2018

Results of Operations- Revenue for the three months ended December 31, ~~2018~~2019 increased by 17% to ~~$179.4~~$210.5 million ~~or by 26%,~~ as compared to the corresponding period of the prior fiscal year. Gross margin was ~~40.2%~~40.4% for the three months ended December 31, ~~2018~~2019 as compared to ~~38.1%~~40.2% for the corresponding period of the prior fiscal year, ~~which resulted in~~ an increase ~~in gross profit~~ of ~~$17.8~~ ~~million in the first quarter of fiscal year 2019 as compared to the corresponding period of the fiscal year 2018.~~$12.9 million. Operating expenses were ~~$66.7~~$74.3 million during the three months ended December 31, ~~2018~~2019 as compared to ~~$49.3~~$66.7 million during the corresponding period of the prior fiscal year, an increase of ~~$17.4~~$7.6 million. Operating income was ~~$5.3~~$10.7 million during the first quarter of fiscal year ~~2018~~2020 as compared to ~~$4.9~~$5.3 million for the corresponding period of the prior fiscal year. Income from continuing operations was ~~$6.3~~$13.1 million for the first quarter of fiscal year ~~2019~~2020, as compared to ~~$1.6~~$6.3 million for the corresponding period of the prior fiscal year. ~~The increase of $4.6 million was primarily attributable to an increase in the tax benefit of $5.2 million compared to the corresponding period of the prior fiscal year.~~

December 31, ~~2018~~2019 Compared to September 30, ~~2018~~2019

Cash Flows and ~~Liquidity-~~ Liquidity - Cash, cash equivalents, restricted cash and marketable securities were ~~$138.3~~$353.1 million at December 31, ~~2018~~2019 as compared to ~~$251.2~~$342.1 million at September 30, ~~2018.~~2019. The ~~decrease~~increase in cash and cash equivalents and marketable securities of ~~$112.9~~$11.0 million from September 30, 2019 was primarily attributable to ~~net~~ cash ~~outflows~~inflows generated from operating activities of ~~$445.2 million to acquire GENEWIZ, cash dividends paid of $7.2 million and capital expenditures of $3.6~~$25.7 million, partially offset by cash ~~inflows from proceeds received from the amendment to our existing term loan~~outflows for capital expenditures of ~~$340.5 million, proceeds from the sales and maturities of marketable securities of $51.5~~$9.6 million and ~~net~~ cash ~~inflows from operating activities~~dividends paid of ~~$6.3~~$7.4 million. ~~The $6.3 million of cash generated from operating activities during the first quarter of fiscal year 2019 was comprised primarily of earnings of~~ ~~$21.5~~ million, including net income of $14.4 million and the impact of non-cash related charges of $7.1 million, partially offset by uses of cash of $15.2 million related to the changes in our operating assets and liabilities, net of acquisitions. Please refer to the "Liquidity and Capital Resources" section below for a detailed discussion of our liquidity and changes in cash flows for the first quarter of fiscal year 2019 compared to the corresponding period of the prior fiscal year.

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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

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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 ~~accounts receivable, inventories, goodwill,~~revenue, intangible assets, ~~other than~~ goodwill, ~~long-lived assets, derivative financial instruments, deferred~~inventories, income taxes, ~~warranty obligations, revenue recognized using the percentage of completion method, pension obligations~~ and stock-based ~~compensation expense.~~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 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 ~~2018~~2019 Annual Report on Form ~~10‑K.~~10-K.

Recently Issued Accounting Pronouncements

For a summary of recently issued 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 Quarterly Report on Form ~~10‑Q.~~10-Q.

RESULTS OF OPERATIONS

Three Months Ended December 31, ~~2018~~2019 Compared to Three Months Ended December 31, ~~2017~~2018

Revenue

We reported revenue of ~~$179.4~~$210.5 million for the three months ended December 31, ~~2018,~~2019, compared to ~~$142.6~~$179.4 million for the corresponding period of the prior fiscal year, an increase of $31.1 million, or 17%.

Our Brooks Semiconductor Solutions Group segment reported revenue of $118.8 million for the three months ended December 31, 2019 compared to $112.7 million for the corresponding period of the prior fiscal year, an increase of ~~$36.8~~$6.1 million, or ~~26%~~5%. We reported ~~revenue growth~~an increase in both the Brooks Semiconductor Solutions Group segment and the Brooks Life Sciences segment. In the first quarter of fiscal 2019, we adopted new accounting guidance for recognizing revenue on a modified retrospective basis. The difference in reported revenue in the first quarter of fiscal year 2019 due to the adoption of the standard was a net decrease of $0.4 million.

~~Our Brooks Semiconductor Solutions Group segment reported~~contamination control solutions revenue of ~~$112.7~~$16.4 million, for the three months ended December 31, 2018 compared to $95.2 million for the corresponding period of the prior fiscal year, an increase of $17.5 million, or 18%. The increase was primarily driven by increases in sales of system automation products, semiconductor services and contamination control systems, partially offset by ~~a decline~~decreases in ~~sales of robotic~~ automation ~~products. Additionally, the acquisition of Tec-Sem contributed incremental~~systems revenue of ~~$9.3~~$9.4 million ~~during the first quarter~~and service revenue of ~~fiscal year 2019.~~$0.8 million. The semiconductor markets are cyclical and may fluctuate significantly from quarter to quarter. Demand for our Brooks Semiconductor ~~Solution~~Solutions Group products is affected by these cycles. ~~The difference in reported revenue in the first quarter of fiscal year 2019 due to the adoption of the new revenue recognition standard was a net increase of $0.4 million.~~

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Our Brooks Life Sciences segment reported revenue of ~~$66.7~~$91.7 million for the three months ended December 31, ~~2018~~2019 compared to ~~$47.4~~$66.7 million for the corresponding period of the prior fiscal year. The increase of ~~$19.2~~$25.0 million, or ~~41%~~38%, was composed of $20.0 million from acquisitions and $5.0 million from internal growth, driven by increases in sales of ~~$2.6 million, principally~~GENEWIZ across all primary service lines of gene synthesis, NGS sequencing, and Sanger sequencing, as well as increases in ~~sample storage services, automated storage systems~~consumables and ~~related services~~instruments, and sample management services. Additionally, the acquisitions of BioSpeciMan and GENEWIZ contributed incremental revenue of $16.6 million in the first quarter of fiscal year 2019. The difference in reported revenue in the first quarter of fiscal year 2019 due to the adoption of the new revenue recognition standard was a net decrease of $0.8 million. BioStore^TM III Cryostores.

Revenue generated outside the United States was ~~$110.5~~$130.8 million, or 62% of total revenue, for the three months ended December 31, ~~2018~~2019 compared to ~~$90.7~~$110.5 million, or ~~64%~~62% of total revenue, for the corresponding period of the prior fiscal year. We had ~~no customers~~one customer that accounted for more than 10% ~~or more~~ of our consolidated revenue ~~for each of the three months ended December 31, 2018 and 2017.~~

~~Gross Margin~~

~~We reported gross margins of 40.2%~~ for the three months ended December 31, ~~2018~~2019 and we had no customers that accounted for more than 10% of our consolidated revenue for the three months ended December 31, 2018.

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Operating Income

We reported operating income of $10.7 million for the three months ended December 31, 2019 compared to ~~38.1%~~$5.3 million for the three months ended December 31, 2018. The increase of 100% is driven by higher revenue and gross profit, partially offset by an increase in both research and development expenses and selling, general and administrative expenses compared to the three months ended December 31, 2018. Drivers of the increases to research and development and selling, general and administrative expenses are described below.

Operating income for our Brooks Semiconductor Solutions Group segment was $14.3 million for the three months ended December 31, 2019 compared to $16.1 million for the three months ended December 31, 2018. Operating income for the three months ended December 31, 2019 included $0.7 million of charges for amortization related to completed technology as compared to $0.9 million incurred during the corresponding period of the prior fiscal year. The three months ended December 31, 2018 also includes inventory step-up charges of $0.2 million. Adjusted operating income for our Brooks Semiconductor Solutions Group segment, which excludes the charges mentioned above, was $15.0 million for the three months ended December 31, 2019 compared to $17.3 million for the three months ended December 31, 2018. Please refer to Note 15, “Segment Information”.

Operating income for our Brooks Life Sciences segment was $4.0 million for the three months ended December 31, 2019 compared to $1.6 million for the three months ended December 31, 2018. Operating income for our Brooks Life Sciences segment includes charges for amortization related to completed technology of $1.9 million and $1.1 million for the three months ended December 31, 2019 and 2018, respectively. Adjusted operating income for our Brooks Life Sciences segment, which excludes the charges mentioned above, was $6.0 million for the three months ended December 31, 2019 compared to $2.7 million for the three months ended December 31, 2018. Please refer to Note 15, “Segment Information”.

Gross Margin

We reported gross margins of 40.4% for the three months ended December 31, 2019 compared to 40.2% for the corresponding period of the prior fiscal year. Gross margin increased in the Brooks Life Sciences segment by 2.9 percentage points partially offset by declines in the Brooks Semiconductor Solutions Group segment by ~~0.3 percentage points and in the Brooks Life Sciences segment by 6.0~~1.8 percentage points in the ~~2019~~first quarter of fiscal year 2020 compared to the same period ~~over the 2018 period.~~in fiscal year 2019. Cost of revenue for the three months ended December 31, 2019 included $2.7 million of charges related to amortization of completed technology, as compared to $2.0 million during the corresponding period of the prior fiscal year. The results for the three months ended December 31, 2018 also included ~~$2.0~~$0.2 million of charges related to the inventory step-up in purchase accounting. Excluding the amortization of completed technology and inventory step-up charges, margins expanded 0.2 percentage points during the three months ended December 31, 2019 as compared to the corresponding period of the prior fiscal year.

Our Brooks Semiconductor Solutions Group segment reported gross margins of 39.0% for the three months ended December 31, 2019 as compared to 40.7% for the corresponding period of the prior fiscal year. The decrease is driven by a mix of product sales. Cost of revenue for the three months ended December 31, 2019 included $0.7 million of charges for amortization related to completed technology as compared to $0.9 million ~~during the corresponding period of the prior fiscal year. Cost of revenue for the three months ended December 31, 2018 also included $0.2 million of charges related to the inventory step-up in purchase accounting,~~ ~~as compared to~~ ~~$1.2 million during the corresponding period of the prior fiscal year.~~ Excluding the purchasing accounting impact related to inventory step-up and the amortization of completed technology, gross margins expanded 1.9 percentage points during the three months ended December 31, 2018 as compared to the corresponding period of the prior fiscal year. The difference in reported gross margin in the first quarter of fiscal year 2019 due to the adoption of the new revenue recognition standard was a net increase in gross profit of $0.1 million.

Our Brooks Semiconductor Solutions Group segment reported gross margins of 40.7% for the three months ended December 31, 2018 as compared to 40.5% for the corresponding period of the prior fiscal year. The increase is driven by volume leverage of fixed costs partially offset by higher warranty expense. Cost of revenue for the three months ended December 31, 2018 included $0.9 million of charges for amortization related to completed technology as compared to $0.5 million incurred during the corresponding period of the prior fiscal year. The results for the three months ended December 31, 2018 also included $0.2 million of charges related to the inventory step-up in purchase accounting. There were no such ~~charges during~~changes in the ~~corresponding period of the prior~~ fiscal ~~year.~~2020 period. Excluding the ~~purchase accounting~~ impact ~~and~~of the amortization of completed technology and the charges related to the inventory step-up, gross margins expanded ~~0.7~~2.1 percentage points during the three months ended December 31, ~~2018~~2019 as compared to the corresponding period of the prior fiscal year. ~~The difference in reported gross margin in the first quarter of fiscal year 2019 due to the adoption of the new revenue recognition standard was a net increase in gross profit of $0.4 million.~~

Our Brooks Life Sciences segment reported gross margins of ~~39.3%~~42.2% for the three months ended December 31, ~~2018~~2019 as compared to ~~33.2%~~39.3% for the corresponding period of the prior fiscal year. The increase during this period was due to a ~~result of volume leverage of fixed costs, the impact of~~ higher ~~margins of recent acquisitions, and improved margins on consumables and instruments,~~margin revenue mix from GENEWIZ as well as improvements in margin performance in our automated stores and sample ~~management services.~~storage business lines. Cost of revenue for the three months ended December 31, ~~2018~~2019 included ~~$1.1~~$1.9 million of charges for amortization related to completed technology as compared to ~~$0.4~~$1.1 million incurred during the corresponding period of the prior fiscal year. ~~Cost~~Excluding the impact of ~~revenue for~~the amortization of completed technology, margins

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expanded 3.5 percentage points during the three months ended December 31, ~~2017 also included $1.2 million of charges related to the inventory step-up in purchase accounting. There were no such charges during the current period.~~ ~~Excluding the purchasing accounting impact and the amortization of completed technology, margins increased 4.4 percentage points for the three months ended December 31, 2018~~2019 as compared to the corresponding period of the prior fiscal year. ~~The difference in reported gross margin in the first quarter of fiscal year 2019 due to the adoption of the new revenue recognition standard was a net decrease in gross profit of $0.3 million.~~

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Research and Development

Research and development expenses were ~~$13.1~~$14.4 million during the three months ended December 31, ~~2018~~2019 as compared to ~~$11.4~~$13.1 million during the corresponding period of the prior fiscal year. The increase of ~~$1.7~~$1.3 million during the first quarter of fiscal year ~~2019~~2020 as compared to the ~~first quarter~~corresponding period of fiscal year ~~2018~~2019 reflects ~~greater investments in~~higher expense of $0.3 million within the ~~2019 period of $1.0~~Brooks Life Sciences segment and $0.9 million within the Brooks Semiconductor Solutions Group ~~segment and $0.8 million within the Brooks Life Sciences~~ segment. ~~Higher research~~

Research and development expenses ~~during the three months ended December 31, 2018 as compared to the same period of prior fiscal year~~in our Brooks Semiconductor Solutions Group segment were ~~primarily attributable new acquisitions and higher employee related costs.~~

~~Selling, General and Administrative~~

~~Selling, general and administrative expenses were $53.5~~$10.1 million during the three months ended December 31, ~~2018~~2019 as compared to ~~$37.9~~$9.2 million during the corresponding period of the prior fiscal year. ~~The increase~~Higher research and development expenses were primarily attributable to increased employee related costs of ~~$15.6~~$0.4 million, outside services of $0.3 million and project spending of $0.1 million.

Research and development expenses in our Brooks Life Sciences segment were $4.3 million during the three months ended December 31, 2018 compared to the corresponding period of the prior fiscal year was primarily attributable to: (i) higher merger-related costs (ii) higher operating expenses related to the acquisitions of GENEWIZ, Tec-Sem and BioSpeciMan (iii) higher employee-related costs resulting from hiring additional personnel to support the growth of our business (iv) higher amortization costs due to intangible assets acquired related to GENEWIZ, Tec-Sem and BioSpeciMan, and (v) higher professional services costs.

~~Amortization expense related primarily to customer relationships was $5.8 million during the three months ended December 31, 2018~~2019 as compared to ~~$4.6~~$3.9 million during the corresponding period of the prior fiscal year. ~~Merger-related~~The three months ended December 31, 2019 included an incremental $1.1 million of costs related to GENEWIZ which was acquired on November of 2018. Partially offsetting this increase were ~~$6.4~~lower employee related costs of $0.4 million and project spending of $0.4 million in our Sample Management business.

Selling, General and Administrative

Selling, general and administrative expenses were $59.3 million during the three months ended December 31, ~~2018~~2019 as compared to $53.5 million during the corresponding period of the prior fiscal year. The increase of $5.8 million was due to increased expenses of $9.8 million within the Brooks Life Sciences segment and increased expenses of $1.3 million within the Brooks Semiconductor Solutions Group segment, partially offset by a reduction in corporate related expenses of $5.3 million. The reduction in corporate related expenses was primarily attributed to decreased merger and acquisition costs of $6.1 million which are not allocated to our segments, partially offset by audit and legal costs which increased $2.4 million compared to the prior year.

Selling, general, and administrative expenses in our Brooks Semiconductor Solutions Group segment were $21.9 million for the three months ended December 31, 2019 as compared to $20.6 million for the three months ended December 31, 2018. The increase of $1.3 million is primarily related to higher corporate allocated costs.

Selling, general, and administrative expenses in our Brooks Life Sciences segment were $30.4 million for the three months ended December 31, 2019 compared to $20.6 million for the three months ended December 31, 2018. The increase was primarily related to GENEWIZ, which was acquired in November of 2018 and added an incremental $5.1 million of expense to the three months ended December 31, 2019, as well as, higher corporate allocated costs.

Restructuring Charges

We recorded restructuring charges of $0.6 million during the three months ended December 31, 2019 as compared to less than $0.1 million during the same period in the prior year. Restructuring charges for the three months ended December 31, 2019 consisted of $0.3 million related to corporate restructuring actions and $0.3 million in the Brooks Life Sciences segment related to the action initiated in the fourth quarter of fiscal year 2019 to eliminate costs within the segment’s Sample Management business. Cost savings realized during the three months ended December 31, 2019 related to these actions were nominal in the Brooks Semiconductor Solutions Group segment and $0.6 million in Brooks Life Sciences segment.

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Non-Operating Income (Expenses)

Interest income - During the three months ended December 31, 2019, we recorded interest income of $0.7 million, as compared to $0.4 million during the corresponding period of the prior fiscal year.

~~Restructuring Charges~~Interest expense - During the three months ended December 31, 2019, we recorded interest expense of $0.7 million, as compared to $5.3 million during corresponding period of the prior fiscal year. The decrease in interest expense in the current period compared to the three months ended December 31, 2018 is due the Company carrying less debt in the current period. The Company extinguished $495.3 million of debt during the fourth quarter of fiscal year 2019.

~~Restructuring charges were nominal~~Other expenses, net - During the three months ended December 31, 2019, we recorded other expenses, net of $0.4 million, compared to less than $0.1 million of the corresponding period of the prior fiscal year.

Income Tax Provision

We recorded an income tax benefit of $3.0 million during the three months ended December 31, ~~2018. There~~2019. The tax benefit was primarily driven by a $5.8 million stock compensation windfall benefit for tax deductions that exceeded the associated compensation expense and a $0.5 million reduction in deferred tax liabilities related to the extension of a tax rate incentive in China. These discrete benefits were ~~no restructuring charges~~partially offset by the tax provision on earnings from operations during the ~~three months ended December 31, 2017.~~period.

~~Non-Operating Income (Expenses)~~

~~Interest income-~~ ~~During the three months ended December 31, 2018 and 2017, we recorded interest income of $0.4 million and $0.1 million, respectively, which represented income earned on our marketable securities.~~

~~Interest expense-~~ During the three months ended December 31, 2018 and 2017, we recorded interest expense of $5.3 million and $2.2 million, respectively. The increase in interest expense is due to interest on the $350.0 million incremental term loan secured in the first quarter of fiscal year 2019 used to pay a portion of the purchase price for our acquisition of GENEWIZ.

~~Other expenses, net-~~ During the three months ended December 31, 2018 and 2017 we recorded other expenses, net of less than $0.1 million and $1.9 million, respectively. The $1.9 million decrease was primarily attributable to higher foreign currency exchange losses of $2.0 million recognized during the three months ended December 31, 2017 as compared to the current year period.

~~Income Tax Provision~~

We recorded an income tax benefit of $5.8 million ~~for~~during the three months ended December 31, ~~2018 and an income tax benefit of $0.7 million for the three months ended December 31, 2017.~~2018. The tax benefit ~~for the three months ended December 31, 2018~~ was primarily driven by a $3.7 million discrete ~~benefits related to~~benefit for stock compensation windfalls, ~~of $3.7 million for tax deductions that exceeded the associated compensation expense,~~ $1.4 million of tax benefits related to the remeasurement of net U.S. deferred tax assets due to state tax rate changes, and a $1.1 million transition tax reduction. These discrete benefits were slightly offset by the tax provision on ~~foreign~~ earnings from operations during the period.

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The tax benefit for the three months ended December 31, 2017 was primarily driven by discrete benefits related to the reduction of reserves for unrecognized tax benefits of $0.3 million and $0.7 million of tax benefits related to the remeasurement of net U.S. deferred tax liabilities at the reduced 21 percent federal income tax rate. These discrete benefits were slightly offset by the tax provision on foreign earnings during the period.

During 2018, the Internal Revenue Service issued proposed regulations on the federal toll charge and various other aspects of the Tax Cuts and Jobs Act. We finalized our analysis of the toll charge and related liabilities, including uncertain tax positions, during the three months ended December 31, 2018 pursuant to U.S. Securities and Exchange Commission, ~~(“SEC”)~~or SEC Staff Accounting Bulletin No. 118. As a result of the new guidance issued and additional work to complete the calculation of ~~our~~the federal toll charge, we reduced ~~our~~the provisional accrual for federal, state and foreign taxes by net $1.1 million during the three months ended December 31, 2018. ~~In addition, we also assessed our uncertain tax positions related to these taxes and accrued income and determined no tax reserves were required.~~

We evaluate the realizability of ~~our~~its deferred tax assets by tax-paying component and ~~assess~~assesses the need for a valuation allowance on ~~an annual and~~a quarterly basis. We evaluate the profitability of each tax-paying component on a historic cumulative basis and a forward-looking basis ~~in the course of~~while performing this analysis. We evaluated all positive and negative evidence in concluding it was appropriate to release the majority of valuation allowance against U.S. net deferred tax assets during fiscal year 2018. The remaining portion of ourmaintain a U.S. valuation allowance is related to the realizability of certain state tax credits and net operating loss ~~carry-forwards. We continue to maintain~~carryforwards, as well as a valuation ~~allowances~~allowance against net deferred tax assets in certain foreign tax-paying components as of December 31, ~~2018.~~

~~During the three months ended December 31, 2018, we recorded $37.4 million of deferred tax liabilities in purchase accounting in connection with the acquisition of GENEWIZ.Also, as a result of the acquisition, we recorded a $13.4 million reserve in purchase accounting for unrecognized tax benefits related to uncertain tax positions taken by GENEWIZ in prior years.~~

As of December 31, 2018, we have evaluated all relevant information related to U.S. tax reform under the allowable period pursuant to SEC Staff Accounting Bulletin No. 118 and have decided to maintain our indefinite reinvestment assertion. Based on this we have not provided income taxes on the outside basis differences of our foreign subsidiaries. We continue to expect our foreign earnings to be reinvested in foreign operations and acquisitions. We have not accrued foreign withholding tax costs on unremitted earnings.2019.

We maintain liabilities for uncertain tax positions. These liabilities involve judgment and estimation and are monitored based on the best information available. We recognize interest related to unrecognized tax benefits as a component of the income tax ~~benefit,~~expense or benefit. We recognized interest expense related to unrecognized tax benefits of ~~which $0.1~~$0.3 million ~~was recognized~~ during the three months ended December 31, 2018. During the three months ended December 31, 2017 the statute of limitations lapsed on an uncertain tax positions in a foreign jurisdiction which resulted in a $0.3 million reduction in the gross unrecognized tax benefits that impacted the effective tax rate.2019.

We are subject to U.S. federal income tax and state, local and international income taxes in various jurisdictions. The amount of income taxes paid is subject to our interpretation of applicable tax laws in the jurisdictions in which we file tax returns. In the normal course of business, we are subject to income tax audits in various global jurisdictions in which we operate. The years subject to examination vary for the U.S. and international ~~jurisdictions, with the earliest tax year being 2011.~~jurisdictions. Based on the outcome of these examinations or the expiration of statutes of limitations for specific jurisdictions, it is reasonably possible that the related unrecognized tax benefits could change from those recorded in ~~our~~the unaudited Consolidated Balance Sheets. We currently anticipate that it is reasonably possible that the unrecognized tax benefits will be reduced by approximately ~~$0.1~~$0.2 million within the next twelve months.

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Discontinued Operations

On July 1, 2019, we completed the sale of the semiconductor cryogenics business which we include as a discontinued operation. We ~~incurred~~generated net loss from discontinued operations of $0.1 million for the three months ended December 31, 2019 related to our semiconductor cryogenics business. We generated revenue and net income from discontinued operations of $39.3 million and $8.1 million, respectively, for the three months ended December 31, 2018 related to our semiconductor cryogenics ~~business as compared to $46.7 million and $14.9 million, respectively for the three months ended December 31, 2017.~~business. The net income ~~is inclusive of~~includes income from the Ulvac Cryogenics, Inc. joint venture ~~in 2018 and 2017.~~during these periods. The income from discontinued operations only

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includes direct operating expenses incurred that (1) are clearly identifiable as costs being disposed of upon completion of the sale and (2) will not be continued by the Company on an ongoing basis. Indirect expenses which supported the ~~Cryogenics~~semiconductor cryogenics business, and which will remain as part of the continuing operations, are not reflected in 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 satisfy our working capital, financing activities, debt service and capital expenditure requirements for the next twelve months. The cyclical nature of our served markets and uncertainty in the current global economic environment 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 of acquisition opportunities, any of which could have a material adverse effect on our business, financial condition and operating results.

The discussion of our cash flows and liquidity that follows does not include the impact of the disposition of ~~our~~the semiconductor cryogenics business and is stated on a total company consolidated basis.

Overview of Cash Flows and Liquidity

Our cash, cash equivalents and marketable securities as of December 31, ~~2018~~2019 and September 30, ~~2018~~2019 consist of the following (in thousands):



	December 31, 2018		September 30, 2018


					December 31, 2019		September 30, 2019
Cash and cash equivalents	$	135,791	$	197,708	$	335,319	$	301,642
Restricted cash						3,529		3,529
Short-term marketable securities		28		46,281		11,233		34,124
Long-term marketable securities		2,489		7,237		3,039		2,845
	$	138,308	$	251,226
					$	353,120	$	342,140

Our cash ~~balances are~~is held in numerous locations throughout the world. As of December 31, ~~2018,~~2019, we had cash and cash equivalents of ~~$135.8~~$335.3 million, of which ~~$99.1~~$179.7 million was held outside of the United States. If these funds are needed for ~~the~~our U.S. operations, we would need to repatriate these funds. As a result of recent changes in U.S. tax legislation, any repatriation in the future would likely not result in further U.S. federal income tax. Our intent is to permanently reinvest these funds outside of the ~~U.S.~~United States and our current operating plans do not demonstrate a need to repatriate these funds for our U.S. operations. AtAs of December 31, ~~2018~~2019 and September 30, ~~2018,~~2019, we had marketable securities of ~~$2.5~~$14.3 million and ~~$53.5~~$37.0 million, respectively. Our marketable securities are generally readily convertible to cash without an adverse impact.

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Three Months Ended December 31, ~~2018~~2019 Compared to Three Months Ended December 31, ~~2017~~ 2018

Overview

Cash, ~~and~~ cash equivalents, restricted cash and marketable securities were ~~$138.3~~$353.1 million at December 31, ~~2018~~2019 as compared to ~~$251.2~~$342.1 million at September 30, ~~2018.~~2019. The ~~decrease in cash and cash equivalents and marketable securities~~increase of ~~$112.9~~$11.0 million from September 30, 2019 was primarily attributable to ~~net~~ cash ~~outflows~~inflows generated from operating activities of ~~$445.2 million to acquire GENEWIZ, cash dividends paid of $7.2 million and capital expenditures of $3.6~~$25.7 million, partially offset by cash ~~inflows from proceeds received from the incremental amendment to our existing term loan~~outflows for capital expenditures of ~~$340.5 million, proceeds from the sales and maturities of marketable securities of $51.5~~$9.6 million and ~~net~~ cash ~~inflows from operating activities~~dividends paid of ~~$6.3 million during the three months ended December 31, 2018.~~

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$7.4 million.

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 operating activities ~~were $6.3~~was $25.7 million during the three months ended December 31, ~~2018,~~2019, comprised primarily of earnings of ~~$21.5~~$26.3 million, including net income of ~~$14.4~~$13.1 million and the unfavorable impact of non-cash related charges of ~~$7.1~~$13.2 million. Partially offsetting these items were the uses of cash of ~~$15.2~~$0.5 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 consisted primarily of an increase ~~in accounts receivable as a result of higher revenue,~~ an increase in inventory levels ~~to support the growth of our business~~ and a decrease in accrued compensation and tax withholdings as a result of year-end cash incentive bonus payments. These uses of cash were partially offset by ~~sources of cash related primarily to increases~~an increase in accrued expenses and other liabilities, increased accounts ~~payable.~~payable and decreased deferred income tax liabilities. Cash ~~flows~~ provided by operating activities ~~were $3.2~~was $6.3 million during the three months ended December 31, ~~2017 and~~2018 comprised primarily of earnings of ~~$27.1~~$21.5 million, including net income of ~~$16.5~~$14.4 million and the unfavorable impact of non-cash related charges of ~~$10.6~~$7.1 million, partially offset by the ~~use~~uses of ~~$23.9~~cash of $15.2 million related to the changes in our operating assets and liabilities.

In January 2020, subsequent to the end of our first fiscal quarter of 2020, we paid $93 million in taxes related to the sale of our semiconductor cryogenics business. We expect to pay another $2 million related to this sale in future periods.

Investing Activities

Cash flows from investing activities consist primarily of 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 ~~used in~~provided by investing activities was ~~$398.6~~$13.2 million during the three months ended December 31, ~~2018~~2019 as compared to ~~$94.3~~cash used by investing activities of $398.6 million during the corresponding period of the prior fiscal year. Cash provided by investing activities during the three months ended December 31, 2019 included cash inflows from the maturities of marketable securities of $33.6 million, partially offset by cash outflows for capital expenditures of $9.6 million and $10.7 million for the purchases of marketable securities. Cash used in investing activities of $398.6 million during the three months ended December 31, 2018 included cash outflow of $445.2 million for the acquisition of GENEWIZ, $3.6 million of capital expenditures, and $1.3 million for the purchases of marketable securities, partially offset by cash inflows from the proceeds of sales and maturities of marketable securities of $51.5 million. Cash used in investing activities during the three months ended December 31, 2017 included cash payments of $65.1 million for acquisitions, $26.9 million for the purchases of marketable securities and $2.7 million of capital expenditures.

Financing Activities

Cash ~~provided by~~outflows for financing activities was ~~$331.4~~$8.1 million during the three months ended December 31, ~~2018~~2019 as compared to ~~$190.2~~cash inflows from investing activities of $331.4 million during the corresponding period of the prior fiscal year. Cash outflows for financing activities during the three months ended December 31, 2019 primarily included cash outflows for cash dividend payments of $7.4 million. Cash provided by financing activities during the three months ended December 31, 2018 included cash inflows of $340.5 million related to proceeds from the incremental term loan secured in November 2018, partially offset by cash dividend payments of $7.2 million and $1.8 million related to principal payments of debt. ~~Cash provided by financing activities during~~

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China Facility

In April 2019, we committed to construct a facility in Suzhou China, to consolidate the ~~first quarter~~Suzhou operations of ~~fiscal year 2018 included cash inflows~~the GENEWIZ business and provide an infrastructure to support future growth. The facility will be constructed in two phases. We expect to incur $50.0 to $55.0 million of ~~$197.6 million~~capital expenditures related to ~~proceeds from~~this facility over the ~~term loan originated~~next five years, of which up to $15.0 to $20.0 million is expected to be incurred during 2020. During the three months ended December 31, 2019, we incurred $1.3 million in ~~October 2017, partially offset by cash dividend payments~~capital expenditures related to the construction of ~~$7.1 million.~~this facility.

Capital Resources

~~Senior Secured~~ Term ~~Loan Facility~~Loans

On October 4, 2017, we entered into a $200.0 million term loan with Morgan Stanley Senior Funding, Inc., JPMorgan Chase Bank, N.A. and Wells Fargo Securities, ~~LLC.~~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. ~~On November 15, 2018,~~ we entered into an incremental amendment, or the Amendment to the existing credit agreement. Under the Amendment, we obtained an incremental term loan in an aggregate principal amount of $350.0 million. The proceeds of the incremental loan were used to pay a portion of the purchase price for our acquisition of GENEWIZ acquisition. ~~The term loan was issued at $340.5 million, or 97.3% of its par value, resulting in a discount of $9.5 million, or 2.7%, which represented financing cost of the loan.~~ ~~Except as provided in the Amendment, the incremental loan is subject to the same terms and conditions as set forth in the existing credit agreement.~~The loan principal amount may be

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increased by an aggregate amount equal to $75.0 million plus any voluntary repayments of the term ~~loans~~loan plus any additional amount such that ~~the~~our secured leverage ratio ~~of the Company~~ is less than 3.00 to 1.00.

The term ~~loans mature~~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. ~~During the three months ended December 31, 2018, we made principal payments of $1.8 million related to the term loan.~~ Subject to certain conditions stated in the ~~term loan~~credit agreement, we may redeem the term ~~loans~~loan at any time at our option without a significant premium or penalty, except for a repricing transaction, as defined in the ~~original term loan agreement and the Amendment.~~credit agreement. We ~~would also be~~are required to redeem the term loan at the principal ~~amounts~~amount then outstanding upon the occurrence of certain events, as set forth in the ~~original~~credit agreement.

On November 15, 2018, we entered into an incremental amendment to the credit agreement under which we obtained an incremental term loan in an aggregate principal amount of $350.0 million, issued at $340.5 million. The proceeds of the incremental term loan were used to pay a portion of the purchase price for our acquisition of GENEWIZ. On February 15, 2019, we entered into the second amendment to the credit agreement and syndicated the ~~Amendment.~~incremental term loan to a group of new lenders. The syndicated incremental term loan was issued at $345.2 million. Except as provided for in the amendments, the incremental term loan was subject to the same terms and conditions of the initial term loan.

On July 1, 2019, in connection with the completion of the sale of our semiconductor cryogenics business, we used $348.3 million of the cash proceeds from the transaction to extinguish the outstanding balance at July 1, 2019 of the incremental term loan and $147.0 million of the cash proceeds from the transaction to extinguish a portion of the outstanding balance at July 1, 2019 of the term loan. The total amount of debt extinguished on July 1, 2019 was $495.3 million.

The credit agreement, as amended, contains certain customary representations and warranties, covenants and events of default. As of December 31, 2019, we were in compliance with all covenants and conditions under the credit agreement, as amended.

In connection with ~~the~~our acquisition of GENEWIZ ~~acquisition,~~in November 2018, we assumed three five-year term loans and two one-year term loans. At December 31, ~~2018,~~2019, we had an aggregate outstanding principal ~~balances~~balance of ~~$5.3~~$1.2 million ~~for these~~under the three five-year term loans. The two one-year short term loans matured and were repaid in full as of September 30, 2019.

At December 31, ~~2018,~~2019, the aggregate outstanding principal balance of all of the outstanding term loans was ~~$540.8~~$50.7 million, excluding unamortized deferred financing costs of ~~$11.6~~$0.5 million. Borrowings under the term ~~loan~~loans bear variable interest rates. 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.~~loans. If rates increase, we may be subject to higher costs of servicing the ~~loan~~loans which could reduce our profitability and cash flows. During the three months ended December 31, ~~2018,~~2019, the weighted average stated interest rate on the term ~~loan~~loans was ~~5.0%~~4.5%. During the three months ended December 31, ~~2018,~~2019, we incurred

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aggregate interest expense of ~~$5.3~~$0.6 million on the term ~~loan.~~loans, including less than $0.1 million of deferred financing costs amortization. Our debt service requirements are expected to be funded through our existing sources of liquidity and operating cash flows.

The term loan agreement and the Amendment contain certain customary representations and warranties, covenants and events of default. As of December 31, 2018, we were in compliance with all covenants and conditions under the term loan agreement.

Line of Credit

Facility

We maintain a revolving line of credit under a credit agreement with Wells Fargo Bank, N.A. and JPMorgan Chase Bank, ~~N.A~~N.A. that provides for revolving credit ~~financing~~facility of up to $75.0 million, subject to borrowing base availability, as defined in the 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.

As of December 31, ~~2018,~~2019, we had approximately ~~$47.3~~$43.6 million available for borrowing under the line of credit. There were no amounts outstanding pursuant to the line of credit as of December 31, ~~2018.~~2019. The amount of funds available for borrowing under the ~~line of~~ credit ~~arrangement~~agreement may fluctuate each period based on our borrowing base availability. The ~~line of~~ credit agreement 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~~agreement as of December 31, ~~2018.~~2019. Although we believe we will be able to generate sufficient cash in the United States and foreign jurisdictions to fund future operating costs, we secured 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~~and for strategic investments ~~and~~or 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, depositary 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.

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Dividends

On January ~~30, 2019,~~24, 2020, the Company’s Board of Directors declared a cash dividend of $0.10 per share payable on March ~~22, 2019~~27, 2020 to common stockholders of record as of March ~~1, 2019.~~6, 2020. Dividends are declared at the discretion of our Board of Directors and depend on actual cash flow from operations, our financial condition, debt service and capital requirements, and any other factors our Board of Directors may consider relevant. We intend to pay quarterly cash dividends in the future; however, the amount and timing of these dividends may be impacted by the cyclical nature of certain markets we serve. We may reduce, delay or cancel a quarterly cash dividend based on the severity of a cyclical downturn.

Share Repurchase Program

On September 29, 2015, our Board of Directors approved a share repurchase program for up to $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 months ended December 31, ~~2018.~~2019 and there have been no shares repurchased under this program since its inception.

Contractual Obligations and Requirements

~~Our non-cancellable inventory purchase commitments were $95.9 million at~~At December 31, ~~2018.~~2019, the Company had non-cancellable commitments of $130.2 million, including purchase orders for inventory of $84.9 million, information technology related commitments of $25.0 million, China facility commitments of $18.6 million and other commitments of $1.7 million.

At December 31, ~~2018,~~2019, we had approximately ~~$1.3~~$1.2 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, ~~2018,~~2019, and we currently do not anticipate any of these obligations to be called in the near future.

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Off-Balance Sheet Arrangements

As of December 31, ~~2018,~~2019, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

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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, cash equivalents and marketable securities.

Interest Rate Exposure

Our term ~~loan bears~~loans bear variable interest rates which ~~subjects~~subject us to interest rate risk. Our primary interest rate risk exposure results from changes in the short-term LIBOR rate, the federal funds effective rate and the prime rate. As of December 31, ~~2018~~,2019, the weighted average stated interest rate on the term ~~loan~~loans was ~~5.0%~~4.5%. At December 31, ~~2018~~,2019, the outstanding term ~~loan~~loans principal balance was ~~$540.8~~$50.7 million, net of unamortized deferred financing costs of ~~$11.6~~$0.5 million. During the three months ended December ~~31, 2018~~,30, 2019, we incurred cash interest expense of ~~$5.3~~$0.6 million on the term ~~loan.~~loans. A hypothetical 100 basis point change in interest rates would result in a ~~$1.1~~$0.1 million change in interest expense incurred during the three months ended December 31, ~~2018~~.2019.

Our cash and cash equivalents consist principally of money market securities that are short-term in nature. At December 31, ~~2018,~~2019, our total short-term and long-term investments were ~~$2.5~~$14.3 million, consisting mostly of highly rated corporate debt securities and other debt securities. At December 31, ~~2018,~~2019, we had no securities in an unrealized ~~losses~~loss position. A hypothetical 100 basis point change in interest rates would result in an insignificant increase in interest income earned during the three months ended December 31, ~~2018.~~2019.

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 ~~35%~~41% and ~~33%~~35% of our total sales, respectively, during the three months ended December 31, ~~2018~~2019 and ~~2017.~~2018. 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 ~~$135.3~~$144.2 million and ~~$84.7~~$117.7 million, respectively, at December 31, ~~2018~~2019 and September 30, ~~2018,~~2019, 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 losses of ~~$0.1~~$0.7 million and ~~$2.0~~$0.1 million, respectively, during the three months ended December 31, ~~2018~~2019 and ~~2017,~~2018, 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, ~~2018~~2019 and ~~2017~~2018 would result in an approximate change of ~~$3.4~~$1.4 million and ~~$0.6~~$3.4 million, respectively, in our net income during the three months ended December 31, ~~2018~~2019 and ~~2017.~~2018.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures~~. As~~

Under the supervision and with the participation of ~~the end of the period covered by this report, and pursuant to Rules 13a‑15(e) and 15d‑15(e) under the Securities Exchange Act of 1934, the Company’s~~our management, including our chief executive officer and chief financial officer, ~~has concluded that~~we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) promulgated under the Exchange Act. Disclosure controls and procedures are ~~effective.~~

~~Change~~designed to ensure that information required to be disclosed by us in ~~Internal Controls. There were no changes~~the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management, including the chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based upon this evaluation, our chief executive officer and our chief financial officer concluded that because of the material weaknesses identified in our internal control over financial reporting discussed below, our disclosure controls and procedures were not effective as of December 31, 2019, the end of the period covered by this Quarterly Report on Form 10-Q.

Previously Identified Material Weaknesses in Internal Control Over Financial Reporting

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that ~~occurred~~there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

We previously disclosed in our Annual Report on Form 10-K for the fiscal year ended September 30, 2019, the following control deficiencies, which continue to exist as of December 31, 2019, that constitute material weaknesses in our internal control over financial reporting:

●

We did not maintain effective controls related to the accuracy of revenue recorded at a business unit within our Brooks Life Sciences segment. Specifically, we did not maintain effective controls to verify the accuracy of the price and quantity data for customer transactions entered into the business unit’s billing system, and to verify that the invoices generated from the billing system were based on the appropriate amounts. These control deficiencies resulted in immaterial misstatements and subsequent immaterial adjustments to revenue and related accounts and disclosures in the interim and annual consolidated financial statements for the years ended September 30, 2019, 2018, and 2017.

●

We did not design and maintain effective controls related to the occurrence and cutoff of revenue on products shipped to customers from contract manufacturers for a business unit within our Brooks Semiconductor Solutions Group segment. Specifically, we did not design and maintain effective controls to verify that revenue from product shipments from contract manufacturers in this business unit were evaluated for proper revenue recognition at the point of transfer of control. Management determined that this control deficiency resulted in an immaterial audit adjustment related to the revenue, cost of sales and the corresponding balance sheet accounts of our consolidated financial statements for the fiscal year ended September 30, 2019.

Remediation Plan for Material Weaknesses

We are committed and are taking steps necessary to remediate the control deficiencies that constituted the material weaknesses described above by implementing changes to our internal control over financial reporting. Management has been implementing and continues to implement measures to ensure that the control deficiencies contributing to the material weaknesses are remediated, such that these controls are designed and operating effectively. The remediation actions in the Brooks Life Sciences segment include: (i) leveraging the implementation a new billing system and enterprise resource planning system (ERP) which will reduce the complexity of this billing process, (ii) improving the oversight of the accuracy of invoice processing and (iii) improving process documentation and training related to the billing and oversight process. The remediation actions in the Brooks Semiconductor Solutions Group include (i) enhanced documentation of inventory cut-off procedures related to contract manufacturing sites (ii) additional employee

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training and (iii) designing and implementing additional cut-off review procedures for transactions occurring near the end of a reporting period.

Status of Remediation Efforts

We implemented a new billing system and enterprise resource planning system (ERP) during the quarter ended December 31, 2019, for the business unit within our ~~most recent~~Brooks Life Sciences segment noted above. We are in the process of implementing new and enhanced controls to verify the accuracy of price and quantity data for customer transactions and enhancing our documentation related to the business unit’s billing procedures and controls, which will support the business unit’s ability to train employees and execute the controls effectively.

To address the material weakness related to the business unit within our Brooks Semiconductor Solutions segment noted above, during the quarter ended December 31, 2019, we designed, documented and implemented new controls to verify that product shipments from contract manufacturers are evaluated for proper revenue recognition at the point of transfer of control. Management will test controls to ensure they have operated effectively for a sufficient period of time before concluding on remediation. We have also initiated employee training with respect to these procedures.

We believe the measures described above will facilitate the remediation of the control deficiencies we have identified and strengthen our internal control over financial reporting. We are committed to continuing to improve our internal control processes and will continue to review, optimize and enhance our financial reporting controls and procedures. As we continue to evaluate and work to improve our internal control over financial reporting, we may take additional measures to address control deficiencies, or we may modify, or, in appropriate circumstances, not complete, certain of the remediation measures described above. These material weaknesses will not be considered remediated until the applicable controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control Over Financial Reporting

Except for the remediation efforts discussed above under “Status of Remediation Efforts”, there were no changes in internal control over financial reporting during the fiscal first quarter ended December 31, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. We implemented internal controls to ensure we adequately evaluated our contracts and properly assessed the impact of the new accounting standards related to revenue recognition on our financial statements to facilitate their adoption on October 1, 2018. There were no significant changes to our internal control over financial reporting due to the adoption of the new standard.

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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, 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 ~~2018~~2019 Annual Report on Form ~~10‑K.~~10-K. There have been no material changes from the risk factors disclosed in our ~~2018~~2019 Annual Report on Form ~~10‑K. We may disclose changes~~10-K, other than the addition of the risk factor set forth below.

Our financial condition and results of operations could be adversely affected by the recent coronavirus outbreak.

In December 2019, a novel strain of coronavirus was first identified in Wuhan, Hubei Province, China. Any outbreak of contagious diseases, or other adverse public health developments, could have a material and adverse effect on our business operations. These could include disruptions or restrictions on our ability 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 $50.0 million worth~~travel, as well as temporary closures of our ~~common stock.~~facilities or the facilities of our suppliers or customers. Any disruption of our suppliers or customers would likely impact our sales and operating results. The ~~timing~~extent to which the coronavirus may impact our results will depend on future developments, which are highly uncertain and ~~amount~~cannot be predicted, including new information which may emerge concerning the severity of any shares repurchased are 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 months ended December 31, 2018 and there have been no~~ ~~shares repurchased under this program since its inception~~. coronavirus.

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Item 6. Exhibits

The following exhibits are included herein:


Exhibit No.		Description
~~Exhibit~~ ~~No.~~		~~Description~~

~~10.01~~		Incremental Amendment, dated as of November 15, 2018, to that certain Credit Agreement dated as of October 4, 2017, among Brooks Automation, Inc., the several lenders party thereto from time to time and Morgan Stanley Senior Funding, Inc., as administrative agent for the Lenders (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 15, 2018).

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, ~~2018,~~2019, 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; and (v) 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).

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~~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, INC.

Date: February ~~8, 2019~~6, 2020	/s/ Lindon G. Robertson
	Lindon G. Robertson
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

Date: February ~~8, 2019~~6, 2020	/s/ David Pietrantoni
	David Pietrantoni
	Vice President-Finance and Corporate Controller
	(Principal Accounting Officer)

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	PAGE NUMBER

PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of December 31, ~~2018~~2019 (unaudited) and September 30, ~~2018~~ 2019	3
Consolidated Statements of Operations for the three months ended December 31, 2019 and 2018 ~~and 2017~~ (unaudited)	4
Consolidated Statements of Comprehensive Income for the three months ended December 31, 2019 and 2018 ~~and 2017~~ (unaudited)	5
Consolidated Statements of Cash Flows for the three months ended December 31, 2019 and 2018 ~~and 2017~~ (unaudited)	6
Consolidated Statements of Changes in Equity for the three months ended December 31, 2019 and 2018 (unaudited)	7
Notes to Consolidated Financial Statements (unaudited)	7 8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	37 33
Item 3. Quantitative and Qualitative Disclosures about Market Risk	48 44
Item 4. Controls and Procedures	49 45
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	50 47
Item 1A. Risk Factors	50 47
Item ~~2. Unregistered Sales of Equity Securities and Use of Proceeds~~6. Exhibits	50 48
~~Item 6. Exhibits~~Signatures	51
~~Signatures~~49	52


	As Reported		Impact of Adopting		As Adopted
	September 30, 2018		ASC 606		October 1, 2018
Prepaid expenses and other current assets	$	31,741	$	350	$	32,091
Prepaid expenses and other current assets - discontinued operations		343		235		578

Other assets		5,294		1,483		6,777

Long-term deferred tax assets		43,798		403		44,201

Deferred revenue		25,884		2,850		28,734
Deferred revenue - discontinued operations		1,052		480		1,532

Accumulated deficit		(994,074)		(859)		(994,933)


		Three Months Ended December 31, 2018
			Without adoption of		Effect of Change
	As Reported		ASC 606		Higher/(Lower)

Revenue	$	179,368	$	179,769	$	(401)
Cost of revenue		107,287		107,799		(512)
Gross profit		72,081		71,970		111
Operating expenses		66,748		66,544		204
Operating income	$	5,333	$	5,426	$	(93)



	Three Months Ended December 31,
	2018		2017
Revenue
Products	$	28,786	$	36,412
Services		10,538		10,317
Total revenue		39,324		46,729
Cost of revenue
Products		16,516		20,648
Services		6,049		5,125
Total cost of revenue		22,565		25,773
Gross profit		16,759		20,956
Operating expenses
Research and development		2,158		1,794
Selling, general and administrative		7,203		3,247
Total operating expenses		9,361		5,041
Operating income		7,398		15,915
Other (expense) income, net		289		272
Income before income taxes and earnings of equity method investment		7,687		16,187
Income tax provision		1,310		3,500
Income before equity in earnings of equity method investment		6,377		12,687
Equity in earnings of equity method investment		1,772		2,180
Net income	$	8,149	$	14,867


			Gross		Gross
	Amortized		Unrealized		Unrealized
	Cost		Losses		Gains		Fair Value
December 31, 2018:
Corporate securities	$	2,489	$	—	$	—	$	2,489
Other debt securities		28						28
	$	2,517	$	—	$	—	$	2,517
September 30, 2018:
U.S. Treasury securities and obligations of U.S. government agencies	$	30,142	$	(65)	$	—	$	30,077
Bank certificates of deposits		5,148		—		1		5,149
Corporate securities		14,763		(30)		—		14,733
Municipal securities		2,797		(17)		—		2,780
Other debt securities		779		—		—		779
	$	53,629	$	(112)	$	1	$	53,518


	Fair Value of
	Assets and
	Liabilities
Accounts receivable, net	$	26,952
Inventories		4,370
Prepaid expenses and other current assets		11,210
Property, plant and equipment, net		36,379
Goodwill		236,504
Intangible assets, net		188,524
Other assets		15,998
Current portion of long-term debt		(3,170)
Accounts payable		(6,522)
Deferred revenue		(67)
Accrued compensation and benefits		(5,145)
Other current liabilities		(6,771)
Long-term debt		(2,482)
Long-term tax reserves		(13,400)
Long-term deferred tax liabilities		(37,415)
Other long-term liabilities		(2,602)
Total purchase price, net of cash acquired	$	442,363


	Three Months Ended December 31, 2018		Three Months Ended December 31, 2017

Revenue	$	196,021		170,033
Net income (loss)		(35,325)		(8,714)


	Fair Value of Assets and Liabilities
Accounts receivable (approximates contractual value)	$	988
Inventories		4,297
Prepaid expenses and other current assets		4,038
Property, plant and equipment		85
Intangible assets		10,694
Goodwill		7,665
Accounts payable		(1,049)
Accrued liabilities		(6,962)
Deferred tax liabilities		(1,391)
Accrued pension liability		(2,800)
Total purchase price, net of cash acquired	$	15,565


	Brooks
	Semiconductor
	Solutions		Brooks
	Group		Life Sciences		Other		Total
Gross goodwill, at September 30, 2018	$	636,907	$	207,913	$	26,014	$	870,834
Accumulated goodwill impairments		(588,944)		—		(26,014)		(614,958)
Goodwill, net of accumulated impairments, at September 30, 2018		47,963		207,913		—		255,876
Acquisitions and adjustments		(167)		234,816		—		234,649
Gross goodwill, at December 31, 2018		636,740		442,729		26,014		1,105,483
Accumulated goodwill impairments		(588,944)		—		(26,014)		(614,958)
Goodwill, net of accumulated impairments, at December 31, 2018	$	47,796	$	442,729	$	—	$	490,525


	Amount
Fiscal year ended September 30,
2019	$	7,738
2020		6,327
2021		6,328
2022		5,500
2023		5,500
Thereafter		521,000
Total outstanding principal balance		552,393
Unamortized deferred financing costs		(11,584)
		540,809
Current portion of long-term debt		9,527
Non-current portion of long-term debt	$	531,282


		Time-Based		Performance-
	Total Units	Units	Stock Grants	Based Units
Three months ended December 31, 2018	745,776	321,835	552	423,389
Three months ended December 31, 2017	471,151	190,266	546	280,339


		Weighted
		Average
		Grant-Date
	Shares	Fair Value
Outstanding at September 30, 2018	2,194,512	$	17.20
Granted	745,776		30.49
Vested	(851,702)		18.70
Forfeited	(9,199)		10.91
Outstanding at December 31, 2018	2,079,387		23.58


	Three Months Ended December 31, 2018
Geographic Location
North America	$	68,897
Asia/Pacific/Other		79,460
United Kingdom		12,078
Rest of Europe		18,933
	$	179,368

Reporting Unit
Automation Solutions	$	73,675
Contamination Control Solutions		27,956
Global Semiconductor Services		11,076
Brooks Semiconductor Solutions Group		112,707
Sample Management		50,303
GENEWIZ		16,358
Brooks Life Sciences		66,661
Total	$	179,368


		As of December 31, 2018
	Less than 1 Year		Greater than 1 Year		Total
Remaining Performance Obligations	$	11,107	$	25,252	$	36,359