Goodwill and Intangible Assets

12 Months Ended

Sep. 30, 2013

Goodwill and Intangible Assets Disclosure [Abstract]

The Company performed its goodwill impairment test as of September 30, 2013 and 2012, and determined that no adjustment to goodwill was necessary. As of September 30, 2013, the fair value of all reporting units exceeded the respective carrying values by at least 10%.

The fair values of the reporting units in the Brooks Product Solutions and Brooks Global Services segments exceeded their carrying values by amounts ranging from 18% to 114% at September 30, 2013.

The fair value of the Brooks Life Science Systems reporting unit exceeded its carrying value by 10% at September 30, 2013. The observable inputs used in the Company's DCF for analysis for the Brooks Life Science Systems reporting unit include a discount rate 18%. In addition, the Company determined the terminal value using the Gordon growth method and a terminal growth rate of 3%. The Gordon growth method assumes that the reporting unit will grow and generate free cash flow at a constant rate. The Company believes that the Gordon growth method is the most appropriate method for determining the terminal value because the terminal value was calculated at the point in which the Company has assumed that the Brooks Life Science Systems reporting unit has reached a stable growth rate.

In fiscal 2013, the Company experienced a decline in revenue and operating profit for the products in the Brooks Life Science Systems reporting unit. The cash flow assumptions in the Company's DCF Method analysis for the Brooks Life Science Systems reporting unit project growth in the Company's current automated sample management systems and the development of new automated sample management systems that would allow the Company to address a broader automated sample management market than it can address with its current products. While the Company believes its assumptions are reasonable, actual results could differ from projections. To the extent that the operating results of the Brooks Life Science Systems reporting unit do not improve as expected and new life science products being designed to expand the markets the Company serve are not introduced in a timely manner or accepted by the market, the Company may be required to write down all or a portion of the goodwill and other long-lived assets associated with this reporting unit, which would adversely impact its earnings.

The components of the Company’s goodwill by business segment at September 30, 2013 and 2012 are as follows (in thousands):



	Brooks Product Solutions			Brooks Global Services			Brooks Life Science Systems		Contract Manufacturing			Other			Total
Gross goodwill at September 30, 2011	$	485,844		$	151,238		$	36,589	$	18,593		$	7,421		$	699,685
Acquisitions and adjustments during fiscal 2012	—			—			3,713		—			—			3,713
Gross goodwill at September 30, 2012	485,844			151,238			40,302		18,593			7,421			703,398
Acquisitions and adjustments during fiscal 2013	20,899			5,554			7,137		—			—			33,590
Gross goodwill at September 30, 2013	$	506,743		$	156,792		$	47,439	$	18,593		$	7,421		$	736,988
Accumulated goodwill impairments at September 30, 2011	$	(437,706	)	$	(151,238	)	$	—	$	(18,593	)	$	(7,421	)	$	(614,958	)
Impairments recorded during fiscal 2012	—			—			—		—			—			—
Accumulated goodwill impairments at September 30, 2012	(437,706		)	(151,238		)	—		(18,593		)	(7,421		)	(614,958		)
Impairments recorded during fiscal 2013	—			—			—		—			—			—
Accumulated goodwill impairments at September 30, 2013	$	(437,706	)	$	(151,238	)	$	—	$	(18,593	)	$	(7,421	)	$	(614,958	)
Goodwill, less accumulated impairments at September 30, 2012	$	48,138		$	—		$	40,302	$	—		$	—		$	88,440
Goodwill, less accumulated impairments at September 30, 2013	$	69,037		$	5,554		$	47,439	$	—		$	—		$	122,030

The Company is required to test certain long-lived assets when indicators of impairment are present. The Company determined that impairment indicators were present for the long-lived assets related to the Celigo product line as of September 30, 2013. The long-lived assets in question were tested for recoverability by comparing the sum of the undiscounted cash flows directly attributable to the assets to their carrying values, which resulted in the conclusion that the carrying amounts of the assets were not recoverable. The fair values of the assets were then evaluated to determine the amount of the impairment, if any. The fair value of the assets was based primarily on market-based valuation techniques. As a result of this analysis, management determined that an impairment loss of $2.0 million had occurred as of September 30, 2013, and allocated the loss amount to the long-lived assets in the impaired asset group based on the carrying value of each asset, with no asset reduced below its respective fair value. The impairment loss was recorded in the Brooks Life Science Systems segment. The impairment charge was allocated as follows (in thousands):



	Year Ended September 30, 2013
Reported as cost of revenue:
Completed technology intangible asset impairment	$	1,910
Reported as selling, general and administrative expense:
Trademarks and trade name intangible asset impairment	50
Total impairment charges	$	1,960

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



	September 30, 2013						September 30, 2012
	Cost		Accumulated Amortization		Net Book Value		Cost		Accumulated Amortization		Net Book Value
Patents	$	7,808	$	7,196	$	612	$	7,808	$	7,093	$	715
Completed technology	65,594		48,898		16,696		54,583		42,751		11,832
Trademarks and trade names	4,013		4,003		10		4,014		3,880		134
Customer relationships	70,490		27,720		42,770		48,654		21,935		26,719
	$	147,905	$	87,817	$	60,088	$	115,059	$	75,659	$	39,400

In connection with the acquisition of Crossing during fiscal year 2013, the Company allocated a portion of the purchase price to the following intangible assets: Completed Technology - $10.5 million and Customer Relationships - $20.0 million. These intangible assets support the products and services provided by the Brooks Products Solutions segment of $24.6 million and the Brooks Global Services segment of $5.9 million. In connection with the acquisition of Matrical during fiscal year 2013, the Company allocated a portion of the purchase price to the following intangible assets: Completed Technology - $0.5 million and Customer Relationships - $1.5 million. These intangible assets support the products and services provided by the Brooks Life Science Systems segment.

In connection with the acquisition of Celigo during fiscal year 2012, the Company allocated a portion of the purchase price to the following intangible assets: Completed Technology - $3.5 million and Trademarks and Trade Names - $0.1 million. These intangible assets support the products and services provided by the Brooks Life Science Systems segment.

For details regarding these intangible assets see "Note 3. Acquisitions."

Amortization expense for intangible assets was $10.1 million, $8.2 million and $4.6 million for the years ended September 30, 2013, 2012 and 2011, respectively.

Estimated future amortization expense for the intangible assets recorded by the Company as of September 30, 2013 is as follows (in millions):



Year ended September 30,
2014	$10.1
2015	9.4
2016	8.7
2017	8.0
2018	6.1
Thereafter	17.8
	$60.1

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References+ Details