Discontinued Operations

6 Months Ended

Mar. 31, 2020

Discontinued Operations and Disposal Groups [Abstract]

Discontinued Operations

3. Discontinued Operations

On August 27, 2018, the Company entered into a definitive agreement to sell its semiconductor cryogenics business to Edwards for $675.0 million in cash, subject to adjustments. On July 1, 2019, the Company completed the sale of the

semiconductor cryogenics business for $661.1 million, which excludes $6.3 million retained by Edwards at closing based on the initial adjustment for net working capital. Net proceeds from the sale were approximately $553.1 million, after deducting estimated taxes payable and closing costs, which remains subject to adjustment for the final determination of working capital and other items.

The semiconductor cryogenics business consists of the CTI pump business, Polycold chiller business, the related services business and the Company's 50% share in Ulvac Cryogenics, Inc., a joint venture based in Japan. The semiconductor cryogenics business was originally acquired by the Company in its 2005 merger with Helix Technology Corporation. The operating results of the semiconductor cryogenics business had been included in the Brooks Semiconductor Solutions Group segment before the plan of disposition.

In connection with the closing of the Disposition on July 1, 2019, the Company and Edwards entered into a transition service agreement, a supply agreement, and lease agreements. The transition service agreement outlines the information technology, people, and facility support the Company would provide to Edwards for a period up to 9 months after transaction closing date. The supply agreement allows the Company to purchase CTI and Polycold goods at cost from Edwards up to an aggregate amount equal to $1.0 million during the one-year term after closing of the Disposition. The lease agreements provide facility space to Edwards free of charge for three years after the transaction closing date. Edwards will have the option to renew each lease at the then current market rates after the initial three-year lease term has ended. This Disposition is consistent with the Company’s long-standing strategy to increase shareholder value by accelerating the growth of its Life Sciences business with further acquisitions and strengthening its semiconductor automation business with opportunistic acquisitions.

The Disposition met the "held for sale" criteria and the “discontinued operation” criteria in accordance with FASB ASC 205 as of September 30, 2018. As such, its operating results have been reported as a discontinued operation for all periods presented. 

The following table presents the financial results of discontinued operations (in thousands):

	Three Months Ended March 31,					Six Months Ended March 31,
	2020		2019		2020		2019
Revenue
Products	$	-	$	23,895	$	-	$	52,681
Services		-		11,759		-		22,297
Total revenue		-		35,654		-		74,978
Cost of revenue
Products		-		15,182		-		31,698
Services		-		6,678		-		12,727
Total cost of revenue		-		21,860		-		44,425
Gross profit		-		13,794		-		30,553
Operating expenses
Research and development		-		2,168		-		4,326
Selling, general and administrative		86		4,993		(171)		12,196
Total operating expenses		86		7,161		(171)		16,522
Operating income		(86)		6,633		171		14,031
Other (loss) income, net		-		278		(410)		567
(Loss) income before income taxes and earnings of equity method investment		(86)		6,911		(239)		14,598
Income tax (benefit) provision		(21)		1,930		(57)		3,240
(Loss) income before equity in earnings of equity method investment		(65)		4,981		(182)		11,358
Equity in earnings of equity method investment		-		1,269		-		3,041
Net (loss) income	$	(65)	$	6,250	$	(182)	$	14,399

The following table presents the summarized financial information for Ulvac Cryogenics, Inc., the unconsolidated subsidiaries accounted for based on the equity method (in thousands):

	Three Months Ended		Six Months Ended
	March 31, 2019		March 31, 2019
Statements of Operations:
Total revenue	$	22,756	$	45,050
Gross profit		8,305		17,241
Operating Income		4,078		9,214
Net income		2,602		6,108

The following table presents the significant non-cash items and capital expenditures for the discontinued operations that are included in the Consolidated Statements of Cash Flows (in thousands):

	Three Months Ended		Six Months Ended
	March 31, 2019		March 31, 2019
Capital expenditures	$	99	$	407
Stock-based compensation		129		420
Earnings of equity method investment		(1,269)		(3,041)