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: ~~June 30,~~December 31, 2021

	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,~~AZENTA, INC.

(Exact name of registrant as specified in its charter)


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) 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~~AZTA	The Nasdaq Stock Market LLC

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

Indicate by check mark whether the registrant has submitted electronically 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, ~~July 29, 2021:~~February 4, 2022: common stock, $0.01 par value and ~~74,296,729~~74,915,975 shares outstanding.

Table of Contents

~~BROOKS AUTOMATION,~~AZENTA, INC.

Table of Contents

	PAGE NUMBER

PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of ~~June 30,~~December 31, 2021 (unaudited) and September 30, ~~2020~~2021	3
Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021 and 2020 (unaudited)	4
Consolidated Statements of Comprehensive Income for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021 and 2020 (unaudited)	5
Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~June 30,~~December 31, 2021 and 2020 (unaudited)	6
Consolidated Statements of Changes in Stockholders Equity for the three ~~and nine months~~ ended ~~June 30,~~December 31, 2021 and 2020 (unaudited)	7
Notes to Consolidated Financial Statements (unaudited)	8
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	3331
Item 3. Quantitative and Qualitative Disclosures About Market Risk	4742
Item 4. Controls and Procedures	4943
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	5044
Item 1A. Risk Factors	5044
Item 6. Exhibits	5146
Signatures	5247

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

~~BROOKS AUTOMATION,~~AZENTA, INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

(In thousands, except share and per share data)

June 30,

September 30,

2021

2020
Assets




Current assets




Cash and cash equivalents

$
269,862

$
295,649
Marketable securities

101

67
Accounts receivable, net

234,079

188,291
Inventories

154,720

114,834
Prepaid expenses and other current assets

58,455

50,612
Total current assets

717,217

649,453
Property, plant and equipment, net

146,522

117,665
Long-term marketable securities

3,637

3,101
Long-term deferred tax assets

4,447

4,979
Goodwill

551,326

501,536
Intangible assets, net

254,937

218,325
Other assets

85,169

64,066
Total assets

$
1,763,255

$
1,559,125
Liabilities and Stockholders' Equity


Current liabilities


Current portion of long-term debt

$
—

$
827
Accounts payable

98,192

61,758
Deferred revenue

35,421

31,357
Accrued warranty and retrofit costs

8,132

8,201
Accrued compensation and benefits

43,803

43,267
Accrued restructuring costs

29

181
Accrued income taxes payable

22,232

10,094
Accrued expenses and other current liabilities

103,251

55,433
Total current liabilities

311,060

211,118
Long-term debt

49,651

49,588
Long-term tax reserves

18,410

19,168
Long-term deferred tax liabilities

16,295

17,798
Long-term pension liabilities

6,536

6,406
Long-term operating lease liabilities

45,034

31,855
Other long-term liabilities

8,440

9,578
Total liabilities

455,426

345,511
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, 87,758,598 shares issued and 74,296,729 shares outstanding at June 30, 2021, 87,293,710 shares issued and 73,831,841 shares outstanding at September 30, 2020

878

873
Additional paid-in capital

1,965,705

1,942,850
Accumulated other comprehensive income

26,619

21,919
Treasury stock, at cost - 13,461,869 shares

(200,956)

(200,956)
Accumulated deficit

(484,417)

(551,072)
Total stockholders' equity

1,307,829

1,213,614
Total liabilities and stockholders' equity

$
1,763,255

$
1,559,125


	December 31,		September 30,
	2021		2021

	(In thousands, except share and per share data)
Assets
Current assets
Cash and cash equivalents	$	215,168	$	227,427
Marketable securities		51		81
Accounts receivable, net		126,001		119,877
Inventories		70,143		60,398
Prepaid expenses and other current assets		60,833		58,198
Current assets held for sale		324,533		311,385
Total current assets		796,729		777,366
Property, plant and equipment, net		147,261		130,719
Long-term marketable securities		3,724		3,598
Long-term deferred tax assets		13,845		10,043
Goodwill		468,585		469,356
Intangible assets, net		178,589		186,534
Other assets		60,042		58,068
Non-current assets held for sale		186,162		183,828
Total assets	$	1,854,937	$	1,819,512
Liabilities and Stockholders' Equity
Current liabilities
Accounts payable	$	46,869	$	42,360
Deferred revenue		28,483		25,724
Accrued warranty and retrofit costs		2,342		2,330
Accrued compensation and benefits		24,872		33,183
Accrued restructuring costs		142		304
Accrued income taxes payable		14,037		8,711
Accrued expenses and other current liabilities		104,306		103,537
Current liabilities held for sale		120,749		128,939
Total current liabilities		341,800		345,088
Long-term debt		49,702		49,677
Long-term tax reserves		1,995		1,973
Long-term deferred tax liabilities		13,141		13,030
Long-term pension liabilities		726		705
Long-term operating lease liabilities		43,802		45,088
Other long-term liabilities		4,372		6,173
Non-current liabilities held for sale		31,976		32,444
Total liabilities		487,514		494,178
Commitments and contingencies (Note 21)
Stockholders' Equity
Preferred stock, $0.01 par value - 1,000,000 shares authorized, 0 shares issued or outstanding		—		—
Common stock, $0.01 par value - 125,000,000 shares authorized, 88,375,410 shares issued and 74,913,541 shares outstanding at December 31, 2021, 87,808,922 shares issued and 74,347,053 shares outstanding at September 30, 2021		884		878
Additional paid-in capital		1,977,571		1,976,112
Accumulated other comprehensive income		24,149		19,351
Treasury stock, at cost - 13,461,869 shares		(200,956)		(200,956)
Accumulated deficit		(434,225)		(470,051)
Total stockholders' equity		1,367,423		1,325,334
Total liabilities and stockholders' equity	$	1,854,937	$	1,819,512

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

Table of Contents

~~BROOKS AUTOMATION,~~AZENTA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

(In thousands, except per share data)


	Three Months Ended				Nine Months Ended				Three Months Ended
	June 30,				June 30,				December 31,
	2021		2020		2021		2020		2021		2020

Revenue
Products	$	215,843	$	142,323	$	565,829	$	413,329	$	45,869	$	41,462
Services		99,506		78,027		285,610		237,748		93,783		76,680
Total revenue		315,349		220,350		851,439		651,077		139,652		118,142
Cost of revenue
Products		120,387		81,989		317,472		245,930		24,523		22,793
Services		50,562		45,573		149,165		137,092		48,085		38,014
Total cost of revenue		170,949		127,562		466,637		383,022		72,608		60,807
Gross profit		144,400		92,788		384,802		268,055		67,044		57,335
Operating expenses
Research and development		18,284		14,004		51,310		43,727		6,485		5,088
Selling, general and administrative		75,883		59,714		221,646		178,866		60,711		51,930
Restructuring charges		—		(29)		179		1,125		173		(40)
Total operating expenses		94,167		73,689		273,135		223,718		67,369		56,979
Operating income		50,233		19,099		111,667		44,337
Operating (loss) income										(325)		356
Interest income		409		29		503		865		35		76
Interest expense		(477)		(810)		(1,485)		(2,265)		(455)		(557)
Other income (expenses), net		(1,625)		498		(147)		(1,318)		(1,077)		1,281
Income before income taxes		48,540		18,816		110,538		41,619
Income tax provision		9,370		5,120		20,428		5,557
(Loss) income before income taxes										(1,822)		1,156
Income tax benefit										(4,680)		(1,550)
Income from continuing operations		39,170		13,696		90,110	��	36,062		2,858		2,706
Loss from discontinued operations, net of tax		(4)		—		(1,168)		(182)
Income from discontinued operations, net of tax										40,462		23,322
Net income	$	39,166	$	13,696	$	88,942	$	35,880	$	43,320	$	26,028
Basic net income per share:
Income from continuing operations	$	0.53	$	0.19	$	1.21	$	0.49	$	0.04	$	0.04
Loss from discontinued operations, net of tax		(0.00)		—		(0.02)		(0.00)
Income from discontinued operations, net of tax										0.54		0.32
Basic net income per share	$	0.53	$	0.19	$	1.20	$	0.49	$	0.58	$	0.35
Diluted net income per share:
Income from continuing operations	$	0.53	$	0.19	$	1.21	$	0.49	$	0.04	$	0.04
Loss from discontinued operations, net of tax		(0.00)		—		(0.02)		(0.00)
Income from discontinued operations, net of tax										0.54		0.31
Diluted net income per share	$	0.53	$	0.19	$	1.20	$	0.49	$	0.58	$	0.35
Weighted average shares used in computing net income per share:
Basic		74,296		73,759		74,195		73,473		74,630		74,021
Diluted		74,495		73,860		74,420		73,766		74,866		74,283

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

Table of Contents

~~BROOKS AUTOMATION,~~AZENTA, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(In thousands)


									Three Months Ended
	Three Months Ended				Nine Months Ended				December 31,
	June 30,				June 30,				2021		2020
	2021		2020		2021		2020
Net income	$	39,166	$	13,696	$	88,942	$	35,880	$	43,320	$	26,028
Other comprehensive income, net of tax:
Foreign currency translation adjustments		4,003		3,691		4,721		7,484		4,801		13,264
Unrealized gains (losses) on marketable securities, net of tax effects of $0 during each of the three and nine months ended June 30, 2021, and $0 during each of the three and nine months ended June 30, 2020		—				—		7
Actuarial losses, net of tax effects of $3 and $4 during the three and nine months ended June 30, 2021, respectively, $2 and $4 during the three and nine months ended June 30, 2020, respectively		(21)		(13)		(20)		(25)
Actuarial gains (losses), net of tax effects of $0 and $5 during the three months ended December 31, 2021 and 2020										(3)		(38)
Total other comprehensive income, net of tax		3,982		3,678		4,701		7,466		4,798		13,226
Comprehensive income	$	43,148	$	17,374	$	93,643	$	43,346	$	48,118	$	39,254

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

Table of Contents

~~BROOKS AUTOMATION,~~AZENTA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(In thousands)


	Nine Months Ended				Three Months Ended
	June 30,				December 31,
	2021		2020		2021		2020

Cash flows from operating activities
Net income	$	88,942	$	35,880	$	43,320	$	26,028
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		48,684		49,760		12,883		15,746
Impairment of property, plant and equipment		—		301
Stock-based compensation		20,277		12,348		7,891		6,710
Amortization of premium on marketable securities and deferred financing costs		169		177		56		56
Deferred income taxes		(10,293)		(9,319)		(3,084)		(4,960)
Other losses on disposals of assets		225		163
(Gain) loss on disposals of assets						(95)		1
Adjustment to the gain on divestiture, net of tax		948		319		—		948
Taxes paid stemming from divestiture		—		(91,500)
Changes in operating assets and liabilities, net of acquisitions and divestiture:
Accounts receivable		(40,286)		(15,719)		1,121		(4,504)
Inventories		(32,532)		(17,695)		(32,150)		(6,307)
Prepaid expenses and other assets		4,000		12,554		(19,647)		28,945
Accounts payable		23,327		11,032		(2,219)		5,727
Deferred revenue		(1,564)		214		4,056		3,186
Accrued warranty and retrofit costs		(286)		580		(103)		(185)
Accrued compensation and tax withholdings		(338)		1,928		(5,371)		(12,307)
Accrued restructuring costs		(153)		(609)		(154)		(75)
Accrued expenses and other liabilities		21,625		(4,347)		9,114		(15,279)
Net cash provided by (used in) operating activities		122,745		(13,933)
Net cash provided by operating activities						15,618		43,730
Cash flows from investing activities
Purchases of property, plant and equipment		(34,606)		(29,685)		(18,409)		(15,227)
Purchases of marketable securities		(100)		(10,843)		(46)		(4)
Sales of marketable securities		25		2,492		30		—
Maturities of marketable securities		25		42,226
Adjustment to proceeds from divestiture		(1,802)		—
Acquisitions, net of cash acquired		(92,375)		(15,743)		—		(15,061)
Issuance of a note receivable		—		(1,000)
Net cash used in investing activities		(128,833)		(12,553)		(18,425)		(30,292)
Cash flows from financing activities
Proceeds from issuance of common stock		2,583		2,332
Principal repayments of finance lease obligations						(186)		(319)
Principal payments on debt		(828)		(828)		—		(414)
Payments of finance leases		(915)		(957)
Common stock dividends paid		(22,288)		(22,127)		(7,494)		(7,424)
Net cash used in financing activities		(21,448)		(21,580)		(7,680)		(8,157)
Effects of exchange rate changes on cash and cash equivalents		7,582		3,095		(1,804)		11,250
Net decrease in cash, cash equivalents and restricted cash		(19,954)		(44,971)
Net (decrease) increase in cash, cash equivalents and restricted cash						(12,291)		16,531
Cash, cash equivalents and restricted cash, beginning of period		302,526		305,171		285,333		302,526
Cash, cash equivalents and restricted cash, end of period	$	282,572	$	260,200	$	273,042	$	319,057
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property, plant and equipment included in accounts payable	$	14,516	$	2,020

Supplemental disclosures:
Cash paid for interest					$	333	$	370
Cash paid for income taxes, net						10,911		3,697
Reconciliation of cash, cash equivalents, and restricted cash to the consolidated balance sheets
Cash and cash equivalents	$	269,862	$	256,633
Cash and cash equivalents of continuing operations					$	215,168	$	263,517
Cash and cash equivalents included in assets held for sale						45,000		45,000
Short-term restricted cash included in prepaid expenses and other current assets		3,570		3,567		3,568		3,571
Long-term restricted cash included in other assets		9,140		—		9,306		6,969
Total cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows	$	282,572	$	260,200	$	273,042	$	319,057

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

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~~BROOKS AUTOMATION,~~AZENTA, INC.

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY

(unaudited)

(In thousands, except share data)


															Common				Accumulated
		Common				Accumulated								Common	Stock at		Additional		Other						Inc.		Noncontrolling
	Common	Stock at		Additional		Other								Stock	Par		Paid-In		Comprehensive		Accumulated		Treasury		Stockholders’		Interests in		Total
	Stock	Par		Paid-In		Comprehensive		Accumulated		Treasury		Total		Shares	Value		Capital		Income		Deficit		Stock		Equity		Subsidiaries		Equity
	Shares	Value		Capital		Income		Deficit		Stock		Equity
Balance March 31, 2021	87,755,666	$	878	$	1,959,619	$	22,637	$	(516,152)	$	(200,956)	$	1,266,026
Balance September 30, 2021														87,808,922	$	878	$	1,976,112	$	19,351	$	(470,051)	$	(200,956)	$	1,325,334	$	—	$	1,325,334
Shares issued under restricted stock and purchase plans, net	2,932		—		—								—	566,488		6		(6)								—				—
Stock-based compensation					6,086								6,086					1,465								1,465				1,465
Common stock dividends declared, at $0.10 per share									(7,431)				(7,431)									(7,494)				(7,494)				(7,494)
Foreign currency translation adjustments							4,003						4,003							4,801						4,801				4,801
Actuarial loss, net of tax effects of $3							(21)						(21)
Actuarial loss, net of tax effects of $0																				(3)						(3)				(3)
Net income									39,166				39,166									43,320				43,320				43,320
Balance June 30, 2021	87,758,598	$	878	$	1,965,705	$	26,619	$	(484,417)	$	(200,956)	$	1,307,829
Balance December 31, 2021														88,375,410	$	884	$	1,977,571	$	24,149	$	(434,225)	$	(200,956)	$	1,367,423	$	—	$	1,367,423

Balance March 31, 2020	87,214,622	$	872	$	1,932,893	$	7,299	$	(578,975)	$	(200,956)	$	1,161,133
Balance September 30, 2020														87,293,710	$	873	$	1,942,850	$	21,919	$	(551,072)	$	(200,956)	$	1,213,614	$	—	$	1,213,614
Shares issued under restricted stock and purchase plans, net	7,493		—		1								1	378,422		4		(4)								—				—
Stock-based compensation					3,725								3,725					6,710								6,710				6,710
Common stock dividends declared, at $0.10 per share									(7,380)				(7,380)									(7,424)				(7,424)				(7,424)
Foreign currency translation adjustments							3,691						3,691							13,264						13,264				13,264
Actuarial losses, net of tax effects of $2							(13)						(13)
Actuarial losses, net of tax effects of $5																				(38)						(38)				(38)
Net income									13,696				13,696									26,028				26,028				26,028
Balance June 30, 2020	87,222,115	$	872	$	1,936,619	$	10,977	$	(572,659)	$	(200,956)	$	1,174,853

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

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	1,462,415		15		2,317								2,332
Stock-based compensation					12,348								12,348
Common stock dividends declared, at $0.30 per share									(22,127)				(22,127)
Foreign currency translation adjustments							7,484						7,484
Changes in unrealized losses on marketable securities, net of tax effects of $0							7						7
Actuarial losses, net of tax effects of $4							(25)						(25)
Net income									35,880				35,880
Balance June 30, 2020	87,222,115	$	872	$	1,936,619	$	10,977	$	(572,659)	$	(200,956)	$	1,174,853
Balance December 31, 2020														87,672,132	$	877	$	1,949,556	$	35,145	$	(532,468)	$	(200,956)	$	1,252,154	$	—	$	1,252,154

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

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~~BROOKS AUTOMATION,~~AZENTA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

1. ~~Basis~~Nature of ~~Presentation~~Operation

~~The unaudited consolidated financial statements of Brooks Automation,~~Azenta, Inc. ~~and its subsidiaries~~ (“~~Brooks”~~Azenta”, or the “Company”) ~~included herein have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). All intercompany accounts~~is a leading global provider of life science sample exploration 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~~solutions for the ~~periods presented, have been reflected in the accompanying unaudited consolidated financial statements.~~life sciences market. The ~~results of operations for the interim periods are not necessarily indicative of the results of operations~~Company supports its customers from research to ~~be expected for the full fiscal year.~~

~~Certain information~~clinical development with its sample management, automated storage, 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 filed with the United States Securities and Exchange Commission (the “SEC”) for the fiscal year ended September 30, 2020 (the “2020 Annual Report on Form 10-K”). The accompanying Consolidated Balance Sheet as of September 30, 2020 was derived from the audited annual consolidated financial statements as of the period then ended.genomic services expertise to help bring impactful therapies to market faster.

Discontinued Operations

In the fourth quarter of fiscal year ~~2018,~~2021, the Company entered into a definitive agreement to sell its semiconductor ~~cryogenics~~automation business ~~(the “Disposition”)~~ to ~~Edwards Vacuum LLC (a member of the Atlas Copco Group)~~Thomas H. Lee Partners, L.P. (“~~Edwards”~~THL”). The Company determined that the semiconductor ~~cryogenics~~automation business met the “held for sale” criteria and the “discontinued operations” criteria in accordance with Financial Accounting Standard Boards (“FASB”) Accounting Standards Codification (“ASC”) 205, Presentation of Financial Statements, (“FASB ASC 205”), as of September 30, ~~2018. On July 1, 2019, the Company completed the sale of the semiconductor cryogenics business.~~2021. Results related to the semiconductor ~~cryogenics~~automation business are included within discontinued operations. Please refer to Note 3, “Discontinued Operations” for further ~~information.~~

~~Separation~~information about the discontinued businesses. The Consolidated Balance Sheets and Consolidated Statements of Operations, and the notes to the Consolidated Financial Statements were restated for all periods presented to reflect the discontinuation of the semiconductor automation business in accordance with FASB ASC 205. The discussion in the notes to these Consolidated Financial Statements, unless otherwise noted, relate solely to the Company's continuing operations.

On ~~May 10, 2021,~~February 1, 2022, subsequent to the close of our first fiscal quarter of 2022, the Company ~~announced its intention~~completed the sale of the semiconductor automation business for $3.0 billion in cash, subject to ~~separate its business into two independent, publicly traded companies.~~working capital and other customary adjustments. The Company ~~plans~~expects net cash proceeds from the sale to spin-off its semiconductor business, which operates as the Semiconductor Solutions Group segment through a pro rata distribution of shares to the Company’s common stockholders. Completion of the proposed spin-off is subject to certain conditions, including final approval by the Company’s Board of Directors. The Company is targeting to complete the separation of the business before the end of calendar year 2021.

be approximately $2.4 billion, after adjustments and deducting taxes and other items.

Risks and Uncertainties

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

During the COVID-19 pandemic, the Company’s facilities have remained operational with only required personnel on site, and the balance of employees working from home. The Company’s ~~semiconductor and life sciences~~ business ~~segments fall~~falls within the classification of an “Essential Critical Infrastructure Sector” as defined by the U.S. Department of Homeland Security and ~~have~~the Company has continued operations during the COVID-19 pandemic. The Company has followed

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government guidance in each region and ~~country and~~ has implemented the U.S. Centers for Disease Control and Prevention social distancing guidelines and other ~~applicable~~ best practices to protect the health and safety of the Company’s employees. The COVID-19 pandemic has not had a substantial negative impact on the Company’s financial results and a portion of ~~the~~this impact has been mitigated by the Company’s realignment of resources to satisfy incremental orders related to virus ~~research. As states safely reopen the economy, get people back to work,~~research and ~~ease social restrictions while minimizing the health~~vaccine development and commercialization. Future impacts ~~of COVID-19, future impacts~~ on the Company’s financial results ~~will depend on future variants of the virus and vaccine effectiveness against the variants, which~~ are not fully determinable, as the full impact of the pandemic on the economy and markets which the Company serves is as yet ~~unknown.~~unknown, but will be dependent, in part, on future variants of the virus and vaccine effectiveness against these variants and new or prolonged government responses to the pandemic. The Company’s financial results will also depend on variables including reduced demand from its customers, the degree that the supply chain may be constrained which could impact its delivery of product and the potential impact to its operations if there is a significant outbreak among the Company’s employees, as well as the amount of incremental demand caused by research and treatments in the areas of COVID-19 or related ~~threats.~~threats.

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2. Summary of Significant Accounting Policies

Principles of Consolidation and Basis of Presentation

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

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 filed with the United States Securities and Exchange Commission for the fiscal year ended September 30, 2021 (the “2021 Annual Report on Form 10-K”). The accompanying Consolidated Balance Sheet as of September 30, 2021 was derived from the audited annual consolidated financial statements as of the period then ended.

Use of Estimates

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

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

Foreign Currency Translation

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

Foreign currency exchange gains ~~and losses~~(losses) generated from the settlement and remeasurement of these transactions are recognized in earnings and presented within “Other income (expenses), net” in the Company’s ~~unaudited~~ Consolidated Statements of Operations. Net foreign currency transaction and remeasurement losses were ~~$1.6~~$1.9 million and ~~less than $0.1~~net foreign currency transaction and remeasurement gains were $0.8 million during the three months ended ~~June 30,~~December 31, 2021 and 2020, respectively. ~~Net~~

The determination of the functional currency of the Company’s subsidiaries is based on their financial and operational environment and is the local currency of all of the Company’s foreign subsidiaries. The subsidiaries’ assets and liabilities are translated into the reporting currency at period-end exchange rates, while revenue, expenses, gains and losses are translated at the average exchange rates during the period. Gains and losses from foreign currency ~~transaction~~translations are recorded in “Accumulated other comprehensive income” in the Company’s Consolidated Balance Sheets and ~~remeasurement losses were $1.2 million and $2.8 million during~~presented as a component of comprehensive income in the ~~nine months ended June 30, 2021 and 2020, respectively.~~Company’s Consolidated Statements of Comprehensive Income.

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Derivative Financial Instruments

The Company has transactions and balances denominated in currencies other than U.S. dollars. Most of these transactions or balances are denominated in Euros, British Pounds and a variety of Asian currencies. The Company enters into foreign exchange contracts to reduce its exposure to currency fluctuations. The arrangements typically mature in three months or less and they do not qualify for hedge accounting. Net gains and losses related to these contracts are

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recorded as a component of ~~"Other~~“Other income (expenses), ~~net"~~net” in the accompanying unaudited Consolidated Statements of Operations and are as follows for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021 and 2020 (in thousands):


	Three Months Ended				Nine Months Ended				Three Months Ended
	June 30,				June 30,				December 31,
	2021		2020		2021		2020		2021		2020
Realized losses on derivatives not designated as hedging instruments	$	(961)	$	(1,719)	$	(7,295)	$	(963)	$	(70)	$	(1,162)

The fair values of the forward contracts are recorded in the accompanying unaudited Consolidated Balance Sheets as “Prepaid expenses and other current assets” and “Accrued expenses and other current 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 certain financial assets and liabilities, including cash equivalents and available for sale securities, at fair value. 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 ~~June 30,~~December 31, 2021, the Company had 0 assets or liabilities measured and recorded at fair value on a recurring basis using Level 3 inputs.

Accounts Receivable, Allowance for Expected Credit Losses and Sales Returns

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

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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.

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Operating lease ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. As most of the Company’s leases do not provide an implicit rate, an incremental borrowing rate is used based on the estimated rate of interest for collateralized borrowing over a similar term of the 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” in the accompanying unaudited Consolidated Balance Sheets. The short-term lease liabilities for both operating leases and finance leases are included within “Accrued expenses and other current liabilities” in the accompanying unaudited Consolidated Balance Sheets. The long-term lease liabilities for operating leases and finance leases are included within “Long-term operating lease liabilities”, and “Other long-term liabilities”, respectively, in the accompanying unaudited Consolidated Balance Sheets.

Recently Issued Accounting Pronouncements

In ~~October 2020,~~November 2021, the FASB issued Accounting Standards Update (“ASU”) ~~2020-10,~~2021-10, ~~Codification Improvements~~Government Assistance (Topic 832) – Disclosures by Business Entities about Government Assistance. The ~~amendments~~amendment in this ASU ~~represent changes~~requires disclosures to ~~clarify~~increase the ~~ASCs, correct unintended application~~transparency of ~~guidance,~~transactions with a government accounted for by applying a grant or ~~make minor improvements to~~contribution accounting model by analogy, including (1) the ~~ASC that are not expected to have a significant~~types of transactions, (2) the accounting for those transactions, and (3) the effect of those transactions on ~~current accounting practice or create a significant administrative cost to most entities.~~an entity’s financial statements. This ASU ~~2020-10~~ is effective for annual periods beginning after December 15, 2020 and interim periods within those annual periods, with early adoption permitted. The amendments in this ASU should be applied retrospectively. This ASU will not affect the Company's consolidated financial statements. 2021. The Company will adopt the provisions of this ASU in the first quarter of fiscal ~~2022 and~~2023. The Company is ~~currently~~ evaluating the ~~impact~~effect of adopting this ~~guidance may have on the disclosure to the consolidated financial statements.~~new accounting guidance.

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting. In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848): Scope. The amendments provide temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (LIBOR) and other interbank offered rates to alternative reference rates. The provisions of the amendments are only available until December 31, 2022, when the reference rate replacement activity is expected to be completed. The Company is currently evaluating the impact this guidance may have on its consolidated financial statements and related disclosures.

Recently Adopted Accounting Pronouncements

In ~~December 2019,~~October 2021, the FASB issued ASU ~~2019-12,~~2021-08, ~~Simplifying the~~Business Combinations(Topic 805), Accounting for ~~Income Taxes (Topic 740)~~Contract Assets and Contract Liabilities from Contracts with Customers~~, which removes~~. ASU 2021-08 requires an entity to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606, Revenue from Contracts with Customers. Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted. The standard should be applied prospectively to business combinations occurring on or after the effective date of the amendments. The Company adopted the guidance during the first quarter of fiscal year 2022. There is no accounting impact on the Company’s consolidated financial statements and related disclosures as a result of the adoption of this ASU.

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In October 2020, the FASB issued ASU 2020-10, Codification Improvements. The amendments in this ASU represent changes to clarify certain ~~exceptions to the general principles in Topic 740 and improves consistent~~ASCs, correct unintended application of ~~and simplifies GAAP for other areas of Topic 740 clarifying and amending existing guidance. This~~guidance, or make minor improvements to certain ASC that are not expected to have a significant effect on current accounting practice or create a significant administrative cost to most entities. ASU 2020-10 is effective for annual periods ~~including~~beginning after December 15, 2020 and interim periods within those annual periods, ~~beginning after December 15, 2020. Early~~with early adoption is permitted. The amendments in this ASU should be applied retrospectively. This ASU will not affect the Company's consolidated financial statements. The Company ~~will adopt~~adopted the provisions of this ASU in the first quarter of fiscal ~~2022. The Company~~2022. There is ~~currently evaluating~~no significant accounting impact on the ~~impact this guidance may have on its~~Company’s disclosure to the consolidated financial ~~statements and related disclosures.~~

statements.

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 requirements for accumulated other comprehensive income expected to be recognized over the next year, information 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

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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 ~~will adopt~~adopted the provisions of this ASU in the first quarter of fiscal ~~2022 and is currently evaluating the impact this guidance may have on the disclosures in the consolidated financial statements.~~

~~Recently Adopted Accounting Pronouncements~~

~~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 disclosure requirements related to fair value measurement. The amendments include new disclosure requirements for changes in unrealized gains or losses included in other comprehensive income 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 requirements 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. The Company adopted the guidance during the first quarter of fiscal year ~~2021~~2022. There is no significant accounting impact on the Company’s consolidated financial statements and related disclosures as a result of the adoption of this ASU.

In ~~August 2018,~~December 2019, the FASB issued ASU ~~2018-15,~~2019-12, ~~Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40): Customer’s~~Simplifying the Accounting for ~~Implementation Costs Incurred~~Income Taxes (Topic 740), which removes certain exceptions to the general principles in ~~a Cloud Computing Arrangement That Is a Service Contract. The amendments align the requirements~~Topic 740 and improves consistent application of and simplifies GAAP 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 elementother areas of ~~a hosting arrangement that is a service contract is not affected by these amendments. The provisions may be adopted prospectively or retrospectively.~~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, ~~2019.~~2020. Early adoption is permitted. The Company adopted the ~~guidance during~~provisions of this ASU in the first quarter of fiscal ~~year~~ ~~2021~~ ~~on a~~ ~~prospective basis. There is no significant accounting impact on the Company’s consolidated financial statements and related disclosures as a result of the adoption of this ASU.~~

~~In June 2016, the FASB issued ASU 2016-13,~~ ~~Financial Instruments - Credit Losses: Measurement of Credit Losses on Financial Instruments~~~~. 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~~~~, ASU 2019-05~~ ~~“Financial Instruments-Credit Losses”~~~~, ASU 2019-11,~~ ~~Codification Improvements to Topic 326, Financial Instruments - Credit Losses,~~ ~~andASU 2020-02~~,~~Financial Instruments-Credit Losses (Topic 326) and Leases (Topic 842)~~ to clarify and address certain items related to the amendments in ASU 2016-13. Topic 326 provides guidance for recognizing credit losses on financial instruments based on an estimate of current expected credit losses model. The amendments are effective for fiscal years, and interim periods within those years, beginning after December 15, 2019. The Company adopted the guidance during the first quarter of fiscal year ~~2021~~2022. There is no significant accounting impact on the Company’s consolidated financial statements and related disclosures as a result of the adoption of this ASU.

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 ~~2020~~2021 Annual Report on Form 10-K.

3. Discontinued Operations

Planned Disposition of Semiconductor Automation Business

On ~~August 27, 2018,~~September 20, 2021, the Company entered into a definitive agreement to sell its semiconductor ~~cryogenics~~automation business to ~~Edwards~~THL.

On February 1, 2022, subsequent to the close of our first fiscal quarter of 2022, the Company completed the sale of the semiconductor automation business for ~~$675.0 million~~$3.0 billion in cash, subject to working capital and other customary adjustments. The ~~sale closed on July 1, 2019. The~~ Company ~~completed the sale for $659.8 million. Net~~expects net cash proceeds from the sale ~~were~~to be approximately ~~$551.7 million, net of~~$2.4 billion, after adjustments, taxes and other items. The semiconductor automation business is comprised of the Semiconductor Solution Group segment. Following the completion of the sale, the Company no longer serves the semiconductor market.

In connection with the closing ~~costs paid~~of the sale, the Company and ~~remaining estimated taxes payable. During~~THL entered into a transition services agreement, to which both the ~~first quarter~~Company and THL will provide each other with certain transition services related to finance and accounting, information technology, human resources, compliance, facilities, legal and research and development support, for time periods ranging from three to 24 months. In addition, the Company entered into 2 separate lease agreements for leases back to the Company for portions of ~~fiscal year 2021,~~ the ~~final net working capital was~~facilities that have served as its corporate headquarters in

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~~determined~~Chelmsford, Massachusetts, and ~~resulted in a negative adjustment in the amount of $1.8 million payable~~were sold to ~~Edwards, which was paid during the second quarter~~THL as part of the ~~2021 fiscal year.~~sale agreement. Each lease provides for a term of 24 months, which may be terminated earlier by the Company upon 90 days’ notice to THL.

InDuring the ~~third~~fourth quarter of fiscal year 2020, Edwards asserted claims for indemnification under the definitive agreement relating to alleged breaches of representations and warranties relating to customer warranty claims and inventory. The Company cannot determine the probability of any losses or outcome of these claims including the amount of any indemnifiable losses, if any, resulting from these claims at this time. The Company believes, however, that none of these claims will have a material adverse effect on its consolidated financial position or results of operations. If the resolution of these claims results in indemnifiable losses in excess of the applicable indemnification deductibles and indemnification escrow established under the definitive agreement, Edwards would be required to seek recovery under the representation and warranty insurance Edwards obtained in connection with the closing of the transaction. The Company believes that any indemnifiable losses in excess of the applicable deductibles and indemnification escrow established in the definitive agreement would be covered by such insurance. If Edwards is unable to obtain recovery under its insurance, however, it could seek recovery of such indemnifiable losses, if any, directly from the Company.

The semiconductor cryogenics business consisted of the CTI pump business, Polycold chiller business, the related services business and a 50% share in Ulvac Cryogenics, Inc., a joint venture based in Japan. The semiconductor cryogenics business was originally acquired by2021, the Company ~~in its 2005 merger with Helix Technology Corporation. The operating results of~~determined that the ~~semiconductor cryogenics business had been included in the~~ ~~Brooks Semiconductor Solutions Group~~ ~~segment before the plan of disposition.~~

In connection with the closing of the Disposition on July 1, 2019, the Company and Edwards entered into a transition service agreement, a supply agreement, and lease agreements. The transition service agreement outlined the information technology, people, and facility support the parties provided to each other for the period ending 9 months after the transaction closing date. The supply agreement allowed the Company to purchase CTI and Polycold goods at cost from Edwards up to an aggregate amount equal to $1.0 million until the one-year anniversary of closing the Disposition. The lease agreements provide facility space in Chelmsford, Massachusetts to Edwards free of charge for three years after the transaction closing date. Edwards has the option to renew each lease at the then current market rates after the initial three-year lease term has ended. This Disposition was consistent with the Company’s long-standing strategy to increase shareholder value by accelerating the growth of its Life Sciences businesses 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~~to be classified as a discontinued operation and, as a result, its historical financial results are reflected in the Company’s financial statements as a discontinued operation, and assets and liabilities were classified as assets and liabilities held for ~~all periods presented.~~ sale.

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


	Three Months Ended June 30,				Nine Months Ended June 30,
	2021		2020		2021		2020		Three Months Ended December 31,
Loss on discontinued operations before income taxes	$	(4)	$	-	$	(1,534)	$	(239)
Net loss from discontinued operations		(4)		-		(1,168)		(182)
									2021		2020
Revenue
Products									$	188,240	$	118,154
Services										15,430		13,207
Total revenue										203,670		131,361
Cost of revenue
Products										107,597		68,777
Services										8,309		6,791
Total cost of revenue										115,906		75,568
Gross profit										87,764		55,793
Operating expenses
Research and development										13,740		10,994
Selling, general and administrative										22,676		14,099
Restructuring charges										-		127
Total operating expenses										36,416		25,220
Operating income										51,348		30,573
Other income (loss), net										(46)		(1,239)
Income before income taxes										51,302		29,334
Income tax provision										10,840		6,012
Net income from discontinued operations									$	40,462	$	23,322

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

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


	December 31,
		2021		2020
Depreciation and amortization	$	-	$	2,019
Capital expenditures	$	2,283	$	1,827
Stock-based compensation		4,923		1,875

The carrying value of the assets and liabilities of the discontinued operations with respect to the semiconductor automation business on the Consolidated Balance Sheets as of December 31, 2021 and September 30, 2021 was as follows (in thousands):

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		December 31, 2021			September 30, 2021
Assets
Cash and cash equivalents	$	45,000		$	45,000
Accounts receivable, net		133,578			142,256
Inventories		132,010			110,735
Other current assets		13,945	��		13,394
Total current assets of discontinued operation	$	324,533		$	311,385

Property, plant and equipment, net	$	34,457		$	32,058
Long-term deferred tax assets		2,518			3,167
Goodwill		81,514			81,477
Intangibles, net		44,576			44,468
Other assets		23,097			22,658
Total long-term assets of discontinued operation	$	186,162		$	183,828

Liabilities
Accounts payable	$	65,285		$	68,074
Deferred revenue		8,160			7,141
Accrued warranty and retrofit costs		5,912			6,081
Accrued compensation and benefits		20,963			18,144
Accrued Income Taxes		6,184			11,702
Accrued expenses and other current liabilities		14,454			18,014
Total current liabilities of discontinued operation	$	120,958		$	129,156

Long-term tax reserves		2,373			2,356
Long-term deferred tax liabilities		6,716			6,548
Long-term pension liabilities		5,547			5,490
Long-term operating lease liabilities		15,837			15,425
Other long-term liabilities		1,503			2,625
Total long-term liabilities of discontinued operation	$	31,976		$	32,444

Acquisition within the Semiconductor Automation Business

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

The allocation of the consideration included $38.7 million of technology, $2.5 million of customer relationships, $33.1 million of goodwill, $6.2 million of deferred tax liabilities, and several other assets and liabilities. The 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 Company applied variations of the income approach to estimate the fair values of the intangible assets acquired. The completed technology was valued using excess earnings method and the customer relationships was valued using distributor margin method, both of which have a useful life of 11 years. The intangible assets acquired are amortized over the total weighted average period of 11 years using methods that approximate the pattern in which the economic benefits are expected to be realized.

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

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

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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 accompanying unaudited Consolidated Balance Sheets. Marketable securities reported as current assets represent investments that mature within one year from the balance sheet date. Long-term marketable securities represent investments with maturity dates greater than one year from the balance sheet date. The 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.

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Unrealized gains and losses are excluded from earnings and reported as a separate component of ~~“Total~~“accumulated other comprehensive income, net of tax” in the accompanying unaudited Consolidated ~~Statement of Comprehensive Income~~Balance Sheets 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 income (expenses), net" in the accompanying unaudited Consolidated Statements of Operations. ~~During the nine months ended June 30, 2021, there~~There were insignificant sales of marketable ~~securities. During~~securities for the ~~nine~~three months ended ~~June 30, 2020, the Company sold marketable securities with a~~ ~~fair value~~December 31, 2021 and amortized cost of $2.5 million, and recognized a net gain of less than $0.1 million in this period. As a result, during the nine months ended June 30, 2020, the Company collected cash proceeds of $2.5 million from the sale of marketable securities and reclassified net unrealized holding gains of less than $0.1 million from accumulated other comprehensive income into “Other expenses, net” in the accompanying unaudited Consolidated Statements of Operations as a result of these transactions.2020.

The following is a summary of the amortized cost and the fair value, including accrued interest receivable ~~and~~as well as unrealized holding gains (losses) on the short-term and long-term marketable securities as of ~~June 30,~~December 31, 2021 and September 30, ~~2020~~2021 (in thousands):


			Gross		Gross						Gross		Gross
	Amortized		Unrealized		Unrealized				Amortized		Unrealized		Unrealized
	Cost		Losses		Gains		Fair Value		Cost		Losses		Gains		Fair Value
June 30, 2021:
U.S. Treasury securities and obligations of U.S. government agencies	$	20	$	—	$	—	$	20
December 31, 2021:
Bank certificates of deposits		30		—		—		30	$	25	$	—	$	—	$	25
Corporate securities		3,663		—		—		3,663		3,703		—		—		3,703
Municipal securities		25		—		—		25		46		—		—		46
	$	3,738	$	—	$	—	$	3,738	$	3,774	$	—	$	—	$	3,774
September 30, 2020:
September 30, 2021:
Bank certificates of deposits	$	51	$	—	$	—	$	51	$	30	$	—	$	—	$	30
Corporate securities		3,101		—		—		3,101		3,624		—		—		3,624
Other debt securities		16		—		—		16		25		—		—		25
	$	3,168	$	—	$	—	$	3,168	$	3,679	$	—	$	—	$	3,679

The fair values of the marketable securities by contractual maturities at ~~June 30,~~December 31, 2021 are presented below (in thousands):


	Fair Value		Fair Value
Due in one year or less	$	101	$	46
Due after one year through five years		—		51
Due after five years through ten years		—		—
Due after ten years		3,637		3,677
Total marketable securities	$	3,738	$	3,774

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

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

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an unrealized loss position as of ~~June 30,~~December 31, 2021. There were 0 securities in an unrealized loss position as of September 30, ~~2020.~~

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Cash equivalents of less than $0.1 million at June 30, 2021 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. There were 0 cash equivalents classified within Level 1 of the fair value hierarchy as of September 30, 2020. Cash equivalents of $0.1 million as of September 30, 2020, consist primarily of 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.2021.

5. Acquisitions

The Company recorded the assets acquired and liabilities assumed related to the following acquisitions at their fair values as of the acquisition date, from a market participant’s perspective. While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value the assets acquired and liabilities assumed on the acquisition date, its estimates and assumptions are subject to refinement. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The 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 of the assignment of fair values will be completed within one year after the respective acquisition date.

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

~~Acquisitions Completed in Fiscal Year 2021~~

Abeyatech LLC

~~Precise~~

On April ~~29,~~2, 2021,, the Company acquired Precise Automation Inc. (“Precise”), a leading developer of collaborative robots and automation subsystems headquartered in Fremont, California. The total cash purchase price for the acquisition was approximately $69.6 million, subject to working capital and other adjustments. Precise provides the Company with a product offering and technology portfolio to take advantage of the opportunities in the collaborative robot market.

The allocation of the consideration included $38.9 million of technology, $2.4 million of customer relationships, $32.9 million of goodwill, $6.2 million of deferred tax liabilities, and several other assets and liabilities. The weighted useful life of all the intangible assets acquired is 11 years. 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 Company has included the financial results of the acquired operations in the Brooks Semiconductor Solutions Group segment. The goodwill and intangibles are ~~not~~ ~~tax deductible.~~

~~Other Acquisitions~~

~~The Company closed an acquisition during the third quarter of fiscal year 2021.~~Abeyatech LLC. The Company has included the financial results of the acquired operations within the ~~Brooks~~ Life Sciences Products segment. The ~~total net of cash~~ purchase price ~~was approximately $19.3~~includes $9.9 million ~~which includes~~cash payment and $9.4 million in contingent consideration based on the acquired business’ performance for the twelve-month period ending December 31, 2021, subject to customary working capital adjustments and other adjustments. The acquisition enhances the breadth and depth of the Company’s offerings and expands its expertise in the ~~Brooks~~ Life Sciences Products segment. The allocation of the consideration included $11.9 million of technology, $4.4 million of goodwill, and several other assets and ~~liabilities.~~liabilities for $3.0 million. The weighted useful life of all the intangible assets acquired is 12 years. 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 and intangibles are tax deductible.

Trans-Hit Biomarkers, Inc.

On December 3, 2020, the Company acquired Trans-Hit Biomarkers Inc. (“THB”), a worldwide biospecimen procurement service provider based in Montreal Canada. THB has an extensive collection capability for biospecimens and clinical samples through a worldwide partner network of clinical sites and biobanks. The total cash purchase price of the acquisition was approximately $15.1 million, net of cash acquired. The acquisition enhances the breadth and depth of the Company’s offerings and expands its expertise in the ~~Brooks~~ Life Sciences Services segment. The allocation of the consideration included $7.8 million of customer relationships, $9.3 million of goodwill, $2.4 million of deferred tax liabilities, and several other assets and liabilities. The weighted useful life of all intangibles acquired is 11 years. The ~~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~~ Company has included the financial results of the acquired operations in the ~~Brooks~~ Life Sciences Services segment. The goodwill and intangibles are not tax deductible.

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~~Acquisition Completed in Fiscal Year 2020~~

~~RURO~~

On February 11, 2020, the Company acquired RURO, Inc. (“RURO”), an informatics software company based in Frederick, Maryland. RURO provides cloud-based software solutions to manage laboratory workflow and bio-sample data for a broad range of customers in the biotech, healthcare, and pharmaceutical sectors. The addition of RURO's capabilities and offerings will enable the Company to offer enhanced on-site and off-site management of biological sample inventories as well as integration solutions to its customers for their increasingly distributed workflow. The total cash purchase price of the acquisition net of cash acquired was $15.2 million after the Company’s agreement with the seller of a net working capital settlement. The Company received $0.5 million in connection with the net working capital settlement on April 1, 2021.

The allocation of the consideration primarily included $0.6 million of accounts receivable, $2.9 million of customer relationships, $2.9 million of technology assets, $11.0 million of goodwill, and $2.7 million of liabilities. The goodwill from this acquisition is reported within the Brooks Life Sciences Services segment and is ~~not~~ ~~tax deductible.~~

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 ~~nine~~three months ended ~~June 30,~~December 31, 2021. Please refer to Note 8, "Goodwill and Intangible Assets" to the Company's consolidated financial statements included in ~~the 2020 Annual Report on Form 10-K for further information on the goodwill impairment testing performed during fiscal year 2020.~~

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

During the quarter ended June 30, 2021, the Company completed the annual goodwill impairment test for each of its reporting units, including the Automation Solutions, Contamination Control Solutions and Global Semiconductor Services reporting units within the Brooks Semiconductor Solutions Group segment, the Brooks Life Sciences Products reporting unit within the Brooks Life Sciences Products segment, and the Sample Repository Solutions and GENEWIZ reporting units within the Brooks Life Sciences Services segment. Based on the test results, the Company determined that 0 adjustment to goodwill was necessary. The Company conducted a qualitative assessment for the Automation Solutions, Global Semiconductor Services and Life Sciences Products reporting units. The Company determined that it was more likely than not that their fair values were greater than their carrying values. As a result of the analysis, the Company did not perform the quantitative assessment for these reporting units, and therefore, did ~~not~~ recognize any impairment losses. The Company performed the quantitative goodwill impairment test for the Contamination Control Solutions, the Sample Repository Solutions and GENEWIZ reporting units. The Company determined that 0 adjustment to goodwill was necessary since the estimated fair values exceed their book values.

As a result of a change in our management reporting structure and immediately post to the annual goodwill impairment test, the Company combined two components within the Brooks Life Sciences Services operating segment, Sample Repository Solutions and GENEWIZ components, into the Brooks Life Sciences Services reporting unit. The Company evaluated the aggregation criteria under ASC 350 for the two components and concluded that they exhibit

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~~similar economic characteristics and meet~~ the ~~aggregation criteria. Post to this aggregation,~~2021 Annual Report on Form 10-K for further information on the Company has five reporting units which includes the Automation Solutions, Contamination Control Solutions, Global Semiconductor Services, Brooks Life Sciences Products, and Brooks Life Sciences Services reporting units.goodwill impairment testing performed during fiscal year 2021.

The changes in the Company’s goodwill by reportable segment since September 30, ~~2020~~2021 are as follows (in thousands):

Brooks






Semiconductor

Brooks

Brooks

Solutions

Life Sciences

Life Sciences

Group

Products

Services

Other

Total
Gross goodwill, at September 30, 2020

$
637,303

$
103,278

$
349,899

$
26,014

$
1,116,494
Accumulated goodwill impairments

(588,944)

—

(26,014)

(614,958)
Goodwill, net of accumulated impairments, at September 30, 2020

48,359

103,278

349,899

—

501,536
Acquisitions and adjustments

32,911

7,493

9,386

—

49,790
Gross goodwill, at June 30, 2021

670,214

110,771

359,285

26,014

1,166,284
Accumulated goodwill impairments

(588,944)

—

(26,014)

(614,958)
Goodwill, net of accumulated impairments, at June 30, 2021

$
81,270

$
110,771

$
359,285

$
—

$
551,326



	Life Sciences		Life Sciences
	Products		Services		Total
Balance, at September 30, 2021		110,138		359,218		469,356
Currency translation adjustments		(737)		(34)		(771)
Balance, at December 31, 2021	$	109,401	$	359,184	$	468,585

During the ~~nine~~three months ended ~~June 30,~~December 31, 2021, the Company recorded a goodwill ~~increase~~decrease of ~~$49.8~~$0.8 million ~~primarily~~which related to ~~acquisitions made during the nine months ended June 30, 2021 and~~ the impact of foreign currency translation adjustments.

The components of the Company’s identifiable intangible assets as of ~~June 30,~~December 31, 2021 and September 30, ~~2020~~2021 are as follows (in thousands):


	June 30, 2021						September 30, 2020						December 31, 2021						September 30, 2021
			Accumulated		Net Book				Accumulated		Net Book				Accumulated		Net Book				Accumulated		Net Book
	Cost		Amortization		Value		Cost		Amortization		Value		Cost		Amortization		Value		Cost		Amortization		Value
Patents	$	5,302	$	5,013	$	289	$	5,302	$	4,865	$	437	$	1,235	$	1,026	$	209	$	1,242	$	1,002	$	240
Completed technology		144,440		58,118		86,323		92,477		49,875		42,602		75,554		34,176		41,378		75,527		32,383		43,144
Trademarks and trade names		27,625		12,102		15,523		25,769		9,322		16,447		424		37		387		424		33		391
Non-competition agreements		731		129		601		—		—		—		681		297		384		681		249		432
Customer relationships		285,685		133,488		152,197		271,113		112,277		158,836		253,577		117,346		136,231		253,486		111,159		142,327
Other intangibles		251		248		3		245		242		3		244		244		—		246		246		—
	$	464,034	$	209,098	$	254,937	$	394,906	$	176,581	$	218,325	$	331,715	$	153,126	$	178,589	$	331,606	$	145,072	$	186,534

Amortization expense for intangible assets was ~~$30.8~~$8.0 million and ~~$31.3~~$8.9 million, ~~respectively, during~~for the ~~nine~~three months ended ~~June 30,~~December 31, 2021 and ~~2020.~~2020, respectively.

Estimated future amortization expense for the intangible assets for the remainder of fiscal year ~~2021,~~2022, the subsequent four fiscal years and thereafter is as follows (in thousands):

Fiscal year ended September 30,

2021

$
10,853
2022

40,414
2023

37,125
2024

32,242
2025

26,937
Thereafter

107,366

$
254,937


2022	$	24,099
2023		30,845
2024		27,354
2025		22,574
2026		19,435
Thereafter		54,282
	$	178,589

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7. Line of Credit

The Company ~~maintains~~maintained a revolving line of credit under a credit agreement with Wells Fargo Bank, N.A. and JPMorgan Chase Bank, N.A. that ~~provides~~provided for a revolving credit 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 discussed below. 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 discussed in Note 8, “Debt” below, the Company amended certain terms and conditions of the credit agreement for the line of credit. Based on the amended terms of the credit agreement, the line of credit continues to provide for a revolving credit facility of up to $75.0 million, subject to borrowing base availability. Borrowing base availability under the amended 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.), 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.

~~As of June 30, 2021, the Company had approximately $49.8 million available for borrowing under the line of credit.~~ There were 0 amounts outstanding under the line of credit as of ~~June 30,~~December 31, 2021 and September 30, ~~2020.~~2021. The Company records commitment fees and other costs directly associated with obtaining the line of credit facility as deferred financing costs which are amortized over the term of the related financing arrangement. Deferred financing costs were ~~$0.2~~$0.1 million ~~and $0.4 million, respectively, at June 30,~~for the period ended December 31, 2021 and September 30, ~~2020.~~2021, respectively. The line of credit

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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 ~~June 30,~~December 31, 2021.

As of February 1, 2022, subsequent to the close of our first fiscal quarter of 2022, the Company terminated the revolving credit facility.

8. Debt

Term Loans

On October 4, 2017, the Company entered into a $200.0 million term loan with the 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 (the “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 Group. 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. Except as provided in the First Amendment, the incremental term loan was 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 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

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~~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 Azenta US, Inc. (fka Brooks Life Sciences, Inc. ~~(fka~~and 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 loan plus any additional amount such that the secured leverage ratio of the Company is less than 3.00 to 1.00.

Subject to certain conditions stated in the 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 credit agreement. The Company 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’s assets, subject to certain limitations, (ii) casualty and condemnation proceeds received by the Company or the guarantor, subject to certain exceptions, or (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 was required to make principal payments equal to the excess cash flow amount, as defined in the 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 deferred financing 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 ~~June 30,~~December 31, 2021, the outstanding principal balance of the term loan was $49.7 million, excluding unamortized deferred financing costs ~~were~~of $0.3 million.

The 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 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 credit agreement does not contain financial maintenance covenants. As of ~~June 30,~~December 31, 2021, the Company was in compliance with all covenants and conditions under the credit agreement.

In connection with the GENEWIZ acquisition, the Company assumed 3 five-year term loans for a total of $3.3 million and 2 one-year short term loans for a total of $3.2 million. The 3 five-year term loans were initiated during 2016 and matured in 2021. The principal payments were payable in 8 installments equal to 12.5% of the initial principal amount of the term loans on December 14th and June 14th of each year. The 3 five-year term loans were secured by GENEWIZ to fund equipment procurement and new building related payments and the interest rates were equal to the LIBOR plus 3.1%. The 2 one-year term loans were secured by GENEWIZ to fund operations. Both of the one-year term loans were initiated in 2018 and matured and were repaid in 2019. The interest rates of these 2 loans were 4.56% and 4.35%. There are 0 deferred financing costs related to either the five-year term loans or the one-year term loans. The 3 five-year term loans matured and were repaid in full on June 30, 2021.

During the ~~nine~~three months ended ~~June 30,~~December 31, 2021, the weighted average stated interest rate paid on all outstanding debt was ~~2.8%~~2.7%. During the ~~nine~~three months ended ~~June 30,~~December 31, 2021, the Company incurred aggregate interest expense of ~~$1.3~~$0.4 million in connection with the borrowings, including ~~$0.2~~$0.1 million of deferred financing costs amortization.

1918

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The following are the future minimum principal payment obligations under all of the Company’s outstanding debt as of ~~June 30,~~December 31, 2021 (in thousands):


	Amount		Amount
Fiscal year ended September 30,
2021	$	—
2022		—	$	—
2023		—		—
2024		—		—
2025		50,000		50,000
Total outstanding principal balance		50,000		50,000
Unamortized deferred financing costs		(349)		(298)
		49,651		49,702
Current portion of long-term debt		—		—
Non-current portion of long-term debt	$	49,651	$	49,702

On February 1, 2022, subsequent to the close of our first fiscal quarter of 2022, the Company settled the Term Loan using proceeds from the sale of its semiconductor automation business.

2019

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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 expiration dates range between ~~2021~~2022 and 2041.

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


	Three Months Ended June 30,				Nine Months Ended June 30,				Three Months Ended December 31,
	2021		2020		2021		2020		2021		2020

Operating lease costs	$	2,878	$	2,358	$	8,135	$	6,755	$	2,171	$	1,704
Finance lease costs:
Amortization of assets		182		311		745		933		75		311
Interest on lease liabilities		10		29		31		84		3		16
Total finance lease costs		192		340		776		1,017		78		327
Variable lease costs		514		448		1,578		1,314		518		406
Short-term lease costs		123		181		349		477		354		38
Total lease costs	$	3,707	$	3,327	$	10,838	$	9,563	$	3,121	$	2,475

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


	June 30, 2021			September 30, 2020			December 31, 2021			September 30, 2021
Operating Leases:
Operating lease right-of-use assets	$	52,159		$	39,071		$	47,971		$	49,650

Accrued expenses and other current liabilities	$	7,489		$	7,015		$	5,342		$	5,254
Long-term operating lease liabilities		45,034			31,855			43,802			45,088
Total operating lease liabilities	$	52,523		$	38,870		$	49,144		$	50,342

Finance Leases:
Property, plant and equipment, at cost	$	2,252		$	2,540		$	2,252		$	2,252
Accumulated amortization		(1,989)			(1,246)			(2,180)			(2,105)
Property, plant and equipment, net	$	263		$	1,294		$	72		$	147

Accrued expenses and other current liabilities	$	610		$	1,135		$	171		$	360
Other long-term liabilities		(10)			348			(10)			(10)
Total finance lease liabilities	$	600		$	1,483		$	161		$	350

Weighted average remaining lease term (in years):
Operating leases		10.73			8.72			11.18			11.33
Finance leases		0.71			1.32			0.33			0.53

Weighted average discount rate:
Operating leases		4.02	%		3.92	%		3.89	%		3.90	%
Finance leases		4.81	%		4.73	%		4.86	%		4.87	%

2120

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


	Three Months Ended June 30,				Nine Months Ended June 30,				Three Months Ended December 31,
	2021		2020		2021		2020		2021		2020
Cash paid for amounts included in measurement of liabilities:
Operating cash flows from operating leases	$	2,532	$	2,215	$	7,530	$	6,089	$	1,659	$	1,432
Operating cash flows from finance leases		8		22		35		77		3		16
Financing cash flows from finance leases		269		297		881		880		190		304

ROU assets obtained in exchange for lease liabilities:
Operating leases	$	14,066	$	3,026	$	19,033	$	13,753	$	186	$	3,532

Future lease payments for operating and finance leases as of ~~June 30,~~December 31, 2021 were as follows for the remainder of fiscal year ~~2021,~~2022, the subsequent ~~four~~five fiscal years and thereafter (in thousands):


	Operating Leases		Finance Leases		Operating Leases		Finance Leases
Fiscal year ended September 30,
2021	$	2,501	$	251
2022		9,032		363	$	5,428	$	171
2023		7,286		-		6,479		-
2024		6,378		-		5,769		-
2025		5,779		-		5,578		-
2026						5,499		-
2027						5,298		-
Thereafter		34,475		-		27,574		-
Total future lease payments		65,451		614		61,625		171
Less imputed interest		(12,928)		(14)		(12,481)		(10)
Total lease liability balance	$	52,523	$	600	$	49,144	$	161

As of ~~June 30,~~December 31, 2021, the Company has entered into leases that have not commenced with future lease payments of ~~$15.1~~$4.5 million. These leases are not yet recorded in the accompanying unaudited Consolidated Balance Sheets. These leases will commence in ~~2021.~~2022.

10. Income Taxes

The Company recorded an income tax ~~provision~~benefit of ~~$9.4~~$4.7 million ~~and $20.4 million, respectively,~~ during the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021. The ~~tax provision~~benefit for the three months ended ~~June 30,~~December 31, 2021 was primarily driven by ~~the provision on earnings from operations during the period. The provision was partially offset by~~ a ~~$1.5~~ million benefit from the reversal of uncertain tax positions during the period. The provision for the nine months ended June 30, 2021 was primarily driven by the provision on earnings from operations during the period and was partially offset by a ~~$2.7~~$4.8 million discrete stock compensation windfall benefit for tax deductions that exceeded the associated book compensation expense.

The Company recorded an income tax ~~provision~~benefit of ~~$5.1~~$1.6 million ~~and $5.6 million, respectively,~~ during the three ~~and nine~~ months ended ~~June 30,~~December 31, 2020. The tax ~~provision~~benefit for the three months ended ~~June 30,~~December 31, 2020 was primarily driven by the provision on earnings from operations during the period. The tax provision for the nine months ended June 30, 2020 was primarily driven by the provision on earnings from operations during the period. The tax provision was offset by a ~~$6.1~~$1.9 million discrete stock compensation windfall benefit for tax deductions that exceeded the associated book compensation ~~expense in the period. During the nine months ended June 30, 2020, the Company also recorded a discrete benefit of $0.5~~ ~~million from a reduction of deferred tax liabilities related to the extension of a tax rate incentive in China.~~expense.

During March 2020, the United States enacted the Coronavirus Aid, Relief, and Economic Security Act which contains numerous income tax provisions among other tax and non-tax provisions. Some of these income tax provisions have retroactive effects on years before the date of enactment. During December 2020, the United States enacted the

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Consolidated Appropriations Act 2021 which also contains numerous income tax provisions among other tax and non-tax provisions. During March 2021, the United States enacted the American Rescue Plan Act of 2021. The Company evaluated the legislation of ~~all three~~these Acts in relation to income taxes and determined that the income tax Acts do not have a material impact on its income tax provision.

The Company evaluates the realizability of its deferred tax assets by tax-paying component and assesses the need for a valuation allowance on a quarterly basis. The Company evaluates the profitability of each tax-paying component on a historic cumulative basis and a forward-looking basis while performing this analysis. The Company maintains a U.S. valuation allowance related to the realizability of certain state tax credits and state net operating loss carry-forwards, as well as a valuation allowance against net deferred tax assets on certain foreign tax-paying components as of ~~June 30,~~December 31, 2021. On February 1, 2022, the Company completed the sale of its semiconductor automation business that resulted

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in a taxable gain in the U.S. During the second quarter of fiscal year 2022, the Company may record adjustments to its valuation allowance as it considers new evidence including updated forecasts of U.S. income and utilization of deferred tax assets that were previously expected to expire.

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 provision or benefit. The Company recognized de minimis interest expense related to its uncertain tax positions ~~of $0.3 million and $0.8 million, respectively,~~ during the three ~~and nine months~~ ended ~~June 30,~~December 31, 2021.

The Company is subject to U.S. federal, state, local and foreign income taxes in various jurisdictions. The amount of income taxes paid is subject to the Company’s interpretation of applicable tax laws in the jurisdictions in which it files.

In the normal course of business, the Company is subject to 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 2013. 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 Consolidated Balance Sheets. The Company currently anticipates that it is reasonably possible that the unrecognized tax benefits and accrued interest on those benefits will be reduced by an amount of ~~$17.2~~$0.4 million in the next 12twelve months due to statute of limitations expirations. These unrecognized tax benefits would impact the effective tax rate if recognized.

11. Other Balance Sheet Information

The following is a summary of accounts receivable at ~~June 30,~~December 31, 2021 and September 30, ~~2020~~2021 (in thousands):


	June 30,		September 30,		December 31,		September 30,
	2021		2020		2021		2021
Accounts receivable	$	238,890	$	195,587	$	130,415	$	124,195
Less allowance for expected credit losses		(4,737)		(7,216)		(4,414)		(4,318)
Less allowance for sales returns		(74)		(80)
Accounts receivable, net	$	234,079	$	188,291	$	126,001	$	119,877

The decrease in the allowance for expected credit losses from September 30, 2020 is due to collections of previously reserved trade receivables in the Brooks Life Sciences Services segment during the first quarter of fiscal year 2021.

The following is a summary of inventories at ~~June 30,~~December 31, 2021 and September 30, ~~2020~~2021 (in thousands):


	June 30,		September 30,		December 31,		September 30,
	2021		2020		2021		2021
Inventories
Raw materials and purchased parts	$	98,997	$	73,609	$	34,379	$	27,644
Work-in-process		21,356		16,461		1,835		4,787
Finished goods		34,367		24,764		33,929		27,967
Total inventories	$	154,720	$	114,834	$	70,143	$	60,398

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Reserves for excess and obsolete inventory were ~~$18.6~~$4.6 million and ~~$17.1~~$3.7 million, respectively, at ~~June 30,~~December 31, 2021 and September 30, ~~2020.~~2021.

At ~~June 30,~~December 31, 2021 and September 30, ~~2020,~~2021, the Company had cumulative capitalized direct costs of ~~$21.9~~$23.2 million and ~~$18.2~~$22.7 million, respectively, associated with the development of software for its internal use. As of ~~June 30,~~December 31, 2021, this balance included ~~$5.0~~$6.3 million associated with software still in the development stage which are included within "Property, plant and equipment, net" in the accompanying unaudited Consolidated Balance Sheets. During the ~~nine~~three months ended ~~June 30,~~December 31, 2021, the Company capitalized direct costs of ~~$3.7~~$0.6 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 ~~and nine~~ months ended ~~June 30,~~December 31, 2021 and 2020 (in thousands):


Activity -Three Months Ended June 30, 2021
Activity -Three Months Ended December 31, 2021								Activity -Three Months Ended December 31, 2021
Balance	Balance					Balance		Balance					Balance
March 31,						June 30,
September 30,								September 30,					December 31,
2021	2021	Accruals		Costs Incurred		2021		2021	Accruals		Costs Incurred		2021
$	8,044	$	1,892	$	(1,804)	$	8,132	2,330	$	673	$	(660)	$	2,342

Activity -Three Months Ended June 30, 2020
Balance						Balance
March 31,						June 30,
2020		Accruals		Costs Incurred		2020
$	7,910	$	1,380	$	(1,409)	$	7,881

Activity -Nine Months Ended June 30, 2021
Activity -Three Months Ended December 31, 2020								Activity -Three Months Ended December 31, 2020
Balance	Balance					Balance		Balance					Balance
September 30,	September 30,					June 30,		September 30,					December 31,
2020	2020	Accruals		Costs Incurred		2021		2020	Accruals		Costs Incurred		2020
$	8,201	$	5,990	$	(6,059)	$	8,132	2,211	$	648	$	(592)	$	2,267

Activity -Nine Months Ended June 30, 2020
Balance						Balance
September 30,						June 30,
2019		Accruals		Costs Incurred		2020
$	7,175	$	6,033	$	(5,327)	$	7,881

12. Stock-Based Compensation

The Company may issue to eligible employees options to purchase shares of the Company’s stock, restricted stock and 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 and deferred restricted stock units to its directors in accordance with its director compensation program.

24The stock-based compensation expense for restricted stock units for continuing operations was $2.6 million and $4.5 million, for the three months ended December 31, 2021 and 2020, respectively. The stock-based compensation expense for employee stock purchase plan for continuing operations was $0.3 million for both the three months ended December 31, 2021 and 2020.

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

The following table reflects stock-based compensation expense recorded during the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021 and 2020 (in thousands):


	Three Months Ended June 30,				Nine Months Ended June 30,				Three Months Ended December 31,
	2021		2020		2021		2020		2021		2020
Restricted stock units	$	5,475	$	3,348	$	18,667	$	11,361	$	7,197	$	6,144
Employee stock purchase plan		611		377		1,610		987		694		566
Total stock-based compensation expense	$	6,086	$	3,725	$	20,277	$	12,348	$	7,891	$	6,710

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. For awards that vest based on service conditions, the Company recognizes stock-based compensation expense on a straight-line basis over the requisite service period. 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 probability of achieving the performance goals. Current estimates may differ from actual results and future changes in 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 ~~nine~~three months ended ~~June 30,~~December 31, 2021 and 2020:


		Time-Based	Stock	Performance-		Time-Based	Stock	Performance-
	Total Units	Units	Grants	Based Units	Total Units	Units	Grants	Based Units
Nine months ended June 30, 2021	346,172	162,842	14,683	168,647
Nine months ended June 30, 2020	411,967	163,390	27,007	221,570
Three months ended December 31, 2021					149,348	59,776	24	89,548
Three months ended December 31, 2020					281,693	122,921	42	158,730

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 and deferred restricted stock units.

Certain members of the Board of Directors have elected to defer receiving their annual stock awards and related quarterly dividends until they attain a certain age or cease to provide services as the Company’s Board members. Stock awards granted in fiscal years ~~2021~~2022 and ~~2020~~2021 were vested as of the respective grant dates.

Performance-Based Grants

Performance-based restricted stock units are earned based on the achievement of performance criteria established by the Human Resources and Compensation Committee 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 2022, 2021 ~~2020~~ and ~~2019~~2020 allow participants to earn 100% of the restricted stock units if the Company’s performance meets its target goal for each applicable financial metric, and up to a

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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 will be measured over a three-year period for each year’s awards and at the end of the period to determine the number of units earned by recipients who continue to meet the service requirement. Around the third anniversary of each year’s 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 ~~nine~~three months ended ~~June 30,~~December 31, 2021:


		Weighted			Weighted
		Average			Average
		Grant-Date			Grant-Date
	Shares	Fair Value		Shares	Fair Value
Outstanding at September 30, 2020	1,183,009	$	36.10
Outstanding at September 30, 2021				1,088,652	$	47.35
Granted	346,172		71.81	149,348		114.42
Vested	(406,764)		36.01	(530,833)		37.57
Forfeited	(32,600)		44.27	(38,951)		59.94
Outstanding at June 30, 2021	1,089,817		47.23
Outstanding at December 31, 2021				668,216		71.19

The weighted average grant date fair value of restricted stock units granted during the three months ended ~~June 30,~~December 31, 2021 and 2020 was ~~$104.54~~$114.42 and ~~$31.87, respectively. The weighted average grant date fair value of restricted stock units granted during the nine months ended June 30, 2021 and 2020 was $71.81 and $46.52,~~$68.49, respectively. The fair value of restricted stock units vested during

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the three months ended ~~June 30,~~December 31, 2021 and 2020 was ~~$0.3~~$64.8 million and ~~$0.2 million, respectively. The fair value of restricted stock units vested during the nine months ended June 30, 2021 and 2020 was $28.2 million and $41.6~~$25.9 million, respectively. During the ~~nine~~three months ended ~~June 30,~~December 31, 2021 and 2020, the Company remitted ~~$9.7~~$24.9 million and ~~$24.1~~$9.6 million, respectively, collected from employees to satisfy their tax obligations as a result of share issuances. ~~Such proceeds collected and remitted were insignificant during the three months ended June 30, 2021 and 2020.~~

As of ~~June 30,~~December 31, 2021, the unrecognized compensation cost related to restricted stock units that are expected to vest is ~~$29.1~~$27.8 million and will be recognized over an estimated weighted average service period of approximately ~~1.7~~2.1 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 offering period, whichever is lower. There were ~~58,124 and 63,934~~0 shares ~~respectively,~~ purchased by employees under the employee stock purchase plan during the ~~nine~~three months ended ~~June 30,~~December 31, 2021 and 2020.

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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 ~~and nine~~ months ended ~~June 30,~~December 31, 2021 and 2020 (in thousands, except per share data):


	Three Months Ended				Nine Months Ended				Three Months Ended
	June 30,				June 30,				December 31,
	2021		2020		2021		2020		2021		2020
Income from continuing operations	$	39,170	$	13,696	$	90,110	$	36,062	$	2,858	$	2,706
Loss from discontinued operations, net of tax		(4)		—		(1,168)		(182)
Income from discontinued operations, net of tax										40,462		23,322
Net income	$	39,166	$	13,696	$	88,942	$	35,880	$	43,320	$	26,028

Weighted average common shares outstanding used in computing basic earnings per share		74,296		73,759		74,195		73,473		74,630		74,021
Dilutive restricted stock units		199		101		225		293		236		262
Weighted average common shares outstanding used in computing diluted earnings per share		74,495		73,860		74,420		73,766		74,866		74,283

Basic net income per share:
Income from continuing operations	$	0.53	$	0.19	$	1.21	$	0.49	$	0.04	$	0.04
Loss from discontinued operations, net of tax		(0.00)		-		(0.02)		(0.00)
Income from discontinued operations, net of tax										0.54		0.32
Basic net income per share	$	0.53	$	0.19	$	1.20	$	0.49	$	0.58	$	0.35

Diluted net income per share:
Income from continuing operations	$	0.53	$	0.19	$	1.21	$	0.49	$	0.04	$	0.04
Loss from discontinued operations, net of tax		(0.00)		—		(0.02)		(0.00)
Income from discontinued operations, net of tax										0.54		0.31
Diluted net income per share	$	0.53	$	0.19	$	1.20	$	0.49	$	0.58	$	0.35
Dividend declared per share	$	0.10	$	0.10	$	0.30	$	0.30	$	0.10	$	0.10

During the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021 ~~restricted stock units of 13,593~~ and 18,548, respectively, were excluded from the computation of diluted earnings per share as their effect would be antidilutive based on the treasury stock method. During the three and nine months ended June 30, 2020, restricted stock units of ~~148,085~~59,513 and ~~162,189,~~124,641 respectively, were excluded from the computation of diluted earnings per share as their effect would be antidilutive based on the treasury stock method.

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14. Revenue from Contracts with Customers

Disaggregated Revenue

The Company disaggregates revenue from contracts with customers in a manner that depicts how the nature, amount, timing, and uncertainty of revenue and cash flows are affected by economic factors.

The Company has 3 operating and reportable segments consisting of Brooks Semiconductor Solutions Group, Brooks Life Sciences Products and Brooks Life Sciences Services. The Company has 5 reporting units, including 3 reporting units within the Brooks Semiconductor Solutions Group operating segment, 1 ~~reporting unit within Brooks Life Sciences Products operating segment, and 1 reporting units within the Brooks Life Sciences Services~~

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~~operating segment~~. The following is revenue by ~~reporting unit~~significant business line for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021 and 2020 (in thousands):

Three months ended June 30,

Nine months ended June 30,

2021

2020

2021

2020
Reporting Unit

Automation Solutions

$
122,567

$
81,656

$
320,540

$
214,627
Contamination Control Solutions

50,742

34,780

117,236

124,584
Global Semiconductor Services

12,953

10,616

36,898

31,575
Total Brooks Semiconductor Solutions Group

186,262

127,052

474,674

370,786

Brooks Life Sciences Products

48,625

30,421

146,490

91,138

Brooks Life Sciences Services

80,462

62,877

230,275

189,153
Total

$
315,349

$
220,350

$
851,439

$
651,077


	Three months ended December 31,
	2021		2020
Significant Business Line
Life Sciences Products	$	49,877	$	45,508
Sample Repository Solutions		25,871		20,533
Genomic Services		63,904		52,101
Total	$	139,652	$	118,142

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 before payment is due. Accounts receivable do not bear interest and are recorded at the invoiced amount. The Company maintains an allowance for expected credit losses representing its best estimate of probable credit losses related to its existing accounts receivable and their net realizable value. The Company determines the allowance for expected credit losses based on a number of factors, including an evaluation of customer credit worthiness, the age of the outstanding receivables, economic trends, historical experience and other information through the payment periods. Accounts receivable, net were ~~$234.1~~$126.0 million and ~~$188.3~~$119.9 million at ~~June 30,~~December 31, 2021 and September 30, ~~2020,~~2021, 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 ~~life sciences~~Life Sciences segments 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 expenses and other current assets” on the Company’s Consolidated Balance Sheet, were ~~$16.1~~$18.8 million and ~~$16.8~~$15.3 million at ~~June 30,~~December 31, 2021 and September 30, ~~2020, respectively.~~

~~Deferred Commissions.~~ Deferred commissions represent a direct and incremental cost of obtaining a contract. These amounts primarily relate to sales commissions within the life sciences segments 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” on the Company’s Consolidated Balance Sheet. Deferred commissions were $0.3 million and $0.4 million, respectively, at June 30, 2021, and September 30, 2020. The Company recorded amortization expense related to deferred commissions of less than $0.1 million and $0.1 million for the three months ended June 30, 2021 and 2020, respectively. The Company recorded amortization expense related to deferred commissions of $0.1 million and $0.4 million for the nine months ended June 30, 2021 and 2020, respectively.

Contract Liabilities. Contract liabilities represent the Company’s obligation to transfer products or services to a customer for which consideration has been received, or for which an amount of 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 ~~$35.4~~$28.5 million and ~~$31.4~~$25.7 million at ~~June 30,~~December 31, 2021 and September 30, ~~2020,~~2021, respectively. Revenue recognized from the contract liability balance at September 30, ~~2020~~2021 was ~~$30.2~~$13.8 million for the ~~nine~~three months ended ~~June 30,~~December 31, 2021.

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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 ~~June 30,~~December 31, 2021 was ~~$65.2~~$53.4 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 (in thousands):


	As of June 30, 2021						As of December 31, 2021
	Less than 1 Year		Greater than 1 Year		Total		Less than 1 Year		Greater than 1 Year		Total
Remaining Performance Obligations	$	46,552	$	18,677	$	65,229	$	37,409	$	15,971	$	53,380

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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 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~~Life Sciences segments 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 ~~and nine~~ months ended ~~June 30,~~December 31, 2021 as the amount of sales commissions that qualified for capitalization during the reporting period was insignificant. Sales commissions incurred during the reporting period have been expensed as incurred. These costs are recorded within “Selling, general and administrative” expenses on the Company’s Consolidated Statement of Operations. The Company has concluded that none of its costs incurred in fulfillment of customer contracts meet the capitalization criteria. The Company will account for shipping and handling activities as fulfillment activities and recognize the associated expense when control of the product has transferred to the customer.

15. Segment and Geographic Information

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

The Company operates in 32 reportable segments: the ~~Brooks Semiconductor Solutions Group segment, the Brooks~~ Life Sciences Products segment and the ~~Brooks~~ Life Sciences Services segment. These reportable segments also represent the Company’s operating ~~segments.~~segments. The Company previously operated in 23 reportable segments: the ~~Brooks~~ Semiconductor Solutions Group segment, ~~and~~ the ~~Brooks~~ Life Sciences ~~segment. The Brooks Life Sciences segment consisted of the Sample Management operating~~Products segment, and the ~~GENEWIZ operating~~Life Sciences Services segment. As discussed in Note 3, “Discontinued Operations”, our Semiconductor Solutions Group reportable segment that aggregated into one reportable segment. During fiscal year 2020, the Company reorganized its operating segments to better align with its business activities in connection with its recent acquisitions and the Company’s strategic vision.has been classified as a discontinued operation. Historical information has been adjusted to reflect the new reportable segments.

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

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

The ~~solutions include atmospheric~~Company considers adjusted operating income, which excludes charges related to amortization of completed technology, the acquisition accounting impact on inventory contracts acquired, restructuring related charges and vacuum robots, robotic modules, tool automation systems, contamination control of carrier pods and reticle storage. The support services include repair services, diagnostic support services, and installation servicesother special charges, such as impairment losses, in ~~support of~~as the products, which enable customers to maximize process tool uptime and productivity. This segment also provides end-user customers with spare parts and enhancement upgrades to maximize tool productivity.primary performance metric when evaluating the business.

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

The Brooks Life Sciences Services segment provides comprehensive sample management programs, integrated cold chain solutions, informatics, as well as sample-based laboratory services to advance scientific research and support drug development. The segment’s service offerings include sample storage, genomic sequencing, gene synthesis, laboratory processing services, laboratory analysis, and other support services which are provided to a wide range of life science customers, including pharmaceutical companies, biotechnology companies, biorepositories and research institutes.

The Company considers adjusted operating income, which excludes charges related to amortization of completed technology, the acquisition accounting impact on inventory contracts acquired and restructuring related charges as the primary performance metric when evaluating the business.

The following is the summary of the financial information for the Company’s reportable segments for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021 and 2020 (in thousands):


	Three Months Ended June 30,					Nine Months Ended June 30,					Three Months Ended December 31,
	2021		2020		2021		2020				2021		2020
Revenue:
Brooks Semiconductor Solutions Group	$	186,262	$	127,052	$	474,674	$	370,786
Brooks Life Sciences Products		48,625		30,421		146,490		91,138
Brooks Life Sciences Services		80,462		62,877		230,275		189,153
Life Sciences Products											$	49,877	$	45,508
Life Sciences Services												89,775		72,634
Total revenue	$	315,349	$	220,350	$	851,439	$	651,077			$	139,652	$	118,142

Operating income:
Brooks Semiconductor Solutions Group	$	44,797	$	23,414	$	99,637	$	55,120
Brooks Life Sciences Products		9,138		2,482		28,295		4,988
Brooks Life Sciences Services		13,783		4,109		41,501		15,695
Life Sciences Products											$	4,388	$	4,183
Life Sciences Services												7,883		6,928
Reportable segment adjusted operating income		67,718		30,005		169,433		75,803				12,271		11,112
Amortization of completed technology		3,352		2,779		8,060		8,194				1,773		2,005
Amortization of other intangible assets		7,733		7,611		22,690		23,137				6,272		6,905
Restructuring charges		—		(29)		179		1,125				173		(40)
Tariff adjustment		—		—		5,414		—
Other unallocated corporate expenses (income)		6,400		545		21,423		(990)				4,378		1,885
Total operating income		50,233		19,099		111,667		44,337
Total operating (loss) income												(325)		356
Interest income		409		29		503		865				35		76
Interest expense		(477)		(810)		(1,485)		(2,265)				(455)		(557)
Other income (expenses), net		(1,625)		498		(147)		(1,318)				(1,077)		1,281
Income before income taxes	$	48,540	$	18,816	$	110,538	$	41,619
(Loss) income before income taxes											$	(1,822)	$	1,156

		Brooks
		Semiconductor		Brooks Life		Brooks Life
Assets:		Solutions Group		Sciences Products		Sciences Services		Total		Life Sciences Products		Life Sciences Services		Total
June 30, 2021	$	433,108	$	259,592	$	779,798	$	1,472,498
September 30, 2020		296,289		214,196		737,967		1,248,452
December 31, 2021									$	285,958	$	797,603	$	1,083,561
September 30, 2021										278,769		780,238		1,059,007

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The following is a reconciliation of the Company’s reportable segments’ segment assets to the corresponding amounts presented in the accompanying unaudited Consolidated Balance Sheets as of ~~June 30,~~December 31, 2021 and September 30, ~~2020~~2021 (in thousands):

June 30,

September 30,

2021

2020
Segment assets

$
1,472,498

$
1,248,452
Cash and cash equivalents, restricted cash, and marketable securities

286,310

305,694
Deferred tax assets

4,447

4,979
Total assets

$
1,763,255

$
1,559,125


	December 31,		September 30,
	2021		2021
Segment assets	$	1,083,561	$	1,059,007
Cash and cash equivalents, restricted cash, and marketable securities		231,817		244,012
Deferred tax assets		13,845		10,043
Other assets		15,019		11,237
Assets held for sale		510,695		495,213
Total assets	$	1,854,937	$	1,819,512

Revenue from external customers is attributed to geographic areas based on locations in which customer orders are placed. Net revenue by geographic area for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021 and 2020 (in thousands) are as follows:


		Three Months Ended June 30,				Nine Months Ended June 30,				Three Months Ended December 31,
	2021		2020		2021		2020		2021		2020
Geographic Location:
North America										90,087		73,588
Europe										28,594		25,836
Asia / Pacific/ Other										20,971		18,718
China	$	55,062	$	30,228	$	137,945	$	76,435
Taiwan		29,844		15,266		73,350		91,993
Republic of Korea		28,994		22,369		77,982		46,296
Other		37,186		31,552		105,861		93,245
		151,086		99,415		395,138		307,969
North America
USA		108,344		79,032		290,883		243,883
Other		2,110		850		22,947		2,117
		110,454		79,882		313,830		246,000
Europe		53,809		41,053		142,471		97,108
Total	$	315,349	$	220,350	$	851,439	$	651,077	$	139,652	$	118,142

~~The geographic location~~28

Table of an OEM is not indicative of where the products will eventually be used. The geographic area for the orders is determined by the onward sale of an OEM system which incorporates the sub-systems and/or components.Contents

16. Significant Customers

The Company had no individual customer that accounted for 10% or more of its consolidated revenue ~~during the three and nine months ended June 30, 2021.~~ ~~The Company had no individual customer that accounted~~ for ~~10% or more~~each of ~~its consolidated revenue during~~ the three months ended ~~June 30, 2020.~~ ~~The Company had one customer that accounted for 10% or more of its consolidated revenue, at 11%, during the nine months ended June 30,~~December 31, 2021 and 2020. There was ~~one customer that accounted for more than 10% of the Company’s accounts receivable balance, at 11%, as of June 30, 2021 and~~ no customer that accounted for more than 10% of the Company’s accounts receivable balance as of both December 31, 2021 and September 30, ~~2020.~~2021.

17. Commitments and Contingencies

~~GENEWIZ~~ Tariff Matter

AsIn fiscal year 2021, as part of the Company’s continued integration of GENEWIZ, which was acquired in November 2018, the Company initiated a review during first quarter of fiscal year 2021, with the assistance of a third party consultant, of the transaction value that the Company has used to calculate tariffs on inter-company imports of samples shipped from its GENEWIZ business. As a result of the

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third-party review and in light of a new interpretation surrounding the valuation method used to calculate the estimated transaction value, the Company revised its estimate of the tariffs owed and as a result recorded a liability of $6.1 million in the second quarter of fiscal year 2021. Of the total liability, $2.8 million is for the period prior to the acquisition of GENEWIZ and an additional $3.3 million iswas recorded within the second fiscal quarter of 2021 for the period since the Company acquired GENEWIZ in November 2018. The Company estimates any additional liability for tariffs owed each period and as of December 31, 2021 and September 30, 2021, the liability for tariffs owed was $7.6 million and $7.0 million, respectively. The Company intends to pay any tariffs determined to be owed. The Company does not expect to incur any significant penalties associated with such tariffs. ~~As a result of the change in estimate, basic net income per share decreased $0.07 for the nine months ended June 30, 2021. Diluted net income per share also decreased $0.07 for the same period.~~

Letters of Credit

As of ~~June 30,~~December 31, 2021, the Company had approximately $1.3 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 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 ~~nine~~three months ended ~~June 30,~~December 31, 2021, and the Company currently does not anticipate any of these obligations to be called in the near future.

Purchase Commitments

At ~~June 30,~~December 31, 2021, the Company had non-cancellable commitments of ~~$288.0~~$59.9 million, including primarily purchase orders for inventory of ~~$254.6~~$44.0 million, information technology related commitments of ~~$18.0~~$14.2 million, and China facility commitments of ~~$15.2~~$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. The Company may also have certain indemnification obligations pursuant to claims made under the definitive agreement it entered into with Edwards Vacuum LLC (a member of the Atlas Copco Group) in connection with the Company’s sale of its semiconductor cryogenics ~~business. See Note 3 “Discontinued Operations” for further information.~~business in the fourth quarter of fiscal year 2018. However, as of the date of this report, the Company believes that none of these claims will have a material adverse effect on its consolidated financial position or results of operations. Please refer to Note 3 “Discontinued Operations – Disposition of Semiconductor Cryogenics Business” to the Company’s consolidated financial statements included in the 2021 Annual Report on Form 10-K for more information on these claims. In the event of unexpected subsequent developments and given the inherent unpredictability of these matters, there can be no assurance that the Company’s assessment of any claim will reflect the ultimate outcome, and an adverse outcome in certain matters could, from time to time, have a material adverse effect on the Company’s consolidated financial position or results of operations in particular quarterly or annual periods.

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18. Subsequent Events

~~Dividend~~Divestiture

On ~~August 3, 2021,~~February 1, 2022, the ~~Company’s Board~~Company completed the sale of ~~Directors declared a~~its semiconductor automation business to THL for $3.0 billion in cash ~~dividend~~subject to net working capital and other customary adjustments. The Company expects net cash proceeds from the sale to be approximately $2.4 billion, after adjustments, taxes and other items.

Extinguishment of ~~$0.10 per share payable on September 24, 2021 to common stockholders~~Debt and Termination of ~~record as of September 3, 2021. Dividends are declared at~~Credit Facility

On February 1, 2022, in connection with the ~~discretion~~completion of the ~~Company’s Board~~sale of ~~Directors and depend on~~its semiconductor automation business, the ~~Company’s actual~~Company used $50.0 million of the cash ~~flows~~proceeds from ~~operations,~~the sale to extinguish the total remaining outstanding balance of its ~~financial condition and capital requirements and any other factors the Company’s Board~~term loan. The Company also closed its revolving credit facility 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.which is had no borrowings.

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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 ~~and nine~~ months ended ~~June 30,~~December 31, 2021 and 2020.

●

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

●

Results of Operations. This section provides an analysis of our financial results for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021 as compared to the three ~~and nine~~ months ended ~~June 30,~~December 31, 2020.

●

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.

Sale of the Semiconductor ~~Cryogenics~~Automation Business

In the fourth quarter of fiscal year ~~2018,~~2021, we entered into a definitive agreement to sell our semiconductor ~~cryogenics~~automation business to ~~Edwards Vacuum LLC (a member of the Atlas Copco Group)~~Thomas H. Lee, Partners, L.P., or ~~Edwards,~~THL, for ~~approximately $675.0 million~~$3.0 billion in cash ~~which was~~ subject to customary adjustments. ~~We originally acquired~~In connection with the planned divestiture of the semiconductor ~~cryogenics~~automation business ~~in 2005 as part~~and our continued focus on our life sciences businesses, we changed our corporate name from “Brooks Automation, Inc.” to “Azenta, Inc.” and our common stock started to trade on the Nasdaq Global Select Market under the symbol “AZTA” on December 1, 2021. On February 1, 2022, subsequent to the close of ~~the acquisition~~our first fiscal quarter of ~~Helix Technology Corporation. On July 1, 2019,~~2022, we completed the sale of our semiconductor automation business for $3.0 billion in cash, subject to working capital and other customary adjustments. Since our founding in 1978, we have been a leading automation provider and partner to the global semiconductor manufacturing industry. Following the completion of the sale of the semiconductor ~~cryogenics business. Any results related to~~automation business, we will no longer serve the semiconductor ~~cryogenics~~market. The semiconductor automation business ~~have~~has been classified as a discontinued ~~operations.~~

~~Separation~~

~~On May 10, 2021, we announced~~operation and, unless otherwise noted, this MD&A relates solely to our ~~intention to separate our business into two independent, publicly traded companies. We plan to spin -off~~continuing operations and does not include the operations of our semiconductor business, which operates as our Semiconductor Solutions Group segment through a pro rata distribution of shares to our common stockholders. Completion of the proposed spin-off is subject to certain conditions, including final approval by our Board of Directors. We are targeting to complete the separation of the business before the end of calendar year 2021.automation business.

Impact of the COVID-19 Pandemic

During the COVID-19 pandemic, our facilities have remained operational with only required personnel on site, and the balance of employees working from home. ~~Both our semiconductor and life sciences~~Our segments fall within the classification of “Essential Critical Infrastructure Sector” as defined by the U.S. Department of Homeland Security and have continued operations during the COVID-19 pandemic. We have followed government guidance in each region and

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country and have implemented the U.S. Centers for Disease Control and Prevention social distancing guidelines and other applicable best practices to protect the health and safety of our employees. ~~In the Life Sciences~~Our life sciences business ~~our~~ operations are accepting customer orders for all of their offerings and are fast tracking customer requests which support research and development and testing related to the COVID-19 virus. ~~The Semiconductor Solutions business continues to supply critical chip manufacturing equipment and support services globally.~~ The COVID-19 pandemic has not had a substantial negative impact on our financial results and a portion of the impact has been mitigated by our realignment of resources to satisfy incremental orders related to virus research. As ~~states safely reopen~~ the ~~economy, get people back~~COVID-19 outbreak continues to ~~work,~~rapidly evolve, we are continuing to monitor and ~~ease social restrictions while minimizing~~assess the ~~health impacts~~effects of the COVID-19 ~~future impacts~~pandemic on our ~~financial results~~business. However, we cannot at this time accurately predict what effects these

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conditions will ~~depend~~ultimately have on ~~future~~our operations due to uncertainties relating to variants of the virus, ~~and~~ vaccine effectiveness against the variants, ~~which are not fully determinable,~~the duration of the outbreak, and the length of the travel restrictions and business closures imposed by the governments of impacted countries, as the full impact of the pandemic on the economy and markets which we serve is as yet unknown. Our financial results will also depend on variables including reduced demand from our customers, the degree that the supply chain may be constrained which could impact our delivery of product and the potential impact to our operations if there is a significant outbreak among our employees, as well as the amount of incremental demand caused by research and treatments in the areas of COVID-19 or related threats.

Information Related to Forward-Looking Statements

This Quarterly Report on Form 10-Q 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, or the Exchange Act. All statements that are not historical facts, including statements about our beliefs or expectations, are forward-looking statements. These statements may be identified by such forward-looking terminology as “expect,” “estimate,” “intend,” “believe,” “anticipate,” “may,” “will,” “should,” “could,” “continue,” “likely” or similar statements or variations of such terms. Forward-looking statements include, but are not limited to, statements that relate to our future revenue, margins, costs, earnings, profitability, product development, demand, acceptance and market share, competitiveness, market opportunities and performance, levels of research and development, the success of our marketing, sales and service efforts, outsourced activities, operating expenses, anticipated manufacturing, customer and technical requirements, the ongoing viability of the solutions that we offer and our customers’ success, tax expenses, our management’s plans and objectives for our current and future operations and business focus, the impact of the COVID-19 pandemic, the expected benefits and other statements relating to our divestitures and acquisitions, including sale of the ~~separation of our~~semiconductor automation business ~~into two independent, publicly traded companies,~~and the semiconductor cryogenics business, our adoption of newly issued accounting guidance, the levels of customer spending, general economic conditions, the sufficiency of financial resources to support future operations, and capital expenditures. Such statements are based on current expectations and 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 for the fiscal year ended September 30, ~~2020,~~2021, or the ~~2020~~2021 Annual Report on Form 10-K, filed with the U.S. Securities and Exchange Commission, or SEC, on November ~~18, 2020,~~24, 2021, as updated and/or supplemented in subsequent filings with the SEC, including under Item 1A “Risk Factors” in Part II of this Quarterly Report on Form ~~10 Q.~~10-Q. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof and are based on information currently and reasonably known to us. We do not undertake any obligation to release revisions to these forward-looking statements to reflect events or circumstances that occur after the date of this Quarterly Report on Form 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. Any additional precautionary statements made in our ~~2020~~2021 Annual Report on Form 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.

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

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OVERVIEW

We are a leading global provider of ~~semiconductor manufacturing automation solutions for the semiconductor industry, and~~ life science ~~sample-based services~~sample exploration and management solutions for the life sciences market. InWe support our customers from research to clinical development with our sample management, automated storage, and genomic services expertise to help our customers bring impactful therapies to market faster. We understand the ~~semiconductor manufacturing market, we provide precision robotics, integrated automation systems~~importance of sample integrity and ~~contamination control solutions to semiconductor fabrication plants, or fabs,~~offer a broad portfolio of products and ~~original equipment manufacturers, or OEMs, worldwide. In~~services spanning across the life ~~sciences market, we offer a full suite~~cycle of samples from procurement and sourcing, automated storage platforms, genomic services and solutions for analyzing, managing, and storing biological and chemical compound samples to advance research and development for clinical, pharmaceutical, and other scientific endeavors. Our life sciences solutions include gene sequencing and synthesis, a broad ~~suite~~range of ~~high-throughput automated cryogenic storage products, related~~ consumables, informatics and data software, and sample ~~inventory software, as well as fully outsourced solutions for sample storage, transport,~~management solutions. Our expertise and ~~inventory management. Our~~ leadership positions ~~and our global support capability in each of these markets~~ make us a ~~valued business~~trusted partner to ~~the largest semiconductor and semiconductor capital equipment manufacturers and~~ pharmaceutical, biotechnology, and life sciences research institutions ~~in the world.~~globally. In total, ~~we employ~~our life sciences business employs approximately ~~4,000~~2,900 full-time employees, part-time employees and contingent workers worldwide and have sales in more than ~~80 countries.~~90 countries. We are headquartered in Chelmsford, Massachusetts and have operations in North America, Asia, and 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 vacuum environments. We are a leader in wafer automation and contamination controls solutions and services that are designed to improve throughput, yield, and cost32

Table 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. 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. Our investments in Vacuum Automation and Contamination Control include ramping our intelligent vacuum robot platform, MagnaTran LEAP^TM~~, with new designs at customers releasing tools for semiconductor technology nodes at 10 nanometers and below. In addition, our new PuroMaxx LEAP~~^TM carrier clean product line brings new innovation to handle new contamination control challenges at 3nm and below. As the market for extreme ultraviolet, or EUV, lithography expands, we will continue our investment in EUV pod cleaning and reticle storage. Our initiatives with our Guardian LEAPContents^TM product line for EUV reticle storage will employ new innovation to solve many contamination challenges with EUV reticles. In the third quarter of fiscal year 2021, we acquired collaborative robots and automation subsystems developer Precise Automation, Inc., or Precise, a leading developer of collaborative robots and automation subsystems headquartered in Fremont, California. The acquisition is expected to expand our existing offerings within the Brooks Semiconductor Solutions Group segment.

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

Our life sciences portfolio includes products and services that we acquired to bring together a comprehensive capability to service our customers’ needs in the sample-based services arena. We continue to develop the acquired products and services offerings through the combined expertise of the newly acquired teams and our existing research and development resources. ~~This~~We believe our approach of acquisition, investment, and integration has allowed us to accelerate our internal development and that of the acquired entity, significantly decreasing our time to market.

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We have also strengthened and broadened our product portfolio and market reach by investing in internal product development. ~~For the fiscal years ended 2020, 2019 and 2018, more than 29% of our cumulative research and development spending was focused on innovating and advancing solutions in the life sciences market.~~ We expect to continue investing in research and development and making strategic acquisitions with the objective of expanding our offerings in the life sciences market.

Within our Life Sciences Products segment, we have developed and continue to develop automated biological sample storage solutions for operating in ultra-low temperature environments. We have a complete line up of automated stores from ambient temperatures to -190°. Our ~~customers are using our automated storage solutions from room temperature to -196°C. Our BioStore™ II’s~~BioStore’s ™ unique design allows ~~dual~~controlled temperature storage down to -80°C with the industry’s highest throughput of sample retrieval. ~~We recently launched the BioStore™ IIIv that compliments the BioStore™ III Cryo product line and~~Our BioStore portfolio offers improved data management and sample security for vaccines and biologics stored at -80°C. Our BioStore’s ™ unique design allows controlled temperature storage with the industry’s highest throughput of sample retrieval and improved data management and sample security for vaccines and biologics stored at ultra-cold temperatures.

Within our Life Sciences Services segment, our ~~GENEWIZ~~genomics services business advances research and development activities inby gene sequencing, synthesis, editing and related ~~services~~services. We offer a comprehensive, global portfolio that has both broad appeal in the life sciences industry as well as enable customers to ~~meet market demands. Recently, enabled by newly developed proprietary technologies, GENEWIZ launched a~~select the best solution for their research challenge. This portfolio ~~of new services, targeting~~ also offers unique solutions for~~analysis of~~ ~~adeno-associated virus, a common vector used in~~ key markets such as cell and gene ~~therapy. We will continue to focus on developing processes~~therapy, antibody development, and ~~technologies that can streamline~~biomarker discovery by addressing genomic complexity and throughput challenges. Our sample ~~to data workflow.~~repository solutions business is a global leader in sample storage and management, and provides a full suite of reliable cold and ultra-cold chain solutions.

Business and Financial Performance

Three Months Ended ~~June 30,~~December 31, 2021 Compared to Three Months Ended ~~June 30,~~December 31, 2020

Results of Operations – - Revenue increased 18% as compared to the prior fiscal year period driven by both our Life Sciences Products and Life Sciences Services segments. Gross margin was 48.0% for the three months ended ~~June 30, 2021 increased 43% to $315.3 million, as compared to the corresponding period of the prior fiscal year. Gross margin was 45.8% for the three months ended June 30,~~December 31, 2021, as compared to 42.1% for the corresponding period of the prior fiscal year, an increase in gross profit of $51.6 million. Operating expenses were $94.2 million during the three months ended June 30, 2021, as compared to $73.7 million during the corresponding period of the prior fiscal year, an increase of $20.5 million. Operating income was $50.2 million during the third quarter of fiscal year 2021, as compared to $19.1 million48.5% for the corresponding period of the prior fiscal year. Operating expenses increased $10.4 million compared to the three months ended December 31, 2020, driven by increases in both research and development expenses and selling, general and administrative expenses. We reported an operating loss of $0.3 million for the three months ended December 31, 2021, as compared to operating income of $0.4 million for the corresponding prior fiscal year period due to an increase in operating expenses. Income from continuing operations ~~was $39.2~~increased $0.2 million ~~for the third quarter of fiscal year 2021, as compared~~due to ~~$13.7~~a $3.1 million ~~for the corresponding period of the prior fiscal year.~~

~~Nine Months Ended June 30, 2021 Compared to Nine Months Ended June 30, 2020~~

~~Results of Operations~~ - Revenue for the nine months ended June 30, 2021 increased 31% to $851.4 million, as compared to the corresponding period of the prior fiscal year. Gross margin was 45.2% for the nine months ended June 30, 2021, as compared to 41.2% for the corresponding period of the prior fiscal year, an increase in gross profit of $116.7 million. Operating expenses were $273.1 million during the nine months ended June 30, 2021, as compared to $223.7 million during the corresponding period of the prior fiscal year, an increase of $49.4 million. Operating income was $111.7 million during the nine months ended June 30, 2021, as compared to $44.3 million for the corresponding period of the prior fiscal year. Income from continuing operations was $90.1 million for the nine months ended June 30, 2021, as compared to $36.1 million for the corresponding period of the prior fiscal year.tax benefit.

~~June 30,~~

December 31, 2021 Compared to September 30, ~~2020~~2021

Cash Flows and Liquidity - Cash and cash equivalents and restricted cash as presented on our Consolidated Statements of Cash Flows is on a total company basis and ~~marketable securities~~ were ~~$286.3~~$273.0 million ~~at June 30,~~as of December 31, 2021 as compared to ~~$305.7~~$285.3 million atas of September 30, ~~2020.~~2021. The decrease of ~~$19.4~~$12.3 million ~~from September 30, 2020 was comprised~~included cash outflows for investing activities of ~~cash inflows of $122.7~~$18.4 million ~~from operating activities; offset by outflows from investing~~ and financing activities ~~which include $92.4~~of $7.7 million, ~~for acquisitions, $34.6 million for capital expenditures, and $22.3 million for dividends. Cash~~partially offset by cash inflows from operating activities ~~was comprised~~ of ~~$148.9 million~~$15.6 million. The effects of ~~earnings, including $88.9 million~~foreign exchange reduced our cash balance by $1.8 million.

Table of ~~net income and $60.0 million of adjustments to net income for non-cash items, partially offset by $26.2 million of cash used for the changes in operating assets and liabilities.~~Contents

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. On an ongoing basis, we evaluate our estimates, including those related to revenue, intangible assets, goodwill, inventories, income taxes, and stock-based compensation. We base our estimates on historical experience and various other assumptions that are believed to be reasonable under the circumstances. We evaluate current and anticipated worldwide economic conditions, both in general and specifically in relation to the semiconductor and life science industries, that serve as a basis for making judgments about the carrying values of assets and liabilities that are not readily determinable based on information from other sources. Actual results may differ from these estimates under different assumptions or conditions that could have a material impact on our financial condition and results of operations.

For further information with regard to our significant accounting policies and estimates, please refer to Note 2, "Summary of Significant Accounting Policies" in the Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of this Quarterly Report on Form 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 ~~2020~~2021 Annual Report on Form 10-K.

Recently Issued and Adopted Accounting Pronouncements

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

RESULTS OF OPERATIONS

~~Three and Nine Months Ended June 30, 2021 Compared to Three and Nine Months Ended June 30, 2020~~

~~Revenue~~

~~We reported revenue of $315.3 million~~Our performance for the three months ended ~~June 30,~~December 31, 2021 and 2020 are as follows:


	Three Months Ended December 31,
Dollars in thousands	2021		2020
Revenue	$	139,652	$	118,142
Cost of revenue		72,608		60,807
Gross profit		67,044		57,335
Operating expenses
Research and development		6,485		5,088
Selling, general and administrative		60,711		51,930
Restructuring charges		173		(40)
Total operating expenses		67,369		56,979
Operating (loss) income		(325)		356
Interest income		35		76
Interest expense		(455)		(557)
Other income (expense), net		(1,077)		1,281
(Loss) income before income taxes		(1,822)		1,156
Income tax benefit		(4,680)		(1,550)
Income from continuing operations	$	2,858	$	2,706
Income from discontinued operations, net of tax		40,462		23,322
Net income	$	43,320	$	26,028

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Summary

Revenue increased 18% as compared to the prior fiscal year period driven by both our Life Sciences Products and Life Sciences Services segments. Gross margin was 48.0% for the three months ended December 31, 2021, as compared to ~~$220.4 million~~48.5% for the corresponding period of the prior fiscal year. ~~year, an increase of $95.0~~Operating expenses increased $10.4 million ~~or 43%.~~compared to the three months ended December 31, 2020, driven by increases in both research and development expenses and selling, general and administrative expenses. We reported ~~revenue~~an operating loss of ~~$851.4~~$0.3 million for the ~~nine~~three months ended ~~June 30,~~December 31, 2021, as compared to ~~$651.1~~operating income of $0.4 million for the corresponding ~~period of the~~ prior fiscal year period due to an increase in operating expenses. Income from continuing operations increased $0.2 million as compared to the prior year primarily due to a $3.1 million increase in income tax benefit, partially offset by a $2.9 million change in (loss) income before income taxes.

Please refer to the commentary provided below for further discussion and analysis of ~~$200.4 million, or 31%.~~the factors contributing to our results from operations for the three months ended December 31, 2021 as compared to the three months ended December 31, 2020.

Revenue

Our revenue performance for the three months ended December 31, 2021 and 2020 is as follows:


	Three Months Ended December 31,
Dollars in thousands	2021		2020		% Change
Life Sciences Products	$	49,877	$	45,508	10	%

Life Sciences Services	$	89,775	$	72,634	24	%

Total revenue	$	139,652	$	118,142	18	%

Revenue increased 18% driven by increases in both our Life Sciences Products and our Life Sciences Services segments. The COVID-19 pandemic has had varying impacts on our business for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021. ~~Further discussion of these impacts by each segment are discussed in the paragraphs below.~~

Our ~~Brooks Semiconductor Solutions Group~~Life Sciences Products segment ~~reported revenue of $186.3 million for the three months ended June 30, 2021, compared to $127.1 million for the corresponding period of the prior fiscal~~ ~~year, an increase of $59.2 million, or 47%. During the three months ended June 30, 2021, Automation~~ revenue increased ~~$43.2 million,~~10% driven by ~~vacuum robots~~increases in our automated cold sample management systems revenue and ~~systems, and~~infrastructure services revenue, increased $2.3 million. The acquisition of Precise in April 2021 added $3.3 million of revenue. Contamination control solutions revenue increased $16.0 million primarily driven by our carrier clean solutions and reticle stocker solutions product lines. For the nine months ended June 30, 2021, our Brooks Semiconductor Solutions Group segment reported revenue of $474.7 million, compared to $370.8 million for the corresponding period of the prior fiscal year, an increase of $103.9 million, or 28%. During the nine months ended June 30, 2021, Automation revenue increased $111.2 million, driven by vacuum robots and systems, and services revenue increased $5.3 million. The acquisition of Precise added an additional $3.3 million of revenue. These increases were partially offset by a ~~decline~~decrease in contamination control solutions revenue of $7.3 million. The semiconductor markets are cyclical and may fluctuate significantly from quarter to quarter. Demand for our Brooks Semiconductor Solutions Group segments’ products and services is affected by these cycles and a prolonged effect of the COVID-19 pandemic could negatively impact demand for our ~~products~~consumables and services in this segment. To date, we have experienced some disruption in our supply chain and operations as a result of the COVID-19 pandemic, which has impacted the timing of some shipments to customers. We do not believe, however, that COVID-19 pandemic has resulted in a negative impact to our bookings or demand for our products in this segment.instruments revenue.

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Our ~~Brooks~~ Life Sciences ~~Products~~Service segment ~~reported~~ revenue ~~of $48.6 million for the three months ended June 30, 2021, as compared to $30.4 million for the corresponding period of the prior fiscal~~ ~~year, an increase of $18.2 million, or 60%. For the nine months ended June 30, 2021,~~increased 24% driven by increased revenue in both our ~~Brooks Life Sciences Products segment reported~~sample repository solutions and genomics services businesses. Sample repository solutions revenue ~~of $146.5 million, as compared to $91.1 million for the corresponding period of the prior fiscal year, an increase of $55.4 million, or 61%~~increased 26%. The primary drivers of this increase ~~in revenue for both the three~~were storage, logistics services, and nine months ended June 30, 2021 as compared to the same periods in the prior year was primarily driven by demand for consumables and instruments. Revenue related to our automation cold sample management systems and infrastructure services also contributed to the increase in revenues in these periods.

~~Our Brooks Life Sciences Services segment reported revenue of $80.5 million for the three months ended June 30, 2021, as compared to $62.9 million for the corresponding period of the prior fiscal~~ year, an increase of $17.6 million, or 28%. Revenue from GENEWIZ increased $21.1 million, or 56%, as compared to the prior period. All service lines increased with the most significant impact coming from next generation sequencing, Sanger sequencing and gene synthesis services. We reported a decrease in revenue from Sample Repository Services of $3.5 million due to a decline in outsourced genomic services which were provided through an alliance with Infinity BiologiX LLC, formerly RUCDR, that was terminated in the fourth quarter of fiscal year 2020. Offsetting this decrease were increases in revenue across several product lines, including storage services and sample administration. The acquisition of Trans-Hit Biomarkers Inc., or THB, which was acquired in December ~~2020 added $0.9 million of~~2020. Genomic services revenue ~~for the three months ended June 30, 2021. For the nine months ended June 30, 2021, our Brooks Life Sciences Services segment reported revenue of $230.3 million, as compared~~increased 23% due to ~~$189.1 million for the corresponding period of the prior fiscal year,~~ an increase ~~of $41.1 million, or 22%. Revenue from GENEWIZ~~in demand across all services lines, primarily driven by increased ~~$45.4 million, or 38%, as compared to the prior period. All service lines increased with the most significant impact coming~~revenue from next generation sequencing and gene synthesis services. We reported a decrease in revenue from Sample Repository Services of $4.3 million due to the decline in outsourced genomic services as described previously. Offsetting this decline were increases across several product lines, including storage services and informatics, which was driven by the acquisition of RURO. In total, the acquisitions of RURO and THB added $4.4 million of revenue for the nine months ended June 30, 2021 as compared to the prior year period.

We estimate ~~the impact of~~that the COVID-19 pandemic had a positive net impact of approximately $10 million on our ~~two life sciences segments’~~ revenue for both the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021 ~~an increase to revenue of approximately $12 million~~ and ~~$39 million, respectively.~~ 2020.

Revenue generated outside the United States was ~~$206.6~~$50.1 million, or ~~66%~~36% of total revenue, for the three months ended ~~June 30,~~December 31, 2021, as compared to ~~$141.3~~$45.5 million, or ~~64% of total revenue, for the corresponding period of the prior fiscal~~ ~~year. Revenue generated outside the United States was $541.6 million, or 64% of total revenue, for the nine months ended June 30, 2021, as compared to $342.4 million, or 59%~~38% of total revenue, for the corresponding period of the prior fiscal year. We had no individual customer that accounted for more than 10% of our consolidated revenue for the three ~~and nine~~ months ended June 30, 2021. We had no individual customer that accounted for more than 10% of our consolidated revenue for the three months ended June 30, 2020.We had one customer that accounted for more than 10% of our consolidated revenue for the nine months ended June 30,December 31, 2021 or 2020.

~~Operating Income~~

We reported operating income of $50.2 million for the three months ended June 30, 2021, as compared to $19.1 million for the three months ended June 30, 2020. The increase of 163% was driven by higher gross profit of $51.6 million, partially offset by an increase in operating expenses of $20.5 million. Within operating expenses, selling, general, and administrative expenses increased $16.2 million, and research and development expenses increased $4.3 million. Restructuring expenses were essentially flat compared to the prior year period.

During the nine months ended June 30, 2021, we reported operating income of $111.7 million, compared to $44.3 million for the corresponding period of the prior fiscal year. The increase of 152% was driven by higher gross profit of $116.7 million, partially offset by an increase in operating expenses of $49.4 million. Within operating expenses, selling, general, and administrative expenses increased $42.8 million, and research and development expenses increased $7.6 million. Restructuring expenses decreased $1.0 million. Operating income for the nine months ended June 30, 2021 included $5.5 million of cost accrued for tariff liabilities on intercompany import activity in fiscal years 2016 through 2020. The costs resulted from an internal review of the transaction value used to calculate tariffs on intercompany

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~~imports~~Operating Income (Loss)

Our operating income performance for the three months ended December 31, 2021 and 2020 is as follows:


	Three Months Ended December 31,
Dollars in thousands		2021			2020
Revenue:
Life Sciences Products	$	49,877		$	45,508
Life Sciences Services		89,775			72,634
Total revenue	$	139,652		$	118,142

Operating income:
Life Sciences Products	$	4,388		$	4,183
Life Sciences Products adjusted operating margin		9	%		9	%
Life Sciences Services	$	7,883		$	6,928
Life Sciences Services adjusted operating margin		9	%		10	%
Segment adjusted operating income	$	12,271		$	11,112
Total segment adjusted operating margin		9	%		9	%

Amortization of completed technology		1,773			2,005
Amortization of acquired intangible assets		6,272			6,905
Restructuring charges		173			(40)
Other unallocated corporate expenses		4,378			1,885
Total operating (loss) income	$	(325)		$	356
Total operating margin		(0)	%		0	%

We reported an operating loss of ~~samples shipped from our GENEWIZ business. The drivers~~$0.4 million, a decrease of $0.7 million compared operating income of $0.3 million reported in the ~~changes~~prior fiscal year period. This decrease was due to an increase in operating expenses of $10.4 million, partially offset by an increase is gross profit ~~research and development, and~~of $9.7 million. Within operating expenses, selling, general, and administrative expenses ~~for the periods presented are discussed in further detail below.~~increased $8.8 million, and research and development expenses increased $1.4 million. Restructuring expenses increased $0.2 million.

~~Operating~~Life Sciences Products segment adjusted operating income increased $0.2 million and adjusted operating margin was flat compared to the prior fiscal year period. Adjusted operating income for our ~~Brooks Semiconductor Solutions Group~~Life Sciences Products segment was $43.5 million for the three months ended June 30, 2021, as compared to $22.7 million for the corresponding period of the prior fiscal year. Operating income for the three months ended June 30, 2021 included $1.2 million ofexcludes charges for amortization related to completed technology ~~as compared to $0.7~~of $0.2 million of these charges incurred during the corresponding period of the prior fiscal year. Operating income for the three months ended June 30, 2021 also includes a $0.1 million charge related to the purchase accounting impact on inventory. Adjusted operating income for our Brooks Semiconductor Solutions Group segment, which excludes the charges mentioned above, was $44.8and $0.3 million for the three months ended ~~June 30,~~December 31, 2021 as compared to $23.4 million for the corresponding period of the prior fiscal year. Operating income for our Brooks Semiconductor Solutions Group segment was $97.6 million for the nine months ended June 30, 2021 as compared to $52.9 million for the corresponding period of prior fiscal year. Operating income for the nine months ended June 30, 2021 included $1.9 million of charges for amortization related to completed technology, as compared to $2.2 million of these charges incurred during the corresponding period of the prior fiscal year. Operating income for the three months ended June 30, 2021 also includes a $0.1 million charge related to the purchase accounting impact on inventory. Adjusted operating income for our Brooks Semiconductor Solutions Group segment, which excludes the charges mentioned above, was $99.6 million for the nine months ended June 30, 2021, compared to $55.1 million for the corresponding period of the prior fiscal year.and 2020, respectively. Please refer to Note 15, “Segment Information” in the Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of this Quarterly Report on Form 10-Q.

~~Operating~~Life Sciences Services segment adjusted operating income increased $1.0 million and adjusted operating margin decreased one percentage point. Adjusted operating income for our ~~Brooks~~ Life Sciences ~~Products~~Services segment was $8.7 million for the three months ended June 30, 2021, as compared to $2.2 million for the corresponding period of the prior fiscal year. Operating income for our Brooks Life Sciences Products segment includesexcludes charges for amortization related to completed technology of ~~$0.4~~$1.6 million and ~~$0.3~~$1.7 million for the three months ended ~~June 30,~~December 31, 2021 and 2020, respectively. Adjusted operating income for our Brooks Life Sciences Products segment, which excludes the charges mentioned above, was $9.1 million for the three months ended June 30, 2021, as compared to $2.5 million for the corresponding period of the prior fiscal year. During the nine months ended June 30, 2021, operating income for our Brooks Life Sciences Products segment was $27.3 million, as compared to $4.1 million for the corresponding period of the prior fiscal year. Operating income for our Brooks Life Sciences Products segment includes charges for amortization related to completed technology of $1.0 million and $0.9 million, respectively, for the nine months ended June 30, 2021 and 2020. Adjusted operating income for our Brooks Life Sciences Products segment, which excludes the charges mentioned above, was $28.3 million for the nine months ended June 30, 2021, as compared to $5 million for the corresponding period of the prior fiscal year. Please refer to Note 15, “Segment Information” in the Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of this Quarterly Report on Form 10-Q.

Operating income for our Brooks Life Sciences Services segment was $12.2 million for the three months ended June 30, 2021, as compared to $2.0 million for the corresponding period of the prior fiscal year. Operating income for our Brooks Life Sciences Services segment includes charges for amortization related to completed technology of $1.7 million and $1.8 million for the three months ended June 30, 2021 and 2020, respectively. Adjusted operating income for our Brooks Life Sciences Service segment, which excludes the amortization expense was $13.8 million for the three months ended June 30, 2021, as compared to $4.1 million for the corresponding period of the prior fiscal year. During the nine months ended June 30, 2021, operating income for our Brooks Life Sciences Services segment was $30.9 million, as compared to $10.2 million for the corresponding period of the prior fiscal year. Operating income for our Brooks Life Sciences Services segment includes charges for amortization related to completed technology of $5.2 million for both the nine months ended June 30, 2021 and 2020. The nine months ended June 30, 2021 also includes $5.5 million of cost accrued for tariff liabilities in the nine months ended June 30, 2021 discussed above. Adjusted operating income for our Brooks Life Sciences Service segment, which excludes the charges mentioned above, was $41.5 million for the nine months ended June 30, 2021, as compared to $15.6 million for the corresponding period of the prior fiscal year. Please refer to Note 15, “Segment Information” in the Notes to the unaudited consolidated financial statements included in Item 1 "Consolidated Financial Statements" of this Quarterly Report on Form 10-Q.

Gross Margin

Our gross margin performance for the three months ended December 31, 2021 and 2020 is as follows:


	Life Science Products						Life Science Services						Azenta Total
	Three Months Ended December 31,						Three Months Ended December 31,						Three Months Ended December 31,
Dollars in thousands	2021			2020			2021			2020			2021			2020
Revenue	$	49,877		$	45,508		$	89,775		$	72,634		$	139,652		$	118,142
Gross profit		22,690			20,525			44,354			36,810			67,044			57,335
Gross margin		45.5	%		45.1	%		49.4	%		50.7	%		48.0	%		48.5	%
Adjustments:
Amortization of completed technology		203			273			1,570			1,732			1,773			2,005
Adjusted gross profit	$	22,894		$	20,798		$	45,924		$	38,542		$	68,817		$	59,340
Adjusted gross margin		45.9	%		45.7	%		51.2	%		53.1	%		49.3	%		50.2	%

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~~We estimate that the impact of the COVID-19 pandemic on~~Total gross margin decreased 0.5 percentage points to 48.0% driven by decreased gross margin in our ~~two life sciences segments’ operating income was~~Life Sciences Services segment; partially offset by a ~~net~~gross margin increase ~~of approximately $7 million and $22 million during the three and nine months ended June 30, 2021, respectively.~~in our Life Sciences Products segment.

Life Sciences Products segment gross margin increased 0.4 percentage points. The increase was primarily driven by ~~the revenue impacts to the life sciences segments noted above~~cost reduction initiatives and ~~lower expenses related to travel and trade shows.~~

~~Gross Margin~~

~~We reported gross margins of 45.8% for the three months ended June 30, 2021, as compared to 42.1% for the corresponding period of the prior fiscal~~ year. Gross margin for the third quarter of fiscal year 2021 as compared to the corresponding period of the prior fiscal year increased in all segments. The Brooks Life Sciences Services segment gross margins increased by 8.1 percentage points, the Brooks Life Sciences Products segment gross margins increased by 3.0 percentage points and the Brooks Semiconductor Solutions Group segment gross margins increased by 1.9 percentage points as compared to the corresponding period of the prior fiscal year. Cost of revenue for the three months ended June 30, 2021, included $3.4 million of charges related to amortization of completed technology, as compared to $2.8 million during the corresponding period of the prior fiscal year. The three months ended June 30, 2021 also included a charge of $0.1 million related to the purchase accounting impact on inventory. There were no such charges in the same period in the prior year. Excluding amortization and the purchase accounting impact on inventory, gross margin expanded 3.4 percentage points during the three months ended June 30, 2021, as compared to the corresponding period of the prior fiscal year. During the nine months ended June 30, 2021, we reported gross margins of 45.2%, as compared to 41.2% for the corresponding period of the prior fiscal year. Gross margins increased in all segments. The Brooks Life Sciences Services segment gross margins increased by 5.3 percentage points, the Brooks Semiconductor Solutions Group segment gross margins increased by 3.6 percentage points and the Brooks Life Sciences Products segment gross margins increased by 3.1 percentage points, as compared to the corresponding period of the prior fiscal year. Cost of revenue for the nine months ended June 30, 2021 included $8.1 million of charges related to amortization of completed technology, as compared to $8.2 million during the corresponding period of the prior fiscal year, and charges of $6.1 million accrued for the tariff liabilities discussed in the “Operating Income” section above. The nine months ended June 30, 2021 also included a $0.1 million charge related to the purchase accounting impact on inventory. There were no such charges for the nine months ended June 31, 2020. Excluding amortization, the purchase accounting impact on inventory, and the $5.5 million of tariff charges related to prior fiscal years, margins expanded 4.3 percentage points during the nine months ended June 30, 2021, as compared to the corresponding period of the prior fiscal year.

~~Our Brooks Semiconductor Solutions Group segment reported gross margins of 44.0% for the three months ended June 30, 2021, as compared to 42.1% for the corresponding period of the prior fiscal~~ ~~year. The increase of 1.9 percentage points was driven by volume leverage from~~customer mix within our automation products and favorable product mix. Cost of revenue for the three months ended June 30, 2021 included $1.2 million of charges for amortization related to completed technology, as compared to $0.7 million of these charges incurred during the corresponding period of the prior fiscal year. In addition, the three months ended June 30, 2021 included a charge of $0.1 million related to the purchase accounting impact on inventory. There were no such charges in the corresponding period of the prior fiscal year. Excluding the impact of the amortization of completed technology and the purchase accounting impact on inventory, gross margins increased 2.0 percentage points during the three months ended June 30, 2021, as compared to the corresponding period of the prior fiscal year. During the nine months ended June 30, 2021, our Brooks Semiconductor Solutions Group segment reported gross margins of 43.6%, as compared to 40.0% for the corresponding period of the prior fiscal year. The increase of 3.6 percentage points was driven by volume leverage from our automation products and favorable product mix. Cost of revenue for the nine months ended June 30, 2021 included $1.9 million of charges for amortization related to completed technology, as compared to $2.2 million of these charges incurred during the corresponding period of the prior fiscal year. The nine months ended June 31, 2021 also included a $0.1 million charge related to the purchase accounting impact on inventory. Excluding the impact of the amortization of completed technology and the purchase accounting impact on inventory, gross margins increased 3.4 percentage points during the nine months ended June 30, 2021, as compared to the corresponding period of the prior fiscal year.

~~Our Brooks Life Sciences Products segment reported gross margins of 46.6% for the three months ended June 30, 2021, as compared to 43.6% for the corresponding period of the prior fiscal~~ ~~year. The increase of 3.0 percentage points~~

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~~was primarily driven by volume leverage related to increased sales in our consumables and instruments product lines.~~automated storage systems business. Cost of revenue included ~~$0.4~~$0.2 million of charges for amortization related to completed technology for the three months ended ~~June 30,~~December 31, 2021 ~~as compared to~~and $0.3 million for the ~~corresponding period of the prior fiscal year.~~three months ended December 31, 2020. Excluding the impact of the amortization of completed technology, margins expanded ~~3.0~~0.2 percentage points during the three months ended ~~June 30,~~December 31, 2021, as compared to the corresponding period of the prior fiscal year. ~~During the nine months ended June 30, 2021, our Brooks~~

Life Sciences ~~Products~~Services segment ~~reported~~ gross ~~margins of 45.9%, as compared to 42.8% for the corresponding period of the prior fiscal year. The increase of 3.1~~margin decreased 1.3 percentage points ~~was primarily~~ driven by ~~volume leverage~~both the sample repository solutions and genomics services businesses. Sample repository solutions gross margin decrease was primarily related to increased ~~sales in our consumables and instruments product lines. Cost of revenue~~employee related costs within sample administration services. Genomic services gross margin decrease was driven by higher labor costs amid continued investment for ~~the nine months ended June 30, 2021 and 2020 included $1.0 million of charges for amortization related to completed technology, as compared to $0.9 million~~growth in the ~~same period of the prior fiscal year.~~business. Excluding the impact of the amortization of completed technology, margins ~~expanded 2.8~~decreased 1.9 percentage points during the ~~nine~~three months ended ~~June 30,~~December 31, 2021, as compared to the corresponding period of the prior fiscal year.

Research and Development Expenses

Our ~~Brooks Life Sciences Services segment reported gross margins of 49.4%~~research and development expense for the three months ended ~~June 30,~~December 31, 2021 and 2020 is as ~~compared to 41.4% for the corresponding period of the prior fiscal~~ follows:

~~year.~~


	Three Months Ended December 31,
Dollars in thousands	2021		2020		% Change
Life Sciences Products	$	3,411	$	2,337	46	%

Life Sciences Services	$	3,075	$	2,747	12	%

Total research and development expense	$	6,485	$	5,084	28	%

Research and development expenses increased $1.4 million driven by both reporting segments. Life Sciences Products segment and Life Sciences Services segment expense increased $1.1 million and $0.3 million, respectively. The increase ~~of 8.1 percentage points~~in both segments was ~~driven by volume leverage, as well as the~~ primarily related to higher payroll costs and higher project costs.

~~favorable~~

~~benefit of 4.4 points from the reduction of outsourced genomic services under the alliance contract referenced above. Cost of revenue~~Selling, General and Administrative Expenses

Our selling, general and administrative expenses for the three months ended ~~June 30,~~December 31, 2021 and 2020 ~~included $1.7~~is as follows:


	Three Months Ended December 31,
Dollars in thousands	2021		2020		% Change
Life Sciences Products	$	15,095	$	14,283	6	%

Life Sciences Services	$	34,978	$	28,867	21	%

Corporate	$	10,638	$	8,780	21	%

Total selling, general and administrative expense	$	60,711	$	51,930	17	%

Total selling, general and administrative expenses increased $8.8 million, ~~of charges for amortization~~driven by increases in both our segments and an increase in unallocated corporate expenses.

Within our segment expenses discussed below, we allocate certain corporate general and administrative expenses including costs related to ~~completed~~shared corporate functions which include finance, information technology, ~~as compared~~human resources, legal, executive, governance, logistics and compliance. In total, corporate general and administrative expense allocated to ~~$1.8~~segments increased $2.8 million, partially due to an increase in ~~the corresponding period~~corporate staff in preparation to fully staff two separate companies, creating a duplication of ~~the prior fiscal year. Excluding the impact of the amortization of completed technology, margins expanded 6.8 percentage points~~roles during the three months ended June 30, 2021, as compared to the corresponding period of the prior fiscal year. During the nine months ended June 30, 2021, our Brooks Life Sciences Services segment reported gross margins of 47.9%, as compared to 42.6% for the corresponding period of the prior fiscal year. The improvement of 5.3 points was driven by volume leverage and revenue mix, partially offset by the impact of the $5.5 million of cost accrued for the tariff liabilities as discussed above. The revenue mix benefit included 3.6 points from the reduction of outsourced genomic services under the alliance contract referenced above. Cost of revenue for the nine months ended June 30, 2021 and 2020 both included $5.2 million of charges for amortization related to completed technology and $5.5 million related to the tariff charges discussed above. Excluding the impact of the amortization of completed technology, and the $5.5 million of tariff charges related to prior periods, margins expanded 7.1 percentage points during the nine months ended June 30, 2021, as compared to the corresponding period of the prior fiscal year.

~~Research and Development Expenses~~

Research and development expenses were $18.3 million and $51.3 million, respectively, during the three and nine months ended June 30, 2021, as compared to $14.0 million and $43.7 million, respectively, during the corresponding periods of the prior fiscal year. The increase of $4.3 million and $7.6 million, respectively, during the three and nine months ended June 30, 2021 as compared to the corresponding periods of fiscal year 2020, was driven by all three operating segments. Incremental research and development expenses related to acquisitions were $0.4 million and $0.7 million, respectively, for the three and nine months ended June 30, 2021. The drivers of the increase to research and development expenses by segment are discussed in more detail below.

Research and development expenses in our Brooks Semiconductor Solutions Group segment were $12.8 million and $35.5 million, respectively, during the three and nine months ended June 30, 2021, as compared to $9.6 million and $30.6 million, respectively, during the corresponding periods of the prior fiscal year. The increase of $3.2 million and $4.9 million, respectively, during the three and nine months ended June 30, 2021 as compared to the corresponding periods of fiscal year 2020 was driven by higher payroll related costs and project spend to support new product development initiatives in our product sets, as well as the expense structure added from the Precise acquisition.

Research and development expenses in our Brooks Life Sciences Products segment were $2.7 million and $7.4 million, respectively, during the three and nine months ended June 30, 2021, as compared to $2.0 million and $6.5 million, respectively, during the corresponding periods of the prior fiscal year. The increase of $0.8 million and $1.0 million, respectively, during the three and nine months ended June 30, 2021 as compared to the corresponding period of fiscal year 2020 was driven by higher program and outside services costs.transition period.

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Research and development expenses in our Brooks Life Sciences Services segment were $2.8 million and $8.4 million, respectively, during the three and nine months ended June 30, 2021, as compared to $2.4 million and $6.7 million, respectively, during the corresponding periods of the prior fiscal year. The increase of $0.4 million and $1.7 million, respectively, during the three and nine months ended June 30, 2021 as compared to the corresponding period of fiscal year 2020 was primarily driven by higher payroll related costs and project costs.

~~Selling, General and Administrative Expenses~~

~~Selling, general and administrative expenses were $75.9 million for the three months ended June 30, 2021, as compared to $59.7 million for the corresponding period of the prior fiscal~~ ~~year. The increase of $16.2 million was driven by $10.2 million from~~Life Sciences Products segment selling, general and administrative expenses ~~$5.9~~increased $0.8 million ~~from corporate expenses not allocated to our segments and $1.0 million of incremental costs~~primarily related to ~~acquisitions. The~~higher allocated costs, and integration of an acquisition.

Life Sciences Services segment selling, general and administrative expenses ~~are discussed~~increased $6.1 million primarily related to headcount investments in ~~further detail below. The increase~~the commercial organization and lab support personnel. In addition, bad debt expense was higher due to a one-time reversal that occurred in ~~unallocated corporate expenses was primarily driven by mergers and acquisition related expenses, which were $6.3 million for~~ the three months ended ~~June 30, 2021, compared~~December 31, 2020, and higher Corporate allocated costs driven by the factors discussed above.

Unallocated corporate expenses increased $2.1 million, primarily due to ~~nominal charges for the three months ended June 30, 2020. Merger~~higher merger and acquisition ~~expenses for the three months ended June 30, 2021 included $5.8 million of~~costs and costs related to the separation of the Company. Unallocated corporate expenses also include amortization primarily related to customer relationship intangible assets, which ~~were $7.7~~decreased $0.6 million, and ~~$7.6 million for the three months ended June 30, 2021 and 2020, respectively.~~

In connection with the announcement of the separation of our business into two publicly-traded companies, we announced that the Automation company will retain the Brooks Automation, Inc. name and the Life Sciences company will be rebranded at the time of the separation. In connection with the rebranding, management is assessing the utility, remaining useful life and fair values of the Life Sciences trademark and tradename assets. The total net book value of these intangible assets is $14.3 million as of June 30, 2021. The conclusion of management’s assessment of the impact of the rebranding could result in an impairment charge of the asset values or an acceleration of amortization expense in future periods.

~~Selling, general and administrative expenses were $221.6 million for the nine months ended June 30, 2021, as compared to $178.9 million for the corresponding period of the prior fiscal~~ year. The increase of $42.8 million was driven by $21.6 million from the segment selling, general and administrative expenses, $21.2 million from corporate expenses not allocated to our segments and $2.7 million of incremental costs related to acquisitions. The segment selling, general and administrative expenses are discussed in further detail below. The increase in unallocated corporate expenses was primarily driven by mergers and acquisition related expenses, which were $21.1 million for the nine months ended June 30, 2021, compared to $0.5 million for the nine months ended June 30, 2020. Merger and acquisition expenses for the nine months ended June 30, 2021 included $19.6 million of costs related to the ~~separation~~transformation of ~~the Company. Unallocated corporate expenses also include amortization primarily~~our business of $0.6M.

Restructuring Charges

Restructuring charges increased $0.2 million. The three months ended December 31, 2021 includes charges for actions taken related to ~~customer relationship intangible assets, which were $22.7 million and $23.1 million for~~ the ~~nine months ended June 30, 2021 and 2020, respectively.~~

~~Selling, general and administrative expenses at the segment level, which~~transformation of our business. Costs savings from these actions are discussed below, include corporate allocations from shared corporate function which include finance, information technology, human resources, legal, executive, governance, logistics and compliance, and variable compensation. During the three and nine months ended June 30, 2021, corporate allocated expenses increased $3.8 million and $7.4 million respectively, comparedexpected to ~~the corresponding prior periods, primarily due to higher variable compensation accruals and IT infrastructure costs.~~

~~Selling, general and administrative expenses~~be realized in our Brooks Semiconductor Solutions Group segment were $25.7 million and $74.1 million, respectively, for the three and nine months ended June 30, 2021, as compared to $21.2 million and $65.0 million, respectively, for the corresponding periods of the prior fiscal year. The increase of $4.5 million and $9.1 million, respectively, for the three and nine months ended June 30, 2021 is primarily related to higher variable compensation expense and corporate allocated costs, which were driven by the factors discussed above, as well as the Precise acquisition which added $0.5 million of costs for the three and nine months ended June 30, 2021. These increases were partially offset by lower travel and trade show expenses.future periods.

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Selling, general and administrative expenses in our Brooks Life Sciences Products segment were $11.2 million and $32.5 million, respectively, for the three and nine months ended June 30, 2021, compared to $9.0 million and $28.4 million, respectively, for the corresponding periods of the prior fiscal year. The increase of $2.2 million and $4.1 million, respectively, for the three and nine months ended June 30, 2021 over the corresponding periods of the prior fiscal year was primarily driven by higher sales commission expenses, variable compensation expense and corporate allocated costs, which were driven by the factors discussed above. These items were partially offset by lower expenses related to travel.

Selling, general and administrative expenses in our Brooks Life Sciences Services segment were $24.9 million and $71.1 million, respectively, for the three and nine months ended June 30, 2021, compared to $21.6 million and $63.6 million, respectively, for the corresponding periods of the prior fiscal year. The increase of $3.3 million and $7.5 million, respectively, for the three and nine months ended June 30, 2021 over the corresponding periods of the prior fiscal year was primarily driven by variable compensation expense and infrastructure costs related to acquisitions, partially offset by lower travel expenses and lower bad debt expense.

Non-Operating Income (Expenses)

Interest income - ~~During the three and nine months ended June 30, 2021, we recorded interest~~Interest income ~~of $0.4 million and $0.5 million, respectively, as compared to~~was less than $0.1 million for both the three months ended December 31, 2021 and ~~$0.9 million, respectively, during the corresponding periods of the prior fiscal year.~~2020.

Interest expense -– ~~During the three and nine months ended June 30, 2021, we recorded interest~~ Interest expense ofwas $0.5 million and ~~$1.5~~$0.6 million, respectively, ~~as compared~~for the three months ended December 31, 2021 and 2020. Interest expense is primarily related to ~~$0.8 million and $2.2 million, respectively, during corresponding periods of the prior fiscal year.~~interest expense on our term loan.

Other income (expenses), net -– ~~During~~For the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021, we ~~recorded~~had other expense ~~net~~ of ~~$1.6~~$1.1 million, ~~and $0.1 million, respectively,~~as compared to other income ~~net~~ of ~~$0.5~~$1.3 million for the three months ended ~~June 30, 2020 and other expense, net of $1.3 million for the nine months ended June 30,~~December 31, 2020. The ~~primary driver of~~change from the ~~increase in other expenses, net in the three months ended June 30, 2021 as compared to the same~~corresponding prior fiscal year period ~~in the prior year was~~is primarily due to ~~an increase in~~higher foreign currency exchange losses of $1.5 million. The primary driver of the decrease in other expenses, net for the nine months ended June 30, 2021 as compared to the same period in the prior year was due to a decrease of foreign exchange losses of $1.6 million.losses.

Income Tax Provision / Benefit

We recorded an income tax ~~provision~~benefit of ~~$9.4~~$4.7 million ~~and $20.4 million, respectively,~~ during the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021. The ~~tax provision~~benefit for the three months ended ~~June 30,~~December 31, 2021 was primarily driven by ~~the provision on earnings from operations during the period. The provision was partially offset by~~ a $1.5 million benefit from the reversal of uncertain tax positions during the quarter. The provision for the nine months ended June 30, 2021 was primarily driven by the provision on earnings from operations during the period and was partially offset by a $2.7$4.8 million discrete stock compensation windfall benefit for tax deductions that exceeded the associated book compensation expense.

We recorded an income tax ~~provision~~benefit of ~~$5.1~~$1.6 million ~~and $5.6 million, respectively,~~ during the three ~~and nine~~ months ended ~~June 30,~~December 31, 2020. The tax ~~provision~~benefit for the three months ended ~~June 30,~~December 31, 2020 was primarily driven by the provision on earnings from operations during the period. The tax provision for the nine months ended June 30, 2020 was primarily driven by the provision on earnings from operations during the period. The tax provision was offset by a ~~$6.1~~$1.9 million discrete stock compensation windfall benefit for tax deductions that exceeded the associated book compensation ~~expense in~~expense.

Discontinued Operations

Discontinued operations for the ~~period. During the nine~~three months ended ~~June 30,~~December 31, 2021 and 2020 include our semiconductor automation business. In the fourth quarter of fiscal year 2021, we ~~also recorded~~entered into a ~~discrete benefit of $0.5 million from a reduction of deferred tax liabilities related~~definitive agreement to sell our semiconductor automation business to THL for $3 billion in cash, subject to net working capital and other adjustments. On February 1, 2022, subsequent to the ~~extension~~close of ~~a tax rate incentive~~our first fiscal quarter of 2022, we completed the sale of our semiconductor automation business to THL for $3.0 billion in ~~China.~~cash, subject to network capital and other adjustments. Net cash proceeds from the divestiture are expected to be approximately $2.4 billion upon the settlement of fees and taxes. The three months ended December 31, 2020 include an adjustment to our previously recorded gain on sale from our semiconductor cryogenics business, which was completed on July 1, 2019.

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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 in our unaudited consolidated financial statements included elsewhere in this Quarterly Report on Form 10 Q. During the first quarter of fiscal year 2021, the final net working capital was determined which resulted in our payment of an additional $1.8 million to Edwards in the nine months ended June 30, 2021. We generated a net lossRevenue from discontinued operations ~~net of tax of $1.2~~was $203.7 million ~~for the nine months ended June 30, 2021 related to our semiconductor cryogenics business. We recorded a nominal loss related to our semiconductor cryogenics business~~and $131.4 million, respectively, for the three months ended ~~June 30,~~December 31, 2021. ~~We did not record~~ and 2020 and relates to the semiconductor automation business. Net income ~~or loss related to our semiconductor cryogenics business for~~from discontinued operations was $40.5 million and $23.3 million the three months ended ~~June 30,~~December 31, 2021 and 2020,. ~~We generated a net loss from discontinued operations of $0.2 million for the nine months ended June 30, 2020 related to our semiconductor cryogenics business.~~ respectively. The ~~net loss~~income from discontinued operations only 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 usour company on an ongoing basis. Indirect expenses which supported the semiconductor ~~cryogenics~~automation business and which ~~will remain~~remained as part of ~~our~~the continuing operations, are not reflected in ~~net loss~~income from discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES

Our semiconductor solutions business represents slightly more than half of our revenue and 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, including the uncertainty related to the COVID-19 pandemic, make it difficult for us to predict longer-term liquidity requirements with sufficient certainty. We may be unable to obtain any required additional financing on terms favorable to us, if at all. If adequate funds are not available to us on acceptable terms or otherwise, we may be unable to successfully develop or enhance products and services, respond to competitive pressure or take advantage 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 the semiconductor cryogenics business~~discontinued operations and is stated on a total company consolidated basis.

Overview of Cash Flows and Liquidity

Our cash and cash equivalents, restricted cash and marketable securities as of ~~June 30,~~December 31, 2021 and September 30, ~~2020~~2021 consist of the following (in thousands):



	June 30, 2021		September 30, 2020		December 31, 2021		September 30, 2021
Cash and cash equivalents	$	269,862	$	295,649	$	215,168	$	227,427
Restricted cash		12,710		6,877		12,874		12,906
Cash and cash equivalents and restricted cash						228,042		240,333
Short-term marketable securities		101		67		51		81
Long-term marketable securities		3,637		3,101		3,724		3,598
	$	286,310	$	305,694	$	231,817	$	244,012

Cash, cash equivalents and restricted cash					$	228,042	$	240,333
Cash and cash equivalents included in assets held for sale						45,000		45,000
					$	273,042	$	285,333

Our cash isand cash equivalents, restricted cash and marketable securities were $231.8 million as of December 31, 2021 and exclude $45 million of cash included within assets held ~~in numerous locations throughout~~for sale related to the ~~world.~~semiconductor automation business. As of ~~June 30,~~December 31, 2021, we had cash, ~~and~~ cash equivalents and restricted cash including cash in assets held for sale of ~~$269.9~~$273.0 million, of which ~~$206.1~~$174.6 million was held outside of the United States. If these funds are needed for ~~our U.S.~~the United States operations, we would need to repatriate these funds. ~~Although under current~~As a result changes in U.S. tax ~~laws~~legislation, any repatriation ~~of these fund to~~in the ~~United States~~future would likely not result in ~~further~~ U.S. federal income ~~tax, it is uncertain whether this will be~~tax. During the ~~case in the future based on changes~~quarter ended September 30, 2021 we repatriated foreign cash to the U.S. in planning for the sale of the discontinued operation and recognized all related tax ~~laws that may be enacted. Our~~costs. We have provided immaterial deferred income taxes for the impact of these future repatriations. Aside from these actions, our intent is to reinvest ~~these funds~~the remaining foreign cash outside of the United States and our current operating plans do not demonstrate a need to repatriate these funds for our U.S. operations. AsWe had marketable securities of ~~June 30,~~$3.8 million and $3.7 million as of December 31, 2021 and September 30, ~~2020, we had marketable securities of $3.7 million and $3.2 million,~~2021, respectively. Our marketable securities are generally readily convertible to cash without an adverse impact.

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~~Nine~~Three Months Ended ~~June 30,~~December 31, 2021 Compared to ~~Nine~~Three Months Ended ~~June 30,~~December 31, 2020

Overview

Cash and cash equivalents and restricted cash as presented on our Consolidated Statements of Cash Flows is on a total company basis and ~~marketable securities~~ were ~~$286.3~~$273.0 million ~~at June 30,~~as of December 31, 2021 as compared to ~~$305.7~~$285.3 million atas of September 30, ~~2020.~~2021. The decrease of ~~$19.4~~$12.3 million ~~from September 30, 2020 was comprised~~included cash outflows for investing activities of ~~cash inflows of $122.7~~$18.4 million ~~from operating activities; offset by outflows from investing~~ and financing activities ~~which include $92.4~~of $7.7 million, ~~for acquisitions, $34.6 million for capital expenditures, and $22.3 million for dividends. Cash~~partially offset by cash inflows from operating activities ~~was comprised~~ of ~~$148.9 million~~$15.6 million. The effects of ~~earnings, including $88.9 million of net income and $60.0 million of adjustments to net income for non-cash items, partially offset~~foreign exchange reduced our cash balance by ~~$26.2 million of cash used for the changes in operating assets and liabilities.~~$1.8 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 ~~provided by~~flows from operating activities ~~was $122.7~~of $15.6 million ~~during~~for the ~~nine~~three months ended ~~June 30,~~December 31, 2021, ~~and was comprised primarily of $148.9 million of earnings, including $88.9 million of~~resulted from net income ~~and $60.0~~$43.3 million, adjusted to exclude the effect of ~~adjustments to~~non-cash operating charges of $17.7 million, partially offset by an increase in net ~~income for non-cash items. Partially offsetting these items was the net use~~operating assets of ~~cash of $26.2 million for~~$45.4 million. Cash outflows from the increase in net operating assets were primarily driven by increases in inventory and ~~liabilities.~~deferred revenue, partially offset by an increase in accrued expenses and other liabilities and a decrease in prepaid expenses and other assets.

Cash flows from operating activities of $43.7 million for the three months ended December 31, 2020, resulted from net income $26.0 million, adjusted to exclude the effect of non-cash operating charges of $18.5 million, partially offset by an increase in net operating assets of $1.0 million. The changes in net ~~increase in~~ operating assets ~~and liabilities~~ consisted primarily of ~~increases in~~accrued compensation and tax withholdings as a result of year-end cash incentive bonus payments, inventory, and accounts receivable ~~and inventory~~, partially offset by increases to accrued expenses and ~~other liabilities~~accounts payable.

Discontinued operations contributed $40.5 million and ~~accounts payable.~~ Cash used in operating activities was $13.9 million during the nine months ended June 30, 2020, comprised primarily of $91.5 million of cash taxes paid for the gain on the sale of the semiconductor cryogenics business and a use of cash of $12.1 million related to increases in net operating assets and liabilities partially offset by ~~$89.6 million of earnings, comprised of $35.9~~$23.3 million of net income to the three months ended December 31, 2021 and ~~$53.7 million of adjustments to net income for non-cash items. The net increase in operating assets and liabilities consisted primarily of an increase in inventory partially offset by increases in~~ ~~accrued expenses and other liabilities, accrued compensation and accounts payable~~.2020, respectively.

Investing Activities

Cash flows used in 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 investing activities was ~~$128.8~~$18.4 million during the ~~nine~~three months ended ~~June 30,~~December 31, 2021 and ~~included cash outflows for acquisitions~~was primarily comprised of ~~$92.4 million and~~ capital ~~expenditures of $34.6 million.~~ expenditures. Cash used in investing activities was ~~$12.6~~$30.3 million during the ~~nine~~three months ended ~~June 30, 2020. Cash used in investing activities during the nine months ended June 30,~~December 31, 2020 ~~included cash outflows~~ for capital expenditures of ~~$29.7~~$15.2 million ~~$15.7 million for the acquisition~~and acquisitions of ~~RURO, and $10.8 million for the purchases of marketable securities. These outflows were partially offset by cash inflows from the maturities and sales of marketable securities of $44.7 million.~~$15.1M

Financing Activities

Cash outflows for financing activities were ~~$21.4~~$7.7 million during the ~~nine~~three months ended ~~June 30,~~December 31, 2021 which primarily consisted of cash outflows for cash dividend payments of ~~$22.3~~$7.4 million. Cash used in financing activities was ~~$21.6~~$8.2 million during the ~~nine~~three months ended ~~June 30,~~December 31, 2020, which primarily consisted of cash outflows for cash dividend payments of ~~$22.1~~$7.4 million.

China Facility

In April 2019, we committed to construct a facility in Suzhou China, to consolidate the multiple locations in Suzhou, ~~operations of~~China related to the ~~GENEWIZ~~genomics business and provide infrastructure to support future growth. The facility is being constructed in two

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phases. We have incurred ~~$23.2~~$45.5 million ~~of capital expenditures~~incurred to date related to the construction of the facility, which includes ~~$6.2~~$9.9 million ~~and $13.8 million, respectively,~~incurred for the three ~~and nine~~ months ended ~~June 30,~~December 31, 2021.

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Divestiture and Extinguishment of Debt

On February 1, 2022, subsequent to the close of our first fiscal quarter of 2022, we completed the sale of our semiconductor automation business to THL for $3.0 billion in cash, subject to network capital and other adjustments. Net cash proceeds from the divestiture are expected to be approximately $2.4 billion upon the settlement of fees and taxes. Upon closure of the sale on February 1, 2022, we utilized $50 million of proceeds to extinguish outstanding debt. The Company also terminated its revolving line of credit, which had no borrowings outstanding.

Capital Resources

Term 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 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. The loan principal amount may be increased by an aggregate amount equal to $75.0 million plus any voluntary repayments of the term loan plus any additional amount such that our secured leverage ratio is less than 3.00 to 1.00.

The term loan matures and becomes fully payable on October 4, 2024. Installment principal payments equal to 0.25% of the initial principal amount of the term loan are payable on the last day of each quarter, with any remaining principal amount becoming due and payable on the maturity date. Subject to certain conditions stated in the credit agreement, we may redeem the term loan at any time at our option without a significant premium or penalty, except for a repricing transaction, as defined in the credit agreement. We are required to redeem the term loan at the principal amount then outstanding upon the occurrence of certain events, as set forth in the credit agreement.

On July 1, 2019, in connection with the completion of the sale of our semiconductor cryogenics business, we used $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 credit agreement, as amended, contains certain customary representations and warranties, covenants and events of default. As of ~~June 30,~~December 31, 2021, we were in compliance with all covenants and conditions under the credit agreement, as amended.

At ~~June 30,~~December 31, 2021, the outstanding principal balance of the term loan was $49.7 million, excluding unamortized deferred financing costs of $0.3 million.

Borrowings under the term loan are subject to a variable interest rate. As a result, we may experience exposure to interest rate risk due to the potential volatility associated with the variable interest rate on the term loan. If rates increase, we may be subject to higher costs of servicing the loan which could reduce our profitability and cash flows.

~~In connection with our acquisition of GENEWIZ Group in November 2018, we assumed three five-year term loans, which matured and were repaid in full on June 30, 2021.~~

During the ~~nine~~three months ended ~~June 30,~~December 31, 2021, the weighted average stated interest rate on the term loans was ~~2.8%~~2.7%. During the ~~nine~~three months ended ~~June 30,~~December 31, 2021, we incurred aggregate interest expense of ~~$1.3~~$0.4 million on the term loans, including ~~$0.2~~$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.

On February 1, 2022, we settled the Term Loan using proceeds from the sale of the semiconductor automation business as discussed above.

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. that provides for a revolving credit 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.

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~~As of June 30, 2021, we had approximately $49.8 million available for borrowing under the line of credit.~~ There were no amounts outstanding ~~pursuant to~~under the line of credit as of ~~June~~December 31, 2021 and September 30, 2021. The ~~amount~~Company records commitment fees and other costs directly associated with obtaining the line of ~~funds available~~credit facility as deferred financing costs which are amortized over the term of the related financing arrangement. Deferred financing costs were $0.1 million for ~~borrowing under~~ the ~~credit agreement may fluctuate each~~ period ~~based on our borrowing base availability.~~ended December 31, 2021 and September 30, 2021, respectively. The line of credit ~~agreement~~ contains certain customary representations and warranties, a financial covenant and affirmative and negative covenants as well as events of default. ~~We were~~The Company was in compliance with the line of credit ~~agreement~~covenants as of ~~June 30,~~December 31, 2021. ~~Although~~

On February 1, 2022, we ~~believe we will be able to generate sufficient cash in the United States and foreign jurisdictions to fund future operating costs, we secured~~closed the revolving line of credit ~~as an additional assurance for maintaining liquidity~~ in connection with the ~~United States during potentially severe downturns~~sale of the ~~cyclical~~ semiconductor ~~market, and for strategic investments or acquisitions.~~

~~Dividends~~

~~On August 3, 2021, our Board of Directors declared a cash dividend of $0.10 per share payable on September 24, 2021 to common stockholders of record~~automation business, as of September 3, 2021. 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 or the impact of the COVID-19 pandemic. We may reduce, delay or cancel a quarterly cash dividend based on the severity of a cyclical downturn or if the effects of the COVID-19 pandemic are prolonged.discussed above.

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 ~~nine~~three months ended ~~June 30,~~December 31, 2021 and there have been no shares repurchased under this program since its inception.

Contractual Obligations and Requirements

At ~~June 30, 2021, we~~December 31, 2021we had non-cancellable commitments of ~~$288.0~~$59.9 million, including primarily purchase orders for inventory of ~~$254.6~~$44.0 million, information technology related commitments of ~~$18.0~~$14.2 million, and China facility commitments of ~~$15.2~~$1.7 million.

At ~~June 30,~~December 31, 2021, we had approximately $1.3 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 ~~nine~~three months ended ~~June 30,~~December 31, 2021, and we currently do not anticipate any of these obligations to be called in the near future.

Off-Balance Sheet Arrangements

As of ~~June 30,~~December 31, 2021, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

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

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Interest Rate Exposure

Our term loan has a variable interest rate which subjects 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. During the ~~nine~~three months ended ~~June 30,~~December 31, 2021, the weighted average stated interest rate on all of our then outstanding term loans was ~~2.8%~~2.7%. At ~~June 30,~~December 31, 2021, the outstanding term loans principal balance on our remaining term loan was $49.7 million, net of unamortized deferred financing costs of $0.3 million. During the ~~nine~~three months ended ~~June 30,~~December 31, 2021, we incurred cash interest expense of ~~$1.1~~$0.3 million on all of our then outstanding term loans. A hypothetical 100 basis point change in interest rates would result in a ~~$0.4~~$0.1 million change in interest expense incurred during the ~~nine~~three months ended ~~June 30,~~December 31, 2021.

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Our cash and cash equivalents and restricted cash consist principally of money market securities that are short-term in nature. At ~~June 30,~~December 31, 2021, our total short-term and long-term investments were ~~$3.7~~$3.8 million, consisting mostly of highly rated corporate debt securities and other debt securities. At ~~June 30,~~December 31, 2021, we had an insignificant amount of securities in an unrealized loss position. A hypothetical 100 basis point change in interest rates would result in an insignificant increase in interest income earned during the ~~nine~~three months ended ~~June 30,~~December 31, 2021.

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 38% and ~~39%~~43% of our total sales, respectively, during the ~~nine~~three months ended ~~June 30,~~December 31, 2021 and 2020. 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 ~~$103.2~~$110.0 million and ~~$142.9~~$119.4 million, respectively, at ~~June 30,~~December 31, 2021 and September 30, ~~2020,~~2021, and related to the Euro, British Pound and a variety of Asian currencies. We mitigate the impact of potential currency translation losses on these short-term intercompany advances by the timely settlement of each transaction, generally within 30 days. We also utilize forward contracts to mitigate our exposures to currency movement. We incurred foreign currency losses of ~~$1.2~~$1.9 million and ~~$2.8~~$0.8 million during the ~~nine~~three months ended ~~June 30,~~December 31, 2021 and 2020, respectively, which related to the currency fluctuation on these balances between the time the transaction occurred and the ultimate settlement of the transaction. A hypothetical 10% change in foreign exchange rates at ~~June 30,~~December 31, 2021 and 2020 would result in an approximate change of ~~$2.8~~$3.1 million and less than ~~$0.1~~$4.6 million, respectively, in our net income during the ~~nine~~three months ended ~~June 30,~~December 31, 2021 and 2020.

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Item 4. Controls and Procedures

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

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

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are subject to various legal proceedings, both asserted and unasserted, that arise in the ordinary course of business. We cannot predict the ultimate outcome of such legal proceedings or in certain instances provide reasonable ranges of potential losses. However, as of the date of this Quarterly Report on Form 10-Q, 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 ~~2020~~2021 Annual Report on Form 10-K. There have been no material changes from the risk factors disclosed in our ~~2020~~2021 Annual Report on Form 10-K, other than the addition of the risk factor set forth below. We may disclose changes to risk factors or additional factors from time to time in our future filings with the SEC.

~~Our plans~~Changes in key personnel could impair our ability to ~~separate into two independent, publicly traded companies may not be completed on the currently contemplated timeline or at all and may not achieve the intended benefits.~~

~~On May 10, 2021, we announced our intention to separate~~execute our business into two independent, publicly traded companies. We plan to spin off our semiconductor business, which operates as our Semiconductor Solutions Group segment, through a pro rata distribution of shares to our common stockholders. The proposed separation is subject to various conditions, is complex in nature, and may be affected by unanticipated developments, credit and equity markets, or changes in market conditions. As independent, publicly traded companies, each of the resulting companies will be smaller and less diversified than our business, with a narrower business focus, and they may be more vulnerable to changing market conditions.

strategy.

We may not be able to achieve the full strategic and financial benefits that we anticipate to result from the separation, or such benefits may be delayed or not occur at all. We may experience negative reactions from financial markets if we do not complete the separation in a reasonable time period, or at all. Following the proposed separation, the combined value of the shares of the two publicly traded companies may not be equal to or greater than what the valueThe continuing service of our ~~common stock would have been had~~executive officers and essential engineering, scientific and management personnel, together with our ability to attract and retain such personnel, is an important factor in our continuing ability to execute our strategy. There is substantial competition to attract and retain such employees and the ~~proposed separation not occurred. In addition, the cost and resources required to effectuate the separation may be significantly higher than what we currently anticipate.~~

~~Any~~loss of ~~these factors~~any such key employees could have a material adverse effect on our business ~~financial condition,~~and operating results. The same could be true if we were to experience a high turnover rate among engineering and scientific personnel and we were unable to replace them. Our ability to attract and retain employees may be negatively impacted by employees’ reactions to our health and safety policies related to COVID-19 vaccination, masks and/or flexibility to work remotely, particularly in the United States. Any failure to attract, recruit, train, retain, motivate and integrate qualified personnel could materially harm our operating results and growth prospects.

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

During fiscal years ended September 30, 2021, 2020 and 2019, approximately 38%, 34% and 32% of our revenue was derived from sales outside of North America. We expect that international sales, including increased sales in Asia, will continue to account for a significant portion of our revenue for the foreseeable future, and that in particular, the proportion of our sales to customers in China will continue to increase, due in large part to our significant genomic services operation in China. Additionally, we intend to invest additional resources in facilities in China, which will increase our global footprint of sales, service and repair operations. As a result of our international operations, we are exposed to many risks and uncertainties, including

●

longer sales-cycles and time to collection;

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tariff and international trade barriers;

●

fewer or less certain legal protections for intellectual property and contract rights abroad;

●

different and changing legal and regulatory requirements in the jurisdictions in which we operate;

●

government currency control and restrictions on repatriation of earnings;

●

a diverse workforce with different experience levels, languages, cultures, customs, business practices and worker expectations, and differing employment practices and labor issues;

●

fluctuations in foreign currency exchange and interest rates, particularly in Asia and Europe; and

●

political and economic instability, changes, hostilities and other disruptions in regions where we operate.

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Negative developments in any of these areas in one or more countries could result in a reduction in demand for our products, the cancellation or delay of orders already placed, threats to our intellectual property, difficulty in collecting receivables, and a higher cost of doing business, any of which could materially harm our business and profitability.

In addition, approximately $1.0 billion of the proceeds from the recently completed sale of the semiconductor automation business is held outside of the United States and our ability to repatriate any of these funds for use in the United Sates or elsewhere in our business may be limited, which could negatively impact our opportunities to deploy our capital.

Unfavorable currency exchange rate fluctuations may impact our significant foreign currency holdings, lead to lower operating margins, or may cause us to raise prices, which could result in reduced sales.

Currency exchange rate fluctuations could have an adverse effect on our sales, cost of sales and results of operations, and we could experience losses with respect to forward exchange contracts into which we may enter. Unfavorable currency fluctuations could require us to increase prices to customers, which could result in lower net sales by us to such customers. Alternatively, if we do not adjust the prices for our products and services in response to unfavorable currency fluctuations, our results of operations could be materially and adversely affected. In addition, most sales made by our foreign subsidiaries are denominated in the currency of the country in which these products are sold or these services are provided and the currency they receive in payment for such sales could be less valuable as compared to the U.S. dollar at the time of receipt as a result of exchange rate fluctuations.

In addition, approximately $1.0 billion of the cash ~~flows~~we received upon the completion of the sale of our semiconductor automation business on February 1, 2022 is denominated in Euro, which represents a substantial portion of our current cash balance. As a result of our increased foreign currency holdings, our financial results and capital ratios may be impacted by movements in exchange rates, and a significant portion of our assets must be translated into U.S. dollars for external reporting purposes or converted into U.S. dollars to meet our strategic needs and service obligations such as any future U.S. dollar-denominated indebtedness or dividends. We may seek to mitigate our exposure to currency exchange rate fluctuations, but our efforts may not be successful.

From time to time, we enter into forward exchange contracts to reduce currency exposure. However, we cannot be certain that our efforts will be adequate to protect us against significant currency fluctuations or that such efforts will not expose us to additional exchange rate risks, which could materially and adversely affect our results of operations.

Our business and operations could be negatively affected by stockholder activism, which could impact the trading price and volatility of our common stock and may constrain capital deployment opportunities and adversely impact our ability to expand our business.

Our business and operations could be negatively affected if we become subject to any securities litigation or stockholder activism, which could cause us to incur significant expenses, hinder the execution of our business and growth strategy, constrain our capital deployment opportunities, and impact the price of our common stock.

Stockholder activism, which could take many forms or arise in a variety of situations, has been increasing recently. Volatility in the price of our common stock, our cash balance or other reasons may cause us to become the target of securities litigation or stockholder activism. Securities litigation and stockholder activism, including potential proxy contests, could result in substantial costs and divert management’s and our Board of Director’s attention and resources from our business. Additionally, such securities litigation and stockholder activism could give rise to perceived uncertainties as to our future, adversely affect our relationships with service providers and make it more difficult to attract and retain qualified personnel. Also, we may be required to incur significant legal fees and other expenses related to any securities litigation and activist stockholder matters. Further, the price of our common stock and could be subject to significant fluctuation or otherwise be adversely affected by the events, risks and uncertainties of any securities litigation and stockholder activism. We received a significant amount of cash upon the completion of the sale of the semiconductor automation business and if we become the focus of stockholder activism as a result thereof or for any other reasons, we may be constrained in our capital deployment opportunities and may be limited in the types of investments that are available to us.

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Item 6. Exhibits

The following exhibits are included herein:


Exhibit No.		Description

3.1		Restated Certificate of Incorporation of the Company (incorporated herein by reference to Exhibit 3.01 to the Company’s Registration Statement on Form S-3 (Reg. No. 333-189582), filed on June 25, 2013)
3.2		Certificate of Amendment to the Certificate of Incorporation of the Company, effective as of December 1, 2021 (incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed on December 1, 2021).
3.3		Amended and Restated Bylaws of the Company, effective as of December 1, 2021 (incorporated by reference to Exhibit 3.2 to the Current Report on Form 8-K filed on December 1, 2021).
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, for the quarter ended ~~June 30,~~December 31, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) the unaudited Consolidated Balance Sheets; (ii) the unaudited Consolidated Statements of Operations; (iii) the unaudited Consolidated Statements of Comprehensive Income; (iv) the unaudited Consolidated Statements of Cash Flows; (v) the unaudited Consolidated Statements of Changes in Stockholders Equity; and (vi) the Notes to the unaudited Consolidated Financial Statements. The instance document does not appear in the Interactive Data File because XBRL tags are embedded in the iXBRL document.

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

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


	~~BROOKS AUTOMATION,~~AZENTA, INC.

Date: ~~August 5, 2021~~February 9, 2022	/s/ Lindon G. Robertson
	Lindon G. Robertson
	Executive Vice President and Chief Financial Officer
	(Principal Financial Officer)

Date: ~~August 5, 2021~~February 9, 2022	/s/ ~~David Pietrantoni~~Vandana Sriram
	~~David Pietrantoni~~Vandana Sriram
	Vice President-Finance and Corporate Controller
	(Principal Accounting Officer)

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Fiscal year ended September 30,
2021	$	10,853
2022		40,414
2023		37,125
2024		32,242
2025		26,937
Thereafter		107,366
	$	254,937