Equity Method and Other Investments

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

BioCision, LLC

In March 2014, the Company acquired a 22% equity interest in BioCision, LLC, or BioCision, a privately-held company based in Larkspur, California, for $4.0 million. During fiscal year 2015, the Company's equity investment was diluted from 22% to 20% as a result of stock options granted to new employees. BioCision develops, manufactures and markets cell cryopreservation products used for improving and standardizing the tools and methods for biomaterial sample handling. The Company determined that BioCision represented a variable interest entity since the level of equity investment at risk was not sufficient to finance its activities without additional financial support. However, the Company does not qualify as a primary beneficiary since it does not have the power to direct BioCision's product research, development, selling and marketing activities that have the most significant impact on its economic performance. The Company's loss exposure is limited to the amount of investment and loan funding provided to BioCision. As such, the Company concluded that BioCision should not be consolidated in its financial statements.

During the fiscal years ended September 30, 2016 and 2015, the Company recorded a loss of $1.1 million and $1.0 million, respectively, representing its proportional share in the BioCision's losses. The carrying value of the investment in BioCision was $1.7 million and $2.7 million, respectively, at September 30, 2016 and 2015.

The Company purchased BioCision's five-year convertible debt securities with a warrant agreement to purchase preferred units of BioCision for $2.5 million on each of the following dates of December 22, 2014 and February 2, 2015, resulting in a total purchase price of $5.0 million. Interest accrues on the convertible debt securities at a rate of 9% per annum, and is due with the principal at maturity. The convertible debt securities were recorded at fair value and accounted for in accordance with the fair value method. The warrant was recorded at fair value and accounted for as a derivative instrument. At September 30, 2016, the fair values of the convertible debt securities and warrants were $5.8 million and less than $0.1 million, respectively. At September 30, 2015, the fair values of the convertible debt securities and warrants were $5.3 million and $0.1 million, respectively.

Please refer to Note 21, “Fair Value Measurements” for further information regarding the convertible debt securities and the warrants. The Company re-measures the fair values of the BioCision convertible debt securities and the warrant during each reporting period and recognizes the respective gains or losses as a component of "Other (expense) income, net" in the accompanying Consolidated Statements of Operations. The Company recognized remeasurement gains of $0.4 million during each fiscal year ended September 30, 2016 and 2015.

During fiscal year 2016, the Company provided a series of bridge loans to BioCision with an aggregate principal amount of $0.6 million bearing an annual interest rate of 10% to support BioCision's working capital requirements. During the second quarter of fiscal year 2016, the Company made an additional loan of $0.2 million to BioCision, and the bridge loans were converted into a part of the permanent term loan, collectively, the" loan", which provides for financing of an aggregate principal amount up to $1.5 million, including the first tranche of $0.8 million and a second tranche of $0.8 million which was provided to BioCision during the third quarter of fiscal year 2016 to support its working capital requirements. All principal and accrued interest outstanding on the loan mature on December 31, 2019 or at an earlier date upon the occurrence of certain events. In the event that BioCision obtains a certain equity investment or has a liquidity event, in either case, on or before September 30, 2016, all accrued and unpaid interest will be due and payable, and interest will thereafter accrue and be due and payable monthly in arrears. All accrued and unpaid interest was converted into additional loan principal with accrued interest due and payable monthly in arrears since no such equity investment or liquidity event occurred on or before September 30, 2016. The financing supports growing working capital requirements in part due to BioCision entering into a supply agreement with a certain customer. The Company will be entitled to receive quarterly royalty payments from BioCision equal to 15% of the revenue generated from this certain customer arrangement until the earlier of: (i) the termination of the customer arrangement, (ii) the receipt by the Company of an aggregate amount of $1.5 million of royalty proceeds, and (iii) the date the loan is repaid in full. All outstanding and unpaid royalties become immediately due and payable to the Company if the customer arrangement is terminated. The loan is secured by a first priority perfected lien on BioCision's cash flows from the aforementioned customer arrangement, as well as a second priority perfected subordinated security interest and a lien on its personal property and other intangible assets, including intellectual property. At September 30, 2016, the aggregate loan of $1.5 million was recorded at its carrying value and included in "Other assets" in the accompanying Consolidated Balance Sheets.

As a result of each of the funding rounds described above, the Company reconsidered whether BioCision represents a variable interest entity subject to consolidation. The Company concluded that BioCision remains a variable interest entity since the level of equity investment at risk is not sufficient to finance its activities without additional financial support. However, the Company does not qualify as a primary beneficiary since it does not have the power to direct BioCision's product research, development, selling and marketing activities that have the most significant impact on its economic performance. As such, the Company concluded that BioCision will not be consolidated in the Company's financial statements.

ULVAC Cryogenics, Inc.

The Company participates in a 50% joint venture, ULVAC Cryogenics, Inc., or UCI, with ULVAC Corporation of Chigasaki, Japan. UCI manufactures and sells cryogenic vacuum pumps, principally to ULVAC Corporation.

The carrying value of the investment in UCI was $25.6 million and $21.5 million, respectively, at September 30, 2016 and 2015. During the fiscal years ended September 30, 2016, 2015 and 2014, the Company recorded income of $3.4 million, $1.4 million and $1.6 million, respectively, representing its proportionate share of the UCI's earnings. Management fee payments received by the Company from UCI were $0.8 million during fiscal year ended September 30, 2016 and $0.6 million during each fiscal year ended September 30, 2015 and 2014. During the fiscal years ended September 30, 2016, 2015 and 2014, the Company incurred charges from UCI for products or services of $0.3 million, $0.4 million and $0.4 million, respectively. The Company owed UCI $0.1 million at each of September 30, 2016 and 2015 in connection with accounts payable for unpaid products and services. During the fiscal years ended September 30, 2016 and 2015, the Company received $1.5 million and $0.6 million, respectively, of cash dividends from UCI which reduced the carrying value of the Company's investment.

The Company's investment in UCI is considered to be significant for the fiscal year ended September 30, 2016 since the Company's proportionate share of the UCI's earnings exceeded 20% of the Company's consolidated income from continuing operations before the income tax provision for the fiscal year 2016. Consolidated Financial Statements of UCI as of June 30, 2016 and 2015 and July 1, 2014 (the date of transition) and the related notes are filed as Exhibit 99.2 hereto and incorporated herein by reference in this Form 10-K.

Yaskawa Brooks Automation, Inc.

During fiscal year 2015, the Company participated in a 50% joint venture with Yaskawa Electric Corporation, or Yaskawa, called Yaskawa Brooks Automation, Inc., or YBA, which came to closure in March 2015 and was liquidated on September 3, 2015. YBA exclusively marketed and sold Yaskawa’s semiconductor robotics products and the Company's automation hardware products to semiconductor customers in Japan. During the first quarter of fiscal year 2015, the Company and Yaskawa agreed in principle to dissolve the joint venture. On January 22, 2015, the Company entered into an agreement with YBA to facilitate the acquisition of certain assets and liabilities by the Company’s subsidiary in Japan. In accordance with provisions of the joint venture's agreement, on March 20, 2015, the Company purchased the net assets of YBA for cash consideration of approximately $1.8 million. The Company recorded the assets received and liabilities assumed from YBA at fair value as of the acquisition date. As a result of the transaction, the Company recorded $0.2 million of goodwill, representing the excess of the consideration transferred over the fair value of the net assets acquired. The Company received a final dividend of $1.8 million upon liquidation of YBA and incurred liquidation costs of $0.2 million during fiscal year 2015. In connection with the planned dissolution, YBA assessed the recoverability of assets held by the joint venture and notified its equity partners of the asset impairment. As a result, the Company recorded an impairment charge of $0.7 million related to the write down of the carrying value of the equity investment in YBA to its fair value during fiscal year 2015.

During the fiscal years ended September 30, 2015 and 2014, the Company recorded a loss of $0.6 million and $0.1 million, respectively, representing its proportionate share of the YBA's losses. During the fiscal years ended September 30, 2015 and 2014, revenue earned by the Company from YBA was $2.5 million and $7.4 million, respectively. The Company incurred charges from YBA for products or services of $0.7 million during each fiscal year ended September 30, 2015 and 2014. There were no amounts receivable by the Company from YBA or owed by the Company to YBA at September 30, 2016 and 2015.

Summarized Financial Information

Summarized financial information for the unconsolidated subsidiaries accounted for based on the equity method for the fiscal years ended September 30, 2016, 2015 and 2014 is as follows (in thousands):



	September 30,
	2016		2015
Balance Sheets:
Current assets	$	59,507	$	43,201
Non-current assets	15,461		12,657
Current liabilities	25,320		15,551
Non-current liabilities	19,933		13,581

	Year Ended September 30,
	2016		2015			2014
Statements of Operations:
Total revenue	$	74,659	$	48,047		$	48,702
Gross profit (loss)	27,355		16,327			16,510
Income (loss) from continuing operations	6,731		(1,074		)	1,745
Net income (loss)	2,374		(2,452		)	1,636

Summarized financial information presented in the table above includes results for UCI and BioCision and does not include results for YBA since such amounts are not significant. The Company currently records its share of UCI's and BioCision's results of operations based on a three-months lag. Accordingly, the Company's Consolidated Financial Statements include its share of income and losses incurred by UCI and BioCision from the periods beginning and ending three months prior to the periods shown in the table.