7. Equity Method and Other Investments

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

ULVAC Cryogenics, Inc.

The Company and ULVAC Corporation of Chigasaki, Japan each own a 50% stake in the joint venture, ULVAC Cryogenics, Inc (“UCI”). UCI manufactures and sells cryogenic vacuum pumps, principally to ULVAC Corporation.

The carrying value of the investment in UCI was $28.6 million and $25.6 million, respectively, at September 30, 2017 and 2016. During the fiscal years ended September 30, 2017, 2016 and 2015, the Company recorded income of $9.8 million, $3.4 million and $1.4 million, respectively, representing its proportionate share of the UCI’s earnings. Management fee payments received by the Company from UCI were $1.1 million, $0.8 million, and $0.6 million during each fiscal years ended September 30, 2017, 2016 and 2015, respectively. During the fiscal years ended September 30, 2017, 2016 and 2015, the Company incurred charges from UCI for products or services of $0.3 million, $0.3 million and $0.4 million, respectively. The Company owed UCI $0.1 million at each of September 30, 2017 and 2016, respectively in connection with accounts payable for unpaid products and services. During the fiscal years ended September 30, 2017 and 2016, the Company received $5.4 million and $1.5 million, respectively, of cash dividends from UCI which reduced the carrying value of the Company’s investment.

BioCision, LLC

As of September 30, 2016, the Company held a 20% equity interest in BioCision, LLC, or BioCision, a privately-held company based in Larkspur, California, which was accounted for as an equity method investment. The carrying value of the investment in BioCision was $1.7 million at September 30, 2016. During fiscal years ended September 30, 2016 and 2015, the Company recorded a loss associated with BioCision of $1.1 million and $1.0 million, respectively, representing its proportionate share of BioCision’s losses.

At September 30, 2016, the Company held a term loan receivable from BioCision and five-year convertible debt securities with a warrant agreement to purchase BioCision’s preferred units. The convertible debt securities and the warrant were purchased by the Company in fiscal year 2015 for a total purchase price of $5.0 million. The convertible debt securities were accruing interest at the annual rate of 9%, and all principal and accrued interest were due at maturity. The convertible debt securities and the warrant were recorded at fair value during each reporting period, and the remeasurement gains and losses were recognized as a component of "Other (expense) income, net" in the Company’s Consolidated Statements of Operations. The fair value of the convertible debt securities and the warrant was $5.8 million and less than $0.1 million, respectively, at September 30, 2016. During the fiscal year ended September 30, 2016, the Company recognized remeasurement gains of $0.4 million related to these financial instruments. Please refer to Note 19, “Fair Value Measurements” for further information on the valuation techniques and inputs used in fair value measurements of the convertible debt securities and the warrant. The term loan with an aggregate principal amount of $1.5 million bore an annual interest rate of 10% and was provided to BioCision to support its working capital requirements. At September 30, 2016, the term loan was recorded at its carrying value of $1.5 million and included in "Other assets" in the Company’s Consolidated Balance Sheets.

On November 28, 2016, BioCision established Cool Lab as its subsidiary upon transferring certain assets related to cell cryopreservation solutions with net carrying values of $0.9 million, in which the Company acquired a 100% equity interest on that date for an aggregate purchase price of $15.2 million. The purchase price consisted of a cash payment of $4.8 million, a liability to the seller of $0.1 million, which has been satisfied, and non-cash consideration of $10.3 million measured at fair value on the acquisition date which was comprised of: (i) the redeemable fair value of the existing 20% equity ownership interest in BioCision of $3.1 million, (ii) the convertible debt securities of BioCision and warrants of $5.6 million to purchase BioCision’s preferred units, and (iii) the term notes of BioCision of $1.6 million including accrued interest.

The carrying value of the equity method investment in BioCision was $1.2 million on November 28, 2016 and reflected BioCision’s losses of $0.5 million recorded from October 1, 2016 through the acquisition date. Prior to closing the equity investment, the Company traditionally recorded the income and losses related to the equity method investment in BioCision one quarter in arrears. During fiscal year 2017, the Company recorded two additional months of activity in the carrying value of the investment as a result of its settlement. The Company deemed the amount of $0.2 million related to two additional months of activity to be insignificant. The equity method investment in BioCision was measured at fair value of $3.1 million at the acquisition date, and as a result the Company recognized a gain of $1.8 million upon the redemption of the equity method investment in its Consolidated Statements of Operations during fiscal year ended September 30, 2017. On November 28, 2016, convertible debt, warrant and the term loan with carrying values of $5.8 million, less than $0.1 million and $1.6 million, respectively, were measured at their fair values of $5.6 million, less than $0.1 million and $1.6 million, respectively. As a result of such measurement, the Company recognized an aggregate loss of $0.2 million upon the settlement of these financial instruments in "Other (expense) income, net" in its Consolidated Statements of Operations during the year ended September 30, 2017. Please refer to Note 3, "Acquisitions" and Note 19, "Fair Value Measurements" for further information on the acquisition transaction and the valuation techniques and inputs used in fair value measurements.

Yaskawa Brooks Automation, Inc.

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

During the fiscal years ended September 30, 2015, the Company recorded a loss of $0.6 million, representing its proportionate share of the YBA’s losses. During the fiscal years ended September 30, 2015, revenue earned by the Company from YBA was $2.5 million. The Company incurred charges from YBA for products or services of $0.7 million during fiscal year ended September 30, 2015. There were no amounts receivable by the Company from YBA or owed by the Company to YBA at September 30, 2017 and 2016.

Summarized Financial Information

Summarized financial information for the unconsolidated subsidiaries accounted for based on the equity method for the fiscal years ended September 30, 2017, 2016 and 2015 is as follows (in thousands):


	September 30,
	2017		2016
Balance Sheets:
Current assets	$	74,645	$	59,507
Non-current assets		16,829		15,461
Current liabilities		29,622		25,320
Non-current liabilities		7,860		19,933


	Fiscal Year Ended September 30,
	2017		2016		2015
Statements of Operations:
Total revenue	$	104,667	$	74,659	$	48,047
Gross profit		41,241		27,355		16,327
Income (loss) from continuing operations		26,340		6,731		(1,074)
Net income (loss)		19,451		2,374		(2,452)

Summarized financial information presented in the table above includes results for UCI for fiscal years ended September 30, 2017, 2016 and 2015 and for BioCision for fiscal years ended September 30, 2016 and 2015. Such summarized financial information does not include results for BioCision for fiscal year ended September 30, 2017 and YBA for fiscal year ended September 30, 2015 since such amounts are not significant. The Company currently records its share of UCI’s results of operations based on a three-month time lag. Accordingly, the Company’s Consolidated Financial Statements include its share of income earned by UCI from the periods beginning and ending three months prior to the periods shown in the table. Consolidated Financial Statements of UCI as of June 30, 2017 and 2016 and for each of the periods ended June 30, 2017, 2016 and 2015 and the related notes are filed as Exhibit 99.2 hereto and incorporated herein by reference in this Form 10-K. The Company has also traditionally recorded the losses related to the equity method investment in BioCision one quarter in arrears. Accordingly, the Company’s Consolidated Financial Statements for the fiscal years ended September 30, 2016 and 2015 include its share of losses incurred by BioCision from the periods beginning and ending three months prior to the periods shown in the table.