B R O O K S A U T O M A T IO N 2 0 0 6 A N N U A L R E P O R T Brooks Automation is a stronger, more focused company than we were just a few years ago. We have transformed ourselves to be much better positioned to satisfy our customers with best-in-class products, systems and services, the results of which are reflected in our achievements at Brooks in 2006. Corporate Information In 2006, Brooks enjoyed record revenues of $692.9 million, an Directors Executive Officers Annual Meeting of Stockholders increase of 49.5 percent over the preceding year revenues of Joseph R. Martin Edward C. Grady Chairman of the Board President and The 2007 Annual Meeting of $463.6 million. Net income for 2006 was $25.8 million compared Brooks Automation Chief Executive Officer Stockholders will be held on Friday to a net loss in 2005 of $8.1 million from continuing operations. Retired Vice Chairman of the Board February 5,2007,at 10:00 a.m., Robert W. Woodbury,Jr. Fairchild Semiconductor at 11 Elizabeth Drive, We continued to generate cash from operations even in a period Executive Vice President and International Corporation Chelmsford,MA 01824 Chief Financial Officer of rapid growth, finishing the year with $191.4 million in cash Edward C. Grady and equivalents with no debt. We have generated approximately President and Joseph M. Bellini Investor Relations President and Chief Operating Officer, $100 million in free cash flow from operations since March 2004. Chief Executive Officer An electronic copy of the 2006 Annual Enterprise Software Group Brooks Automation,Inc. Report and the 2007 Annual Meeting James Gentilcore Proxy Statement is available online A. Clinton Allen Selected Financial Highlights Chairman and President and in the Investor Relations Section of Chief Operating Officer, the Company’s website: (in thousands,except per share data) Chief Executive Officer Semiconductor Products Group http://Investor.brooks.com A.C.Allen & Company Year Ended September 30, 2006 2005 2004 Thomas S. Grilk Electronic copies of quarterly earnings John K. McGillicuddy Revenues $692,870 $463,746 $535,053 Senior Vice President, reports,10-Q’s and recent news Retired Partner KPMG LLP and Gross profit $244,784 $160,136 $199,666 General Counsel,and Secretary releases may also be found at the Chairman of the Audit Committee same online location. Income (loss) from continuing operations $ 25,841 ($ 8,096) $ 24,134 Watts Water Technologies,Inc. Richard C. Small Senior Vice President Printed copies of investor packages, Diluted earnings (loss) per share from continuing operations $ 0.36 $ (0.18) $ 0.55 Robert J. Lepofsky and Corporate Controller quarterly earnings reports,10-Q’s and Retired President and CEO Diluted net earnings (loss) per share $ 0.36 $ (0.26) $ 0.34 recent news releases are also available. Ensign-Bickford Industries,Inc. Cash,cash equivalents and marketable securities $191,360 $356,958 $329,110 Independent Accountants Call,write,fax or e-mail: Krishna G. Palepu Cash,cash equivalents and marketable securities,net of PricewaterhouseCoopers LLP Mark Chung Professor long term debt $191,360 $181,958 $154,110 One Post Office Square Director of Investor Relations Harvard Business School Boston,MA 02109 Brooks Automation,Inc. DSO 55 68 69 Alfred Woolacott,III 15 Elizabeth Drive Inventory turns 5.4 5.5 5.5 Retired Partner of KPMG LLP Transfer Agent Chelmsford,MA 01824 Tel:978.262.2459 Mark S. Wrighton Computershare Fax:978.262.2510 Free Cash Flow Chancellor,Washington University P.O.Box 43023 [email protected] in St.Louis Providence,RI 02940-3023 (in thousands) Shareholder Inquiries:1-781-575-2879 Investor Relations Department $60,000 10.0% Dr. Marvin Schorr www.computershare.com 978.262.2602 Director Emeritus $40,000 5.0% Retired Chairman of Helix Technology Stock Listing $20,000 0.0 The Company’s common stock $0 (5.0%) % is traded in the Over-the-Counter Market d FCF ($20,000) (10.0%) F Yiel uonn dtehre tNhea ssdyamqb Noal t“iBonRaKlS M”aarnkde tq™u.oted C ($40,000) (15.0%) F As of December 15,2006,there were approximately 1,755 holders of record ($60,000) (20.0%) of the Company’s common stock. ($80,000) (25.0%) ($100,000) (30.0%) 2001 2002 2003 2004 2005 2006 ©2007 by Brooks Automation,Inc.All rights reserved.Printed in the U.S.A.All products listed as being from Brooks Automation,Inc. are registered trademarks or trademarks of Brooks Automation,Inc.All other trademarks are owned by their respective companies. Free Cash Flow FCF Yield 2 0 0 6 ANNUAL REPORT Dear Stockholders, Brooks is a stronger, more focused company believe these strategic moves provide a strong than we were just a few years ago. We have platform for profitable growth throughout the transformed ourselves to be much better industry cycles. positioned to satisfy our customers with best-in- class products, systems and services, the results For the year, we delivered strong financial of which are reflected in our achievements at performance as the semiconductor industry went Brooks in 2006. We finished the fiscal year with a through a positive investment cycle, primarily robust business model centered on our strategy driven by consumer demand for electronics of better serving our customers, providing more products that consumed both DRAM and NAND integrated engineered content, and working flash memory chips. Because we are a leading towards a vision of helping improve productivity supplier to many market-leading equipment and efficiency that ultimately will enable companies who are benefiting from the spending companies to change the way semiconductors by memory makers, we enjoyed record revenues are made. of $692.9 million, an increase of 49.5 percent over the preceding year revenues of $463.6 million. We had a very active year, accomplishing Net income for 2006 was $25.8 million compared several important strategic objectives designed to to a net loss in 2005 of $8.1 million from increase our core strengths by completing two continuing operations. We continued to generate key acquisitions and forming a joint venture in cash from operations even in a period of rapid Japan with Yaskawa Electric. These transactions growth, finishing the year with $191.4 million in have enhanced our portfolio of semiconductor cash and equivalents with no debt after repaying equipment offerings, improved our customer the unpaid principal of $175 million of our 4.75% service organization while providing enhanced Convertible Subordinated Notes in July 2006. access to and relationships with existing and new We have generated approximately $100 million in customers worldwide. In November 2006 we free cash flow from operations since March 2004. also announced the sale of our software division to Applied Materials for $125 million in cash. We also remained focused on integrating the We believe this sale will enable us to focus further two acquisitions, Helix Technology and Synetics on improving the products and services we Solutions. I was pleased with the progress that provide in our core business segments and was made in consolidating these businesses enhances our financial profile. Together we with Brooks and the significant cost synergies that Brooks Automation 2006 they contributed to Brooks’ financial performance. Our atmospheric systems business was Additionally, I remain very excited about the considerably enhanced by the acquisition of potential of Brooks to offer more value-added Synetics Solutions in Portland, Oregon. integrated content to our customers by leveraging This business, which we sometimes refer to the combined products and expertise of Brooks as CDA, or customer designed automation, and Helix. The joint venture in Japan, called demonstrated strong growth and positive margin Yaskawa Brooks Automation (YBA), had a as we exited fiscal 2006. Through the combination successful opening ceremony in September of the core Brooks business with Synetics and which was well attended by many top customers Helix, we achieved a new milestone in the fourth in Japan. We believe YBA is the key that will quarter as Applied Materials became a customer enable us to unlock the door to the second representing more than 10 percent of revenues largest equipment market in the world. for the first time in company history. We also improved our position with the other top North Our customer support capabilities were upgraded American equipment manufacturers as a result tremendously when we adopted the highly- of the Synetics business. regarded Helix support model. Brooks has been able to evolve from our traditional “break-fix” During the year we overcame several challenges model to a more proactive approach to keep end and managed to minimize the distractions to user fabs running. This service business is one of the company. The current management team the fastest growing areas for Brooks and our goal proactively addressed the matters related to stock is to double the revenues over the next 2 to 4 options backdating. We believe that Brooks has years from its nominal combined annual run-rate emerged from this experience a better company of $85 million at the time of the Helix acquisition. with stronger controls and governance. We are on track to achieve this goal by delivering over $120M in revenue in 2006. We have a strong management team with good bench strength. Our employees are highly valued Another area where we made outstanding and we will continue to invest in them. We have progress was in growing our traditional vacuum identified many important objectives for the tool automation business, both our vacuum robots coming fiscal year that are intended to help further and our systems. Our new MagnaTran™ 8 robot improve our financial performance and strengthen was designed into a new high-throughput CVD our position with our customers. tool at a major equipment manufacturer and volume shipments are expected to ramp in 2007. We thank our stockholders, customers, We also continued to enjoy strong momentum in employees and suppliers for your support over the the systems business with revenues from vacuum past year. We look forward to another successful transport systems being one of the fastest growing year in 2007. segments for Brooks over the past two years. With new products such as the Marathon™ 2, or Sincerely, M2, which has configurable options such as the Marathon Compact™, the Marathon Tandem™, and the newly introduced Marathon Quad™ each targeted at specific process applications, we Edward C. Grady believe customers will be able to continue to drive President and their new product and process development more Chief Executive Officer efficiently than ever before using these systems, helping us sustain our market leadership and driving growth. Brooks Automation UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON,D.C. 20549 Form 10-K (Mark One) [X] ANNUAL REPORT PURSUANT TO SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For fiscal year ended September30, 2006 OR [ ] TRANSITION REPORT PURSUANT TO SECTION13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from __________ to ___________. Commission File Number: 0-25434 BROOKS AUTOMATION, INC. (Exact name of Registrant as Specified in Its Charter) Delaware 04-3040660 (State or Other Jurisdiction ofIncorporation or Organization) (I.R.S. EmployerIdentification No.) 15 Elizabeth Drive Chelmsford, Massachusetts 01824 (Address of Principal Executive Offices) (Zip Code) 978-262-2400 F (Registrant’s Telephone Number, Including Area Code) IN A Securities registered pursuant to Section12(b) of the Act: N C None IA L Securities registered pursuant to Section12(g) of the Act: S Common Stock, $0.01par value Rights to Purchase Common Stock Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule405 of the Securities Act. Yes(cid:134) No(cid:95) If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section13 or 15(d) of the Securities Exchange Act of 1934. Yes(cid:134) No(cid:95) Indicate by check mark whether the registrant (1)has filed all reports required to be filed by Section13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months (or for such shorter period that the registrant was required to file such reports), and (2)has been subject to such filing requirements for the past 90days. Yes(cid:95) No(cid:134) Indicate by check mark if disclosure of delinquent filers pursuant to Rule405 of RegulationS-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in PartIII of this Form10-K or any amendment to the Form10-K. (cid:134) Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule12b-2 of the Exchange Act. (Check one): Large accelerated filer(cid:95) Accelerated filer (cid:134) Non-accelerated filer(cid:134) Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule12b-2). Yes(cid:134) No(cid:95) The aggregate market value of the registrant’s Common Stock, $0.01par value, held by nonaffiliates of the registrant as of March31, 2006, was approximately $1,061,248,600 based on the closing price per share of $14.24 on that date on the Nasdaq Stock Market. As of March31, 2006, 75,365,813shares of the registrant’s Common Stock, $0.01par value, were outstanding. As of November30, 2006, 75,563,054shares of the registrant’s Common Stock, $0.01, par value, were outstanding. DOCUMENTS INCORPORATED BY REFERENCE Portions of the registrant’s Proxy Statement involving the election of directors, which is expected to be filed within 120days after the end of the registrant’s fiscal year, are incorporated by reference in PartIII of this Report. TABLE OF CONTENTS PARTI Item1. Business .......................................................................... 1 Item1A. Risk Factors ....................................................................... 14 Item1B. Unresolved Staff Comments .......................................................... 22 Item2. Properties ......................................................................... 22 Item3. Legal Proceedings .................................................................. 23 Item4. Submission of Matters to a Vote of Security Holders ....................................... 25 PARTII Item5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities ................................................................ 26 Item6. Selected Financial Data .............................................................. 27 Item7. Management’s Discussion and Analysis of Financial Condition and Results of Operations ......... 28 Item7A. Quantitative and Qualitative Disclosures About Market Risk ................................ 42 Item8. Financial Statements and Supplementary Data ............................................ 43 Item9. Changes In and Disagreements With Accountants on Financial Accounting and Financial Disclosure .............................................................. 84 Item9A. Controls and Procedures ............................................................. 84 Item9B. Other Information .................................................................. 85 PARTIII S L Item10. Directors and Executive Officers of the Registrant ........................................ 85 A CI Item11. Executive Compensation ............................................................. 85 N A N Item12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder FI Matters ........................................................................ 85 Item13. Certain Relationships and Related Transactions ........................................... 85 Item14. Principal Accountant Fees and Services ................................................. 85 PARTIV Item15. Exhibits and Financial Schedules ...................................................... 86 SIGNATURES ............................................................................... 90 PARTI ITEM 1. BUSINESS Brooks Automation, Inc. (“Brooks”, “we”, “us” or “our”) is a leading supplier of technology products and solutions primarily serving the worldwide semiconductor market. We supply hardware, software and services to both chip manufacturers and original equipment manufacturers, or OEMs, who make semiconductor device manufacturing equipment. We are a technology and market leader with offerings ranging from individual hardware and software modules to fully integrated systems as well as services to install and support our products world-wide. Although our core business addresses the increasingly complex automation and integrated subsystems requirements of the global semiconductor industry, we also provide solutions for a number of related industries, including the flat panel display manufacturing, data storage and certain other industries which have complex manufacturing environments. We were founded in 1978 to develop and market automated substrate handling equipment for semiconductor manufacturing and became a publicly traded company in February 1995. We have grown significantly from being a niche supplier of wafer-handling robot modules for vacuum-based processes, to become the largest merchant supplier of hardware and software automation products for the semiconductor industry in consecutive calendar years from 2001 through 2005, and the world’s thirteenth largest semiconductor front-end capital equipment company in 2005, according to the independent market research firm Gartner Dataquest. Our business is significantly dependent on capital expenditures by semiconductor manufacturers, which in turn are dependent on the current and anticipated market demand for integrated circuit (“IC”) chips and electronics equipment. To maintain manufacturing leadership and growth in the semiconductor industry, companies make significant capital expenditures in manufacturing equipment and investments in research and development. For example, investments in the production of chips that use advanced 90-nanometer (“nm”) and 65nm process technology are the enablers (increased chip performance, decreased power consumption and reduced cost) for a broad range of new products that are expected to help drive growth in the chip industry. Further advances in IC designs utilizing 45nm and smaller sizes continue to enable innovation and are driving the need for new manufacturing facilities and new generation processing F IN equipment. A N C The demand for semiconductors is cyclical and has historically experienced periodic expansions and contractions, IA which are called upturns and downturns. The semiconductor industry experienced a prolonged downturn from fiscal LS 2001 to the end of fiscal 2003. The industry economics improved significantly in fiscal 2004 and we were able to return to profitability in fiscal 2004, benefiting from improved market demand and from some of the cost reduction initiatives that we implemented during the downturn. The industry conditions weakened again in our fiscal 2005 leading to a decline in revenues and profitability for Brooks during 2005, but rebounded in 2006 to help drive growth and profitability for Brooks in fiscal 2006. We expect industry conditions to continue to fluctuate unpredictably. On October26, 2005, we acquired all the issued and outstanding stock of Helix Technology Corporation (“Helix”). Helix develops and manufactures vacuum technology solutions for the semiconductor, data storage, and flat panel display markets. We believe that the acquisition of Helix enables us to better serve our current market, increase our addressable market, reduce the volatility that both businesses have historically faced and position us to enhance our financial performance. The aggregate purchase price, net of cash acquired, was approximately $458.1million, consisting of 29.0million shares of common stock valued at $444.6million, the fair value of assumed Helix options of $3.3million and transaction costs of $10.2million. The market price used to value the Brooks’ shares issued as consideration for Helix was $15.32, which represents the average of the closing market price of Brooks common stock for the period beginning two trading days before and ending two trading days after the merger agreement was announced. The actual number of shares of Brooks common stock issued was determined based on the actual number of shares of Helix common stock outstanding immediately prior to the completion of the merger, based on an exchange ratio of 1.11shares of Brooks common stock for each outstanding share of Helix common stock. The Helix business operates in our hardware segment. This transaction qualified as a tax-free reorganization under Section368(a) of the Internal Revenue Code of 1986, as amended. On May8, 2006, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Synetics Solutions Inc. (“Synetics”). We completed our acquisition of Synetics from Yaskawa Electric Corporation (“Yaskawa”), a corporation duly organized and existing under the laws of Japan, through a merger that became effective as of June30, 2006. Synetics provides customized manufactured solutions for the North American semiconductor equipment 1 industry. Pursuant to the Merger Agreement, Synetics became a wholly owned subsidiary of Brooks. The aggregate purchase price of Synetics, net of cash acquired, was approximately $50.2million consisting of a $28.6million cash payment to Yaskawa, repayment of outstanding debt of $19.9million and transaction costs of $1.7million. Also on May8, 2006, we entered into a Joint Venture Agreement (the “Agreement”) with Yaskawa to form a 50/50 joint venture called Yaskawa Brooks Automation, Inc. (“YBA”) to exclusively market and sell Yaskawa’s semiconductor robotics products and Brooks’ automation hardware products to semiconductor customers in Japan. This Agreement was executed on June30, 2006. YBA began operations on September21, 2006. On November3, 2006, our Board of Directors committed to a formal plan of disposal of our software division, Brooks Software and entered into an Asset Purchase Agreement (the “Purchase Agreement”) with Applied Materials, Inc. (“Applied”), a Delaware corporation. Under the terms of the Purchase Agreement, we will divest and sell our software division, Brooks Software, to Applied for $125million in cash consideration. We will transfer to Applied substantially all of our assets primarily related to Brooks Software, including the stock of several subsidiaries engaged only in the business of Brooks Software, and Applied will assume certain liabilities related to Brooks Software. We are selling our software division in order to focus on our core semiconductor-related hardware businesses. We expect to recognize a gain on disposal of the software division and to reclassify this division as discontinued operations in fiscal 2007. Completion of the transaction is subject to several conditions, including expiration or termination of applicable waiting periods under the Hart-Scott-Rodino AntitrustImprovements Act of 1976 and clearance under any applicable foreign antitrust laws, and other customary closing conditions. We expect to close the transaction during the second fiscal quarter of 2007. INDUSTRY BACKGROUND In recent years the semiconductor industry has experienced significant growth in both the volume and complexity of integrated circuit devices manufactured. This growth has been driven by the increased demand for electronic S L A products that require semiconductors such as computers, telecommunications equipment, consumer electronics, data CI storage media and wireless communications devices. N A N To meet these demands, semiconductor manufacturers have sought volume and efficiency improvements FI through increased equipment utilization, higher manufacturing yields, capacity expansion of existing facilities and the construction of new facilities. Automation and vacuum-based processes perform critical functions in the manufacturing of semiconductors. The majority of modern semiconductor fabrication facilities, or fabs, manufacture semiconductor chips on circular silicon wafers with diameters of 150mm, or 6inches, and 200mm, or 8inches. More recently the industry has begun to adopt wafers with diameter sizes of 300mm, or 12inches. The wafers are typically processed in production lots of 25 wafers, with 150mm and 200mm wafers contained in either an open cassette or a fully enclosed pod called SMIF, or standard mechanical interface. Production lots for 300mm manufacturing typically consist of 25 wafers contained in a FOUP, or front-opening unified pod. Both SMIF and FOUP technologies isolate the wafers from their surroundings by creating an ultra-clean “mini-environment” within the pod. One wafer may yield hundreds of chips, and each chip may contain tens or hundreds of millions of microscopic transistors in leading-edge devices. The production of advanced semiconductor chips is an extremely complex and logistically challenging manufacturing activity. To create the millions of microscopic transistors and connect them together horizontally and in vertical layers into a functioning integrated circuit, or IC chip, the silicon wafers must go through hundreds of process steps that require complex processing equipment, or tools, to create the integrated circuits. A large production fab may have more than 70 different types of process and metrology tools, totaling as many as 500 tools or more. Up to 40percent of these tools perform processes in a vacuum, such as removing, depositing or measuring material on wafer surfaces. Wafers can go through as many as 400 different process steps before completion. These steps, which comprise the initial fabrication of the integrated circuit and are referred to in the industry as front-end processes, are repeated many times to create the desired pattern on the silicon wafer. As the complexity of semiconductors continues to increase, the number of process steps also increases, resulting in a greater need for automation due to more handling and tracking requirements, and higher number of tools. Upon completing the front-end processing, the wafer is cut into individual devices, or chips, which then undergo additional assembly and testing steps before being packaged into a device that is used in an electronic product. 2 Vacuum-based processes are fundamental steps integral to chip manufacturing. High vacuum pumps are required in certain process steps to remove all potentially contaminating gases and impurities from the processing environment. In order to achieve optimal production yields, semiconductor manufacturers must also ensure that each process operates at carefully controlled pressure levels. Impurities or incorrect pressure levels can lower production yields, thereby significantly increasing the cost per usable semiconductor chip produced. Some key vacuum processes include dry etching and dry stripping; chemical vapor deposition, or CVD; physical vapor deposition, or PVD; and ion implantation. During manufacturing, the wafers need to be physically transported between different process tools, repeatedly identified, tracked, loaded into the equipment and processed, unloaded, verified and inspected, and dispatched to the next process step or storage area. All these actions can be automated. Automation enables the right material to be delivered at the right time to the right equipment with the right process recipe. Similarly, non-production wafers and durable goods, such as wafer carriers and photolithography masks or reticles used in production, must also be handled, tracked and managed. Consequently, the automation systems physically touch and handle nearly every wafer in the fab, while the software systems manage the tracking and recording of data for virtually every manufacturing lot, piece of equipment and resource in the fab. The capital expenditure by a semiconductor company to create a modern 200mm fab can be as much as $2billion while the cost for a 300mm fab can exceed $3billion. While most 200mm fabs were only partially automated, virtually all 300mm production fabs are fully automated due to the heavier weight and value of a production lot. The investment in automation hardware, software and services has grown from approximately $50million in a 200mm fab to $180million in a 300mm fab. Typically 75 to 80percent of the capital investment for a fab is for manufacturing equipment, while the remainder is dedicated to the land, the physical building, the clean room production floor and automation, network and facilities infrastructure. The served available market for semiconductor automation approximated $1.8billion in 2005, according to Dataquest. We believe we are the only company with a portfolio of hardware and software products and system integration services that can address the majority of the automation needs for semiconductor manufacturing. Today, almost every aspect of processing includes automation, from material handling, tracking work-in-process, FIN process control and scheduling. Factory and equipment automation directly impact factory performance. Factory A N performance, in turn, drives semiconductor manufacturers’ ability to: C IA • reduce manufacturing costs; LS • reduce cycle time, making the throughput more predictable; • deliver products to market first when product profitability is greatest;and • reduce defects and improve yield. The Company has two reportable segments: hardware and software. In the fourth quarter of fiscal year 2005, the Company’s equipment automation and factory automation segments were combined into the hardware segment, which reflects how management now evaluates its business. The hardware segment also includes the acquired operations of Helix from the date of acquisition. Also included in this segment are the acquired operations of Synetics Solutions from the date of acquisition. Prior year amounts have been reclassified to conform to the current year. The hardware segment provides a wide range of wafer handling products, vacuum subsystems and wafer transport platforms for use within the semiconductor process and metrology equipment. Within the hardware segment, there are four businesses consisting of automation hardware products, vacuum products and subsystems, customer- designed automation and the global customer service organization. The automation hardware products, historically the core products of Brooks, include wafer transfer robots and platforms, or systems that operate in either vacuum or atmospheric environments that are sold to equipment manufacturers. The Company also provides hardware directly to fabs including equipment for lithography that automate the storage, inspection and transport of photomasks, or reticles. Another line of business includes the vacuum products and subsystems acquired from Helix that include vacuum technology solutions such as cryogenic pumps for creating vacuum, products for measuring vacuum, and thermal management products that are used in manufacturing equipment for the semiconductor, data storage and flat panel display industries. Additionally, the Company leverages its domain knowledge and manufacturing expertise to build customer-designed automation systems, or contract automation systems, in a program designed to help customers outsource their automation. This assembly and manufacturing capability was a core competency of Synetics Solutions, 3 and these offerings have been combined under the line of business managed by the former Synetics enterprise. The primary customers for these solutions are manufacturers of process equipment. Finally, the global customer service offerings provide customers with support for all our hardware offerings. The software segment addresses the need for production management systems driven by the extensive tracking and tracing requirements of the semiconductor industry. At the core of these production systems is the manufacturing execution system (“MES”) that is primarily responsible for tracking the movement of production wafers in a fab, and managing the data and actions for every wafer, equipment, operator and other resources in the fab. These mission- critical systems provide real time information primarily to production operators, supervisors and fab managers. We provide other important software applications to meet the critical requirements of the fab, such as real time dispatching and scheduling, equipment communications, advanced process control, material control for the automated material handling systems, or AMHS, activity execution and control, automated maintenance management of equipment, and other applications. Customers often purchase more than one of these software products from Brooks for a single fab, often driving the need for consulting and integration services. Our software products enable semiconductor manufacturers to increase their return on investment by maximizing production efficiency, and may be sold as part of an integrated solution or on a stand-alone basis. These software products and services are also used in many similar manufacturing industries as semiconductor, including flat panel display, data storage, and electronic assembly. Hardware Modern semiconductor process tools demand fast, error-free handling of the silicon wafers on which the integrated circuits are produced. In the late 1980’s and early 1990’s, many processes done in vacuum, such as CVD, PVD, dry etching and other processes, changed from batch processing to single wafer processing, driving the need for equipment that could process individual wafers simultaneously in multiple chambers. The single wafer tool configuration is often referred to as a cluster tool because of the typically radial layout, or cluster, of process chambers surrounding one or more central wafer handling robot. The transition to cluster tools greatly increased the demands on the automation system, forcing it to become as much as four to eight times more reliable than previous generations. The result was a S L A market need for highly reliable and fast vacuum robots, as well as vacuum cluster tool platforms, both of which were CI the genesis of our business model. N A N Vacuum cluster tools consist of three primary sections: the equipment front-end module or EFEM, the cluster FI tool platform, and the process modules or chambers that are attached to the tool platform. An intermediate chamber, called a load-lock, separates the vacuum environment used in processing from the EFEM, which operates at standard atmosphere. A vacuum robot performs the task of transferring wafers from the load-lock to the process chambers that are mounted on the cluster tool platform. Wafers are placed in the load-lock by atmospheric robots that are housed in the EFEM. Vacuum tool automation includes load-locks, robots and other modules as well as the cluster tool platform. Brooks vacuum subsystems, acquired in the Helix transaction, create and manage the vacuum environment needed for several key process steps within semiconductor manufacturing, including ion implant, PVD and metrology. The introduction and adoption of new materials and technology in semiconductor processing drove the emergence of important non-vacuum processes such as chemical mechanical planarization, or CMP, and electro-chemical deposition, or ECD, as well as increased dependence on other atmospheric processes such as metrology, all requiring automation. The growth in atmospheric tool automation has been further driven by the transition to 300mm technology and smaller feature sizes on ICs. The front end of most 300mm and 200mm process equipment require an atmospheric system called an EFEM. EFEMs have modules called loadports on which wafer carriers are placed. Loadports have mechanisms that open the door or lid on the carriers so that the atmospheric robots can gain access to the wafers in the carriers. The individual atmospheric modules can be sold separately or as an integrated atmospheric system which includes the loadports, the atmospheric robots, and other necessary modules such as aligners, fan filter units and control software. Many modern fabs are laid out in a series of processing rooms or bays that contain similar equipment. Process engineers recognized early in the history of semiconductor manufacturing that human handling of wafer carriers or wafers was a significant source of defects and errors. Automating the transport and handling of wafers to reduce or eliminate human handling created a market for factory automation. For 200mm fabs, AMHS was widely adopted for inter-bay transport only. AMHS consists of rails that are attached to the ceilings in the main aisles between bays on which cars transport the wafer carriers to a stocker at the head of a bay. These stockers automated the storage and retrieval of the carriers. Virtually all the movement of materials within a bay, or intra-bay transport, is done manually 4