What changed in this filing

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Item 7. Management’s Discussion and Analysis

2021-11-24 compared with 2020-11-18 · 280 added, 253 removed, 246 unchanged (68% of the section changed)

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● Results of Operations.

This section provides an analysis of our financial results for the fiscal year ended September 30, 2020 compared to the fiscal year ended September 30, 2019.

For the discussion covering the fiscal year ended September 30, 2018, please refer to Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Form 10-K for the fiscal year ended September 30, 2019.

This section provides an analysis of our financial results for the fiscal year ended September 30, 2021 compared to the fiscal year ended September 30, 2020 and for the fiscal year ended September 20, 2020 compared to the fiscal year ended September 20, 2019.

● Liquidity and Capital Resources.

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included above in this Form 10-K for a discussion of important factors that could cause our actual results to differ materially from our expectations.

We are a leading global provider of manufacturing automation solutions for the semiconductor industry, and life science sample-based services and solutions for the life sciences market.

In the semiconductor manufacturing market, we provide precision robotics, integrated automation systems, and contamination control solutions to semiconductor fabs and OEMs worldwide.

In the life sciences market, we offer a full suite of 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 of high-throughput automated cryogenic storage products, related consumables, sample inventory software, as well as fully outsourced solutions for sample storage, transport, and inventory management.

Our leadership positions and our global support capability in each of these markets make us a valued business partner to the largest semiconductor and semiconductor capital equipment manufacturers and pharmaceutical and life sciences research institutions in the world.

In the semiconductor capital equipment market, equipment productivity and availability are critical factors for our customers, who typically operate equipment under demanding temperature and/or pressure environments.

We are a leader in wafer automation and contamination controls solutions and services that are designed to improve throughput, yield, and cost of ownership of tools in semiconductor fabs.

Our product offerings include vacuum and atmospheric robots, turnkey vacuum and atmospheric wafer handling systems, as well as wafer carrier cleaning and reticle storage systems.

We also capture the complete life cycle of value through our global service network of expert application and field engineers who are located close to our customers.

Our services include rapid refurbishment of robots to stringent specifications, upgrades to improve equipment productivity, and proactive monitoring and diagnostics for predictive risk management and improved up-time of the installed base.

Although the demand for semiconductors and semiconductor manufacturing equipment is cyclical resulting in periodic expansions and contractions, we expect the semiconductor equipment market to remain one of our principal markets as we continue making investments to maintain and grow our semiconductor product and service offerings.

A majority of our research and development spending advances our current product lines and drives innovations for new product offerings.

We invest in research and development initiatives within the Brooks Semiconductor Solutions Group segment to maintain continued leadership position in the markets we serve.

Our investments in Vacuum Automation and Contamination Control include ramping our intelligent vacuum robot platform, MagnaTran LEAP, with new designs at customers releasing tools for 10 nanometers and below.

In addition, our new PuroMaxx LEAP carrier clean product line is well positioned to handle the contamination challenges at 5 nanometers and below.

As the market for EUV lithography expands, we will continue our investment in EUV pod cleaning and reticle storage.

Our initiatives with Guardian LEAP for EUV reticle storage will provide new innovation to solve many contamination challenges with EUV reticles.

In April 2018, we acquired Tec-Sem, a Switzerland-based provider of semiconductor fabrication automation equipment with a focus on reticle management.

The acquisition has enhanced our contamination controls solutions offerings.

We are a leading global provid er of life science sample exploration and management solutions for the life sciences market.

We 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 importance of sample integrity and offer a broad portfolio of products and services spanning across the life cycle of samples from procurement and sourcing, automated storage platforms, genomic services and a broad range of consumables, informatics and data software, and sample management solutions.

Our expertise and leadership positions enable us to be a trusted partner to pharmaceutical, biotechnology, and life sciences research institutions globally.

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, and both on-site and off-site full sample management services.

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.

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.

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 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.

Our recent acquisitions are as follows:

● In November 2018, we acquired GENEWIZ, a leading global genomics service provider headquartered in South Plainfield, New Jersey.

GENEWIZ is a global leader in genomics services that enable research scientists to advance their discoveries within the pharmaceutical, academic, biotechnology, agriculture and other markets.

GENEWIZ provides gene sequencing and synthesis services for more than 4,000 institutional customers worldwide supported by their global network of laboratories spanning the United States, China, Japan, Germany and the United Kingdom.

This transaction has added a new and innovative services platform which we can leverage, along with our core capabilities, to add even more value to samples under our care.

● In February 2020, we acquired 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 has enabled 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.

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.

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 storage from -20°C to -196°C.

Our BioStore™ II’s unique design allows dual temperature storage down to -80°C with the industry’s highest throughput of sample retrieval.

We recently launched the BioStore™ III V that compliments the BioStore™ III Cryo product line and offers improved data management and sample security for vaccines and biologics stored at -80°C.

Within our Life Sciences Services segment, our GENEWIZ business advances research and development activities in gene sequencing, synthesis and related services to meet market demands.

Recently, enabled by newly developed proprietary technologies, GENEWIZ launched a portfolio of new services, targeting analysis of adeno-associated virus, a common vector used in cell and gene therapy.

We have a complete line up of automated stores from ambient temperatures to -190°.

Our BioStore’s ™ unique design allows controlled temperature storage down to -80°C with the industry’s highest throughput of sample retrieval.

Our BioStore portfolio offers improved data management and sample security for vaccines and biologics stored at -80°C.

Within our Life Sciences Services segment, our genomics services business advances research and development activities in gene sequencing, synthesis editing and related services to meet market demands.

Recently, enabled by newly developed proprietary technologies, we launched a portfolio of new services, targeting analysis of adeno-associated virus, a common vector used in cell and gene therapy.

We will continue to focus on developing processes and technologies that can streamline sample to data workflow.

Sale of the Semiconductor Automation Business

In the fourth quarter of fiscal year 2021, we entered into a definitive agreement to sell our semiconductor automation business, which consists of our Brooks Semiconductor Solutions Group reportable segment, to Thomas H.

Lee, Partners, L.P., or THL, for $3.0 billion in cash subject to customary adjustments.

Since our founding in 1978, we have been a leading automation provider and partner to the global semiconductor manufacturing industry.

At the completion of the sale of the semiconductor automation business, we will no longer serve this market.

We anticipate closing of the transaction in the first half of calendar year 2022 upon satisfaction of customary closing conditions and regulatory approvals.

The semiconductor automation business has been classified as discontinued operations and, unless otherwise noted, this MD&A relates solely to our continuing operations and does not include the operations of our semiconductor automation business.

Sale of the Semiconductor Cryogenics Business

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We originally acquired the cryogenics business in 2005 as part of the acquisition of Helix Technology Corporation.

The semiconductor cryogenics business has been classified as discontinued operations and, unless otherwise noted, the description of our business in this report relates solely to our continuing operations and does not include the operations of our semiconductor cryogenics business.

On July 1, 2019, we completed the sale of the semiconductor cryogenics business for $661.5 million which excludes $6.3 million retained by the buyer at closing based on an estimate of net working capital adjustments, which are currently pending finalization.

The semiconductor cryogenics business has been classified as discontinued operations and, unless otherwise noted, this MD&A relates solely to our continuing operations and does not include the operations of our semiconductor cryogenics business.

On July 1, 2019, we completed the sale of the semiconductor cryogenics business for $659.8 million.

Net proceeds from the sale were $551.7 million, net of taxes and closing costs paid and remaining taxes payable.

During the first quarter of fiscal year 2021, the final net working capital was determined, resulting in a negative adjustment in the amount of $1.8 million payable to Edwards.

As part of this sale, we transferred our intellectual property, for our cryogenics pump products, but not our intellectual property related to our semiconductor automation or life sciences businesses.

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Refer to “Liquidity and Capital Resources” for further discussion of the debt extinguishment.

We serve the semiconductor capital equipment market through one operating and reportable segment, our Semiconductor Solutions Group segment.

We serve the life sciences market through two operating and reportable segments:

Brooks Life Sciences Products and Brooks Life Sciences Services.

Prior to the fiscal year 2020, we had only two reportable segments that consisted of the Brooks Semiconductor Solutions Group segment and the Brooks Life Sciences segment.

The Brooks Life Sciences segment consisted of two operating segments, Sample Management and GENEWIZ.

During the fiscal year 2020, we realigned our life sciences businesses to combine the sample management services offerings under the leadership of our GENEWIZ genomic services business to form the Brook Life Sciences Services operating and reportable segment.

By combining these two service-based businesses we believe we can more effectively leverage the potential for synergies as customers engage us to manage a broad variety of sample-based services including gene sequencing, gene synthesis, lab analysis, sample kitting and preparation, transportation, and storage.

In the realignment we also formed our Brooks Life Sciences Products operating and reportable segment composed of product offerings of large automated ultra-cold stores, automated cryogenic storage systems, and consumables and instruments, and related product support services.

Our prior period reportable segment information has been reclassified to reflect the current segment structure and conform to the current period presentation.

For additional information on our segment revenues and their operating results, please refer to Note 20, "Segment and Geographic Information"

to our Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data"

of this Form 10-K.

The Brooks Semiconductor Solutions Group segment provides a variety of products, services and solutions that enable improved throughput and yield in controlled operating environments, as well as an extensive range of support services.

The solutions include atmospheric and vacuum robots, robotic modules, tool automation systems, and contamination control of wafer carriers.

The support services include repair services, diagnostic support services, and installation services in support of the products, which enable our customers to maximize process tool uptime and productivity.

This segment also provides end-user customers with spare parts and productivity enhancement upgrades to maximize tool productivity.

The Brooks Life Sciences Products and Brooks Life Sciences Services segments provide comprehensive life cycle sample management solutions to life science and bioscience customers including complete end-to-end “cold chain of custody” solutions and sample-based lab services such as genomic sequencing and gene synthesis to advance scientific research and support drug development.

The Brooks Life Sciences Products segment’s offerings include 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 Brooks Life Sciences Services segment’s offerings include sample storage services, genomic sequencing, gene synthesis, lab processing services, lab analysis, informatics and other support services provided to a wide range of life science customers, including pharmaceutical companies, biotechnology companies, biorepositories and research institutes.

Our business is comprised of two reportable segments, our Life Sciences Products segment and our Life Sciences Services segment.

For further information on our reportable and operating segments, please refer to Note 19, “Segment and Geographic Information” to our Consolidated Financial Statements included under Item 8, “Financial Statements and Supplementary Data” of this Form 10- K.

Our Life Sciences Products business is a leading provider of automated ultra-cold storage solutions for biological and chemical compound samples.

Our storage systems provide reliable automation and sample inventory management at temperatures down to -196°C and can store anywhere from one to millions of samples.

Our sample management solutions include consumable vials and tubes, PCR plates, instruments for supporting workflow, and informatics, all of which focus on providing customers with the highest level of sample quality, security, availability, intelligence and integrity throughout the lifecycle of samples providing customers with complete end-to-end “cold-chain of custody” capabilities.

Our Life Sciences Services business is a leading provider of solutions addressing the many needs of customers in the area of genomic analysis and the management and care of biological samples used in pharmaceutical, biotech, healthcare, clinical, and academic research and development markets.

Millions of samples are processed every year, each containing valuable information that must be preserved with the sample.

Through our genomic services we provide a broad capability to customers for sequencing and synthesis of genes.

Our sample management services include off-site storage services, transport services, laboratory services, and interactive informatics solutions.

We also provide expert-level consultation services to our clients throughout their experimental design and implementation.

Our services also include short- and long-term sample storage and management of the “cold chain of custody” from collection, to storage, to retrieving the sample which ultimately may go back into the customer’s research workflow.

Business and Financial Performance

Results of Operations –

Fiscal Year Ended September 30, 2021 Compared to Fiscal Year Ended September 30, 2020

Results of Operations - We reported revenue of $897.3 million for fiscal year 2020 compared to $780.8 million for fiscal year 2019, an increase of $116.4 million, or 15%.

We reported revenue of $513.7 million for fiscal year 2021 compared to $388.5 million for fiscal year 2020, an increase of $125.2 million, or 32%.

Gross margin was 47.5% for fiscal year 2021 compared to 44.3% for fiscal year 2020, an increase in gross profit of $71.7 million.

Operating expenses were $274.9 million for fiscal year 2021 compared to $208.7 million for fiscal year 2020, an increase of $66.2 million.

Operating income was

$78.5 million for fiscal year 2020 compared to $46.0 million for fiscal year 2019, an increase of $32.4 million, which was primarily attributable to the revenue growth and gross margin improvement, partially offset by higher operating expenses.

We generated income from continuing operations of $65.0 million during fiscal year 2020 as compared to $9.6 million in fiscal year 2019.

This increase was primarily attributable to our increase in operating income as well as a loss on extinguishment of debt of $14.3 million and higher interest expense of $19.3 million in fiscal year 2019.

We reported an operating loss of $31.1 million for fiscal year 2021 compared to an operating loss of $36.6 million for fiscal year 2020, a decrease in operating loss of $5.5 million, which was primarily attributable to the revenue growth and gross margin improvement, partially offset by higher operating expenses.

Other expenses, net includes $16 million of expense due to the release of a tax indemnification asset which is offset within our income tax benefit from the release of a related liability.

Overall, we generated a net loss from continuing operations of $28.9 million during fiscal year 2021 as compared to $26.4 million in fiscal year 2020.

Please refer to the “Results of Operations ” section below for a detailed discussion of our financial results for the fiscal year 2021 compared to fiscal year 2020.

Cash Flows and Liquidity - Cash and cash equivalents, restricted cash and marketable securities were $305.7 million at September 30, 2020 as compared to $342.1 million at September 30, 2019.

The decrease of $36.4 million was primarily comprised of outflows of $39.9 million for capital expenditures, $15.7 million for acquisitions, and $29.5 million for dividends, partially offset by cash inflows from operating activities of $37.9 million.

Cash flows from operating activities was comprised of $64.9 million of net income and $77.2 million of adjustments to net income for non-cash items, partially offset by $91.5 million of cash taxes paid for the gain on the sale of the semiconductor cryogenics business and $12.7 million uses of cash from the changes in operating assets and liabilities.

The prior fiscal year cash flows included $661.6 million related to proceeds from the sale of our semiconductor cryogenics business and cash inflows of $90.9 million generated from our operating activities, partially offset by net cash outflows of $442.7 million to acquire GENEWIZ, net cash outflows of $163.8 million related to principal payments made on and proceeds received from our term loans, cash dividends paid of $28.9 million and capital expenditures of $23.9 million.

Fiscal Year Ended September 30, 2020 Compared to Fiscal Year Ended September 30, 2019

We reported revenue of $388.5 million for fiscal year 2020 compared to $334.2 million for fiscal year 2019, an increase of $54.3 million, or 16%.

Gross margin was 44.3% for fiscal year 2020 compared to 40.3% for fiscal year 2019, an increase in gross profit of $37.5 million.

Operating expenses were $208.7 million for fiscal year 2020 compared to $182.0 million for fiscal year 2019, an increase of $26.7 million.

We reported an operating loss of $36.6 million for fiscal year 2020 compared to an operating loss of $47.4 million for fiscal year 2019, a decrease in operating loss of $10.8 million, which was primarily attributable to the revenue growth and gross margin improvement, partially offset by higher operating expenses.

We generated a net loss from continuing operations of $26.4 million during fiscal year 2020 as compared to $61.1 million in fiscal year 2019.

The decrease in operating loss was primarily attributable to our increase in operating income in the current year as well as a loss on extinguishment of debt of $14.3 million and higher interest expense of $19.3 million in fiscal year 2019.

Please refer to the “Results of Operations” section below for a detailed discussion of our financial results for the fiscal year 2020 compared to fiscal year 2019.

Cash Flows and Liquidity -

Our cash and cash equivalents, restricted cash and marketable securities were $244.0 million as of September 30, 2021 and $260.7 million as of September 30, 2020.

Both fiscal year 2021 and 2020 each exclude $45.0 million of cash classified as assets held for sale related to the semiconductor automation business.

Cash and cash equivalents and restricted cash as presented on our Consolidated Statements of Cash Flows is on a total company basis and were $285.3 million as of September 30, 2021 compared to $302.5 million as of September 30, 2020.

The decrease of $17.2 million included cash outflows for investing activities of $146.3 million and financing activities of $25.9 million, partially offset by cash inflows from operating activities of $149.9 million.

The effects of foreign exchange positively impacted the annual change in balances by $5.2 million.

Please refer to the “Liquidity and Capital Resources” section below for a detailed discussion of our liquidity and changes in cash flows for fiscal year 2021 compared to fiscal year 2020.

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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.

We evaluate current and anticipated worldwide economic conditions, both in general and specifically in relation to the life science industry, 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.

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We rely on either observable standalone sales or an expected cost-plus margin approach to determine the standalone selling price of offerings, depending on the nature of the performance obligation.

Performance obligations whose standalone selling price is estimated using an expected cost-plus margin approach relate to the sale of customized automated cold sample management systems and service-type warranties within the Brooks Life Sciences Products segment.

have alternative use to us and an enforceable right to payment for performance completed to date is present.

Revenue from the sales of certain products that involve significant customization, which primarily include automated cold sample management systems is recognized over time as the asset created by our performance does not have alternative use to us and an enforceable right to payment for performance completed to date is present.

We recognize revenue as work progresses based on a percentage of actual labor hours incurred on the project to-date and total estimated labor hours expected to be incurred on the project.

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These estimates are based on a number of factors, including the degree of required product customization and the work required to be able to install the product in the customer’s existing environment, as well as our historical experience, project plans and an assessment of the risks and uncertainties inherent in the contract related to implementation delays or performance issues that may or may not be within our control.

We estimate a loss on a contract by comparing total estimated contract revenue to the total estimated contract costs and recognize a loss during the period in which it becomes probable and can be reasonably estimated.

We review profit estimates for long-term contracts during each reporting period and revise the estimate based on changes in circumstances.

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Goodwill represents the excess of the purchase price over the estimated fair values of the assets acquired and liabilities assumed.

Significant judgment is used in determining fair values of assets acquired and liabilities assumed, as well as intangibles and their estimated useful lives.

Fair value and useful life determinations are based on, among other factors, estimates of future expected cash flows, royalty cost savings and appropriate discount rates used in computing present values.

Particularly for GENEWIZ, management applied significant judgment in estimating the fair value of the acquired intangible assets, which involved significant estimates and assumptions with respect to forecast revenue growth rates, gross margin percentage, selling, general and administrative expense percentage and the discount rate.

Significant judgment is used in determining fair values of assets acquired, liabilities assumed and contingent consideration, as well as intangibles and their estimated useful lives.

Fair value and useful life determinations may be based on, among other factors, estimates of future expected cash flows, royalty cost savings and appropriate discount rates used in computing present values.

For all the current year acquisitions, management applied significant judgment in estimating the fair value of the acquired intangible assets, which involved significant estimates and assumptions with respect to forecast revenue growth rates and the discount rates.

These judgments may materially impact the estimates used in allocating acquisition date fair values to assets acquired and liabilities assumed, as well as our current and future operating results.

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Adjustments to fair values of assets and liabilities made after the end of the measurement period are recorded within our operating results.

During the third quarter of fiscal 2021, the Company recorded $9.4 million level 3 liability which represents contingent consideration for an acquisition within the Life Sciences Products segment.

The amount is contingent based on the acquired business’ performance for the twelve-month period ending December 31, 2021.

Please refer to Note 4, “Acquisitions” for further detail.

Changes in the fair value of contingent consideration resulting from a change in the underlying inputs are recognized in results of operations until the arrangement is settled.

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A reporting unit is either an operating segment or one level below it, which is referred to as a “component.” The level at which the impairment test is performed requires an assessment of whether the operations below an operating segment constitute a self-sustaining business, in which case testing is generally performed at this level.

We have three operating and three reportable segments consisting of Brooks Semiconductor Solutions Group, Brooks Life Sciences Products and Brooks Life Sciences Services.

We have six reporting units, including three reporting units within the Brooks Semiconductor Solutions Group operating segment, one reporting unit within Brooks Life Sciences Products operating segment and two reporting units within the Brooks Life Sciences Services operating segment.

We have two operating and two reportable segments consisting of Life Sciences Products and Life Sciences Services.

As of the date of our goodwill impairment test, we had six reporting units which three reporting units are within semiconductor automation discontinued operations.

The three reporting units within the continuing operations include one reporting unit within Life Sciences Products operating segment and two reporting units within the Life Sciences Services operating segment.

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 Life Sciences Services operating segment, Sample Repository Solutions and Genomic Services components, into the Life Sciences Services reporting unit.

The Company evaluated the aggregation criteria under ASC 350 for the two components and concluded that they exhibit similar economic characteristics and meet the aggregation criteria.

We perform our annual goodwill impairment assessment on April 1 st of each fiscal year.

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No impairment loss is recognized if the fair value of the reporting unit exceeds its carrying value.

We also concluded that the fair value of the aggregated reporting units significantly exceeded the book value thus no adjustment to goodwill was necessary.

We determine fair values of our reporting units based on an income approach in accordance with the discounted cash flow method, or DCF Method.

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Application of the goodwill impairment test requires judgment based on market and operational conditions at the time of the evaluation, including management’s best estimates of the reporting unit’s future business activity and the related estimates and assumptions of future cash flows from the assets that include the associated goodwill.

Different assumptions of revenue growth rates, gross margin percentage, selling, general and administrative expense percentage and the discount rate used in the DCF model could results in different estimates of the reporting unit’s fair value as of each testing date.

We completed our annual goodwill impairment test as of April 1, 2020 for our six reporting units:

Automation Solutions, Contamination Control Solutions and Global Semiconductor Services within the Brooks Semiconductor Solutions Group segment, as well Life Sciences Products, Sample Repository Solutions and GENEWIZ within the life sciences businesses.

Different assumptions of revenue growth rates, gross margin percentage, selling, general and administrative expense percentage and the discount rate used in the DCF model could result in different estimates of the reporting unit’s fair value as of each testing date.

We completed our annual goodwill impairment test as of April 1, 2021 for the three reporting units within our continuing operations, including Life Sciences Products as the only reporting unit within our Life Sciences Products segment, and Sample Repository Solutions and Genomic Services within our Life Sciences Services segment.

Based on the test results, we determined that no adjustment to goodwill was necessary.

We conducted a qualitative assessment for the three reporting units within the Brooks Semiconductor Solutions Group segment and determined that it was more likely than not that their fair values were more than their carrying values.

As a result of the analysis, we did not perform the quantitative assessment for these reporting units and did not recognize any impairment losses.

We performed the quantitative goodwill impairment test for the three reporting units within the life sciences businesses.

We determined that no adjustment to goodwill was necessary for these three reporting units.

The Life Sciences Products and the Sample Repository Solutions unit’s fair values significantly exceeded book value.

The GENEWIZ reporting unit, which was acquired in the first quarter of fiscal year 2019, also had a fair value in excess of its book value.

We conducted a qualitative assessment for the Life Science Products reporting unit and determined that it was more likely than not that its fair value was greater than its carrying value.

As a result of the analysis, we did not perform the quantitative assessment for this reporting unit, and therefore, did not recognize any impairment losses.

We performed the quantitative goodwill impairment test for the two reporting units within the Life Sciences Services segment.

We determined that no adjustment to goodwill was necessary for these two reporting units.

Both reporting units’ fair values significantly exceeded their respective book values.

We are required to test long-lived assets, other than goodwill, for impairment when impairment indicators are present.

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If we determine that indicators of potential impairment are present, we assess the recoverability of the long-lived asset group by comparing its undiscounted future cash flows to its carrying value.

If the carrying value of the long-lived asset group

exceeds its future cash flows, we determine fair values of the individual net assets within the long-lived asset group to assess potential impairment.

If the carrying value of the long-lived asset group exceeds its future cash flows, we determine fair values of the individual net assets within the long-lived asset group to assess potential impairment.

If the aggregate fair values of the individual net assets of the group are less than their carrying values, an impairment loss is recognized for an amount in excess of the group’s aggregate carrying value over its fair value.

The loss is allocated to the assets within the group based on their relative carrying values, with no asset reduced below its fair value.

We did not test our long-lived assets for impairment during fiscal years 2020 and 2019 since no events indicating impairment occurred during the periods then ended.

We state our inventory at the lower of cost or market amount and make adjustments to reduce the inventory cost to its net realizable value by providing estimated reserves for obsolete or unmarketable inventory.

The reserves are established for the difference between the cost of inventory and its estimated market value based on assumptions related to future demand and market conditions.

During the fourth quarter of fiscal year 2021, we announced that the life sciences businesses will be rebranded under a single, unified life sciences brand, Azenta Life Sciences, or Azenta, during the first half of fiscal year 2022.

We concluded that the abandoned tradenames for these businesses were fully impaired in the fiscal fourth quarter of 2021 and recorded a $13.4 million charge for the tradename impairment loss.

The impairment loss is included in the Selling, general and administrative expense in our Consolidated Statements of Operations .

We did not test our long-lived assets for impairment during fiscal years 2020 since no events indicating impairment occurred during the periods then ended.

We state our inventory at the lower of cost or market amount and make adjustments to reduce the inventory cost to its net realizable value by providing estimated reserves for excess or obsolete inventory.

The reserves are established for the difference between the cost of inventory and its estimated market value based on assumptions related to future demand and market conditions to reduce the carrying value to its net realizable value.

We fully reserve for inventories and non-cancelable purchase orders for inventory deemed obsolete.

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We compare on-hand inventory balances to anticipated inventory usage based on our recent historical activity and anticipated or forecasted demand for our products developed through our planning systems and sales and marketing inputs.

We adjust the reserves for obsolete or unmarketable inventory and record additional inventory write downs based on unfavorable changes in estimated customer demand or actual market conditions that may differ from management projections.

We adjust the reserves for excess or obsolete inventory and record additional inventory write downs based on unfavorable changes in estimated customer demand or actual market conditions that may differ from management projections.

Deferred Income Taxes

We record a valuation allowance to reduce our deferred tax assets to the amount that is more likely than not to be realized.

We consider recent historical income, estimated future taxable income, carry-forward periods of tax attributes, the volatility of the semiconductor industry and ongoing tax planning strategies in assessing the need for the valuation allowance.

We consider recent historical income, estimated future taxable income, carry-forward periods of tax attributes, and ongoing tax planning strategies in assessing the need for the valuation allowance.

We evaluate the realizability of our deferred tax assets by tax-paying component and assess the need for a valuation allowance on an annual and quarterly basis.

We evaluate the profitability of each tax-paying component on a historic cumulative basis and on a forward-looking basis while performing this analysis.

After evaluating all the relevant positive and negative evidence as of March 31, 2018, we concluded that it was more likely than not that a substantial portion of the U.S.

deferred tax assets would be realized.

In the second quarter of fiscal year 2018 we reached a significant level of cumulative profitability in the U.S., coupled with an improved outlook of U.S.

During the full fiscal year 2018, we reduced our U.S.

valuation allowance against our U.S.

net deferred tax assets resulting in a tax benefit of $77.2 million.

In the fourth quarter of fiscal year 2020 we reduced our U.S.

valuation allowance by an additional $1.0 million based on our conclusion that it is more likely than not that there will be sufficient future foreign source income to realize the foreign tax credit carryover balance held in the U.S.

The remaining portion of our U.S.

valuation allowance is related to the realizability of certain state tax credits and net operating loss carry-forwards.

We also continue to maintain valuation allowances against net deferred tax assets in certain foreign tax-paying components as of the end of fiscal year 2020.

After evaluating all the relevant positive and negative evidence we reduced our valuation allowance against certain foreign net deferred tax assets resulting in a tax benefit of $2.0 million in fiscal year 2021.

We continue to hold a U.S.

valuation allowance related to the realizability of certain state tax credits and net operating loss carry-forwards.

We also maintain valuation allowances against net deferred tax assets in certain foreign tax-paying components as of the end of fiscal year 2021.

Stock-Based Compensation

We measure compensation cost for all employee stock awards at fair value on the date of grant and recognize compensation expense over the service period for awards expected to vest.

The fair value of restricted stock units is determined based on the number of shares granted and the closing price of our common stock quoted on Nasdaq on the date of grant, and the fair value of stock options is determined using the Black-Scholes valuation model.

The fair value of restricted stock units is determined based on the number of shares granted and the closing price of our common stock quoted on the Nasdaq Global Select Market on the date of grant, and the fair value of stock options is determined using the Black-Scholes valuation model.

Such fair values are recognized as expense over the service period, net of estimated forfeitures.

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Further discussion of the impacts by each segment are discussed below.

Our Brooks Semiconductor Solutions Group segment reported revenue of $508.7 million for fiscal year 2020 compared to $446.7 million for fiscal year 2019, an increase of $62.1 million or 14%.

We reported increases in contamination control solutions revenue of $39.2 million, automation revenue of $22.4 million, and services revenue of $0.4 million.

The semiconductor markets are cyclical and may fluctuate significantly from quarter to quarter.

Demand for our Brooks Semiconductor Solutions Group products and services is affected by these cycles and a prolonged effect of the COVID-19 pandemic could negatively impact demand for our products and services in this segment.

To date, we have experienced some disruption in our supply chain as a result of the COVID-19 pandemic, which constrained our ability to ship some of the orders in our backlog during the second and third quarters of fiscal 2020.

However, we do not believe that COVID-19 pandemic has impacted our bookings or demand for our semiconductor equipment products.

Our Brooks Life Sciences Products segment reported revenue of $129.8 million for fiscal year 2020 compared to $119.0 million for fiscal year 2019, an increase of $10.7 million or 9%.

Our Life Sciences Products segment reported revenue of $199.6 million for fiscal year 2021 compared to $129.8 million for fiscal year 2020, an increase of $69.8 million or 54%.

The increase in revenue was driven by all major product lines.

Consumables and instruments were the most significant driver of the increase, primarily due to COVID-19 related demand.

Our Life Sciences Services segment reported revenue of $314.1 million for fiscal year 2021 compared to $258.8 million for fiscal year 2020, an increase of $55.3 million or 21%.

We reported an increase of $56.2 million from our genomics services business driven by Next Generation sequencing, gene synthesis services and Sanger sequencing.

We reported a decrease in sample repository solutions revenue of $1.0 million primarily due to reduction of 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 the decrease in revenue from the alliance was an increase in storage, informatics, and revenue from the acquisition of Trans-Hit Bio.

Revenue increased 30% excluding the impact of the RUCDR alliance.

We estimate that the impact of the COVID-19 pandemic on our revenue for the fiscal year ended September 30, 2021 was a net increase of approximately $53 million in the aggregate primarily attributable to the increased demand for in our consumables and instruments products.

We anticipate continued growth in revenue from our life sciences products and services businesses through our internally developed products and services and through our acquired businesses and potential future acquisitions.

Revenue generated outside the United States amounted to $192.9 million, or 38% of total revenue, for fiscal year 2021 compared to $135.0 million, or 35% of total revenue, for fiscal year 2020.

Operating Income (Loss)

We reported an operating loss of $31.1 million for fiscal year 2021 compared to an operating loss of $36.6 million for fiscal year 2020.

The decrease in operating loss of 15% was driven by higher revenue and gross profit, partially offset by an increase in both research and development expenses and selling, general and administrative expenses compared to the prior fiscal year.

Within operating expenses, selling, general, and administrative expenses increased $61.8 million, and research and development expenses increased $4.6 million.

Restructuring expenses decreased $0.3 million.

Selling, general and administrative expenses for fiscal year 2021 included $13.4 million of impairment charges related to abandoned tradenames due to the rebranding of our life sciences business announced during the fourth quarter of fiscal year 2021.

Cost of sales in fiscal year 2021 also included $5.5 million of cost of sales accrued for tariff liabilities related to intercompany import activity that occurred during the fiscal years of 2016 through 2020.

The costs resulted from an internal review of the transaction value used to calculate tariffs on intercompany imports of samples shipped from our genomics services business.

Operating income for our Life Sciences Products segment was $22.0 million for fiscal year 2021 compared to an operating loss of $4.2 million for fiscal year 2020.

Cost of sales for our Life Sciences Products segment includes charges for amortization related to completed technology of $1.1 million for fiscal year 2021 and $1.2 million for the fiscal year 2020.

Adjusted operating income for our Life Sciences Products segment, which excludes the charges mentioned above, was $23.1 million for fiscal year 2021 and adjusted operating loss in fiscal year 2020 was $3.0 million after excluding these charges.

Please refer to Note 19, “Segment and Geographic Information”.

Operating income for our Life Sciences Services segment was $10.3 million for fiscal year 2021 compared to an operating loss of $4.4 million for fiscal year 2020.

Cost of sales for our Life Sciences Services segment includes charges for amortization related to completed technology of $7.0 million for fiscal year 2021 and $6.9 million for 2020.

Fiscal year 2021 cost of sales includes $5.5 million of cost accrued for tariff liabilities as discussed above.

Fiscal year 2020 includes $0.3 million of restructuring related charges.

Adjusted operating income for our Life Sciences Services segment, which excludes the charges mentioned above, was $22.7 million for fiscal year 2021 and adjusted operating loss in fiscal year 2020 was $2.9 million after excluding these charges.

Please refer to Note 19, “Segment and Geographic Information”.

We reported gross margins of 47.5% for fiscal year 2021 compared to 44.3% for fiscal year 2020, an increase of 3.2 points.

Gross margin increased 3.4 percentage points in the Life Sciences Products segment and 3.1 percentage points in the Life Sciences Services segment.

Cost of revenue for both fiscal years 2021 and 2020 included $8.1 million of charges for amortization related to completed technology.

Cost of revenue for fiscal year 2021 included $5.5 million of cost accrued for tariff liabilities as discussed above.

Cost of revenue for fiscal year 2020 included $0.3 million of restructuring related charges.

Excluding these charges, margins expanded 3.6 percentage points in fiscal year 2021, as compared to fiscal year 2020.

Our Life Sciences Products segment reported gross margins of 46.4% for fiscal year 2021 compared to 42.9% for fiscal year 2020.

The improvement of 3.4 percentage points was primarily driven by volume leverage related to increased sales across all product lines.

Cost of revenue in fiscal year 2021 and 2020 included $1.1 million and $1.2 million, respectively, of amortization related to completed technology.

Excluding these charges, margins expanded 3.1 percentage points in fiscal year 2021, compared to fiscal year 2020.

Our Life Sciences Services segment reported gross margins of 48.1% for fiscal year 2021 compared to 45.0% for fiscal year 2020.

The improvement of 3.1 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 2.9 percentage points from the reduction in outsourced genomic services due to the exit of the alliance with RUCDR.

Cost of revenue during fiscal year 2021 included $7.0 million of amortization related to completed technology as compared to $6.9 million incurred during fiscal year 2020.

Cost of revenue for fiscal year 2020 included $0.3 million of restructuring related charges.

Excluding the impact of the amortization related to completed technology, tariff charges and restructuring related charges, as described above, margins expanded 4.3 percentage points in fiscal year 2021, as compared to fiscal year 2020.

Research and Development Expenses

Research and development expenses were $22.4 million in fiscal year 2021 compared to $17.8 million in fiscal year 2020, which represented 4.4% and 4.6% of revenue for fiscal years 2021 and 2020, respectively.

Research and development expenses in our Life Sciences Products segment were $10.9 million in fiscal 2021 compared to $8.7 million in fiscal year 2020, which represented 5.4% and 6.7% of Life Sciences Products revenue in fiscal years 2021 and 2020, respectively.

The increase in research and development expenses were primarily attributable to investments in our cryogenic product line and outside services costs.

Research and development expenses in our Life Sciences Services segment were $11.5 million in fiscal 2021 compared to $9.1 million in fiscal year 2020 which represented 3.7% and 3.5% of Life Sciences Services revenue for fiscal years 2021 and 2020, respectively.

The increase in research and development expenses was primarily driven by higher payroll related costs and project costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $252.1 million in fiscal year 2021 as compared to $190.3 million in fiscal year 2020.

The increase of $61.8 million was driven by $26.2 million from segment selling, general and administrative expenses and $35.6 million from corporate expenses not allocated to our segments.

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 $20.7 million for fiscal year 2021, compared to $0.5 million in fiscal year 2020.

Merger and acquisition expenses for fiscal year 2021 included $18.6 million of costs related to separation activities resulting in the sale of the semiconductor automation business.

Unallocated corporate expenses also include the amortization of intangible assets primarily related to customer relationships, which were $8.1 million for both fiscal years 2021 and 2020.

Fiscal year 2021 also includes $13.4 million of impairment charges to intangible assets related to tradenames.

The charges were driven by the abandonment of tradenames which resulted from the rebranding of our life sciences products and life sciences services business during the fourth quarter of fiscal year 2021 and $0.8 million of costs related to rebranding and transformation efforts.

Selling, general and administrative expenses at the segment level, which 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 fiscal year 2021 corporate allocated expenses increased $10.0 million compared to fiscal year 2020, primarily due to higher variable compensation accruals and information technology infrastructure costs.

Selling, general and administrative expenses in our Life Sciences Products segment were $59.7 million in fiscal year 2021 as compared to $51.2 million in fiscal year 2020.

The increase of $8.5 million was due to higher sales commission expenses, variable compensation expense and corporate allocated costs, which were driven by the factors discussed above.

Selling, general and administrative expenses in our Life Sciences Services segment were $129.4 million in fiscal year 2021 as compared to $111.7 million in fiscal year 2020.

The increase of $17.6 million is primarily related to variable compensation expense and costs to support growth, partially offset by lower travel expenses, and lower bad debt expense

Non-Operating Income (Expenses)

Interest income – During fiscal years 2021 and 2020, we recorded interest income of $0.6 million and $0.8 million respectively, which primarily represented interest earned on our marketable securities.

Interest expense – During fiscal years 2021 and 2020, we recorded interest expense of $2.0 million and $2.9 million, respectively.

Interest expense is primarily related to our term loan.

Other expenses, net – During fiscal years 2021 and 2020 we recorded other expenses, net of $16.5 million and $1.6 million, respectively.

Other expense, net for fiscal year 2021 includes a $16.0 million charge related to the release of a tax indemnification asset which is offset in the Income tax benefit line item in our Consolidated Statements of Operations.

Income Tax Benefit

We recorded an income tax benefit on continuing operations of $20.1 million in fiscal year 2021 compared to an income tax benefit of $13.9 million in fiscal year 2020.

The income tax benefit for fiscal year 2021 was primarily driven by uncertain tax position reversals totaling $18.2 million, which includes $16.0 million of uncertain tax positions that were indemnified.

The tax reserve reversal is offset by a $3.4 million tax charge related to the write off a future tax deduction that would have been recognized if the uncertain tax position was settled in an audit.

The benefit also included $2.0 million of benefits related to the reversal of valuation allowances against deferred tax assets, losses in the U.S.

jurisdiction and stock compensation deductions in excess of book expenses.

The overall benefit for fiscal year 2021 was partially offset by $4.1 million of withholding tax costs related to repatriation of foreign earnings in connection with the planned sale of the semiconductor automation business and the tax provision on earnings in our foreign jurisdictions during the year.

The income tax benefit during fiscal year 2020 was driven primarily by benefits in the U.S.

jurisdiction related to continuing operations losses and stock compensation deductions in excess of book expenses.

The overall benefit for fiscal year 2020 was partially offset by the tax provisions on earnings in our foreign jurisdictions during the year.

Discontinued Operations

Discontinued operations include our semiconductor automation business and our semiconductor cryogenics business.

In the fourth quarter of fiscal year 2021, we entered into a definitive agreement to sell our semiconductor automation business to THL for $3 billion in cash, subject to customary adjustments.

The sale is expected to close in the first half of 2022.

On July 1, 2019, we completed the sale of the semiconductor cryogenics business for $659.8 million in cash.

Revenue from discontinued operations was $680.1 million and $508.7 million, respectively, for fiscal years 2021 and 2020 and relates to the semiconductor automation business.

Net income from discontinued operations was $139.6 million and $91.2 million for fiscal years 2021 and 2020, respectively, and is comprised primarily of the results of operations of our semiconductor automation business.

The 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 our company on an ongoing basis.

Indirect expenses which supported the semiconductor automation business and semiconductor cryogenics business, and which remained as part of the continuing operations, are not reflected in income from discontinued operations.

Fiscal Year Ended September 30, 2020 Compared to Fiscal Year Ended September 30, 2019

We reported revenue of $388.5 million for fiscal year 2020 compared to $334.2 million for fiscal year 2019, an increase of $54.3 million, or 16%.

The COVID-19 pandemic had varying impacts on our business for the fiscal year ended September 30, 2020.

The impacts by segment are discussed below.

Our Life Sciences Products segment reported revenue of $129.8 million for fiscal year 2020 compared to $119.0 million for fiscal year 2019, an increase of $10.7 million or 9%.

The increase in revenue was driven by consumables and instruments, which delivered record revenue levels driven by COVID-19 related demand, and an increase in revenue for our BioStore III Cryo systems, partially offset by decreases in revenue from automated cold sample management systems and infrastructure services revenue which were both impacted by customer site restrictions and schedule delays due to COVID-19.

Our Brooks Life Sciences Services segment reported revenue of $258.8 million for fiscal year 2020 compared to $215.2 million for fiscal year 2019, an increase of $43.6 million or 20%.

We reported an increase of $40.2 million from GENEWIZ, which was composed of $20.0 million from the additional weeks of ownership for the twelve months ended September 30, 2020, and $20.2 million from organic growth.

Our Life Sciences Services segment reported revenue of $258.8 million for fiscal year 2020 compared to $215.2 million for fiscal year 2019, an increase of $43.6 million or 20%.

We reported an increase of $40.2 million from genomic services, which was composed of $20.0 million from the additional time of ownership for fiscal year 2020, compared to the prior fiscal year and $20.2 million from organic growth.

Our genomic services business, which is comprised of the acquisition of GENEWIZ Group, or GENEWIZ, was acquired in November 2018.

We reported an increase in Sample Repository Solutions revenue of $3.4 million primarily driven by informatics services and storage services, partially offset by declines in outsourced genomic services and transportation services, which were negatively impacted by COVID-19.

Informatics revenue was primarily driven by the acquisition of RURO in February 2020.

We estimate that the impact of the COVID-19 pandemic on our two life sciences segments’ revenue for the fiscal year ended September 30, 2020 was a net reduction of approximately $11 million in the aggregate primarily attributable to a slow-down in the marketplace, reflecting the absence of a portion of the workforces within our customers.

This slow-down was first present in the China market in the early part of the second quarter ended March 31, 2020 and began surfacing in the rest of the world in the latter part of March 2020.

We estimate that the impact of the COVID-19 pandemic on our revenue for the fiscal year ended September 30, 2020 was a net reduction of approximately $11 million in the aggregate primarily attributable to a slow-down in the marketplace, reflecting the absence of a portion of the workforces within our customers.

This slowdown was first present in the China market in the early part of the second quarter ended March 31, 2020 and began surfacing in the rest of the world in the latter part of March 2020.

Partially offsetting these declines, we experienced an increase in demand for gene synthesis services and consumables and instruments, in support of numerous activities including research and development in the areas of virus detection and vaccines.

During the fourth quarter of fiscal year 2020, demand and shipments for certain products and services in our life sciences businesses which were impacted by COVID-19 recovered to levels we experienced prior to the pandemic.

We anticipate continued growth in revenue from our Brooks Life Sciences Products segment and our Brooks Life Sciences Services segment through our internally-developed products and services and through our acquired businesses.

We will continue to seek opportunities to expand our market share in the semiconductor and adjacent technology

markets served by our Brooks Semiconductor Solutions Group segment.

Our sales into the semiconductor and adjacent technology markets are substantially driven by our customers’ significant capital investments.

These markets are cyclical, often fluctuating significantly from quarter to quarter.

Demand for our Brooks Semiconductor Solution Group products is affected by these cycles.

Revenue generated outside the United States amounted to $135.0 million, or 35% of total revenue, for fiscal year 2020 compared to $81.7 million, or 24% of total revenue, for fiscal year 2019.

Operating Income

We reported operating income of $78.5 million for fiscal year 2020 compared to $46.0 million for fiscal year 2019.

The increase of 70% was driven by higher revenue and gross profit, partially offset by an increase in both research and development expenses and selling, general and administrative expenses compared to the prior fiscal year.

Operating Income (Loss)

We reported an operating loss of $36.6 million for fiscal year 2020 compared to $47.4 million for fiscal year 2019.

The decrease in operating loss of $10.8 million was driven by higher revenue and gross profit, partially offset by an increase in both selling, general and administrative expenses and research and development expenses compared to the prior fiscal year.

Drivers of the increases to research and development and selling, general and administrative expenses are described below.

Operating income for our Brooks Semiconductor Solutions Segment was $80.0 million for fiscal year 2020 compared to $66.2 million for fiscal year 2019.

Operating income includes charges for amortization related to completed technology of $2.9 million and $3.6 million for fiscal years 2020 and 2019, respectively.

Fiscal year 2019 also includes inventory step-up charges of $0.2 million.

There were no such charges in fiscal year 2020.

Adjusted operating income for our Brooks Semiconductor Solutions Group segment, which excludes the charges mentioned above, was $83.0 million for fiscal year 2020 compared to $70.0 million in fiscal year 2019.

Please refer to Note 20, “Segment and Geographic Information”.

Operating income for our Brooks Life Sciences Products segment was $8.2 million for fiscal year 2020 compared to an operating loss of $3.1 million for fiscal year 2019.

Operating income for our Brooks Life Sciences Products segment includes charges for amortization related to completed technology of $1.2 million in each of the fiscal years 2020 and 2019.

Adjusted operating income for our Brooks Life Sciences Products segment, which excludes the charges mentioned above, was $9.4 million for fiscal year 2020 compared to an operating loss of $1.8 million in fiscal year 2019.

Operating loss for our Life Sciences Products segment was $4.2 million for fiscal year 2020 compared to an operating loss of $22.1 million for fiscal year 2019.

Operating income for our Life Sciences Products segment includes charges for amortization related to completed technology of $1.2 million in each of the fiscal years 2020 and 2019.

Adjusted operating loss for our Life Sciences Products segment, which excludes the charges mentioned above, was $3.0 million for fiscal year 2020 compared to an adjusted operating loss of $20.9 million in fiscal year 2019.

Please refer to Note 19, “Segment and Geographic Information”.

Operating income for our Brooks Life Sciences Services segment was $21.6 million for fiscal year 2020 compared to $16.6 million for fiscal year 2019.

Operating income for our Brooks Life Sciences Services segment includes charges for amortization related to completed technology of $6.9 million and $5.6 million for fiscal years 2020 and 2019, respectively, and restructuring related charges of $0.3 million in each of the fiscal years 2020 and 2019.

Adjusted operating income for our Brooks Life Sciences Services segment, which excludes the charges mentioned above, was $28.8 million for fiscal year 2020 compared to $22.5 million in fiscal year 2019.

Operating loss for our Life Sciences Services segment was $4.4 million for fiscal year 2020 compared to operating income of $3.1 million for fiscal year 2019.

Operating loss for our Life Sciences Services segment includes charges for amortization related to completed technology of $6.9 million and $5.6 million for fiscal years 2020 and 2019, respectively, and restructuring related charges of $0.3 million in each of the fiscal years 2020 and 2019.

Adjusted operating income for our Life Sciences Services segment, which excludes the charges mentioned above, was $2.9 million for fiscal year 2020 compared to $9.0 million in fiscal year 2019.

Please refer to Note 19, “Segment and Geographic Information”.

We reported gross margins of 44.3% for fiscal year 2020 compared to 40.3% for fiscal year 2019, an increase of 4.0 points.

Gross margin increased 6.3 points in the Brooks Life Sciences Products segment, 2.7 points in the Brooks Life Sciences Services segment and 0.2 points in the Brooks Semiconductor Solutions segment.

Cost of revenue for fiscal year 2020 included $11.0 million of charges for amortization related to completed technology as compared to $10.4 million incurred during fiscal year 2019.

Gross margin increased 6.2 percentage points in the Life Sciences Products segment and 2.7 percentage points in the Life Sciences Services segment.

Cost of revenue for fiscal year 2020 included $8.1 million of charges for amortization related to completed technology as compared to $6.8 million in fiscal year 2019.

Cost of revenue for both fiscal year 2020 and 2019 included $0.3 million of restructuring related charges.

Additionally, fiscal year 2019 included $0.2 million of inventory step-up charges from acquisitions.

There were no such charges in the current year period.

Excluding these charges, margins expanded 1.7 percentage points in fiscal year 2020, as compared to fiscal year 2019.

Our Brooks Semiconductor Solutions Group segment reported gross margins of 40.9% for fiscal year 2020 compared to 40.7% for fiscal year 2019.

The gross margin improvement of 0.2 percentage points was primarily driven by volume leverage and lower amortization expense related to completed technology, partially offset by adverse impact from product mix.

Cost of revenue during fiscal year 2020 included $2.9 million of amortization related to completed technology as compared to $3.6 million during fiscal year 2019.

During fiscal year 2019, cost of revenue included $0.2 million of inventory step-up charges, which were attributable to the acquisition of Tec-Sem.

There were no such charges

in fiscal year 2020.

Excluding these charges, margins declined 0.1 percentage points in fiscal year 2020, as compared to fiscal year 2019, primarily due to adverse product mix.

Our Brooks Life Sciences Products segment reported gross margins of 42.9% for fiscal year 2020 compared to 36.6% for fiscal year 2019.

The improvement of 6.3 points was driven by material and labor cost reductions related to large stores and BIII Cryo systems, efficiencies realized installing large stores and performing infrastructure services, and volume leverage.

Our Life Sciences Products segment reported gross margins of 42.9% for fiscal year 2020 compared to 36.6% for fiscal year 2019.

The improvement of 6.3 percentage points was driven by material and labor cost reductions related to large stores and BIII Cryo systems, efficiencies realized installing large stores and performing infrastructure services, and volume leverage.

Cost of revenue in each of the fiscal years 2020 and 2019 included $1.2 million of amortization related to completed technology.

Excluding these charges, margins expanded 6.2 percentage points in fiscal year 2020, as compared to fiscal year 2019.

Our Brooks Life Sciences Services segment reported gross margins of 45.0% for fiscal year 2020 compared to 42.3% for fiscal year 2019.

The improvement of 2.7 points is due to volume leverage, cost performance, and favorable service mix.

Our Life Sciences Services segment reported gross margins of 45.0% for fiscal year 2020 compared to 42.3% for fiscal year 2019.

The improvement of 2.7 percentage points is due to volume leverage, cost performance, and favorable service mix.

Cost of revenue during fiscal year 2020 included $6.9 million of amortization related to completed technology as compared to $5.6 million incurred during fiscal year 2019.

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Research and Development Expenses

Research and development expenses were $59.1 million in fiscal year 2020 compared to $56.4 million in fiscal year 2019.

The increase of $2.7 million was due to increased expense of $2.5 million within the Brooks Life Sciences Services segment and $2.2 million within the Brooks Semiconductor Solutions segment, partially offset by a decline of $2.0 million within our Brooks Life Sciences Products segment.

Research and development expenses in our Brooks Semiconductor Solutions Group segment were $41.3 million in fiscal year 2020 compared to $39.1 million in fiscal year 2019.

Higher research and development expenses were primarily attributable to employee related costs and outside services, driven by product development initiatives related to our vacuum robotics platform, contamination control solutions for lower technology nodes and reticle storage for EUV.

Research and development expenses in our Brooks Life Sciences Products segment were $8.8 million in fiscal 2020 compared to $10.8 million in fiscal year 2019.

Research and development expenses were $17.8 million in fiscal year 2020 compared to $17.3 million in fiscal year 2019, which represented 4.6% and 5.2% of revenue, for fiscal years 2020 and 2019, respectively.

Research and development expenses in our Life Sciences Products segment were $8.7 million in fiscal 2020 compared to $10.8 million in fiscal year 2019, which represented 6.7% and 9.1% of Life Sciences Products revenue for fiscal years 2020 and 2019, respectively.

The decline in research and development expenses were primarily attributable to lower outside service costs and lower temporary employee costs supporting product development initiatives.

Research and development expenses in our Brooks Life Sciences Services segment were $9.1 million in fiscal 2020 compared to $6.5 million in fiscal year 2019.

The increase of $2.5 million was primarily driven by acquisitions.

The timing of the GENEWIZ acquisition added an additional $1.1 million of expense in fiscal year 2020 and the RURO acquisition added $0.6 million of additional expense.

Research and development expenses in our Life Sciences Services segment were $9.1 million in fiscal 2020 compared to $6.5 million in fiscal year 2019, which represented 3.5% and 3.0% of Life Sciences Services revenue for fiscal years 2020 and 2019, respectively.

The increase in research and development expenses was primarily driven by acquisitions.

The timing of the GENEWIZ acquisition added an additional $1.1 million of expense in fiscal year 2020 and the acquisition of RURO, Inc.

in February 2020 added $0.6 million of additional expense.

Investments in employee related costs and outside services to support development initiatives in our service offerings drove the remainder of the increase.

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Selling, general and administrative expenses were $190.3 million in fiscal year 2020 as compared to $163.3 million in fiscal year 2019.

The increase of $29.2 million was due to increased expense of $17.9 million within the Brooks Life Sciences Services segment, $10.2 million within the Brooks Semiconductor Solutions segment, and $2.9 million within the Brooks Life Sciences Products segment.

Our segment selling general and administrative expenses include allocations for Corporate general and administrative functions which drove $15.1 million of the $29.2 million increase.

The increase in Corporate expenses were driven by legal and audit fees, and finance and IT department expenses.

Corporate expenses, not allocated to segments, were $30.0 million in fiscal year 2020, compared to $31.8 million in fiscal year 2019.

Unallocated corporate expenses included amortization expense related primarily to customer relationships of $30.8 million and $24.7 million, during fiscal years 2020 and 2019, respectively, and merger and acquisition related expenses of $0.5 million and $6.7 million, during fiscal years 2020 and 2019, respectively.

Selling, general and administrative expenses in our Brooks Semiconductor Solutions Group segment were $86.6 million in fiscal year 2020 as compared to $76.4 million in fiscal year 2019.

The increase of $10.2 million was primarily

due to an increase in corporate allocated costs and segment employee payroll costs, partially offset by decreases in employee travel, trade shows and conferences.

Selling, general and administrative expenses in our Brooks Life Sciences Products segment were $38.8 million in fiscal year 2020 as compared to $35.9 million in fiscal year 2019.

The increase of $2.9 million is primarily due to higher corporate allocated costs and higher sales commissions partially offset by decreases in employee related costs as a result of restructuring actions taken in 2019 and 2020 and decreases in expenses related to employee travel, trade shows, and conferences.

Selling, general and administrative expenses in our Brooks Life Sciences Services segment were $85.8 million in fiscal year 2020 as compared to $67.9 million in fiscal year 2019.

The increase of $26.9 million was driven by $26.6 million from segment selling, general and administrative expenses and $0.3 million from corporate expenses not allocated to our segments.

Selling, general and administrative expenses at the segment level, which are discussed below, include corporate allocations from shared corporate functions which include finance, information technology, human resources, legal, executive, governance, logistics and compliance, and variable compensation.

During fiscal year 2020 corporate allocated expenses increased $33.8 million compared to fiscal year 2019, primarily due to the integration of the shared corporate functions from our acquisitions.

Selling, general and administrative expenses in our Life Sciences Products segment were $51.2 million in fiscal year 2020 as compared to $54.9 million in fiscal year 2019.

The decrease of $3.7 million is primarily due to decreases in employee related costs from restructuring actions taken in 2019 and 2020 and decreases in expenses related to employee travel, trade shows, and conferences, partially offset by higher corporate allocated costs and higher sales commissions.

Selling, general and administrative expenses in our Life Sciences Services segment were $111.7 million in fiscal year 2020 as compared to $81.4 million in fiscal year 2019.

The increase of $30.4 million is primarily related to acquisitions, corporate allocations, and bad debt expense, partially offset by lower employee travel expense.

The timing of the GENEWIZ acquisition added an additional $5.1 million of expense in fiscal year 2020 and the RURO acquisition added $1.2 million of additional expense in fiscal year 2020.

The timing of the GENEWIZ acquisition added an additional $5.1 million of expense and the RURO acquisition added $1.2 million of additional expense in fiscal year 2020.

Non-Operating Income (Expenses)

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Interest expense – During fiscal years 2020 and 2019, we recorded interest expense of $2.9 million and $22.2 million, respectively.

The decrease in interest expense in the current fiscal year compared to the prior fiscal year is due to carrying less debt.

The decrease in interest expense in the fiscal year 2020 compared to the prior fiscal year is due to carrying less debt.

We extinguished $495.3 million of debt during the fourth quarter of fiscal year 2019.

Loss on extinguishment of debt - During fiscal year 2019, we recorded losses on extinguishment of debt of $14.3 million of which $9.1 million was in connection with the syndication of the incremental term loan secured during the first quarter of fiscal 2019.

The syndication to a new group of lenders during the second quarter of fiscal 2019 met the criteria of a debt extinguishment and therefore the amortization of the deferred financing costs associated with the origination of the incremental term loan was accelerated and recorded as a loss on extinguishment of debt in our statement of operations.

In addition, as a result of the $495.3 million extinguishment of debt during the fourth quarter of fiscal year 2019, we recorded an additional $5.2 million loss on extinguishment of debt.

Other expenses, net – During fiscal years 2020 and 2019 we recorded other expenses, net of $1.6 million and $1.4 million, respectively.

Income Tax Provision

We recorded an income tax provision on continuing operations of $9.9 million in fiscal year 2020 compared to an income tax benefit of $0.1 million in fiscal year 2019.

The income tax expense for fiscal year 2020 was primarily driven by the provision on earnings from operations during the year.

The expense was partially offset by a $6.4 million stock compensation windfall benefit for tax deductions that exceeded the associated compensation expense, a $2.0 million benefit from research tax credits, and a benefit of $0.5 million from a reduction of deferred tax liabilities related to the extension of a tax rate incentive in China.

Income Tax Benefit

We recorded an income tax benefit on continuing operations of $13.9 million in fiscal year 2020 compared to an income tax benefit of $22.8 million in fiscal year 2019.

The income tax benefit during fiscal year 2020 was driven primarily by benefits in the U.S.

jurisdiction related to continuing operations losses and stock compensation deductions

in excess of book expenses.

The overall benefit for fiscal year 2020 was partially offset by the tax provisions on earnings in our foreign jurisdictions during the year.

The income tax benefit during fiscal year 2019 was driven primarily by benefits in the U.S.

jurisdiction related to continuing operations losses, research tax credits, and stock compensation deductions in excess of book expenses.

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Discontinued Operations

On July 1, 2019, we completed the sale of the semiconductor cryogenics business which we include as a discontinued operation.

We recorded $0.2 million of net loss from discontinued operations for fiscal year 2020.

We recorded revenue of $109.5 million and $427.9 million of net income from discontinued operations for fiscal year 2019,

which includes the net gain on sale of the business of $408.6 million.

The net income is also inclusive of income from the ULVAC Cryogenics, Inc.

joint venture in 2019.

As discussed above, discontinued operations include the results of the semiconductor automation business and the results of the semiconductor cryogenics business, which was sold on July 1, 2019.

The sale of the semiconductor automation business is expected to be completed during the first half of the calendar year 2022.

Revenue from discontinued operations was $508.7 million and $556.2 million, respectively, for fiscal years 2020 and 2019, respectively.

Revenue from discontinued operations for fiscal year 2020 relates to the semiconductor automation business.

Revenue from discontinued operations for fiscal year 2019 includes $446.7 million related to the semiconductor automation business and $109.5 million related to the semiconductor cryogenics business.

Net income from discontinued operations was $91.2 million for fiscal year 2020 and is comprised primarily of our semiconductor automation business.

Net income for fiscal 2019 was $498.5 million and includes the net gain on sale of the semiconductor cryogenics business of $408.6 million.

The net income for fiscal year 2019 is also inclusive of income from the ULVAC Cryogenics, Inc.

joint venture.

Indirect expenses which supported the semiconductor cryogenics business, and which remained as part of the continuing operations, are not reflected in income from discontinued operations.

Indirect expenses which supported the semiconductor automation business and cryogenics business, and which remained as part of the continuing operations, are not reflected in income from discontinued operations.

LIQUIDITY AND CAPITAL RESOURCES

A considerable portion of our revenue is dependent on the demand for semiconductor capital equipment which historically has experienced periodic downturns.

We believe that we have adequate resources to satisfy our working capital, financing activities, debt service and capital expenditure requirements for the next twelve months.

The cyclical nature of our served markets and uncertainty in the current global economic environment, including the uncertainty related to the COVID-19 pandemic, make it difficult for us to predict longer-term liquidity requirements with sufficient certainty.

The current global economic environment, including the uncertainty related to the short and long-term impacts of 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, unless otherwise noted, and is stated on a total company consolidated basis.

The discussion of our cash flows and liquidity that follows does not include the impact of any adjustments to remove discontinued operations, unless otherwise noted, and is stated on a total company consolidated basis.

Overview of Cash Flows and Liquidity

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Long-term marketable securities

Our cash and cash equivalents, restricted cash and marketable securities were $305.7 million as of September 30, 2020.

Our cash balances are held in numerous locations throughout the world, with the substantial majority of those amounts located outside of the United States.

As of September 30, 2020, we had cash and cash equivalents of $295.7 million, of which $241.1 million was held outside of the United States.

Cash, cash equivalents and restricted cash

Cash and cash equivalents included in assets held for sale

Our cash and cash equivalents, restricted cash and marketable securities were $244.0 million as of September 30, 2021 and exclude $45 million of cash included within assets held for sale related to the semiconductor automation business.

As of September 30, 2021, we had cash, cash equivalents and restricted cash including cash in assets held for sale of $285.3 million, of which $169.6 million was held outside of the United States.

If these funds are needed for the United States operations, we would need to repatriate these funds.

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federal income tax.

Our intent is to reinvest these funds outside of the United States and our current operating plans do not demonstrate a need to repatriate these funds for our U.S.

During the 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 costs.

We have provided immaterial deferred income taxes for the impact of these future repatriations.

Aside from these actions, our intent is to reinvest the remaining foreign cash.

Aside from these actions, our intent is to reinvest 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.

We had marketable securities of $3.7 million and $3.2 million as of September 30, 2021 and 2020, respectively.

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Fiscal Year Ended September 30, 2021 Compared to Fiscal Year Ended September 30, 2020

Cash Flows and Liquidity - Cash and cash equivalents, restricted cash and marketable securities were $305.7 million at September 30, 2020 as compared to $342.1 million at September 30, 2019.

The decrease of $36.4 million was comprised of outflows of $39.9 million for capital expenditures, $15.7 million for acquisitions, and $29.5 million for dividends, partially offset by cash inflows from operating activities of $37.9 million.

Cash inflows from operating activities was $37.9 million and was comprised of $64.9 million of net income and $77.2 million of adjustments to net

income for non-cash items, partially offset by $91.5 million of cash taxes paid for the gain on the sale of the semiconductor cryogenics business and $12.7 million uses of cash from the changes in operating assets and liabilities.

Divestiture and Extinguishment of Debt

In the fiscal year 2019, we completed the sale of the semiconductor cryogenics business for $661.5 million which excludes $6.3 million retained by the buyer at closing to preliminarily settle net working capital adjustments.

Net proceeds from the sale were $553.1 million, net of estimated taxes payable and closing costs.

In connection with the completion of the sale of our semiconductor cryogenics business, we used $348.3 million of the cash proceeds from the sale to extinguish the total remaining outstanding balance of the incremental term loan and $147.0 million of the cash proceeds from the sale to extinguish a portion of the outstanding balance of the term loan.

The total amount of debt extinguished was $495.3 million.

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 were $285.3 million as of September 30, 2021 compared to $302.5 million as of September 30, 2020.

The effects of foreign exchange positively impacted the annual change in balances by $5.2 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 charges impact reported cash flows.

Cash flows provided by operating activities were $37.9 million during fiscal year 2020 and were comprised primarily of $50.5 million of earnings, which included $64.9 million of net income and a $77.2 million impact of non-cash related items, partially offset by $91.5 million of cash taxes paid for the gain on the sale of the semiconductor cryogenics business.

Cash flows provided by operating activities also included $12.7 million in uses of cash from the changes in operating assets and liabilities.

The changes in operating assets and liabilities that resulted in a use of cash consisted primarily of an increase in accounts receivable and inventory levels.

These uses of cash were partially offset by an increase in accrued expenses and other liabilities, accrued compensation and tax withholdings and increased prepaid expenses and other assets.

Cash flows provided by operating activities were $90.9 million during fiscal year 2019 and comprised primarily of earnings of $84.6 million and sources of cash provided by changes in operating assets and liabilities of $6.3 million.

Earnings of $84.6 million consists of net income of $437.4 million offset by the impact of non-cash related charges of $352.8 million which includes the net gain on the sale of our semiconductor cryogenics business of $408.6 million and $13.4 million of contingent transaction fees paid related to the closing of the sale of the cryogenics business.

The changes in operating assets and liabilities which results in sources of cash consisted primarily of an increase in accrued expenses and other liabilities which includes accrued taxes of approximately $95.0 million related to the sale of our semiconductor cryogenics business, as well as decreases in accounts receivable, prepaid expenses and other current assets and an increase of deferred revenue.

These sources of cash were partially offset by decreased accrued compensation and tax withholdings.

Discontinued operations contributed $0.2 million loss and $427.9 million gain for fiscal years ended 2020 and 2019, respectively, in the net income referenced for the respective periods above.

Net income for fiscal year 2019 includes the net gain on sale of the semiconductor cryogenics business of $408.6 million.

The sale of the semiconductor cryogenics business was completed on July 1, 2019.

Cash flows from operating activities of $149.9 million for the fiscal year ended September 30, 2021, resulted from net income $110.7 million, adjusted to exclude the effect of non-cash operating charges of $90.3 million, partially offset by an increase in net operating assets of $51.2 million.

Cash outflows from the increase in net operating assets were primarily driven by increases in accounts receivable, inventory, and prepaids and other assets partially offset by increases in accounts payable, accrued expenses, and other liabilities and accrued compensation and tax withholdings.

Cash flows from operating activities of $37.9 million for the fiscal year ended September 30, 2020, resulted from net income of $64.9 million, adjusted to exclude the effect of non-cash operating charges of $77.2 million, partially

offset by an increase in net operating assets of $12.7 million.

Additionally, the company paid $91.5 million in cash taxes related to the sale of the semiconductor cryogenics business.

Cash outflows related to the increase in net operating assets were primarily driven by increases in accounts receivable, inventory, and decreases in accrued expenses and other liabilities, partially offset by increased accrued compensation and tax withholdings.

Discontinued operations contributed $139.6 million of net income to fiscal year 2021 and $91.2 million of net income to fiscal year 2020 referenced above.

The pending sale of the semiconductor automation business may have a negative impact on cash flows from operations in future periods after the sale is completed.

Investing Activities

Cash flows from investing activities consist primarily of cash used for acquisitions, proceeds from divestitures, 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 $22.7 million during fiscal year 2020 and consisted of $39.9 million for capital expenditures and $15.7 million for acquisitions, partially offset by $33.9 million of net proceeds from the purchases, sales and maturities of marketable securities.

Cash provided by investing activities was $211.3 million during fiscal year 2019 and consisted of $661.6 million related to the proceeds from the sale of our semiconductor cryogenics business, partially offset by net cash outflows of $442.7 million to acquire GENEWIZ, $23.9 million of capital expenditures, and net purchases, sales and maturities of marketable securities of $16.2 million.

Capital expenditures were $39.9 million during fiscal year 2020 as compared to $23.9 million during the fiscal year 2019.

Capital expenditures are made primarily for increasing capacity, replacing equipment, supporting new product development and improving information technology infrastructure.

Capital expenditures for the fiscal year 2020

included $8.3 million for construction in process of a building site in Suzhou, China.

The site is intended to replace space currently leased in three different buildings in the same city and to allow for growth.

Cash used in investing activities was $146.3 million during fiscal year 2021 and consisted of $95.5 million for acquisitions and $52.8 million for capital expenditures, partially offset by $2.0 million of proceeds from the collection of loans receivable.

Capital expenditures were made primarily to increase capacity, support new product development, and enhance information technology infrastructure.

Capital expenditures for the fiscal year 2021 included $35.6 million for construction in process of a building site in Suzhou, China.

The site is intended to consolidate operations of three leased sites in the same region, while expanding operational capacity.

Cash used in investing activities was $22.7 million during fiscal year 2020 and consisted of $39.9 million for capital expenditures and $15.7 million for acquisitions, partially offset by $33.9 million of net proceeds from the net purchases, sales, and maturities of marketable securities.

Financing Activities

Cash used for financing activities was $27.0 million during fiscal year 2020 and included net cash outflows for cash dividends paid of $29.5 million.

Cash used for financing activities was $191.2 million during fiscal year 2019 and included net cash outflows of $163.8 million primarily related to the extinguishment of debt and principal payments on our term loans totaling $850.2 million offset by proceeds of $686.4 million.

Proceeds from the incremental term loan in the first quarter of fiscal year 2019 were $340.5 million.

In the second quarter of fiscal year 2019, we syndicated the incremental term loan which resulted in an extinguishment of the incremental term loan of $349.1 million and proceeds from syndication of $345.2 million.

Cash outflows also included cash dividends paid of $28.9 million.

Cash used for financing activities was $25.9 million during fiscal year 2021 and included net cash outflows for cash dividends paid of $29.7 million, $1.2 million in payment of finance leases and $0.8 million of debt principal payments.

Partially offsetting these cash outflows was $5.8 million related to the proceeds from issuance of common stock.

Cash used for financing activities was $27.0 million during fiscal year 2020 and included net cash outflows for cash dividends paid of $29.5 million, $1.3 million in payment of finance leases and $0.8 million of debt principal payments.

Partially offsetting these cash outflows was $4.6 million related to the proceeds from issuance of common stock.

China Facility

In April 2019, we committed to construct a facility in Suzhou China, to consolidate the Suzhou operations of the GENEWIZ business and provide infrastructure to support future growth.

In April 2019, we committed to construct a facility in Suzhou China, to consolidate the Suzhou operations of our genomic services business and provide infrastructure to support future growth.

The facility is being constructed in two phases.

We have incurred $9.0 million of capital expenditures to date related to the construction of the facility, which includes $8.3 million and $0.7 million, respectively, for fiscal years 2020 and 2019.

We expect to incur an additional $41 to $46 million of capital expenditures related to this facility over the next four years.

We have incurred $35.6 million of capital expenditures to date related to the construction of the facility, which includes $26.0 million and $8.3 million, respectively, for fiscal years 2021 and 2020, respectively.

Capital Resources

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In connection with our acquisition of GENEWIZ in November 2018, we assumed three five-year term loans and two one-year term loans.

At September 30, 2020, we had an aggregate outstanding principal balance of $0.8 million under the three five-year term loans.

The two one-year short term loans matured and were repaid in full as of September 30, 2020.

The three five-year term loans matured and were repaid in full during fiscal year 2021.

At September 30, 2021, the aggregate outstanding principal balance of all outstanding term loans was $49.7 million, excluding unamortized deferred financing costs of $0.3 million.

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We were in compliance with the credit agreement as of September 30, 2021.

Although we believe we will be able to generate sufficient cash in the United States and foreign jurisdictions to fund future operating costs, we secured the revolving line of credit as an additional assurance for maintaining liquidity in the United States during potentially severe downturns of the cyclical semiconductor market, as well as for strategic investments and acquisitions.

Our Board of Directors declared the following dividends during the fiscal years 2021 and 2020(in thousands, except per share data):

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June 25, 2021

July 29, 2020

August 3, 2021

September 3, 2021

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The total dividend of approximately $7.5 million will be paid on December 23, 2021 to shareholders of record at the close of business on December 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.

On November 16, 2021 at our investor day conference, we disclosed that we intend to discontinue paying a quarterly dividend upon the completion of the sale of our semiconductor automation business.

Share Repurchase Program

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Contractual Obligations and Requirements

Our contractual obligations were as follows at September 30, 2020 (in thousands):

Contractual Cash Obligations:

Pension and other post-retirement benefit plans

Inventory purchase commitment

IT-related commitments

China facility commitments

Other commitments

Total contractual cash obligations

Other Commercial Commitments:

Letters of credit

Total commitments

The letters of credit of approximately $1.3 million are related primarily to customer advances and other performance obligations at September 30, 2020.

At September 30, 2021, we had non-cancelable commitments of $65.9 million, including purchase orders for inventory of $44.0 million, information technology related commitments of $15.9 million and China facility commitments of $6.0 million related to the construction of our facility in China discussed above.

At September 30, 2021, the Company had $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.

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As of September 30, 2021, the total amount of net unrecognized tax benefits for uncertain tax positions and the accrual for the related interest was $2.0 million, all of which represents a potential future cash outlay, in comparison to September 30, 2020 where the balance was $18.5 million.

The increase in the balance over the year was primarily driven by normal interest accruals on our preexisting unrecognized tax benefits for uncertain tax positions.

We are unable to make a reasonably reliable estimate of the timing of the cash settlement for these liabilities since the timing of future tax examinations by various tax jurisdictions and the related resolution is uncertain, however, $15.3 million of this liability is indemnified by the sellers of GENEWIZ.

Off-Balance Sheet Arrangements

As of September 30, 2020, we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K.

The decrease in the balance over the year was primarily driven by many of our accruals on our preexisting unrecognized tax benefits for uncertain tax positions reaching their statute of limitations.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis