Acquisitions

Acquisitions Completed in 2014

On April 30, 2014, the Company acquired all the outstanding stock of Dynamic Micro Systems Semiconductor Equipment GmbH (“DMS”), a German provider of automated contamination control solutions for front opening unified pod, or "FOUP," carriers and reticle storage, which are targeted at improving yield of semiconductor processes at semiconductor fabrication plants. The Company paid, in cash, aggregate merger consideration of $31.6 million, net of cash acquired. The acquisition of DMS expands the Company’s capabilities at semiconductor fabrication plants for yield improvement on new technology nodes.

The Company recorded the assets and liabilities associated with DMS at their fair values as of the acquisition date. The preliminary amounts recorded were as follows (in thousands):



Accounts receivable	$	15,262
Inventory	10,051
Prepaid and other current assets	2,727
Property, plant and equipment	2,049
Completed technology	3,610
Customer relationships	7,100
Goodwill	11,638
Accounts payable	(10,393		)
Accrued liabilities	(5,522		)
Deferred revenue	(1,309		)
Long-term deferred tax liabilities	(3,588		)
Total purchase price, net of cash acquired	$	31,625

The purchase price was allocated based on the fair value of the identified assets acquired and liabilities assumed as of the acquisition date from a market participant’s perspective.

The Company reached settlement on certain working capital adjustments with the sellers of DMS' stock in the fourth quarter of fiscal year 2014. As a result of this settlement, the Company will receive a refund of approximately $2.2 million from certain escrows established at the date of acquisition. The amount to be received is reflected in the allocation presented above as a reduction in the consideration transferred. At September 30, 2014, $3.2 million remained in escrow related to potential future claims against the sellers of DMS' stock. The Company has not yet completed the final allocation of the consideration paid in connection with the acquisition of DMS with respect to matters associated with the balances held in escrow and the potential impact of these matters on deferred tax liabilities. However, the Company expects to complete the final allocation within the measurement period.

The Company used the relief-from-royalty method, a form of the income approach, to value the completed technology acquired. The principle behind this method is that the value of an intangible asset is equal to the present value of the after-tax royalty savings attributable to owning that intangible asset. The Company used the excess-earnings method, a form of the income approach, to value the customer relationship acquired. The principle behind this method is that the value of the intangible asset is equal to the present value of the after-tax cash flows attributable to the intangible asset only. The weighted average amortization periods for intangible assets acquired in the DMS acquisition are 5.0 years for completed technologies and 8.0 years for customer relationships. The intangible assets acquired will be amortized using methods that approximate the pattern in which the economic benefits are expected to be realized, including variable declining balance and straight-line methods.

Goodwill represents the excess of the consideration transferred over the net assets acquired and has been assigned to the Company's Brooks Product Solutions segment. Goodwill is primarily the result of expected synergies from combining the operations of DMS with the Company. Goodwill arising from the acquisition of DMS is not deductible for tax purposes.

The operating results of DMS have been included in the results of operations for the Brooks Product Solutions segment from the date of the acquisition. Revenue from DMS for the fiscal year ended September 30, 2014 was $5.5 million and the net loss was $4.5 million. The net loss includes charges to expense of $1.9 million related to the step-up in value of the acquired inventories, $0.9 million of amortization expense and $0.3 million of restructuring charges.

The following pro forma summary presents consolidated information of the Company for the fiscal years ended September 30, 2014 and 2013, as if the acquisition of DMS occurred on October 1, 2012 (in thousands):



	Year ended September 30,
	2014			2013
Revenue	$	501,951		$	456,588
Income (loss) from continuing operations	(4,788		)	(10,678		)
Net income (loss) attributable to Brooks Automation, Inc.	25,053			(5,779		)

The pro forma income (loss) from continuing operations and net income (loss) attributable to Brooks Automation, Inc. have been adjusted to reflect additional amortization from adjustments to intangible assets as if those adjustments had been applied as of October 1, 2012.

Acquisitions Completed in 2013

In August 2013, the Company acquired certain assets and assumed certain liabilities of Matrical, Inc.’s (“Matrical”) life science businesses (collectively “the Matrical Assets”) for cash consideration of approximately $9.3 million, net of cash acquired. Matrical is a Spokane, Washington-based, privately held company that provided biological sample preparation, management and storage solutions to customers in agricultural biotechnology, biotechnology, life science and pharmaceutical markets. The acquisition of the Matrical Assets provides the Company with the opportunity to enhance its existing product offerings in biobanking and sample management for the Brooks Life Science Systems segment.

In October 2012, the Company acquired all the outstanding stock of Crossing Automation Inc. (“Crossing”), a Fremont, California based provider of automation solutions and services primarily to global semiconductor front-end markets. The Company paid, in cash, an aggregate merger consideration of $59.0 million, net of cash acquired. The acquisition of Crossing provides the Company with the opportunity to enhance its existing capabilities with respect to manufacturing of atmospheric and vacuum automation solutions within the semiconductor front-end market.

The Company recorded the assets and liabilities associated with the purchase of the Matrical Assets and Crossing at their fair values as of their respective acquisition dates. The amounts recorded were as follows (in thousands):



	Matrical Assets			Crossing
Accounts receivable	$	636		$	5,356
Inventory	2,095			8,668
Prepaid and other current assets	103			1,968
Property, plant and equipment	534			2,270
Completed technology	500			10,530
Customer relationships	1,500			20,010
Goodwill	7,076			26,453
Other long-term assets	—			885
Debt	(902		)	—
Accounts payable	(294		)	(3,024		)
Deferred revenue	(351		)	(319		)
Customer deposits	(1,249		)	—
Other current liabilities	(322		)	(5,560		)
Other long-term liabilities	—			(8,232		)
Total purchase price, net of cash acquired	$	9,326		$	59,005

The purchase prices were allocated based upon the fair value of the identified assets acquired and liabilities assumed as of the acquisition date from a market participant’s perspective. The Company finalized the purchase price allocations for these acquisitions within the measurement periods. Subsequent adjustments to the initially reported purchase price allocations were not material.

The Company used the relief-from-royalty method to value the completed technology and the excess-earnings method to value the customer relationships. The weighted-average amortization periods for the intangible assets acquired in connection with the Matrical Assets are 4.6 years for completed technologies and 7.0 years for customer relationships and are being amortized using the straight-line method because it approximates the pattern in which the economic benefits are expected to be realized. The weighted-average amortization periods for intangible assets acquired in the Crossing acquisition are 7.7 years for completed technologies and 8.0 years for customer relationships and are being amortized using methods that approximate the pattern in which the economic benefits are expected to be realized, including variable declining balance and straight-line methods.

Goodwill represents the excess of the purchase price over the fair values of the net tangible and intangible assets acquired and is primarily the result of expected synergies from combining the acquired products with the Company’s existing products and integrating the operations of the acquired businesses into those of the Company. The goodwill resulting from the acquisition of the Matrical Assets has been allocated to the Brooks Life Science Systems segment and goodwill resulting from the Crossing acquisition has been allocated to the Brooks Product Solutions and Brooks Global Services segments. Goodwill from the acquisition of the Matrical Assets is deductible for tax purposes. Goodwill from the acquisition of Crossing is not deductible for tax purposes.

Acquisitions Completed in 2012

In March 2012, the Company acquired assets, consisting primarily of intellectual property, from Intevac, Inc. for $3.0 million. Management evaluated this asset purchase to determine if this acquisition would be considered an acquisition of a business. Since only limited assets were acquired, management concluded that the inputs and processes required to meet the definition of a business were not acquired, and therefore, this transaction was treated as the purchase of an asset group. The Company expensed essentially all of this asset purchase as an in-process research and development cost in 2012.

In December 2011, the Company acquired the Celigo® automated Cell Cytometer product line (“Celigo”) from Cyntellect, Inc., for $8.7 million in cash, plus a deferred cash payment of $0.5 million that was paid in July 2012. The Celigo product line provided life science customers with cellular imaging in a high-throughput and easy-to-use platform. The Celigo product line was part of the Brooks Life Science Systems segment and provided a complementary analysis tool for customers currently using the Company’s automated sample management systems.

The Company completed the sale of the Celigo product line in the second quarter of fiscal year 2014. The Company has recorded impairment charges totaling $2.4 million related to long-lived assets acquired with the Celigo product line in connection with the sale. The impairment charge is described more fully in “Note 8. Goodwill and Intangible Assets."