2010 Annual Report
Bruker Corporation
Innovation with Integrity
Bruker Corporation
Bruker Corporation Revenue (in Millions)
BSI* Segment Adjusted Earnings Per Share
BSI* Segment Adjusted Operating Margin
* Bruker Scientific Instruments
* Bruker Scientific Instruments
We use certain non-GAAP financial measures, including adjusted operating income and adjusted EPS. We believe that the use of certain non-
GAAP measures helps our investors to gain a better understanding of our core operating results and future prospects, consistent with how
management measures and forecasts our performance. A reconciliation from our GAAP results is presented at the end of the report.
Bruker Opens NASDAQ - September 7, 2010 to Celebrate 50th Anniversary
Dear Fellow Bruker Stockholders,
In 2010, Bruker celebrated its 50th anniversary
with many customer events all over the world, and
with the opening of the NASDAQ on September
7th, 2010 – exactly 50 years after the founding of
Bruker Physik AG in Karlsruhe, Germany.
In 2010, our company had excellent momentum
and set new records for revenue, margins and
earnings per share with rapid growth in all three
categories. Our emphasis on product innovation,
close customer collaborations, organic growth,
disciplined acquisitions and operational excel-
lence enabled us to deliver for the full year 2010:
Bruker currency-adjusted revenue growth of
18% to $1.3 billion (exceeding our 2010 goal
of growth >5%)
Bruker operating cash flow of $156.1 million, and
free cash flow of $124.2 million, which is defined
as cash flow from operations less capital
expenditures
Bruker Scientific Instruments (BSI) segment
adjusted operating margin of 14.8%, an increase
of 190 basis points (bps) compared to 2009 BSI
adjusted operating margin of 12.9% (exceeding
our 2010 goal of BSI adjusted operating margin
expansion by >125 bps)
BSI adjusted EPS of $0.76, an increase of 49%
over 2009 BSI adjusted EPS of $0.51 (exceeding
our 2010 goal to grow BSI EPS by >15%)
BSI Return on Invested Capital (RoIC) was 32.6%
Bruker Energy & Supercon Technologies (BEST)
segment currency-adjusted revenue growth
of 59% (exceeding our 2010 goal of >25% BEST
growth)
BEST adjusted operating loss of $2.3 million
(better than our goal of 2010 BEST operating
loss of $7-8 million)
BEST achieved approximately EBITDA
(Earnings Before Interest, Taxes, Depreciation
and Amortization) break-even
In 2010, Bruker also made two strategically impor-
tant acquisitions:
The acquisition of the three former Varian product
lines Laboratory GC, GC-MS and ICP-MS, in May
2010, complements our existing life-science mass
spectrometry products, and further strengthens
Bruker’s position in many industrial and applied
markets.
The former Veeco AFM and SOM product lines
fit perfectly into our high-performance scientific
instruments strategy, and are complementary
to our existing product portfolio for materials
research and surface microscopy/metrology. This
acquisition expands the total addressable market
segments for our materials and nanotechnology
research and analysis systems to over $2 billion
annually.
Throughout the year 2010, we also continued to
strengthen our market position by remaining true
to our core competencies of delivering innovative,
high performance and customer-focused life-sci-
ence and analytical instruments.
In 2010, we launched an operational excellence
initiative, supported by the appointment of a
Chief Operating Officer and of senior operational
executives within each division. We continue to
introduce new products not only with exciting new
capabilities, but also with improved gross margins
as a result of redesign-to-cost processes. More-
over, we have started a major off-shoring program
to source components and subassemblies in low
cost regions. In addition, we continue to improve
our internal manufacturing processes to further
leverage our infrastructure and further improve
our working capital management. All of these
operational excellence initiatives are expected to
contribute to gross margins, operating income and
cash flow in 2011 and beyond.
As we look forward in 2011, our goal is to continue
our excellent momentum by growing revenue
more than 18% and further expanding our operat-
safer and healthier. Financially, we are aiming for
rapid and profitable growth, high RoIC and contin-
ued shareholder value creation by following our
motto “Innovation with Integrity” and by focusing
on our customers. I look forward to the coming
years with excitement and thank you for your
commitment to Bruker.
Sincerely,
Frank H. Laukien, Ph.D.
Chairman, President and Chief Executive Officer
March 31, 2011
We use certain non-GAAP financial measures, including adjusted operating
income and adjusted EPS. We believe that the use of certain non-GAAP measures
helps our investors to gain a better understanding of our core operating results
and future prospects, consistent with how management measures and forecasts
our performance. A reconciliation from our GAAP results is presented at the end
of the report.
ing margins. We expect to grow by continuing
to invest in R&D, developing new products, and
through targeted acquisitions, that fill out our
product portfolio and allow us to cover additional
market segments. At Pittcon 2011, we introduced
13 new products, including several major new sys-
tems, more than double the number of new prod-
ucts introduced by any of our competitors.
So far in 2011, we closed the acquisition of
PROTECT US, which provides us with important
radiation detection and identification systems for
our Bruker Detection division, and we announced
an agreement to acquire Michrom, a nano-UHPLC
provider, to complement our proteomics LC/MS
mass spectrometry products.
Finally, our previous medium-term financial goals,
which we adopted in early 2009, targeted a 15%
BSI adjusted operating margin by 2012. As we
now anticipate that BSI will exceed its 15% target
one year earlier in 2011, we have established new
medium-term financial targets for the full year
2014:
Currency-adjusted revenue CAGR (Compound
Annual Growth Rate) of greater than 10% in the
years 2012 to 2014, to reach a Bruker total
revenue target of greater than $2 billion in 2014,
and
Average annual BSI adjusted operating margin
expansion by 75-100 bps in the years 2012-2014,
with a BSI adjusted operating margin target
of >18% in 2014.
All of us at Bruker are looking forward to our next
50 years of providing enabling scientific tools to
our customers for breakthrough scientific and
medical research, and analytical tools to develop
better drugs and diagnostics, to protect our food
supply and environment, to develop new technolo-
gies and energy sources, and to make the world
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(cid:2) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT of 1934
(cid:3) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2010
Commission File Number 000-30833
BRUKER CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
Incorporation or organization)
40 Manning Road, Billerica, MA
(Address of principal executive offices)
04-3110160
(I.R.S. Employer Identification No.)
01821
(Zip Code)
Registrant’s telephone number, including area code: (978) 663-3660
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Name of Each Exchange on Which Registered
Common Stock, $0.01 par value per share
The Nasdaq Global Select Market
Securities registered pursuant to Section 12(b) of the Act:
None
Indicate by check mark if the registrant is a well known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes (cid:2) No (cid:3)
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the
Act. Yes (cid:3) No (cid:2)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months (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 90 days. Yes (cid:2) No (cid:3)
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the
preceding 12 months (or for such shorter period that the registrant was required to submit and post such
files). Yes (cid:3) No (cid:3)
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. (cid:2)
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated
filer, or a smaller reporting company. See the definitions of ‘‘large accelerated filer,’’ ‘‘accelerated filer’’ and ‘‘smaller
reporting company’’ in Rule 12b-2 of the Exchange Act:
Large accelerated filer (cid:2) Accelerated filer (cid:3)
Non-accelerated filer (cid:3) Smaller reporting company (cid:3)
(do not check if smaller
reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes (cid:3) No (cid:2)
The aggregate market value of the voting and non-voting stock held by non-affiliates of the registrant as of June 30,
2010 (the last business day of the registrant’s most recently completed second fiscal quarter) was $914,717,067, based on
the reported last sale price on the Nasdaq Global Select Market. This amount excludes an aggregate of 89,546,186 shares
of common stock held by officers and directors and each person known by the registrant to own 10% or more of the
outstanding common stock of the registrant as of June 30, 2010. Exclusion of shares held by any person should not be
construed to indicate that such person possesses the power, direct or indirect, to direct or cause the direction of
management or policies of the registrant, or that such person is controlled by or under common control with the
registrant. The number of shares of the registrant’s common stock outstanding as of February 22, 2011 was 165,226,343.
DOCUMENTS INCORPORATED BY REFERENCE
The information required by Part III of this report (Items 10, 11, 12, 13 and 14) is incorporated by reference from
Bruker Corporation’s definitive Proxy Statement for its 2011 Annual Meeting of Stockholders.
BRUKER CORPORATION
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
Part I
Item 1
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
[Reserved]
Item 4
Part II
Item 5
Item 6
Item 7
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Selected Financial Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Management’s Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7A Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . .
Financial Statements and Supplementary Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 8
Changes in and Disagreements with Accountants on Accounting and Financial
Item 9
Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9A Controls and Procedures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9B Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part III
Item 10 Directors, Executive Officers and Corporate Governance . . . . . . . . . . . . . . . . . . . . . .
Executive Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 11
Security Ownership of Certain Beneficial Owners and Management and Related
Item 12
Stockholder Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Certain Relationships and Related Transactions, Director Independence . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Principal Accounting Fees and Services
Page
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Exhibits, Financial Statements and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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115
Any statements contained in this Annual Report on Form 10-K that are not statements of
historical fact may be deemed to be forward-looking statements within the meaning of Section 21E of
the Securities and Exchange Act of 1934. Without limiting the foregoing, the words believes,
anticipates, plans, expects, seeks, estimates, should and similar expressions are intended to identify
forward-looking statements. Any forward-looking statements contained herein are based on current
expectations, but are subject to a number of risks and uncertainties. The factors that could cause actual
future results to differ materially from current expectations include, but are not limited to, risks and
uncertainties related to adverse changes in the global economy and volatility in the capital markets, the
integration of businesses we have acquired or may acquire in the future, changing technologies, product
development and market acceptance of our products, the cost and pricing of our products,
manufacturing, competition, dependence on collaborative partners and key suppliers, capital spending
and government funding policies, changes in governmental regulations, intellectual property rights,
litigation, exposure to foreign currency fluctuations and other factors, many of which are described in
2
Item 13
Item 14
Part IV
Item 15
more detail in this Annual Report on Form 10-K under Item 1A. ‘‘Risk Factors’’ and from time to time
in other filings we may make with the Securities and Exchange Commission. While the Company may
elect to update forward-looking statements in the future, it specifically disclaims any obligation to do
so, even if the Company’s estimates change, and readers should not rely on those forward-looking
statements as representing the Company’s views as of any date subsequent to the date of the filing of
this report.
References to ‘‘we,’’ ‘‘us,’’ ‘‘our’’ or the ‘‘Company’’ refer to Bruker Corporation and, in some
cases, its subsidiaries, as well as all predecessor entities.
Our principal executive offices are located at 40 Manning Road, Billerica, MA 01821, and our
telephone number is (978) 663-3660. Information about Bruker Corporation is available at
www.bruker.com. The information on our website is not incorporated by reference into and does not
form a part of this report. All trademarks, trade names or copyrights referred to in this report are the
property of their respective owners.
3
ITEM 1 BUSINESS
Our Business
PART I
We are a global manufacturer of scientific instruments that address the rapidly evolving needs of a
diverse array of customers in life science, pharmaceutical, biotechnology, clinical and molecular
diagnostics research, as well as in materials and chemical analysis in various industries and government
applications. Our technology platforms include magnetic resonance technologies, mass spectrometry
technologies, gas chromatography technologies, X-ray technologies, spark-optical emission spectroscopy,
atomic force microscopy, stylus and optical metrology technology and infrared and Raman molecular
spectroscopy technologies. We manufacture and distribute a broad range of field analytical systems for
chemical, biological, radiological, nuclear and explosives, or CBRNE, detection. We also design,
manufacture and market superconducting materials and devices based primarily on metallic low
temperature superconductors and ceramic high temperature superconductors. We maintain major
technical and manufacturing centers in Europe, North America, and Japan, and we have sales offices
located throughout the world. Our corporate headquarters are located in Billerica, Massachusetts.
In 2010, we completed the acquisition of Veeco Metrology Inc., a scanning probe microscopy and
optical industrial metrology business, or the nano surfaces business, and certain assets and liabilities in
Varian, Inc.’s, or Varian’s, inductively coupled plasma mass spectrometry instruments business,
laboratory gas chromatography instruments business, and gas chromatography triple-quadrupole mass
spectrometry instruments business, or the chemical analysis business. These businesses complement our
existing atomic force microscopy products and mass spectrometry products and expand our offerings to
industrial and applied markets. These acquisitions also provide opportunities to supply our customers
with equipment packages that have a broader range of applications and value.
Strategy and Competitive Strengths
Our business strategy is to capitalize on our ability to innovate, generating rapid revenue growth,
both organically and through acquisitions. If we can execute on this strategy while improving our gross
margins and effectively leveraging our research and development, sales and marketing and distribution
investments, and general and administrative expenses, we believe we will enhance our operating
margins and improve our earnings in the future.
Our key competitive strengths include our:
(cid:129) broad product and service offerings in the markets we serve;
(cid:129) commitment to innovative, reliable, and performance-leading products and solutions for our
customers;
(cid:129) premier global brand;
(cid:129) extensive intellectual property portfolio; and
(cid:129) global manufacturing, distribution, and logistics networks.
We believe we benefit from our broad product portfolio, including our latest product introductions
and products acquired in connection with our acquisitions of the nano surfaces and chemical analysis
businesses. We also believe, through our relationships with government, academic, and not-for-profit
customers, we may continue to benefit from government economic programs enacted to provide
funding for investment in a variety of industries, including life science research and development.
4
Business Segments
We are organized into five operating segments: Bruker BioSpin, Bruker Daltonics, Bruker MAT,
Bruker Optics, and Bruker Energy & Supercon Technologies. Bruker BioSpin is in the business of
designing, manufacturing and distributing life science tools based on magnetic resonance technology.
Bruker Daltonics is in the business of designing, manufacturing, and distributing mass spectrometry
instruments and solutions for life sciences, including proteomics, metabolomics, and clinical research
applications. Our mass spectrometry and gas chromatography instruments also provide solutions for
certain chemical and applied markets. Bruker Daltonics also designs, manufactures, and distributes
various analytical instruments for CBRNE detection. Bruker MAT, or MATerials research, analysis and
metrology, is in the business of designing, manufacturing, and distributing advanced X-ray, spark optical
emission spectroscopy, or spark-OES, atomic force microscopy, or AFM, and stylus and optical
metrology, or SOM, instrumentation used in molecular, materials, and elemental analysis. Bruker
Optics is in the business of designing, manufacturing, and distributing research, analytical, and process
analysis instruments and solutions based on infrared and Raman molecular spectroscopy technologies.
Bruker Energy & Supercon Technologies is in the business of developing and producing
superconducting materials and devices based primarily on metallic low temperature superconductors
and ceramic high temperature superconductors with applications in renewable energy, energy
infrastructure, medical imaging and life science analytics and ‘‘big science’’ research, which typically
consists of large scale projects funded by a government or a group of governments.
For financial reporting purposes, we combine the Bruker BioSpin, Bruker Daltonics, Bruker MAT
and Bruker Optics operating segments into the Scientific Instruments reporting segment because each
has similar economic characteristics, product processes and services, types and classes of customers,
methods of distribution, and regulatory environments. As such, management reports its financial results
based on the following segments:
(cid:129) Scientific Instruments. The operations of this segment include the design, manufacture and
distribution of advanced instrumentation and automated solutions based on magnetic resonance
technology, mass spectrometry technology, gas chromatography technology, X-ray technology,
spark-optical emission spectroscopy, or spark-OES, technology, atomic force microscopy, stylus
and optical metrology technology and infrared and Raman molecular spectroscopy technology.
Typical customers of the Scientific Instruments segment include: pharmaceutical, biotechnology,
and molecular diagnostic companies; academic institutions, medical schools and other non-profit
organizations, and clinical microbiology laboratories; government departments and agencies;
nanotechnology, semiconductor, chemical, cement, metals and petroleum companies; and food,
beverage and agricultural analysis companies and laboratories.
(cid:129) Energy & Supercon Technologies. The operations of this segment include the design, manufacture
and marketing of superconducting materials, primarily metallic low temperature superconductors
for use in magnetic resonance imaging, nuclear magnetic resonance and fusion energy research,
and ceramic high temperature superconductors for use in fusion energy research and other
applications. Typical customers of the Energy & Supercon Technologies segment include
companies in the medical industry, private and public research and development laboratories in
the fields of fundamental and applied sciences and energy research and academic institutions
and government agencies. The Energy & Supercon Technologies segment is also developing
superconductors and superconducting-enabled devices for applications in power and energy, as
well as industrial processing industries.
Scientific Instruments Segment
Bruker BioSpin manufactures and distributes enabling life science tools based on magnetic
resonance technology. Magnetic resonance is a natural phenomenon occurring when a molecule placed
5
in a magnetic field gives off a signature radio frequency. The signature radio frequency is characteristic
of the particular molecule and provides a multitude of precise chemical and structural information.
Depending on the intended application, we market and sell to our customers a magnetic resonance
imaging system, known as pre-clinical MRI; a nuclear magnetic resonance system, known as NMR; or
an electron paramagnetic resonance system, known as EPR. Bruker BioSpin also offers high-field OEM
MRI magnets to medical device manufacturers. Bruker BioSpin’s products, which have particular
application in structural proteomics, drug discovery, research, and food and materials science fields,
provide customers with the ability to determine the structure, dynamics, and function of specific
molecules, such as proteins, and to characterize and determine the composition of mixtures. Customers
of our Bruker BioSpin operating segment include pharmaceutical and biotechnology companies,
academic institutions, medical schools, other nonprofit laboratories, and government agencies, as well
as chemical, food and beverage, and polymer companies.
Bruker Daltonics manufactures and distributes life-science mass spectrometry instruments that can
be integrated and used along with other sample preparation or chromatography instruments, as well as
our CBRNE detection products. Our mass spectrometers are sophisticated devices that measure the
mass or weight of a molecule and can provide accurate information on the identity, quantity, and
primary structure of molecules. Mass spectrometry based solutions often combine advanced mass
spectrometry instrumentation; automated sampling and sample preparation robots; reagent kits and
other disposable products, known as consumables, which are used in conducting tests, or assays; and
powerful bioinformatics software. We offer mass spectrometry systems and integrated solutions for
applications in multiple existing and emerging life-science markets and chemical and applied markets,
including expression proteomics, clinical proteomics, metabolic and peptide biomarker profiling, drug
discovery and development, molecular diagnostics research, and molecular and systems biology, as well
as basic molecular medicine research and clinical microbiology (for research use only outside the
European Union). We are also a worldwide leader in supplying various systems based on mass
spectrometry, ion mobility spectrometry, infrared spectroscopy, and radiological/nuclear detectors for
CBRNE detection in emergency response, homeland security, and defense applications. Customers of
our Bruker Daltonics operating segment include pharmaceutical, biotechnology, and diagnostics
companies, academic institutions, medical schools, nonprofit or for-profit forensics, food and beverage
safety, environmental and clinical microbiology laboratories, and government departments and agencies.
Bruker MAT includes the operations of Bruker AXS and the nano surfaces business we acquired
in 2010. The Bruker MAT operating segment, which we formerly referred to as Bruker AXS, was
renamed to reflect the growth in our product lines focused on materials identification and
characterization beyond Bruker AXS’ advanced X-ray instrumentation. Specifically, within the Bruker
MAT operating segment, we manufacture and distribute Bruker AXS advanced X-ray and spark-OES
systems, as well as AFM and SOM instrumentation. Bruker AXS X-ray systems are advanced
instruments that use electromagnetic radiation with extremely short wavelengths to determine the
characteristics of matter and the three-dimensional structure of molecules. Bruker AXS spark-OES
systems are used to identify the presence of metallic elements in samples. Our AFM instruments
provide atomic or near atomic resolution of surface topography using nano scale probes or white light
interferometry. Using modular platforms, we often combine each of these three technology applications
with sample preparation tools, automation, consumables, and data analysis software. These products
provide customers with the ability to determine the three-dimensional structure of specific molecules,
such as proteins, and to characterize and determine the composition of materials down to the
dimensions used in nanotechnology. Bruker MAT also includes thermal analyzers, which measure the
physical characteristics of materials as a function of temperature and can be used in development,
production, and characterization of materials in a variety of industries. Customers of our Bruker MAT
operating segment include biotechnology and pharmaceutical companies, nanotechnology companies,
semiconductor companies, raw material manufacturers, chemical companies, academic institutions,
governmental customers, and other businesses involved in materials analysis.
6
Bruker Optics manufactures and distributes research, analytical, and process analysis instruments
and solutions based on infrared and Raman molecular spectroscopy technologies. These products are
utilized in industry, government, and academia for a wide range of applications and solutions for life
science, pharmaceutical, food and agricultural analysis, quality control, and process analysis
applications. Infrared and Raman spectroscopy are widely used in both research and industry as simple,
rapid, nondestructive, and reliable techniques for applications ranging from basic sample identification
and quality control to advanced research. Bruker Optics utilizes Fourier transform and dispersive
Raman measurement techniques on an extensive range of laboratory and process spectrometers.
Infrared spectroscopy is a type of absorption spectroscopy that uses the infrared part of the
electromagnetic spectrum. The Bruker Optics product line is complemented by a wide range of
sampling accessories and techniques, which include microanalysis, high-throughput screening, and many
others, to help users find suitable solutions to analyze their samples effectively.
Energy & Supercon Technologies Segment
Bruker Energy & Supercon Technologies, or BEST, designs, manufactures and markets
superconducting materials, primarily metallic low temperature superconductors for use in magnetic
resonance imaging, nuclear magnetic resonance, fusion energy research and other applications. We also
develop, manufacture and market ceramic high temperature superconductors for fusion energy research
and other applications. Additionally, we offer non-superconducting CuponalTM materials and wires,
based on co-extruded copper and aluminum, used in the power and transport industries. We develop,
manufacture and market devices based primarily on superconductivity that utilize our low temperature
and high temperature superconducting materials. These devices are sophisticated and complex tools
that have applications primarily in ‘‘big science’’ research, and include superconducting magnets and
radio frequency accelerator cavities and modules, power couplers and linear accelerators. We also
manufacture and sell non-superconducting high technology tools, such as X-ray beamlines and
synchrotrons and laboratory instrumentation, principally to customers engaged in materials research
and ‘‘big science’’ research projects. BEST is currently developing second generation high temperature
superconductors and new superconductivity-enabled devices, including crystal growth magnets for use in
the solar and semiconductor industries, inductive superconducting fault current limiters for energy
infrastructure applications and other second generation high temperature superconducting materials
and coils for high-power wind turbine generators.
We have announced plans to sell a minority ownership position in BEST through an initial public
offering of the capital stock of BEST. We believe the offering will provide our shareholders greater
visibility into BEST’s performance and expand BEST’s access to financing for its growth initiatives,
including the development of products for the renewable energy and energy infrastructure markets.
Products and Solutions
We believe that our products and solutions offer the following advantages to our customers:
(cid:129) high performance and specificity;
(cid:129) integrated solutions for specific applications;
(cid:129) reliability and increased productivity;
(cid:129) high-quality results; and
(cid:129) cost-efficiency.
7
Scientific Instruments Segment
Bruker BioSpin systems integrate a radio frequency source and transmitter, one or more sensitive
detectors, a magnet sized for the particular application, and operating and analysis software to acquire
and analyze radio frequency signatures that are given off when a molecule is placed in a magnetic field.
These systems address many of the matter characterization needs of the pharmaceutical and
biotechnology industries and also have applications in advanced materials research, materials analysis,
and quality control. During 2010, we launched a number of new products in the BioSpin product line,
including a high field dynamic nuclear polarization system designed to provide increased sensitivity in
solid state nuclear magnetic resonance imaging, a compact 300-megahertz nuclear magnetic resonance
system for use in education and routine industrial and pharmaceutical chemistry and a desktop
magnetic resonance imaging system for preclinical and molecular imaging.
Bruker BioSpin magnetic resonance systems are based on the following technology platforms:
(cid:129) NMR—Nuclear magnetic resonance;
(cid:129) MRI—Magnetic resonance imaging; and
(cid:129) EPR—Electron paramagnetic resonance.
NMR is a qualitative and quantitative analytical technique that is used to determine the molecular
structure and purity of a sample. Molecules are placed in a magnetic field and give off a radio
frequency, or rf, signature that is recorded by a sensitive detector. Analysis software helps to determine
the molecular structure of the sample. The NMR technique is used in academia, pharmaceutical and
biotechnology companies, and by other industrial users in life science and material science research.
MRI is a process of creating an image from the manipulation of hydrogen atoms in a magnetic
field. In the presence of an external magnetic field, atoms will align with or against the external
magnetic field. Application of a radio frequency causes the atoms to jump between high and low energy
states. MRI and magnetic resonance spectroscopy, or MRS, include many methods including diffusion-
weighted, perfusion-weighted, molecular imaging, and contrast-enhance. Customers use our MRI
systems in pharmaceutical research, including metabonomics, to study a number of diseases including
degenerative joint diseases, oncology, and cardiovascular disorders.
EPR is a process of absorption of microwave radiation by paramagnetic ions or molecules with at
least one unpaired electron that spins in the presence of a static magnetic field. EPR detects unpaired
electrons unambiguously, whereas other techniques can only provide indirect evidence of their
presence. In addition, EPR can identify the paramagnetic species that are detected, which present
information on the molecular structure near the unpaired electron and give insight into dynamic
processes such as molecular motions or fluidity. Our EPR instruments are used for a wide range of
applications including advanced materials research, materials analysis, and quality control.
Bruker Daltonics mass spectrometry instruments address a wide range of life sciences applications.
Mass spectrometry is the method of choice for protein primary structure analysis, including the
determination of amino acid sequence and post-translational modifications and protein quantification.
As a result, mass spectrometry is a key enabling technology of the expression proteomics laboratory.
Mass spectrometers are also increasingly used for the discovery of peptide, protein, or metabolite
biomarkers and panels or patterns of biomarkers. These biomarkers can be used for toxicity screening
or to assess drug efficacy in pre-clinical trials in pharmaceutical drug development. They are also used
in clinical research and validation studies in an effort to develop the emerging field of protein
molecular diagnostics. During 2010, we expanded the Bruker Daltonics product lines with a number of
new systems and applications in its matrix-assisted laser desorption ionization time-of-flight mass
spectrometers and Fourier transform mass spectrometers. In addition, we acquired Varian’s inductively
coupled plasma mass spectrometry, laboratory gas chromatography and gas chromatography single and
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triple-quadrupole mass spectrometry instruments from Agilent Technologies, Inc. in May 2010. This
acquisition expanded our mass spectrometry and chromatography offerings into industrial and applied
analytical markets where we previously did not compete.
Bruker Daltonics’ solutions are based on the following technology platforms:
(cid:129) MALDI-TOF—Matrix-assisted laser desorption ionization time-of-flight mass spectrometry,
including tandem time-of-flight systems (MALDI-TOF/TOF);
(cid:129) ESI-TOF—Electrospray ionization time-of-flight spectrometry, including tandem mass
spectrometry systems based on ESI-quadrupole-TOF mass spectrometry (ESI-Q-q-TOF);
(cid:129) FTMS—Fourier transform mass spectrometry, including hybrid systems with a quadrupole front
end (Q-q-FTMS);
(cid:129) ITMS—Ion trap mass spectrometry;
(cid:129) ICP-MS—Inductively coupled plasma mass spectrometry;
(cid:129) Laboratory GC—Laboratory gas chromatography; and
(cid:129) GC-MS—Gas chromatography-mass spectrometry systems utilizing single or triple-quadrupole
time-of-flight mass spectrometry.
MALDI-TOF mass spectrometers utilize an ionization process to analyze solid samples using a
laser that combines high sample throughput with high mass range and sensitivity. Our MALDI-TOF
mass spectrometers are particularly useful for applications in clinical diagnostics, environmental and
taxonomical research, and food processing and quality control. Specific applications include:
(a) oligonucleotide and synthetic polymer analysis; (b) protein identification and quantification;
(c) peptide de novo sequencing; (d) determination of post-translational modifications of proteins;
(e) interaction proteomics and protein function analysis; (f) drug discovery and development; and
(g) fast body fluid and tissue peptide or protein biomarker detection. MALDI mass spectrometry allows
users to classify and identify microorganisms quickly and reliably using high throughput. This robust
technology requires minimal sample preparation efforts and life cycle costs. Our MALDI Biotyper
solution enables identification, taxonomical classification, or dereplication of microorganisms like
bacteria, yeasts, and fungi.
ESI-TOF mass spectrometers utilize an electrospray ionization process to analyze liquid samples.
This ionization process, which does not dissociate the molecules, allows for rapid data acquisition and
analysis of large biological molecules. ESI-TOF mass spectrometers are particularly useful for:
(a) identification, protein analysis and functional complex analysis in proteomics and protein function;
(b) molecular identification in metabonomics, natural product and drug metabolite analysis;
(c) combinatorial chemistry high throughput screening; and (d) fast liquid chromatography mass
spectrometry, or liquid chromatography mass spectrometry (LC/MS), in drug discovery and
development.
FTMS systems utilize high-field superconducting magnets to offer the highest resolution, selectivity,
and mass accuracy currently achievable in mass spectrometry. Our systems based on this technology
often eliminate the need for time-consuming separation techniques in complex mixture analyses. In
addition, our systems can fragment molecular ions to perform exact mass analysis on all fragments to
determine molecular structure. FTMS systems are particularly useful for: (a) the study of structure and
function of biomolecules including proteins, DNA, and natural products; (b) complex mixture analysis
including body fluids or combinatorial libraries; (c) high-throughput proteomics and metabonomics; and
(d) top-down proteomics of intact proteins without the need for enzymatic digestion of the proteins
prior to analysis. We offer next-generation hybrid FTMS systems that combine a traditional external
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quadrupole mass selector and hexapole collision cell with a high-performance FTMS for further ion
dissociation, top-down proteomics tools, and ultra-high resolution detection.
ITMS systems collect all ions simultaneously, which improves sensitivity relative to previous
quadrupole mass spectrometers. Ion trap mass spectrometers are particularly useful for: (a) sequencing
and identification based on peptide structural analysis; (b) quantitative liquid chromatography—mass
spectrometry; (c) identification of combinatorial libraries; and (d) generally enhancing the speed and
efficiency of the drug discovery and development process.
ICP-MS systems utilize mass spectrometers combined with a high-temperature inductively coupled
plasma source. The inductively coupled plasma source can convert solid and liquid samples to ions
which are then separated and detected by the mass spectrometer. ICP-MS is a fast and flexible
technique that offers advantages over more traditional techniques for elemental analysis. Our ICP-MS
systems are designed to provide high performance and ease of use. ICP-MS systems are used for both
routine analysis and research in a variety of areas including environmental, geochemical and food and
agriculture fields.
Laboratory GC systems are used to separate volatile or semi-volatile compounds by separating
them into individual components using a temperature controlled gas chromatographer. In GC systems a
sample is introduced to the gas chromatographer and it passes through a chromatography column. The
chromatographer separates mixtures into individual components and provides a quantitative analysis of
the components. Our Laboratory GC systems can be utilized in a variety of configurations and are
designed to enhance system efficiency and performance and to provide analysts with a wide degree of
flexibility in choosing their platform or customizing their system to meet their particular application
need. Our Laboratory GC systems are particularly useful for applications in food and product safety,
forensics and environmental, petroleum, fuel and hydrocarbon analysis.
GC-MS systems combine the features of gas chromatography and mass spectrometry to identify
different substances within a test sample. The two components, used together, allow for a finer degree
of substance identification than either system when used separately. The result is a quantitative analysis
of the components and the mass spectrum of each component. Our GC-MS systems are available in
single and triple quadrupole configurations and can be configured with a variety of options to suit a
range of applications. Our GC-MS systems have applications in food and product safety, forensics,
clinical and toxicology testing and environmental, pharmaceutical and chemical analysis.
We sell a wide range of portable analytical and bioanalytical detection systems and related
products for CBRNE detection. Our customers use these devices for nuclear, biological agent and
chemical agent defense applications, anti-terrorism, law enforcement, and process and facilities
monitoring. Our CBRNE detection products use many of the same technology platforms as our life
science products, as well as additional technologies, including infrared remote detection and ion
mobility spectrometry for handheld chemical detectors. We also provide integrated, comprehensive
detection suites that include our multiple detection systems, consumables, training, and simulators.
Bruker MAT’s X-ray systems integrate powerful detectors with advanced X-ray sources, computer-
controlled positioning systems, sample handling devices, and data collection and analysis software to
acquire, analyze and manage elemental and molecular information. These integrated solutions address
many of the matter characterization and structure needs of the life science, pharmaceutical,
semiconductor, raw materials, and research industries across a broad range of applications. During
2010, we introduced a new X-ray diffraction system for high-end materials research and a new X-ray
fluorescence spectrometer for the food, minerals and mining and cement industries. In addition, we
acquired the scanning probe microscopy and optical industrial metrology business from Veeco
Instruments Inc., or Veeco, in October 2010. This acquisition significantly expanded our product
offerings in atomic force microscopy.
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Bruker MAT X-ray systems are based on the following technology platforms:
(cid:129) XRD—Polycrystalline X-ray diffraction, often referred to as X-ray diffraction;
(cid:129) XRF—X-ray fluorescence, also called X-ray spectrometry, including handheld XRF systems;
(cid:129) SC-XRD—Single crystal X-ray diffraction, often referred to as X-ray crystallography;
(cid:129) MA—X-ray microanalysis;
(cid:129) Elemental Analysis—Optical emission spectroscopy for carbon, sulfur, oxygen, nitrogen, and
hydrogen (CS/ONH) metals analysis;
(cid:129) AFM—Atomic force microscopy; and
(cid:129) SOM—Stylus and optical metrology.
XRD systems investigate polycrystalline samples or thin films with single wavelength X-rays. The
atoms in the polycrystalline sample scatter the X-rays to create a unique diffraction pattern recorded by
a detector. Computer software processes the pattern and produces a variety of information, including
stress, texture, qualitative and quantitative phase composition, crystallite size, percent crystallinity and
layer thickness, composition, defects, and density of thin films and semiconductor material. Our XRD
systems contribute to a reduction in the development cycles for new products in the catalyst, polymer,
electronic, optical material, and semiconductor industries. Customers also use our XRD systems for
analyses in a variety of other fields, including forensics, art, and archaeology.
XRF systems determine the elemental composition of a material and provide a full qualitative and
quantitative analysis. Our XRF systems direct X-rays at a sample, and the atoms in the sample absorb
the X-ray energy. The elements in the sample then emit X-rays that are characteristic for each element.
The system collects the X-rays, and the software analyzes the resulting data to determine the elements
that are present. Our XRF products provide automated solutions on a turn-key basis for industrial
users that require automated, controlled production processes that reduce product and process cost,
increase output, and improve product quality. Our XRF products cover substantially all of the periodic
table and can analyze solid, powder, or liquid samples.
SC-XRD systems determine the three-dimensional structures of molecules in a chemical, mineral,
or biological substance being analyzed. SC-XRD systems have the capability to determine structure in
both small chemical molecules and larger biomolecules. SC-XRD systems direct an X-ray beam at a
solid, single crystal sample. The atoms in the crystal sample scatter the X-rays to create a precise
diffraction pattern recorded by an electronic detector. Software then reconstructs a model of the
structure and provides the unique arrangement of the atoms in the sample. This information on the
exact arrangement of atoms in the sample is a critical part of molecular analysis and can provide
insight into a variety of areas, including how a protein functions or interacts with a second molecule.
Our SC-XRD systems are designed for use in the life sciences industry, academic research, and a
variety of other applications.
MA systems analyze the chemical composition of materials under investigation in electron
microscopes by utilizing the fact that atoms of different chemical elements, when exposed to the high
energy electron beam generated by the microscope, irradiate X-rays of different, characteristic energy.
The evaluation of the energy spectrum collected by an energy dispersive X-ray detector allows the
determination of the qualitative and quantitative chemical sample composition at the current beam
position. This technique provides high spatial resolution since the information is obtained from a small
sample volume on the order of only a few microns. MA systems allow for simultaneous analysis of all
elements in the periodic table, beginning with atomic number 4 (beryllium). Our MA systems are used
for a wide range of applications including nanotechnology and advanced materials research, as well as
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materials analysis and quality control. Customers for MA systems include industrial customers,
academia, and government research facilities.
Elemental Analysis systems, including spark-OES and CS/ONH instruments, are used for analyzing
metals. Spark-OES instruments cover a broad range of applications for metals analysis from pure
metals trace analysis to high alloyed grades, and allow for analysis of a complete range of relevant
elements simultaneously. Spark-OES instruments pass an electric spark onto a sample, which burns the
surface of the sample and causes atoms to jump to a higher orbit. Our detectors quantify the light
emitted by these atoms and help our customers to determine the elemental composition of the
material. This technique is widely used in production control laboratories of foundries and steel mills.
CS/ONH systems incorporate a furnace, infrared detection and gas infusion techniques to analyze
inorganic and organic materials for the determination of carbon, sulfur, nitrogen and oxygen, as well as
other elements. Combustion analyzers are used for applications in metal production and processing,
chemicals and pharmaceuticals, ceramics and cement, coal processing and oil refining, and
semiconductors.
AFM systems provide atomic or near-atomic resolution of material surface topography using a
nano-scale probe that is brought into light contact with the sample being investigated. In addition to
presenting a surface image, AFM can also provide quantitative nano-scale measurements of feature
sizes, material properties, electrical information, chemical properties and other sample characteristics.
Our AFM systems are used for applications in materials and biological research and semiconductor,
data storage hard drive, LED, battery, solar cells, polymers and pharmaceutical product development
and manufacturing.
SOM systems provide atomic or near-atomic two dimensional and three dimensional surface
resolution using white light interferometry, confocal optical and stylus profilometry methods. SOM
profilers range from low-cost manual tools for single measurements to advanced, highly automated
systems for production line quality assurance and quality control applications where the combination of
throughput, repeatability and reproduceability is essential. SOM profilers support a range of
applications in research, product development, tribology, quality control and failure analysis related to
materials and machining in the automotive, orthopedic, ophthalmic, high brightness LED,
semiconductor, data storage, optics and other markets.
Bruker Optics’ research, analytical, and process analysis instruments are based on infrared, or IR,
near-infrared, or NIR, Raman, and time-domain nuclear magnetic resonance, or TD-NMR,
spectroscopy. Bruker Optics utilizes Fourier transform, or FT-IR, FT-NIR, and FT-Raman, and the
dispersive Raman measurement techniques on an extensive range of laboratory and process
spectrometers. Infrared spectroscopy is a type of absorption spectroscopy that uses the infrared part of
the electromagnetic spectrum. Raman spectroscopy relies on the Raman scattering of a monochromatic
light that yields similar and complementary analytical information. Infrared and Raman spectroscopy
are widely used in both research and industry as simple, rapid, nondestructive, and reliable techniques
for applications ranging from basic sample identification and quality control to advanced research. The
Bruker Optics product line is complemented by a range of sampling accessories and techniques to help
users find the best solution to analyze samples effectively. During 2010, we expanded the Bruker Optics
product line with a number of new products targeted at pharmaceutical monitoring and production
control.
Bruker Optics systems are based on the following technology platforms:
(cid:129) FT-IR—Fourier transform-infrared spectroscopy;
(cid:129) NIR—Near-infrared spectroscopy; and
(cid:129) Raman—Raman spectroscopy.
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FT-IR is a spectroscopic method that utilizes the mid- and far-infrared regions of the
electromagnetic spectrum. FT-IR is commonly used for various quality control and materials research
applications.
NIR is a spectroscopic method that utilizes the near-infrared region of the electromagnetic
spectrum. This technique is heavily used for quality and process control applications in the
pharmaceutical, food and agriculture, and chemical industries. The pharmaceutical industry is the
leading user of NIR instruments, and applications include quality control, research and development,
and process analytical technology. The food and agricultural industry is the second largest user of NIR
instrumentation, with an increasing demand for food, forage, and beverage quality control.
Raman spectroscopy is the measurement of the wavelength and intensity of inelastically scattered
light. The Raman scattered light occurs at wavelengths that are shifted from the incident light by the
energies of molecular vibrations. Like infrared spectroscopy (IR), the Raman spectrum provides
information on molecular structure. The mechanism of Raman scattering is different from that of
infrared absorption, in that Raman and IR spectra provide complementary information. Raman is
useful for the identification of both organic and inorganic compounds and functional groups. It is a
nondestructive technique, and can be used for the analysis of both liquids and solids. Raman is well
suited for use in the polymer and pharmaceutical industries, and has applications in the metals,
electronics, and semiconductors industries. The technique also has applications in life sciences,
forensics, and artwork authentication.
Energy & Supercon Technologies Segment
BEST products include superconducting materials as well as superconductivity-enabled tools and
devices for markets in healthcare and ‘‘big science’’ research. We also provide non-superconducting
materials and conventional devices, which largely share our core platforms of technologies and
processes, and which give us access to additional markets. Low temperature superconducting products
are used in diagnostic and research tools for the healthcare and life science industries, including clinical
MRI and ultra-high field NMR spectroscopy. Low temperature superconducting materials are also used
in products developed or in development for a range of renewable energy and ‘‘big science’’ research
applications, including energy storage, high energy physics and fusion research. High temperature
superconducting, or HTS, materials are used in a range of pre-commercial HTS applications, including
motors, generators, superconducting fault current limiters, transformers, cables and current leads.
Sales and Marketing
We maintain direct sales forces throughout North America, Europe, Japan, Asia Pacific and
Australia. We also utilize indirect sales channels to reach customers. We have various international
distributors, independent sales representatives, and various other representatives in parts of Asia, Latin
America, and Eastern Europe. These entities augment our direct sales force and provide coverage in
areas where we do not have direct sales personnel. In addition, we have adopted a distribution business
model in which we engage in strategic distribution alliances with other companies to address certain
market segments. The sales cycle for our products is dependent on the size and complexity of the
system and budgeting cycles of our customers. Our sales cycle is typically three to twenty four months
for academic and high-end research products and two weeks to six months for industrial products. The
sales cycle of our low temperature superconducting materials is typically four to twelve months, with
cycles of certain high-end materials exceeding one year. Sales of our superconducting devices typically
take more than one year and certain large, complex contracts can take more than two years to obtain.
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We have well-equipped application and demonstration facilities and qualified application personnel
who assist customers and provide product demonstrations in specific application areas. We maintain our
primary demonstration facilities at our production facilities as well as in other key markets.
Customers
We have a broad and diversified global life sciences and advanced and raw materials customer
base. Our life science customer base is composed primarily of end-users and includes pharmaceutical,
biotechnology, proteomics, food/feed/agricultural, biotechnology, molecular diagnostics, and fine
chemical companies, as well as commercial laboratories, university laboratories, medical schools, and
other not-for-profit research institutions and government laboratories. We sell our X-ray materials
research and infrared Raman molecular spectroscopy solutions to the above customer groups as well as
to a number of semiconductor, polymer, automotive, cement, steel, aluminum, and combinatorial
materials design companies. The majority of our low temperature superconducting materials are sold to
magnetic resonance imaging and nuclear magnetic resonance imaging manufacturers and our
superconducting devices are sold primarily to universities, as well as national and international research
facilities. We have not historically depended on any single customer and no single customer accounted
for more than 10% of revenue in any of the last three fiscal years.
Competition
Our existing products and solutions and any products and solutions that we develop in the future
may compete in multiple, highly competitive markets. Many of our potential competitors in these
markets have substantially greater financial, technical, and marketing resources than we do. In addition,
there has been a trend towards consolidation in our industry, including Agilent’s acquisition of Varian,
Thermo Fisher Scientifics’ pending acquisition of Dionex Corporation and Danaher Corporation’s
pending acquisition of Beckman Coulter, Inc. Our competitors may offer or succeed in developing
products that could render our products or those of our strategic partners obsolete or noncompetitive.
In addition, many of these competitors have significantly more experience in the life sciences, chemical
and materials markets. Our ability to compete successfully will depend on our ability to develop
proprietary products that reach the market in a timely manner and are technologically superior to
and/or less expensive, or more cost effective, than other products marketed by our competitors. Current
competitors or other companies may possess or develop technologies and products that are more
effective than ours. Our technologies and products may be rendered obsolete or uneconomical by
technological advances or entirely different approaches developed by one or more of our competitors.
We also compete with other companies that provide analytical or automation tools based on other
technologies. These technologies may prove to be more successful in meeting demands in the markets
that our products and solutions serve. In addition, other companies may choose to enter our fields in
the future. We believe that the principal competitive factors in our markets are technology-based
applications expertise, product specifications, functionality, reliability, marketing expertise, distribution
capability, proprietary patent portfolios, cost, and cost effectiveness.
Scientific Instruments Segment
Bruker BioSpin competes with companies that offer magnetic resonance spectrometers, mainly
Agilent, JEOL, and Oxford Instruments. Bruker Daltonics competes with a variety of companies that
offer mass spectrometry-based systems. Bruker Daltonics’ competitors in the life science markets and
chemical and applied markets include a division of Danaher, Agilent, GE-Healthcare, Waters, Thermo
Fisher Scientific, Shimadzu/Kratos, Hitachi and JEOL. Bruker Daltonics’ CBRNE detection customers
are highly fragmented, and we compete with a number of companies in this area, of which the most
significant competitor is Smiths Detection. Bruker MAT competes with companies that offer analytical
X-ray solutions, OES systems and AFM and SOM systems, primarily Rigaku, Oxford Instruments,
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Thermo Fisher Scientific, Ametek’s Spectro division, PANalytical and Olympus. Bruker Optics
competes with a variety of companies that offer molecular spectrometry-based systems, including
Thermo Fisher Scientific, PerkinElmer, Agilent, Foss, ABB Bomem, Renishaw, Buchi, Shimadzu, and
Jasco. In addition, there are several smaller companies, specializing in various markets, with which we
compete frequently.
Energy & Supercon Technologies Segment
BEST competes with Oxford Instruments and Luvata in low temperature superconducting
materials. In addition, BEST competes with Sumitomo and Innost in the market for first generation
high temperature superconducting products, Babcock Noell and ASG Superconductors in the market
for customized superconducting magnets, FMB Oxford in the market for synchrotron beamlines, and
Xradia in the market for X-ray microscopes. BEST further competes with Zanon, Mitsubishi Electric
and AES in the development and supply of accelerator cavities, with Thales, Toshiba and CPI
International in the development and supply of radio frequency couplers, with Mitsubishi Heavy
Industries in the development and supply of superconducting accelerator modules and with AES and
Thales for electron linear accelerators.
Seasonal Nature of Business
We experience highly variable and fluctuating revenues in the first three quarters of the year, while
our fourth quarter revenues have historically been stronger than the rest of the year.
Manufacturing and Supplies
Several of our manufacturing facilities are certified under ISO 9001:2008 and ISO 13485, the most
rigorous of the international quality standards. We manufacture and test our magnetic resonance
products at our facilities in Karlsruhe, Germany; Wissembourg, France; Zurich, Switzerland; and
Billerica, Massachusetts, U.S.A. We manufacture and test our mass spectrometry products, including
CBRNE detection products, at our facilities in Bremen, Germany; Leipzig, Germany; Billerica,
Massachusetts, U.S.A.; Fremont, California, U.S.A.; and Goes, Netherlands. We manufacture and test
our X-ray, OES and AFM products at our facilities in Karlsruhe, Germany; Berlin, Germany; Kalkar,
Germany; Madison, Wisconsin, U.S.A.; Santa Barbara, California, U.S.A.; Kennewick, Washington,
U.S.A.; and Yokohama, Japan. In addition, we manufacture and test our molecular spectroscopy
products at our facilities in Ettlingen, Germany; Billerica, Massachusetts, U.S.A.; and The Woodlands,
Texas, U.S.A. We manufacture and test the majority of our energy and superconducting products at our
facilities in Hanau, Germany; Bergisch Gladbach, Germany; and Perth, Scotland. Manufacturing
processes at our facilities in Germany include all phases of manufacturing, such as machining,
fabrication, subassembly, system assembly, and final testing. Our other facilities primarily perform
high-level assembly, system integration, and final testing. We typically manufacture critical components
in-house to ensure key competence.
We purchase material and components from various suppliers that are either standard products or
built to our specifications. We obtain some of the components included in our products from a limited
group of suppliers or from a single-source supplier for items such as charge coupled device area
detectors, X-ray tubes, robotics, and infrared optics. Bruker AXS has an ongoing collaboration and
joint development project with the Siemens AG X-ray tube division (now Siemens Medical Solutions
Vacuum Technology Division) in Germany for the development of X-ray tubes. Some Bruker AXS
subsidiaries, Bruker Nano GmbH, Bruker Elemental GmbH, and Bruker AXS Handheld Inc., presently
procure key X-ray detector chips and certain OES optical detectors and miniaturized X-ray sources
from single-source suppliers. In addition, BEST sources niobium titanium and other niobium products
from a single supplier.
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Research and Development
We commit substantial capital and resources to internal and collaborative research and
development projects in order to provide innovative products and solutions to our customers. We
conduct research primarily to enhance system performance and improve the reliability of existing
products, and to develop new products and solutions. We expensed $141.4 million, $126.4 million and
$133.8 million in 2010, 2009 and 2008, respectively, for research and development purposes. Our
research and development efforts are conducted for the relevant products within each of the operating
segments, as well as in collaboration on areas such as microfluidics, automation and workflow
management software.
Scientific Instruments Segment
The research and development performed in the Scientific Instruments segment is primarily
conducted at our facilities in Bremen, Ettlingen, Karlsruhe and Leipzig, Germany; Faellanden,
Switzerland; Wissembourg, France; Billerica, Massachusetts, U.S.A.; Madison, Wisconsin, U.S.A.;
Fremont, California, U.S.A.; and Santa Barbara, California, U.S.A.
Bruker BioSpin maintains technical competencies in core magnetic resonance technologies and
capabilities, including MRI, NMR, and EPR. Recent advancements include the development of
compact ultra-high field NMR magnets and the world’s first 1 Gigahertz NMR spectrometer. Other
recent developments include the development of a 7-tesla whole-body magnet that was developed as an
OEM product for medical imaging suppliers, a joint development with Philips on magnetic particle
imaging and a low-cost NMR instrument for routine chemical analysis and education, called the
Fourier 300. Finally, we have continued to develop further applications for our solid state dynamic
nuclear polarization device which enables research in biological solids that are made possible by large
signal enhancements. Bruker BioSpin has accepted some sponsored research contracts, primarily from
the German government.
Bruker Daltonics maintains technical competencies in core mass spectrometry technologies and
capabilities, including MALDI, ESI, ICP and EI/CI ion sources; TOF, TOF/TOF, ion traps, FTMS and
quadrupole analyzers; bioinformatics; and related software. Recent developments include the
introduction of three new mass spectrometry platforms. Bruker Daltonics also accepts some sponsored
research contracts from external agencies, such as government or private sources. Historically, we have
been the recipient of government grants from Germany and the United States for various projects
related to early-stage research and development. We have generally retained, at a minimum,
non-exclusive rights to any items or enhancements we develop under these grants. The German
government requires that we use and market technology developed under grants in order to retain our
rights to the technology.
Bruker MAT maintains technical competencies in core X-ray technologies and capabilities,
including detectors used to sense X-ray diffraction patterns, X-ray sources and optics that generate and
focus the X-rays, robotics and sample handling equipment that holds and manipulates the experimental
material, and software that generates the structural data. Recent projects include refining
next-generation high brilliancy optics and microsources, developing new high-power X-ray sources for
X-ray diffraction and protein crystallography applications, developing a system with combined XRD
and Raman technology for applications in high-throughput combinatorial analysis, developing a new
large solid angle, high-resolution, high-throughput energy dispersive X-ray detector for microanalysis,
creating a high sensitivity area detector system, and developing other solution-based technologies and
software applications. In the past, Bruker AXS, included in the Bruker MAT operating segment, has
accepted some sponsored research contracts, mainly from private sources.
Bruker Optics maintains technical competencies in core vibrational spectroscopy technologies and
capabilities, including FT-IR, NIR, and Raman. Recent advancements include the ALPHA FT-IR,
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which is Bruker Optics’ smallest FT-IR and is based on our patented ROCKSOLID interferometer
design. In the past, Bruker Optics has accepted some sponsored research contracts, primarily from the
German government.
Energy & Supercon Technologies Segment
The research and development performed in the Energy & Supercon Technologies segment is
primarily conducted at our facilities in Hanau, Bergisch Gladbach and Alzenau, Germany. BEST
maintains technical competencies in the production of low and high temperature superconducting
materials and devices. BEST is currently developing second generation high temperature
superconductors and new superconductivity-enabled devices including crystal growth magnets for use in
the solar and semiconductor industries, inductive superconducting fault current limiters for energy
infrastructure applications and other second generation high temperature superconducting materials
and coils for high-power wind turbine generators. In the past, BEST has accepted some sponsored
research contracts, from both government and private sources.
Intellectual Property
Our intellectual property consists of patents, copyrights, trade secrets, know-how, and trademarks.
Protection of our intellectual property is a strategic priority for our business because of the length of
time and expense associated with bringing new products through the development process and to the
marketplace. We have a substantial patent portfolio, and we intend to file additional patent applications
as appropriate. We believe our owned and licensed patent portfolio provides us with a competitive
advantage. This portfolio permits us to maintain access to a number of key technologies. We license
our owned patent rights where appropriate. We intend to enforce our patent rights against infringers, if
necessary. The patent positions of life sciences tools companies involve complex legal and factual
questions. As a result, we cannot predict the enforceability of our patents with certainty. In addition,
we are aware of the existence from time to time of patents in certain countries which, if valid, could
impair our ability to manufacture and sell products in these countries.
We also rely upon trade secrets, know-how, trademarks, copyright protection, and licensing to
develop and maintain our competitive position. We generally require the execution of confidentiality
agreements by our employees, consultants, and other scientific advisors. These agreements provide that
all confidential information made known during the course of a relationship with us will be held in
confidence and used only for our benefit. In addition, these agreements provide that we own all
inventions generated during the course of the relationship. Our management considers Bruker, Bruker
Corporation, Bruker BioSciences, Bruker AXS, Bruker BioSpin, Bruker Daltonics, Bruker Optics and
Bruker Energy & Supercon Technologies to be our material trademarks.
Government Contracts
We are a party to various government contracts. Under some of these government contracts, the
government may receive license or similar rights to intellectual property developed under the contract.
However, under government contracts we enter we generally receive no less than non-exclusive rights
to any items or technologies we develop. Although we transact business with various government
agencies, we believe that no government contract is of such magnitude that a renegotiation of profits or
termination of the contract or subcontracts at the election of the government would have a material
adverse effect on our financial results.
17
Government Regulation
We are required to comply with federal, state, and local environmental protection regulations. We
do not expect this compliance to have a significant impact on our capital spending, earnings, or
competitive position.
Prior to introducing a product in the U.S., Bruker AXS provides notice to the Food and Drug
Administration, or FDA, in the form of a Radiation Safety Abbreviated Report, which provides
identification information and operating characteristics of the product. If the FDA finds that the report
is complete, it provides approval in the form of what is known as an accession number. Bruker AXS
may not market a product until it has received an accession number. In addition, Bruker AXS submits
an annual report to the FDA that includes the radiation safety history of all products it sells in the U.S.
Bruker AXS is required to report to the FDA incidents of accidental exposure to radiation arising from
the manufacture, testing, or use of any of its products. Bruker AXS also reports to state governments
which products it sells in their states. For sales in Germany, Bruker AXS registers each system with the
local authorities. In some countries where Bruker AXS sells systems, Bruker AXS uses the license we
obtained from the federal authorities in Germany to assist it in obtaining a license from the country in
which the sale occurs. In addition, as indicated above, we are subject to various other foreign and
domestic environmental, health, and safety laws and regulations in connection with our operations.
Apart from these areas, we are subject to the laws and regulations generally applicable to businesses in
the jurisdictions in which we operate.
Bruker AXS possesses low-level radiation materials licenses from the Nuclear Regulatory
Commission for its facility in Madison, Wisconsin; from the local radiation safety authority,
Gewerbeaufsichtsamt Karlsruhe, for its facility in Karlsruhe, Germany; and from the local radiation
safety authority, Kanagawa Prefecture, for its facility in Yokohama, Japan, as well as from various other
countries in which it sells its products. Bruker Daltonics possesses low-level radiation licenses for
facilities in Billerica, Massachusetts, and Leipzig, Germany. The U.S. Nuclear Regulatory Commission
also has regulations concerning the exposure of our employees to radiation.
Working Capital Requirements
There are no credit terms extended to customers that would have a material adverse effect on our
working capital.
To effectively operate our business, we are required to hold a significant number of systems
shipped but not yet accepted by the customer, or finished goods in-transit, and demonstration systems.
We recognize revenue from system sales upon customer acceptance. As a result, a significant
percentage of our inventory represents systems shipped but not yet accepted by the customer. Finished
goods in-transit were $85.3 million and $80.8 million at December 31, 2010 and 2009, respectively. We
also have well-equipped application and demonstration facilities and qualified application personnel
who assist customers and provide product demonstrations in specific application areas. In total, we held
$48.6 million and $41.3 million of demonstration inventory at December 31, 2010 and 2009,
respectively.
Employees
As of December 31, 2010 and 2009, we had approximately 5,400 and 4,500 full-time employees
worldwide, respectively. Of these employees, approximately 1,050 and 560 were located in the United
States as of December 31, 2010 and 2009, respectively. Our employees in the United States are not
unionized or affiliated with any labor organizations. Employees based outside the U.S. are primarily
located in Europe. Several of our international subsidiaries are parties to contracts with labor unions
and workers’ councils. We believe that we have good relationships with our employees.
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As of December 31, 2010 we had approximately 2,690 full-time and part-time employees in
production and distribution, 1,280 full-time and part-time employees in selling and marketing and 920
full-time and part-time employees in research and development. As of December 31, 2009 we had
approximately 2,280 full-time and part-time employees in production and distribution, 980 full-time and
part-time employees in selling and marketing and 790 full-time and part-time employees in research
and development.
Financial Information about Geographic Areas and Segments
Financial information about our geographic areas and segments as required by Item 1 of
Form 10-K may be found in Note 22 to our Financial Statements in this annual report on Form 10-K,
included as part of Item 8 to this report, which includes information about our revenues from external
customers, measure of profit and total assets by reportable segment.
Available Information
Our website is located at www.bruker.com. We make available free of charge through this website
our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and
amendments to those reports filed with or furnished to the Securities and Exchange Commission (SEC)
pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as
reasonably practicable after they are electronically filed with or furnished to the SEC.
ITEM 1A RISK FACTORS
The following risk factors should be considered in conjunction with the other information included in
this Annual Report on Form 10-K. This report may include forward-looking statements that involve risks
and uncertainties. In addition to those risk factors discussed elsewhere in this report, we identify the
following risk factors, which could affect our actual results and cause actual results to differ materially from
those in the forward-looking statements.
Unfavorable economic conditions in the countries in which we operate may have an adverse impact on our
business results or financial condition.
Our business and results of operations are affected by international, national and regional
economic conditions. Many of the countries in which we operate, including the United States, have
experienced and continue to experience unfavorable economic conditions. Our business or financial
results may be adversely impacted by these unfavorable economic conditions, including adverse changes
in interest rates or tax rates, volatile financial and commodity markets, contraction in the availability of
credit in the marketplace, and changes in capital spending patterns. A continuing economic downturn
in the United States and elsewhere, or reductions in the level of government funding for scientific
research, may cause our current or potential customers to delay or reduce purchases which could, in
turn, result in reductions in sales of our products, materially and adversely affecting our results of
operations and cash flows. Volatility and disruption of global financial markets could limit our
customers’ ability to obtain adequate financing to maintain operations and proceed with planned or
new capital spending initiatives, leading to a reduction in sales volume that could materially and
adversely affect our results of operations and cash flow. In addition, a decline in our customers’ ability
to pay as a result of a slow-down in the general global economy may lead to increased difficulties in
the collection of our accounts receivable, higher levels of reserves for doubtful accounts and write-offs
of accounts receivable, and higher operating costs as a percentage of revenues. We cannot predict how
current or worsening economic conditions will affect our customers and suppliers or how any negative
impact on our customers and suppliers might adversely impact our business results or financial
condition.
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If our products fail to achieve and sustain sufficient market acceptance across their broad intended range of
applications, we will not generate expected revenue.
Our business strategy depends on our ability to successfully commercialize a broad range of
products based on our technology platforms, including, magnetic resonance technology, mass
spectrometry technology, gas chromatography technology, X-ray technology, spark-OES technology,
atomic force microscopy technology, stylus and optical metrology technology, infrared and Raman
molecular spectroscopy technology and superconducting magnet technologies for use in a variety of life
science, chemistry and materials analysis applications. Some of our products have only recently been
commercially launched and have achieved only limited sales to date. The commercial success of our
products depends on our obtaining and expanding market acceptance of our products by our diverse
industrial, academic, medical research and governmental customers around the world. We may fail to
achieve or sustain substantial market acceptance for our products across the full range of our intended
applications or in one or more of our principal intended applications. Any such failure could decrease
our sales and revenue. To succeed, we must convince substantial numbers of potential customers to
invest in new systems or replace their existing techniques with X-ray, magnetic resonance, mass
spectrometry and vibrational spectroscopy techniques employing our systems. Limited funding available
for capital acquisitions by our customers, as well as our customers’ own internal purchasing approval
policies, could hinder market acceptance of our products. Our intended customers may be reluctant to
make the substantial capital investment generally needed to acquire our products or to incur the
training and other costs involved with replacing their existing systems with our products. We also may
not be able to convince our intended customers that our systems are an attractive and cost-effective
alternative to other technologies and systems for the acquisition, analysis and management of molecular
information. Because of these and other factors, our products may fail to gain or sustain market
acceptance.
Our products compete in markets that are subject to rapid technological change, and one or more of the
technologies underlying our products could be made obsolete by new technology.
The market for discovery and analysis tools is characterized by rapid technological change and
frequent new product introductions. Rapidly changing technology could make some or all of our
product lines obsolete unless we are able to continually improve our existing products and develop new
products. Because substantially all of our products are based on our technology platforms, including
magnetic resonance technology, mass spectrometry technology, gas chromatography technology, X-ray
technology, spark-OES technology, atomic force microscopy technology, stylus and optical metrology
technology, infrared and Raman molecular spectroscopy technology, we are particularly vulnerable to
any technological advances that would make these techniques obsolete as the basis for analytical
systems in any of our markets. To meet the evolving needs of our customers, we must rapidly and
continually enhance our current and planned products and services and develop and introduce new
products and services. In addition, our product lines are based on complex technologies which are
subject to rapid change as new technologies are developed and introduced in the marketplace. We may
have difficulty in keeping abreast of the rapid changes affecting each of the different markets we serve
or intend to serve. If we fail to develop and introduce products in a timely manner in response to
changing technology, market demands or the requirements of our customers, our product sales may
decline, and we could experience significant losses.
Our new technologies and product developments may not succeed.
We are currently developing a number of new key technologies and products in all of our
operating segments, including various new low temperature and high temperature superconductors,
prototype crystal growth magnets, and prototype superconducting fault current limiters at Bruker
Energy & Supercon Technologies, new magnet types at Bruker BioSpin, new mass spectrometry
20
technologies and applications at Bruker Daltonics, and new CBRNE detection products that may not
succeed technically, or may not be able to be manufactured reliably and economically. Any technology,
product or manufacturing ramp-up failure could decrease our opportunities for additional revenues and
increased margins.
If we are unable to make or complete future mergers, acquisitions or strategic alliances as a part of our
growth strategy, or integrate recent or future mergers, acquisitions or strategic alliances, our business
development may suffer.
Our strategy potentially includes expanding our technology base through selected mergers,
acquisitions and strategic alliances. For example, in 2010 we completed the acquisitions of Veeco
Instruments Inc.’s scanning probe microscopy and optical industrial metrology business, which we now
operate as the nano surfaces business, and certain assets and liabilities of Varian, Inc.’s inductively
coupled plasma mass spectrometry instruments business, laboratory gas chromatography instruments
business, and gas chromatography triple-quadrupole mass spectrometry instruments business, which we
now operate as the chemical analysis business. We may seek to continue to expand our technology base
through mergers, acquisitions and strategic alliances. If we fail to execute mergers, acquisitions and
strategic alliances, our technology base may not expand as quickly and efficiently as possible. Without
such complementary growth from selected mergers, acquisitions and strategic alliances, our ability to
keep up with the evolving needs of the markets we serve and to meet our future performance goals
could be adversely affected. However, we may not be able to find attractive candidates, or enter into
mergers, acquisitions or strategic alliances on terms that are favorable to us, or successfully integrate
the operations of companies that we acquire. In addition, we may compete with other companies for
these merger, acquisition or strategic alliance candidates, which could make such a transaction more
expensive for us. If we are able to successfully identify and complete a merger, acquisition or strategic
alliance, it could involve a number of risks, including, among others:
(cid:129) the difficulty of coordinating or consolidating geographically separate organizations and
integrating personnel with different business backgrounds and corporate cultures;
(cid:129) the difficulty of integrating previously autonomous departments in accounting and finance, sales
and marketing, distribution, and administrative functions, and expanding and integrating
information and management systems;
(cid:129) the diversion of resources and management time;
(cid:129) the potential disruption of our ongoing business;
(cid:129) the potential impairment of relationships with customers as a result of changes in management
or otherwise arising out of such transactions; and
(cid:129) the significantly increased risk of key management or key employees leaving the acquired
companies within the first 1-2 years after the acquisition, including the risk that they may
compete with us subsequently.
If we are not able to successfully integrate acquired businesses, we may not be able to realize all of
the cost savings and other benefits that we expect to result from the transactions.
Our business could be harmed if our collaborations fail to advance our product development.
Demand for our products will depend in part upon the extent to which our collaborations with
pharmaceutical, biotechnology and proteomics companies are successful in developing, or helping us to
develop, new products and new applications for our existing products. In addition, we collaborate with
academic institutions and government research laboratories on product development. We have limited
or no control over the resources that any collaborator may devote to our products. Any of our present
21
or future collaborators may not perform their obligations as expected. If we fail to enter into or
maintain appropriate collaboration agreements, or if any of these events occur, we may not be able to
develop some of our new products, which could materially impede our ability to generate revenue or
profits.
We face substantial competition.
We face substantial competition and we expect that competition in all of our markets will increase
further. Currently, our principal competition comes from established companies providing products
using existing technologies, including mass spectrometry, X-ray technology, magnetic resonance
technologies, optical emission spectrometry technology, vibrational spectroscopy, CBRNE detection
technologies, TD-NMR technologies and other technologies, which perform many of the same
functions for which we market our products. Other companies also may choose to enter our fields in
the future. Our competitors may develop or market products that are more effective or commercially
attractive than our current or future products or that may render our products obsolete. Competition
has in the past and is likely in the future to subject our products to pricing pressure. Many of our
competitors have more experience in the market and substantially greater financial, operational,
marketing and technical resources than we do which could give them a competitive edge in areas such
as research and development, production, marketing and distribution. Our ability to compete
successfully will depend, in part, on our ability to develop proprietary products that reach the market in
a timely manner and are technologically superior to, less expensive than, or more cost-effective than,
other currently marketed products.
If we are unable to recover significant development costs of one or more of our products or product lines, our
business, results of operations and financial condition may suffer.
We offer and plan to continue to offer a broad product line and incur and expect to continue to
incur substantial expenses for the development of new products and enhanced versions of our existing
products. Our business model calls for us to derive a significant portion of our revenues each year from
products that did not exist in the previous two years. However, we may experience difficulties which
may delay or prevent the successful development, introduction and marketing of new products or
product enhancements. The speed of technological change in the markets we serve may prevent us
from successfully marketing some or all of our products for the length of time required to recover their
often significant development costs. If we fail to recover the development costs of one or more
products or product lines, our business, results of operations and financial condition could be harmed.
If we lose our strategic partners, our marketing efforts could be impaired.
A substantial portion of our sales of selected products consists of sales to third parties who
incorporate our products in their systems. These third parties are responsible for the marketing and
sales of their systems. We have little or no control over their marketing and sales activities or how they
use their resources. Our present or future strategic partners may or may not purchase sufficient
quantities of products from us or perform appropriate marketing and sales activities. In addition, if we
are unable to maintain our relationships with strategic partners, our business may suffer. Failures by
our present or future strategic partners, or our inability to maintain or enter into new arrangements
with strategic partners for product distribution, could materially impede the growth of our business and
our ability to generate sufficient revenue and profits.
If general health care spending patterns decline, our ability to generate revenue may suffer.
We are dependent, both directly and indirectly, upon general health care spending patterns,
particularly in the research and development budgets of the pharmaceutical and biotechnology
industries, as well as upon the financial condition and funding priorities of various governments and
22
government agencies. Since our inception, both we and our academic collaborators and customers have
benefited from various governmental contracts and research grants. Whether we or our academic
collaborators will continue to be able to attract these grants depends not only on the quality of our
products, but also on general spending patterns of public institutions.
Any reduction in the capital resources or government funding of our customers could reduce our sales and
impede our ability to generate revenue.
A significant portion of our sales are capital purchases by our customers. The spending policies of
our customers could have a significant effect on the demand for our products. These policies are based
on a wide variety of factors, including the resources available to make purchases, the spending priorities
among various types of equipment, policies regarding spending during recessionary periods and changes
in the political climate. Any changes in capital spending or changes in the capital budgets of our
customers could significantly reduce demand for our products. The capital resources of our life science
and other corporate customers may be limited by the availability of equity or debt financing. Any
significant decline in research and development expenditures by our life science customers could
significantly decrease our sales. In addition, we make a substantial portion of our sales to non-profit
and government entities which are dependent on government support for scientific research. Any
decline in this support could decrease the ability of these customers to purchase our products.
Our operations are dependent upon a limited number of suppliers and contract manufacturers.
We currently purchase components used in our products from a limited number of outside
suppliers. Our reliance on a limited number of suppliers could result in time delays associated with
redesigning a product due to an inability to obtain an adequate supply of required components and
reduced control over pricing, quality and timely delivery. Any of these factors could adversely affect our
revenues and profitability. For example, we currently purchase key components used in our mass
spectrometry, vibrational spectroscopy and X-ray systems from certain suppliers. In particular, our
X-ray microanalysis business, which manufactures and sells accessories for electron microscopes, is
partially dependent on cooperation from larger manufacturers of electron microscopes. Additionally,
our Bruker-Elemental subsidiary purchases certain optical detectors from a single supplier,
PerkinElmer, Inc., the sole supplier of these detector components. Bruker Daltonics purchases
detectors and power supplies from sole or limited source suppliers. Bruker Optics purchases its focal
plane array detectors from a single supplier, Lockheed Martin Corporation. Similarly, Bruker BioSpin
obtains various components from sole or limited source suppliers and Bruker Energy & Supercon
Technologies obtains various raw materials and uses key production equipment from sole or limited
source suppliers or subcontractors. There are limited, if any, available alternatives to these suppliers.
The existence of shortages of these components or the failure of delivery with regard to these
components could have a material adverse effect upon our revenues and margins. In addition, price
increases from these suppliers or subcontractors could have a material adverse effect upon our gross
margins.
Because of the scarcity of some components, we may be unable to obtain an adequate supply of
components, or we may be required to pay higher prices or to purchase components of lesser quality.
Any delay or interruption in the supply of these or other components could impair our ability to
manufacture and deliver our products, harm our reputation and cause a reduction in our revenues. In
addition, any increase in the cost of the components that we use in our products could make our
products less competitive and decrease our gross margins. We may not be able to obtain sufficient
quantities of required components on the same or substantially the same terms. Additionally,
consolidations among our suppliers could result in other sole source suppliers for us in the future.
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Increasing prices of metal raw materials could adversely affect the gross margins and profitability of our
Bruker BioSpin subsidiary, and of our Bruker Energy & Supercon Technologies business.
The last few years have seen sharp increases in the prices for various raw materials, in part due to
high demand from developing countries. Both Bruker BioSpin and Bruker Energy & Supercon
Technologies rely on some of these materials for the production of their products. In particular, for its
superconducting magnet production, both for the horizontal and vertical magnet series, Bruker BioSpin
relies on the availability of copper, steel and the metallic raw materials for traditional low-temperature
superconducting wires. Similarly, Bruker Energy & Supercon Technologies relies on the availability of
niobium titanium for its production of low-temperature superconducting materials and devices. Higher
prices for these commodities will increase the production cost of superconducting wires and
superconducting magnets and may adversely affect gross margins.
The prices of copper and certain other raw materials used for superconductors have increased
significantly over the last decade. Since copper is a main constituent of low temperature
superconductors, this may affect the price of superconducting wire. This type of increase would have an
immediate effect on the production costs of superconducting magnets and may negatively affect the
profit margins for those products. In addition, an increase in raw material cost affects the production
cost of the superconducting wire produced by Bruker Energy & Supercon Technologies and of
superconducting wire used by Bruker BioSpin.
The demand for NMR, EPR, MRI and FTMS products may be adversely impacted by increases in the price of
liquid helium.
The demand for helium has risen sharply over the last decade. The superconducting magnets used
in magnetic resonance rely on liquid helium for their operation. The high global demand, in
combination with a shortage in supply, has caused prices for liquid helium to rise significantly. This has
an adverse effect on the operating costs for magnetic resonance equipment, and may dampen demand
for NMR, EPR, MRI and FTMS magnets in the future.
Our manufacture and sale of products could lead to product liability claims for which we could have
substantial liability.
The manufacture and sale of our products exposes us to product liability claims if any of our
products cause injury or are found otherwise unsuitable during manufacturing, marketing, sale or
customer use. In particular, if one of our CBRNE detection products malfunctions, this could lead to
civilian or military casualties in a time of unrest, exposing us to increased potential for high-profile
liability. If our CBRNE detection products malfunction by generating a false-positive to a potential
threat, we could be exposed to liabilities associated with actions taken that otherwise would not have
been required. Additionally, the nuclear magnetic resonance, research magnetic resonance imaging,
Fourier transform mass spectrometry and certain electron paramagnetic resonance magnets of Bruker
BioSpin utilize high magnet fields and cryogenics to operate at approximately 4 Kelvin, the temperature
of liquid helium. There is an inherent risk of potential product liability due to the existence of these
high magnetic fields, associated stray fields outside the magnet, and the handling of the cryogens
associated with superconducting magnets. In addition, the Bruker Daltonics MALDI Biotyper has an
IVD-CE mark and is used for the identification of microorganisms. Misidentification or a false-negative
of certain bacteria, yeasts or fungi could lead to inappropriate treatment for patients, and could expose
Bruker Daltonics to product liability.
A successful product liability claim brought against us in excess of, or outside the coverage of, our
insurance coverage could have a material adverse effect on our business, financial condition and results
of operations. We may not be able to maintain product liability insurance on acceptable terms, if at all,
and insurance may not provide adequate coverage against potential liabilities.
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Responding to claims relating to improper handling, storage or disposal of hazardous chemicals and
radioactive and biological materials which we use could be time consuming and costly.
We use controlled hazardous and radioactive materials in our business and generate wastes that
are regulated as hazardous wastes under United States federal, and Massachusetts, California,
Washington and Wisconsin state, environmental and atomic energy regulatory laws and under
equivalent provisions of law in those jurisdictions in which our research and manufacturing facilities are
located. Our use of these substances and materials is subject to stringent, and periodically changing,
regulation that can impose costly compliance obligations on us and have the potential to adversely
affect our manufacturing activities. The risk of accidental contamination or injury from these materials
cannot be completely eliminated. If an accident with these substances occurs, we could be held liable
for any damages that result, in addition to incurring clean-up costs and liabilities, which can be
substantial. Additionally, an accident could damage our research and manufacturing facilities resulting
in delays and increased costs.
In addition to the risks applicable to our life science and materials analysis products, our CBRNE detection
products are subject to a number of additional risks, including lengthy product development and contract
negotiation periods and certain risks inherent in long-term government contracts.
Our CBRNE detection products are subject to many of the same risks associated with our life
science products, including vulnerability to rapid technological change, dependence on mass
spectrometry and other technologies and substantial competition. In addition, our CBRNE detection
products and certain FT-IR products are generally sold to government agencies under long-term
contracts. These contracts generally involve lengthy pre-contract negotiations and product development.
We may be required to devote substantial working capital and other resources prior to obtaining
product orders. As a result, we may incur substantial costs before we recognize revenue from these
products. Moreover, in return for larger, longer-term contracts, our customers for these products often
demand more stringent acceptance criteria. These criteria may also cause delays in our ability to
recognize revenue from sales of these products. Furthermore, we may not be able to accurately predict
in advance our costs to fulfill our obligations under these long-term contracts. If we fail to accurately
predict our costs, due to inflation or other factors, we could incur significant losses. Also, the presence
or absence of such contracts may cause substantial variation in our results of operations between fiscal
periods and, as a result, our results of operations for any given fiscal period may not be predictive of
our results for subsequent fiscal periods. The resulting uncertainty may have an adverse impact on our
stock price.
We are subject to existing and potential additional regulation and government inquiry, which can impose
burdens on our operations and narrow the markets for our products.
We are subject, both directly and indirectly, to the adverse impact of existing and potential future
government regulation of our operations and markets. For example, exportation of our products,
particularly our CBRNE detection products, is subject to strict regulatory control in a number of
jurisdictions. The failure to satisfy export control criteria or obtain necessary clearances could delay or
prevent shipment of products, which could adversely affect our revenues and profitability. Moreover,
the life sciences industry, which is the market for our principal products, has historically been heavily
regulated. There are, for example, laws in several jurisdictions restricting research in genetic
engineering, which can operate to narrow our markets. Given the evolving nature of this industry,
legislative bodies or regulatory authorities may adopt additional regulation that adversely affects our
market opportunities. Additionally, if ethical and other concerns surrounding the use of genetic
information, gene therapy or genetically modified organisms become widespread, we may have less
demand for our products. Our business is also directly affected by a wide variety of government
regulations applicable to business enterprises generally and to companies operating in the life sciences
25
industry in particular. We note that, as a result of developing and selling products which are the subject
of such regulation, we have been, are, and expect to be in the future, subject to inquiries from the
government agencies which enforce these regulations, including the U.S. Department of State, the U.S.
Department of Commerce, the U.S. Food and Drug Administration, the U.S. Internal Revenue Service,
the U.S. Department of Homeland Security, the U.S. Department of Justice, the Securities and
Exchange Commission, the Federal Trade Commission, the U.S. Customs and Border Protection and
the U.S. Department of Defense, among others, as well as from state or foreign governments and their
departments and agencies. As a result, from time to time, the attention of our management and other
resources may be diverted to attend to these inquiries. In addition, failure to comply with these
regulations or obtain or maintain necessary permits and licenses could result in a variety of fines or
other censures or an interruption in our business operations which may have a negative impact on our
ability to generate revenues.
Our success depends on our ability to operate without infringing or misappropriating the proprietary rights of
others.
Our commercial success depends on avoiding the infringement of other parties’ patents and
proprietary rights as well as avoiding the breach of any licenses relating to our technologies and
products. Given that there may be patents of which we are unaware, particularly in the U.S. where
patent applications are confidential, avoidance of patent infringement may be difficult. Various third-
parties hold patents which may relate to our technology, and we may be found in the future to infringe
these or other patents or proprietary rights of third parties, either with products we are currently
marketing or developing or with new products which we may develop in the future. If a third party
holding rights under a patent successfully asserts an infringement claim with respect to any of our
current or future products, we may be prevented from manufacturing or marketing our infringing
product in the country or countries covered by the patent we infringe, unless we can obtain a license
from the patent holder. We may not be able to obtain a license on commercially reasonable terms, if at
all, especially if the patent holder is a competitor. In addition, even if we can obtain the license, it may
be non-exclusive, which will permit others to practice the same technology licensed to us. We also may
be required to pay substantial damages to the patent holder in the event of an infringement. Under
some circumstances in the U.S., these damages could include damages equal to triple the actual
damages the patent holder incurs. If we have supplied infringing products to third parties for marketing
by them or licensed third parties to manufacture, use or market infringing products, we may be
obligated to indemnify these third parties for any damages they may be required to pay to the patent
holder and for any losses the third parties may sustain themselves as the result of lost sales or license
payments they are required to make to the patent holder. Any successful infringement action brought
against us may also adversely affect marketing of the infringing product in other markets not covered
by the infringement action, as well as our marketing of other products based on similar technology.
Furthermore, we will suffer adverse consequences from a successful infringement action against us even
if the action is subsequently reversed on appeal, nullified through another action or resolved by
settlement with the patent holder. The damages or other remedies awarded, if any, may be significant.
As a result, any successful infringement action against us may harm our business.
If we are unable to effectively protect our intellectual property, third parties may use our technology, which
would impair our ability to compete in our markets.
Our continued success will depend in significant part on our ability to obtain and maintain
meaningful patent protection for our products throughout the world. We rely on patents to protect a
significant part of our intellectual property and to enhance our competitive position. However, our
presently pending or future patent applications may not issue as patents, and any patent previously
issued to us may be challenged, invalidated, held unenforceable or circumvented. Furthermore, the
claims in patents which have been issued, or which may be issued to us in the future, may not be
26
sufficiently broad to prevent third parties from producing competing products similar to our products.
In addition, the laws of various foreign countries in which we compete may not protect our intellectual
property to the same extent as do the laws of the U.S. Failure to obtain adequate patent protection for
our proprietary technology could materially impair our ability to be commercially competitive.
In addition to patent protection, we also rely on the protection of trade secrets, know-how and
confidential and proprietary information. To maintain the confidentiality of trade secrets and
proprietary information, we generally seek to enter into confidentiality agreements with our employees,
consultants and strategic partners upon the commencement of a relationship with us. However, we may
not obtain these agreements in all circumstances. In the event of unauthorized use or disclosure of this
information, these agreements, even if obtained, may not provide meaningful protection for our trade
secrets or other confidential information. In addition, adequate remedies may not exist in the event of
unauthorized use or disclosure of this information. The loss or exposure of our trade secrets and other
proprietary information would impair our competitive advantages and could have a material adverse
affect on our operating results, financial condition and future growth prospects. Furthermore, others
may have, or may in the future independently develop, substantially similar or superior know-how and
technology.
We may be involved in lawsuits to protect or enforce our patents that are brought by us which could be
expensive and time consuming and, if determined adversely, could adversely affect our patent position.
In order to protect or enforce our patent rights, we may initiate patent litigation against third
parties, and we may be similarly sued by others. We may also become subject to interference
proceedings conducted in the patent and trademark offices of various countries to determine the
priority of inventions. The defense and prosecution, if necessary, of intellectual property suits,
interference proceedings and related legal and administrative proceedings is costly and diverts our
technical and management personnel from their normal responsibilities. We may not prevail in any of
these suits. An adverse determination of any litigation or defense proceedings could put our patents at
risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not
issuing.
Furthermore, because of the substantial amount of discovery required in connection with
intellectual property litigation, there is a risk that some of our confidential information could be
compromised by disclosure during this type of litigation. In addition, during the course of this kind of
litigation, there could be public announcements of the results of hearings, motions or other interim
proceedings or developments in the litigation. If securities analysts or investors perceive these results to
be negative, it could have a substantial negative effect on the trading price of our common stock.
We may not be able to maintain our sales and service staff to meet demand for our products and services.
Our future revenue and profitability will depend in part on our ability to maintain our team of
marketing and service personnel. Because our products are technical in nature, we believe that our
marketing, sales and support staff must have scientific or technical expertise and experience.
Competition for employees with these skills is intense. We may not be able to continue to attract and
retain sufficient qualified sales and service people, and we may not be able to maintain and develop
efficient and effective sales, marketing and support department. If we fail to continue to attract or
retain qualified people, then our business could suffer.
We plan significant future growth, and there is a risk that we will not be able to manage this growth.
Our success will depend on the expansion of our operations. Effective growth management will
place increased demands on our management, operational and financial resources. To manage our
future growth, we must expand our facilities, augment our operational, financial and management
27
systems, and hire and train additional qualified personnel. Our failure to manage this growth effectively
could impair our ability to generate revenue or could cause our expenses to increase more rapidly than
revenue, resulting in operating losses.
Armed hostilities could constrain our ability to conduct business internationally and could also disrupt our
U.S. operations.
The current world unrest, or the responses of the United States, may lead to further acts of
terrorism and civil disturbances in the United States or elsewhere, which may further contribute to the
economic instability in the United States. These attacks or armed conflicts may affect our physical
facilities or those of our suppliers or customers and could have an impact on our domestic and
international sales, our supply chain, our production capability, our insurance premiums or the ability
to purchase insurance and our ability to deliver our products to our customers. The consequences of
these risks are unpredictable, and their long-term effect upon us is uncertain.
We derive a significant portion of our revenue from international sales and are subject to the risks of doing
business in foreign countries.
International sales account and are expected to continue to account for a significant portion of our
total revenues. Our international operations are, and will continue to be, subject to a variety of risks
associated with conducting business internationally, many of which are beyond our control. These risks,
which may adversely affect our ability to achieve and maintain profitability and our ability to sell our
products internationally, include:
(cid:129) changes in foreign currency exchange rates;
(cid:129) changes in regulatory requirements;
(cid:129) legislation and regulation, including tariffs, relating to the import or export of high technology
products;
(cid:129) the imposition of government controls;
(cid:129) political and economic instability, including international hostilities, acts of terrorism and
governmental restrictions, inflation, trade relationships and military and political alliances;
(cid:129) costs and risks of deploying systems in foreign countries;
(cid:129) compliance with export laws and controls in multiple jurisdictions;
(cid:129) limited intellectual property rights; and
(cid:129) the burden of complying with a wide variety of complex foreign laws and treaties, including
unfavorable labor regulations, specifically those applicable to our European operations, as well
as U.S. laws affecting the activities of U.S. companies abroad.
While the impact of these factors is difficult to predict, any one or more of these factors could
adversely affect our operations in the future.
We may lose money when we exchange foreign currency received from international sales into U.S. dollars.
A significant portion of our business is conducted in currencies other than the U.S. dollar, which is
our reporting currency. As a result, currency fluctuations among the U.S. dollar and the currencies in
which we do business have caused and will continue to cause foreign currency transaction gains and
losses. In addition, currency fluctuations could cause the price of our products to be more or less
competitive than our principal competitors’ products. Currency fluctuations will increase or decrease
our cost structure relative to those of our competitors which could lessen the demand for our products
28
and affect our competitive position. We cannot predict the effects of exchange rate fluctuations upon
our future operating results because of the number of currencies involved, the variability of currency
exposures and the potential volatility of currency exchange rates. From time to time we enter into
certain hedging transactions and/or option and foreign currency exchange contracts which are intended
to offset some of the market risk associated with our sales denominated in foreign currencies. We
cannot predict the effectiveness of these transactions or their impact upon our future operating results,
and from time to time they may negatively affect our quarterly earnings.
Our reported financial results may be adversely affected by fluctuations in currency exchange rates.
Our exposure to currency exchange rate fluctuations results primarily from the currency translation
exposure associated with the preparation of our consolidated financial statements and from the
exposure associated with transactions of our subsidiaries that are denominated in a currency other than
the respective subsidiary’s functional currency. While our financial results are reported in U.S. Dollars,
the financial statements of many of our subsidiaries outside the United States are prepared using the
local currency as the functional currency. During consolidation, these results are translated into U.S.
Dollars by applying appropriate exchange rates. As a result, fluctuations in the exchange rate of the
U.S. Dollar relative to the local currencies in which our foreign subsidiaries report therefore could
cause significant fluctuations in our reported results. Moreover, as exchange rates vary, revenue and
other operating results may differ materially from our expectations.
Additionally, to the extent monetary assets and liabilities, including debt, are held in a different
currency than the reporting subsidiary’s functional currency, fluctuations in currency exchange rates
may have a significant impact on our reported financial results, and may lead to increased earnings
volatility. We may record significant gains or losses related to both the translation of assets and
liabilities held by our subsidiaries into local currencies and the remeasurement of inter-company
receivables and loan balances.
Our debt may adversely affect our cash flow and may restrict our investment opportunities or limit our
activities.
Our ability to satisfy our obligations depends on our future operating performance and on
economic, financial, competitive and other factors beyond our control. Our business may not generate
sufficient cash flow to meet these obligations. If we are unable to service our debt or obtain additional
financing, we may be forced to delay strategic acquisitions, capital expenditures or research and
development expenditures. We may not be able to obtain additional financing on terms acceptable to us
or at all.
Additionally, the agreements governing our debt require that we maintain certain financial ratios
related to maximum leverage and minimum interest coverage, and contain affirmative and negative
covenants that restrict our activities by, among other limitations, limiting our ability to make certain
payments; incur additional debt; incur certain liens; make certain investments, including derivative
agreements; merge, consolidate, sell or transfer all or substantially all of our assets; and enter into
certain transactions with affiliates. Our ability to comply with these financial restrictions and covenants
is dependent on our future performance, which is subject to prevailing economic conditions and other
factors, including factors that are beyond our control such as foreign exchange rates and interest rates.
Our failure to comply with any of these restrictions or covenants may result in an event of default
under the applicable debt instrument, which could permit acceleration of the debt under that facility
and require us to prepay that debt before its scheduled due date.
29
Goodwill and other intangible assets are subject to impairment.
As a result of our acquisitions we have recorded goodwill and other intangible assets which must
be periodically evaluated for potential impairment. We assess the realizability of the reported goodwill
and other intangible assets annually, as well as whenever events or changes in circumstances indicate
that the assets may be impaired. These events or circumstances generally include operating losses or a
significant decline in the earnings associated with the reporting segment these acquisitions are reported
within. A decline in our stock price and market capitalization may also cause us to consider whether
goodwill and other intangible assets may require an impairment assessment. Our ability to realize the
value of the goodwill will depend on the future cash flows of the reporting segment in addition to how
well we integrate the businesses acquired.
Various international tax risks could adversely affect our earnings and cash flows.
We are subject to international tax risks. Distributions of earnings and other payments received
from our subsidiaries may be subject to withholding taxes imposed by the countries where they are
operating or are formed. If these foreign countries do not have income tax treaties with the United
States or the countries where our subsidiaries are incorporated, we could be subject to high rates of
withholding taxes on these distributions and payments. We could also be subject to being taxed twice
on income related to operations in these non-treaty countries. Because we are unable to reduce the
taxable income of one operating company with losses incurred by another operating company located in
another country, we may have a higher effective income tax rate than that of other companies in our
industry. The amount of the credit that we may claim against our U.S. federal income tax for foreign
income taxes is subject to many limitations which may significantly restrict our ability to claim a credit
for all of the foreign taxes we pay.
We currently have reserves established on the statutory books of certain international locations.
Within our audited consolidated financial statements, which have been prepared under U.S. generally
accepted accounting principles, or GAAP, the potential tax liabilities associated with these reserves have
been recorded as long-term deferred tax liabilities. If these reserves are challenged, and we are unable
to successfully defend the need for such reserves, these liabilities could become current resulting in a
negative impact to our anticipated cash flows from operations over the next twelve months.
The unpredictability and fluctuation of our quarterly results may adversely affect the trading price of our
common stock.
Our revenues and results of operations have in the past and may in the future vary from quarter
to quarter due to a number of factors, many of which are outside of our control and any of which may
cause our stock price to fluctuate. The primary factors that may affect us include the following:
(cid:129) the timing of sales of our products and services;
(cid:129) the timing of recognizing revenue and deferred revenue under U.S. GAAP;
(cid:129) changes in our pricing policies or the pricing policies of our competitors;
(cid:129) increases in sales and marketing, product development or administration expenses;
(cid:129) the mix of services provided by us and third-party contractors;
(cid:129) our ability to attain and maintain quality levels for our products;
(cid:129) costs related to acquisitions of technology or businesses; and
(cid:129) the effectiveness of transactions entered into to hedge the risks associated with foreign currency
and interest rate fluctuations.
30
Historically, we have experienced a decrease in revenue in the first, second and third quarters of
each fiscal year relative to the prior fourth quarter, which we believe is due to our customers’
budgeting cycles. You should not rely on quarter-to-quarter comparisons of our results of operations as
an indication of our future performance. It is likely that in some future quarters, our results of
operations may be below the expectations of public market analysts and investors. In this event, the
price of our common stock may fall.
Our previously announced proposed initial public offering of Bruker Energy & Supercon Technologies, Inc.
(‘‘BEST’’) common stock may not be completed and, if it is completed, may lead to additional volatility in our
stock price.
We have announced that we intend to sell a minority ownership position in our wholly-owned
subsidiary, BEST, via an initial public offering, or IPO. BEST has filed an initial registration statement
to register such portion of its shares, as well as shares that we may include in the IPO as a selling
stockholder. We may not complete the IPO, in which event we will have incurred significant expenses,
which we will be unable to recover, and for which we will not receive any benefit. Additionally, our
strategic objectives for the IPO, including improving visibility into BEST’s performance and growth
relative to the market and strengthening BEST’s access to financing for its growth initiatives, are based
on the completion of the IPO. If we do not complete the IPO, we will need to pursue alternative
means of accomplishing these strategic objectives.
If the IPO is completed, BEST would be a new public company in which we are the majority
shareholder. We are unable to predict what the market price of our common stock would be after the
IPO. We cannot assure you that the IPO, if completed, will produce any increase for our shareholders
in the market value of their holdings in our company. In addition, the market price of our common
stock could be volatile for several months after the IPO and may continue to be more volatile than our
common stock would have been if a transaction had not occurred.
Existing stockholders have significant influence over us.
As of February 22, 2011, our majority stockholders, including our Chairman, President and Chief
Executive Officer Frank Laukien, and Director and Chief Operating Officer of Bruker BioSpin Joerg
Laukien and other Laukien family members owned, in the aggregate, approximately 50% of our
outstanding common stock. As a result, these stockholders will be able to exercise substantial influence
over all matters requiring stockholder approval, including the election of directors and approval of
significant corporate transactions. This could have the effect of delaying or preventing a change in
control of our company and will make some transactions difficult or impossible to accomplish without
the support of these stockholders.
Other companies may have difficulty acquiring us, even if doing so would benefit our stockholders, due to
provisions under our corporate charter and bylaws, as well as Delaware law.
Provisions in our certificate of incorporation, as amended, and our bylaws, as well as Delaware law
could make it more difficult for other companies to acquire us, even if doing so would benefit our
stockholders. Our certificate of incorporation, as amended, and bylaws contain the following provisions,
among others, which may inhibit an acquisition of our company by a third party:
(cid:129) staggered board of directors, where stockholders elect only a minority of the board each year;
(cid:129) advance notification procedures for matters to be brought before stockholder meetings;
(cid:129) a limitation on who may call stockholder meetings; and
(cid:129) the ability of our board of directors to issue up to 5,000,000 shares of preferred stock without a
stockholder vote.
31
ITEM 1B UNRESOLVED STAFF COMMENTS
We have not received any written comments from the staff of the Securities and Exchange
Commission regarding our periodic or current reports that (1) we believe are material, (2) were issued
not less than 180 days before the end of our 2010 fiscal year end, and (3) remain unresolved.
ITEM 2 PROPERTIES
We believe that our existing principal facilities are well maintained and in good operating
condition and that they are adequate for our foreseeable business needs.
In addition to the principal facilities noted below we lease additional facilities for sales,
applications and service support in various countries throughout the world including Australia, Austria,
Belgium, Brazil, China, Czech Republic, Estonia, France, Germany, Hong Kong, India, Israel, Italy,
Japan, Malaysia, Mexico, Netherlands, Poland, Russia, Singapore, South Africa, South Korea, Spain,
Sweden, Switzerland, Taiwan, Ukraine, the United Kingdom and the United States. If we should
require additional or alternative facilities, we believe that such facilities can be obtained on short notice
at competitive rates.
The location and general character of our principal properties by operating segment as of
December 31, 2010 are as follows:
Scientific Instruments Segment:
Bruker BioSpin’s six principal facilities are located in Rheinstetten, Ettlingen and Karlsruhe,
Germany; Faellanden, Switzerland; Wissembourg, France; and Billerica, Massachusetts, U.S.A. These
facilities, which incorporate manufacturing, research and development, application and demonstration,
marketing and sales and administration functions for the businesses of Bruker BioSpin, include:
(cid:129) an owned 475,000 square foot facility in Rheinstetten, Germany;
(cid:129) an owned 360,000 square foot facility in Ettlingen, Germany;
(cid:129) an owned 345,000 square foot facility in Karlsruhe, Germany;
(cid:129) an owned 260,000 square foot facility and a leased 55,000 square foot facility in Faellanden,
Switzerland;
(cid:129) an owned 120,000 square foot facility, a leased 65,000 square foot facility and a leased 18,000
square foot facility in Wissembourg, France; and
(cid:129) a leased 50,000 square foot facility in Billerica, Massachusetts, U.S.A.
Bruker Daltonics’ five principal facilities are located in Bremen and Leipzig, Germany; Goes,
Netherlands; Billerica, Massachusetts, U.S.A.; and Fremont, California, U.S.A. These facilities, which
incorporate manufacturing, research and development, application and demonstration, marketing and
sales and administration functions for the mass spectrometry and CBRNE businesses of Bruker
Daltonics, include:
(cid:129) an owned 180,000 square foot facility in Bremen, Germany;
(cid:129) an owned 90,000 square foot facility in Billerica, Massachusetts, U.S.A.;
(cid:129) an owned 60,000 square foot facility in Leipzig, Germany;
(cid:129) a leased 22,500 square foot facility in Fremont, California, U.S.A.; and
(cid:129) a leased 22,000 square foot facility in Goes, Netherlands.
32
Bruker MAT’s four principal facilities are located in Karlsruhe and Kalkar, Germany; Madison,
Wisconsin, U.S.A.; and Santa Barbara, California, U.S.A. These facilities, which incorporate
manufacturing, research and development, application and demonstration, marketing and sales and
administration functions for the businesses of Bruker MAT, include:
(cid:129) an owned 100,000 square foot facility in Santa Barbara, California, U.S.A.;
(cid:129) an owned 97,000 square foot facility in Karlsruhe, Germany;
(cid:129) an owned 43,000 square foot facility in Madison, Wisconsin, U.S.A.; and
(cid:129) an owned 25,000 square foot facility in Kalkar, Germany
Bruker Optics’ three principal facilities are located in Ettlingen, Germany; Billerica, Massachusetts,
U.S.A.; and The Woodlands, Texas, U.S.A. These facilities, which incorporate manufacturing, research
and development, application and demonstration, marketing and sales and administration functions for
the business of Bruker Optics, include:
(cid:129) an owned 165,000 square foot facility in Ettlingen, Germany;
(cid:129) a leased 25,000 square foot facility in Billerica, Massachusetts, U.S.A.; and
(cid:129) a leased 22,700 square foot facility in The Woodlands, Texas, U.S.A.
Energy & Supercon Technologies:
Bruker Energy & Supercon Technologies’ four principal facilities are located in Hanau, Bergisch
Gladbach and Alzenau, Germany and Perth, Scotland. These facilities, which incorporate
manufacturing, research and development, application and demonstration, marketing and sales and
administration functions for the business of Bruker Energy & Supercon Technologies, include:
(cid:129) an owned 47,000 square foot facility in Perth, Scotland;
(cid:129) a leased 113,000 square foot facility in Hanau, Germany;
(cid:129) a leased 66,000 square foot facility in Bergisch Gladbach, Germany; and
(cid:129) a leased 24,000 square foot facility in Alzenau, Germany.
ITEM 3 LEGAL PROCEEDINGS
Our subsidiary Bruker Daltonics was formerly party to an agreement with Isis
Pharmaceuticals, Inc., or Isis, regarding the manufacture and sale by Isis, through its wholly owned
subsidiary Ibis BioSciences, Inc., or Ibis, of certain systems incorporating Bruker Daltonics mass
spectrometers. A dispute arose in January 2008 regarding the performance of each party under the
agreement. In May 2008, Bruker Daltonics filed suit against Isis and Ibis, and Isis and Ibis thereafter
asserted breach of contract counterclaims against Bruker Daltonics. In January 2011, the parties
reached an agreement in principle to settle all claims and counterclaims asserted in the proceedings.
The Company does not expect to record any income or charges in connection with the settlement.
On September 28, 2008, Roenalytic GmbH, previously known as Roentgenanalytik
Appartebau GmbH (‘‘RAA’’), filed a civil proceeding with the regional court of Frankfurt am Main in
Germany against a Bruker AXS subsidiary and one employee in connection with alleged improper use
of certain intellectual property of RAA. Following a series of hearings, in December 2009 the court
appointed an independent software expert to investigate the copyright infringement allegations made by
RAA and provide an opinion to the court relating to the alleged infringement. RAA filed for
insolvency in August 2010 and a receiver was appointed by the district court in Weisbaden, Germany.
The charges against the Bruker AXS subsidiary were adjourned by the regional court pending further
33
actions by the court-appointed receiver. The receiver has elected to proceed with the litigation and in
January 2011 the regional court entered a ruling permitting the independent software expert to
continue with the investigation of the alleged infringement. The Bruker AXS subsidiary continues to
deny all allegations made by RAA and is cooperating in the investigation.
On January 21, 2009, The Research Foundation of the State University of New York (‘‘SUNY’’)
filed an action in federal district court in the Northern District of New York against the Company,
Bruker BioSpin GmbH, Bruker BioSpin Corporation and an unrelated third party alleging infringement
by the Bruker entities and the unrelated third party of a U.S. patent related to nuclear magnetic
resonance held by SUNY. In October 2010, the Company reached an agreement in principle to settle
all claims and counterclaims involving the Company and its affiliates asserted in the SUNY matter, with
neither party admitting liability. The matter was resolved in the fourth quarter of 2010.
ITEM 4
[RESERVED]
34
PART II
ITEM 5 MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Prices
Our common stock is traded on the Nasdaq Global Select Market under the symbol ‘‘BRKR.’’ The
following table sets forth, for the period indicated, the high and low sales prices for our common stock
as reported on the Nasdaq Global Select Market:
First Quarter 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First Quarter 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
High
Low
$14.98
15.85
14.47
17.65
$ 6.50
9.48
11.12
12.49
$12.08
11.73
10.52
13.93
$ 3.25
5.45
7.90
10.04
As of February 22, 2011, there were approximately 85 holders of record of our common stock. This
number does not include individual beneficial owners of shares held in nominee name or within
clearinghouse positions of brokerage firms and banks. The official close price per share of our common
stock on February 22, 2011, as reported by the Nasdaq Global Select Market, was $18.65.
Dividends
We have never declared or paid cash dividends on our capital stock. We currently anticipate that
we will retain all available funds for use in our business and do not anticipate paying any cash
dividends in the foreseeable future. The terms of certain debt facilities restrict our ability to pay cash
dividends.
Recent Sales of Unregistered Securities
There were no unregistered sales of equity securities during the fourth quarter of fiscal 2010.
Issuer Purchases of Equity Securities
There were no issuer purchases made by or on behalf of the Company or any ‘‘affiliated
purchaser,’’ as defined in Rule 10b-18(a)(3) under the Exchange Act during the fourth quarter of fiscal
2010.
35
Stock Price Performance Graph
The graph below shows the cumulative stockholder return, assuming the investment of $100 (and
the reinvestment of any dividends thereafter) for the period beginning on December 31, 2005 and
ending on December 31, 2010, for our common stock, stocks traded on Nasdaq and a peer group
consisting of companies traded on Nasdaq with Standard Industry Classification, or SIC, codes from
3800 to 3899, representing measuring instruments, photo, medical and optical goods and timepieces.
The stock price performance of Bruker Corporation shown in the following graph is not indicative of
future stock price performance.
400.00
350.00
300.00
250.00
200.00
150.00
100.00
50.00
0.00
2005
2006
2007
2008
2009
2010
Bruker Corporation
NASDAQ Stock Market (US Companies)
NASDAQ Stocks (SIC 3800-3899)
Legend
24FEB201101195309
CRSP Total Returns Index for:
12/2005 12/2006 12/2007 12/2008 12/2009 12/2010
Bruker Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NASDAQ Stock Market (US Companies) . . . . . . . . . . . . . . . . .
NASDAQ Stocks (SIC 3800-3899 US Companies—measuring
$100.0
100.0
$154.5
109.8
$273.6
119.1
$83.1
57.4
$248.1
82.5
$341.4
125.3
instruments, photo, med & optical goods, timepieces) . . . . . . . .
100.0
109.1
142.0
71.5
98.5
118.5
The data for this performance graph was compiled by Zack’s Investment Research, Inc. and is
used with their permission.
36
ITEM 6 SELECTED FINANCIAL DATA
On February 26, 2008, we completed our acquisition of Bruker BioSpin and on July 1, 2006 we
completed our acquisition of Bruker Optics. The Company, Bruker BioSpin and Bruker Optics were
majority owned by affiliated stockholders prior to the respective acquisitions. As a result, our
acquisitions of Bruker BioSpin and Bruker Optics were considered business combinations of entities
under common control and were accounted for at historical carrying values. Historical consolidated
balance sheets, statements of income and statements of cash flows were restated by combining the
historical audited financial statements of the Company with those of Bruker BioSpin and Bruker
Optics. The consolidated statements of income data for each of the years ended December 31, 2010,
2009 and 2008, and the consolidated balance sheet data as of December 31, 2010 and 2009, have been
derived from our audited financial statements included in Item 8 of this report. The combined
statements of income data and combined balance sheet data for certain other periods presented were
derived by combining amounts from the historical audited financial statements of Bruker Corporation,
Bruker BioSpin and Bruker Optics.
The data presented below was derived from financial statements that were prepared in accordance
with U.S. generally accepted accounting principles and should be read with the consolidated and
combined financial statements, including the notes, and ‘‘Management’s Discussion and Analysis of
Financial Condition and Results of Operations’’ included elsewhere in this report.
Year Ended December 31,
2010
2009
2008
2007
2006
(in millions, except per share data)
Combined/Consolidated Statements of Operation Data:
Product revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,145.4 $ 985.3 $ 974.9 $ 913.2 $758.9
87.9
Service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.6
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
851.4
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
745.1
Total costs and operating expenses . . . . . . . . . . . . . . . .
106.3
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Bruker Corporation . . . . . . .
74.4
Net income per common share attributable to Bruker
126.9
5.3
1,107.1
998.9
108.2
64.9
115.4
3.8
1,032.4
894.7
137.7
98.9
122.4
6.8
1,114.5
977.8
136.7
81.2
151.1
8.4
1,304.9
1,149.2
155.7
95.4
Corporation shareholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
0.58 $
0.58 $
0.50 $
0.49 $
0.40 $
0.39 $
0.61 $ 0.47
0.60 $ 0.46
During 2010, we recorded $4.6 million of acquisition-related costs in connection with our
acquisitions of the Varian, Inc. chemical analysis business from Agilent Technologies, Inc. and the nano
surfaces business from Veeco Instruments Inc. During 2010, we also recorded $0.2 million of
restructuring charges and a loss $1.0 million in connection with the divestiture of a business. During
2009, we recorded a gain of $1.3 million in connection with the acquisition of the research instruments
business from Varian Medical Systems, Inc.; we also recorded acquisition-related costs in connection
with this acquisition of $0.8 million. The results for 2009 also include impairment charges of
$0.7 million and restructuring charges of $0.2 million. During 2008, we recorded acquisition-related
charges of $6.2 million related to our acquisition of Bruker BioSpin, $2.3 million of restructuring
charges, and net tax benefits of $9.5 million related to reversing certain valuation allowances on
deferred tax assets and reaching the more-likely-than-not threshold for recognizing certain tax
receivables. During 2007, we recorded acquisition-related charges of $7.4 million and a tax benefit of
37
$10.1 million related to a change in tax law that was enacted in Germany. During 2006, we recorded
acquisition-related charges of $5.6 million in connection with our acquisition of Bruker Optics.
Year Ended December 31,
2010
2009
2008
2007
2006
(in millions)
Combined/Consolidated Balance Sheet Data:
Cash and cash equivalents, short-term investments and
restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 233.3 $ 209.1 $ 167.7 $ 344.6 $ 325.6
420.5
1,171.0
57.5
69.0
569.0
Working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . .
333.3
1,172.3
137.7
97.3
418.8
219.6
1,549.8
301.0
104.3
527.4
472.6
1,310.7
44.2
105.5
635.5
301.0
1,116.3
223.8
101.1
312.7
ITEM 7 MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following Management’s Discussion and Analysis of Financial Condition and Results of
Operations, or MD&A, describes the principal factors affecting the results of our operations, financial
condition and changes in financial condition, as well as our critical accounting policies and estimates.
Our MD&A is organized as follows:
(cid:129) Executive Overview. This section provides a general description and history of our business, a
brief discussion of our reportable segments, significant recent developments in our business and
other opportunities, and challenges and risks that may impact our business in the future.
(cid:129) Critical Accounting Policies. This section discusses the accounting estimates that are considered
important to our financial condition and results of operations and require us to exercise
subjective or complex judgments in their application. All of our significant accounting policies,
including our critical accounting policies and estimates, are summarized in Note 2 to our
consolidated financial statements in Item 8 of this report on Form 10-K.
(cid:129) Results of Operations. This section provides our analysis of the significant line items on our
consolidated statement of income for the year ended December 31, 2010 compared to the year
ended December 31, 2009 and for the year ended December 31, 2009 compared to the year
ended December 31, 2008.
(cid:129) Liquidity and Capital Resources. This section provides an analysis of our liquidity and cash flow
and a discussion of our outstanding debt and commitments.
(cid:129) Transactions with Related Parties. This section summarizes transactions with principal
shareholders and directors.
(cid:129) Recent Accounting Pronouncements. This section provides information about new accounting
standards that have been issued but for which adoption is not yet required.
EXECUTIVE OVERVIEW
Business Overview
Bruker Corporation and its wholly-owned subsidiaries design, manufacture, service and market
proprietary life science and materials research systems based on our technology platforms, including
magnetic resonance technologies, mass spectrometry technologies, gas chromatography technologies,
X-ray technologies, spark-optical emission spectroscopy, atomic force microscopy, stylus and optical
metrology technology and infrared and Raman molecular spectroscopy technologies. We sell a broad
38
range of field analytical systems for chemical, biological, radiological, nuclear and explosive, or
CBRNE, detection. We also develop and manufacture low temperature and high temperature
superconducting wire products and superconducting wire and superconducting devices for use in
advanced magnet technology, physics research and energy applications. Our diverse customer base
includes life science, pharmaceutical, biotechnology and molecular diagnostic research companies,
academic institutions, advanced materials and semiconductor industries and government agencies. We
maintain major technical and manufacturing centers in Europe, North America and Japan and we have
sales offices located throughout the world. Our corporate headquarters are located in Billerica,
Massachusetts.
Our business strategy is to capitalize on our ability to innovate and generate rapid revenue growth,
both organically and through acquisitions. Our revenue growth strategy combined with anticipated
improvements to our gross profit margins and increased leverage on our research and development,
sales and marketing and distribution investments and general and administrative expenses is expected
to enhance our operating margins and improve our profitability in the future.
In 2010, we completed the acquisition of Veeco Metrology Inc., a scanning probe microscopy and
optical industrial metrology business, or the nano surfaces business, and certain assets and liabilities in
Varian’s inductively coupled plasma mass spectrometry instruments business, laboratory gas
chromatography instruments business, and gas chromatography triple-quadrupole mass spectrometry
instruments business, or the chemical analysis business. These businesses complement our existing
atomic force microscopy and mass spectrometry products and expand our offerings to industrial and
applied markets. These acquisitions also provide opportunities to supply our customers with equipment
packages that have a broader range of applications and value.
In 2008, we completed our acquisition of Bruker BioSpin. Both Bruker Corporation and Bruker
BioSpin were majority owned by six affiliated shareholders prior to the acquisition. As a result, the
acquisition of Bruker BioSpin was considered a combination of companies under common control and
was accounted for at historical carrying values. With the addition of Bruker BioSpin, we enhanced our
scientific instruments business and thus furthered our position as a leading supplier of life science and
materials research systems. The technologies of Bruker BioSpin are particularly complementary to our
accurate-mass electrospray time-of-flight mass spectrometers and our single-crystal diffraction X-ray
spectrometers. The addition of Bruker BioSpin created revenue synergies, improved our sales and
service infrastructure and enhanced our distribution of scientific instruments in the Americas, Europe
and Asia.
We are organized into five operating segments, representing each of our five divisions: Bruker
BioSpin, Bruker Daltonics, Bruker MAT, Bruker Optics and Bruker Energy & Supercon Technologies.
Bruker BioSpin is in the business of designing, manufacturing and distributing enabling life science
tools based on magnetic resonance technology. Bruker Daltonics is in the business of manufacturing
and distributing mass spectrometry instruments that can be integrated and used along with other
analytical instruments and our CBRNE detection products. Bruker MAT includes the operations of
Bruker AXS and the nano surfaces business we acquired in 2010. The Bruker MAT operating segment,
which we formerly referred to as Bruker AXS, was renamed to reflect the growth in our product lines
focused on materials identification and characterization beyond Bruker AXS’ advanced X-ray
instrumentation. Specifically, Bruker MAT is in the business of manufacturing and distributing
advanced X-ray, spark-optical emission spectroscopy, atomic force microscopy and stylus and optical
metrology instrumentation used in non-destructive molecular and elemental analysis. Bruker Optics is
in the business of manufacturing and distributing research, analytical and process analysis instruments
and solutions based on infrared and Raman molecular spectroscopy technologies. Bruker Energy &
Supercon Technologies is in the business of developing and producing superconducting materials and
devices for growing markets in renewable energy, energy infrastructure, healthcare and ‘‘big science’’
research.
39
We combine the Bruker BioSpin, Bruker Daltonics, Bruker MAT and Bruker Optics operating
segments into the Scientific Instruments reporting segment because each has similar economic
characteristics, product processes and services, types and classes of customers, methods of distribution
and regulatory environments. As such, management reports its results based on the following segments:
(cid:129) Scientific Instruments. The operations of this segment include the design, manufacture and
distribution of advanced instrumentation and automated solutions based on magnetic resonance
technology, mass spectrometry technology, gas chromatography technology, X-ray technology,
spark-optical emission spectroscopy technology, atomic force microscopy technology, stylus and
optical metrology technology, and infrared and Raman molecular spectroscopy technology.
Typical customers of the Scientific Instruments segment include: pharmaceutical, biotechnology,
and molecular diagnostic companies; academic institutions, medical schools and other non-profit
organizations, and clinical microbiology laboratories; government departments and agencies;
nanotechnology, semiconductor, chemical, cement, metals and petroleum companies; and food,
beverage and agricultural analysis companies and laboratories.
(cid:129) Energy & Supercon Technologies. The operations of this segment include the design, manufacture
and marketing of superconducting materials, primarily metallic low temperature superconductors
for use in magnetic resonance imaging, nuclear magnetic resonance and fusion energy research,
and ceramic high temperature superconductors for use in fusion energy research and other
applications. Typical customers of the Energy & Supercon Technologies segment include
companies in the medical industry, private and public research and development laboratories in
the fields of fundamental and applied sciences and energy research and academic institutions
and government agencies. The Energy & Supercon Technologies segment is also developing
superconductors and superconducting-enabled devices for applications in power and energy, as
well as industrial processing industries.
Financial Overview
For the year ended December 31, 2010, our revenue increased by $190.4 million, or 17.1%, to
$1,304.9 million, compared to $1,114.5 million for the comparable period in 2009. Included in this
change in revenue is a reduction of approximately $18.1 million from the impact of foreign exchange
due to the strengthening of the U.S. Dollar versus the Euro and other foreign currencies and an
increase of approximately $67.1 million attributable to our recent acquisitions. Excluding the effect of
foreign exchange and our recent acquisitions, revenue increased by $141.4 million, or 12.7%. The
increase in revenue, on an adjusted basis, is attributable to both the Scientific Instruments segment,
which increased by $115.3 million, or 10.8%, and the Energy & Supercon Technologies segment, which
increased by $28.8 million, or 48.2%. Revenue in the Scientific Instruments segment reflects an increase
in sales of all our core technologies, particularly in magnetic resonance, X-ray and mass spectrometry.
Revenue in the Energy & Supercon Technologies segment increased due to higher demand for low
temperature superconducting wire.
The mix of products sold in the Scientific Instruments segment during 2010 reflects increased
demand from academic, government and industrial customers. We attribute the increase in sales of
magnetic resonance and mass spectrometry products and spending by academic and government
customers to our new product introductions over the last twelve to eighteen months and to stimulus
packages implemented by governments of various countries, including the U.S., Germany, Japan and
China. The improvement in revenues from our industrial customers reflects an ongoing economic
improvement in these end markets. In general, the spending patterns of our industrial customers were
negatively impacted by the global recession through the first half of 2009. In the second half of 2009, as
the global economy started to improve, we began to see indicators of improvement in the industrial
markets. We experienced an increase in demand from our industrial customers in 2010 and we remain
optimistic that the industrial markets we serve will continue to improve. Additionally, while many
40
European governments have announced their intentions to reduce overall spending, a number of our
key European markets, including Germany, France and the U.K., have announced that research
spending will remain stable, or grow in some cases. Based on the recent announcements from these
governments and recent announcements from the European Union, we believe that funding for the
majority of our products and markets will remain stable, or grow, in most of our key European
markets.
Income from operations for the year ended December 31, 2010 was $155.7 million, resulting in an
operating margin of 11.9%, compared to income from operations of $136.7 million, resulting in an
operating margin of 12.3%, for the comparable period in 2009. Included in income from operations are
various charges to cost of revenue, amortization of intangible assets and other charges related primarily
to our recent acquisitions. Excluding the effect of these charges, operating margins increased to 13.4%
in 2010 compared to 12.5% in 2009. The increase in operating margin, on an adjusted basis, is
primarily the result of the higher revenue described above and a corresponding improvement in our
gross profit margins. Our gross profit margin for the year ended December 31, 2010 was 46.4%,
compared with 46.5% for the comparable period in 2009. However, excluding the effect of our recent
acquisitions, gross profit margins increased to 47.0% in 2010 compared to 46.5% in 2009. The increase
in revenue also allowed us to leverage our selling, general and administrative costs and our research
and development costs, which decreased to 33.6% of revenue for the year ended December 31, 2010
compared with 34.1% of revenue for the comparable period in 2009.
Higher gross profit margins in the year ended December 31, 2010 resulted primarily from higher
revenues and changes in product mix, specifically an increase in revenues from high-end
instrumentation, including our newly introduced products which were designed to carry higher gross
margins than our previous generations of products. The increase in revenue also allowed us to better
utilize our production facilities and leverage our fixed production costs. The weakening of the Euro,
which favorably impacts our gross profit margins as a majority of our production is performed in
Europe, also contributed to the improvement in gross profit margin.
We incurred approximately $5.6 million of interest expense during the year ended December 31,
2010 compared to $7.5 million for the comparable period in 2009. Of the total interest expense
incurred during the year ended December 31, 2010, approximately $5.0 million related to a credit
facility that we entered into during the first quarter of 2008. In October 2010 we borrowed
$167.6 million under the revolving portion of the credit agreement to finance the acquisition and the
working capital requirements of the nano surfaces business. Subsequent to the acquisition of the nano
surfaces business we borrowed an additional $17.9 million for general working capital requirements. We
are currently evaluating long-term financing options to replace $185.5 million borrowed under the
revolving loan.
Our effective tax rate for the year ended December 31, 2010 was 35.5%, compared to 37.3% in
2009. Our tax rate can vary from year-to-year as the amount and mix of income and taxes outside of
the U.S. changes. Our tax rate also varies as a result of discrete items that are of a non-recurring
nature. In 2010, we increased our reserves for certain ongoing tax audits by $2.8 million. In 2009, we
repatriated cash from certain foreign locations into the U.S. in order to reduce our outstanding debt
under the credit agreement. This repatriation, and certain other transactions that were taxable in the
United States, resulted in approximately $4.3 million of tax expense.
Our net income attributable to the shareholders of Bruker Corporation for the year ended
December 31, 2010 was $95.4 million, or $0.58 per diluted share, compared to $81.2 million, or $0.49
per diluted share, for the comparable period in 2009.
41
CRITICAL ACCOUNTING POLICIES
This discussion and analysis of our financial condition and results of operations is based upon our
consolidated financial statements, which have been prepared in accordance with accounting principles
generally accepted in the United States of America. The preparation of these financial statements
requires that we make estimates and assumptions that affect the reported amounts of assets and
liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements
and reported amounts of revenues and expenses during the reporting period. On an ongoing basis,
management evaluates its estimates and judgments, including those related to revenue recognition,
income taxes, allowance for doubtful accounts, inventories, goodwill, other intangible assets and
long-lived assets, warranty costs and derivative financial instruments. We base our estimates and
judgments on historical experience, current market and economic conditions, industry trends and other
assumptions that we believe are reasonable and form the basis for making judgments about the carrying
value of assets and liabilities that are not readily apparent from other sources. Actual results could
differ from these estimates.
We believe the following critical accounting policies to be both those most important to the
portrayal of our financial position and results of operations and those that require the most subjective
judgment.
Revenue recognition. We recognize revenue from system sales when persuasive evidence of an
arrangement exists, the price is fixed or determinable, title and risk of loss has been transferred to the
customer and collectability of the resulting receivable is reasonably assured. Title and risk of loss
generally are transferred to the customer upon receipt of a signed customer acceptance form for a
system that has been shipped, installed, and for which the customer has been trained. As a result, the
timing of customer acceptance or readiness could cause our reported revenues to differ materially from
expectations. When products are sold through an independent distributor or a strategic distribution
partner who assumes responsibility for installation, we recognize the system sale when the product has
been shipped and title and risk of loss have been transferred to the distributor. Our distributors do not
have price protection rights or rights of return; however, our products are typically warranted to be free
from defect for a period of one year. Revenue is deferred until cash is received when collectability is
not reasonably assured, such as when a significant portion of the fee is due over one year after delivery,
installation and acceptance of a system. For arrangements with multiple elements, we recognize revenue
for each element based on the relative fair value of the elements, provided all other criteria for
revenue recognition have been met. The fair value for each element provided in multiple element
arrangements is typically determined by referencing the prices charged when the element is sold
separately. If there is objective and reliable evidence of the fair value of the undelivered items in an
arrangement, but no such evidence for the delivered items, we use the residual method to allocate the
arrangement consideration. Changes in our ability to establish the fair value for each element in
multiple element arrangements could affect the timing of revenue recognition. Revenue from
accessories and parts is recognized upon shipment and service revenue is recognized as the services are
performed. We also have contracts for which we apply the percentage-of-completion model of revenue
recognition. Application of the percentage-of-completion method requires us to make reasonable
estimates of the extent of progress toward completion of the contract and the total costs we will incur
under the contract. Changes in our estimates could affect the timing of revenue recognition.
Income taxes. The determination of income tax expense requires us to make certain estimates and
judgments concerning the calculation of deferred tax assets and liabilities, as well as the deductions,
carryforwards and credits that are available to reduce taxable income. Deferred tax assets and liabilities
arise from differences in the timing of the recognition of revenue and expenses for financial statement
and tax purposes. Deferred tax assets and liabilities are measured using the tax rates in effect for the
year in which these temporary differences are expected to be settled. We estimate the degree to which
tax assets and loss carryforwards will result in a benefit based on expected profitability by tax
42
jurisdiction, and we provide a valuation allowance for tax assets and loss carryforwards that we believe
will more likely than not go unused. If it becomes more likely than not that a tax asset or loss
carryforward will be used for which a reserve has been provided, we reverse the related valuation
allowance. If our actual future taxable income by tax jurisdiction differs from estimates, additional
allowances or reversals of reserves may be necessary. In addition, we only recognize benefits for tax
positions that we believe are more likely than not of being sustained upon review by a taxing authority
with knowledge of all relevant information. We reevaluate our uncertain tax positions on a quarterly
basis and any changes to these positions as a result of tax audits, tax laws or other facts and
circumstances could result in additional charges to operations.
Allowance for doubtful accounts. We maintain allowances for doubtful accounts for estimated
losses resulting from the inability of our customers to pay amounts due. If the financial condition of
our customers were to deteriorate, reducing their ability to make payments, additional allowances
would be required, resulting in a charge to operations.
Inventories.
Inventories are stated at the lower of cost or market, with costs determined by the
first-in, first-out method for a majority of subsidiaries and by average cost for certain international
subsidiaries. We record provisions to account for excess and obsolete inventory to reflect the expected
non-saleable or non-refundable inventory based on an evaluation of slow moving products. Inventories
also include demonstration units located in our demonstration laboratories or installed at the sites of
potential customers. We consider our demonstration units to be available for sale. We reduce the
carrying value of demonstration inventories for differences between cost and estimated net realizable
value, taking into consideration usage in the preceding twelve months, expected demand, technological
obsolescence and other information including the physical condition of the unit. If ultimate usage or
demand varies significantly from expected usage or demand, additional write-downs may be required,
resulting in additional charges to operations.
Goodwill, other intangible assets and other long-lived assets. We evaluate whether goodwill is
impaired annually and when events occur or circumstances change. We test goodwill for impairment at
the reporting unit level, which is the operating segment or one level below an operating segment. The
performance of the test involves a two-step process. The first step of the impairment test involves
comparing the fair values of the applicable reporting units with their aggregate carrying values,
including goodwill. We generally determine the fair value of our reporting units using an income
approach methodology of valuation that includes the discounted cash flow method. Estimating the fair
value of the reporting units requires significant judgments by management about the future cash flows.
If the carrying amount of a reporting unit exceeds the fair value of the reporting unit, we perform the
second step of the goodwill impairment test to measure the amount of the impairment. In the second
step of the goodwill impairment test we compare the implied fair value of the reporting unit’s goodwill
with the carrying value of that goodwill. We also review finite-lived intangible assets and other
long-lived assets when indications of potential impairment exists, such as a significant reduction in
undiscounted cash flows associated with the assets. Should the fair value of our long-lived assets decline
because of reduced operating performance, market declines, or other indicators of impairment, a
charge to operations for impairment may be necessary.
Warranty costs. We normally provide a one year parts and labor warranty with the purchase of
equipment. The anticipated cost for this warranty is accrued upon recognition of the sale based on
historical warranty rates and our assumptions of future warranty claims. The warranty accrual is
included as a current liability on the consolidated balance sheets. Although our products undergo
quality assurance and testing procedures throughout the production process, our warranty obligation is
affected by product failure rates, material usage and service delivery costs incurred in correcting a
product failure. Although our actual warranty costs have historically been consistent with expectations,
to the extent warranty claim activity or costs associated with servicing those claims differ from our
estimates, revisions to the warranty accrual may be required.
43
Derivative financial instruments. All derivative instruments are recorded as assets or liabilities at
fair value, which is calculated as an estimate of the future cash flows, and subsequent changes in a
derivative’s fair value are recognized in income, unless specific hedge accounting criteria are met.
Changes in the fair value of a derivative that is highly effective and designated as a cash flow hedge are
recognized in accumulated other comprehensive income until the forecasted transaction occurs or it
becomes probable that the forecasted transaction will not occur. We perform an assessment at the
inception of the hedge and on a quarterly basis thereafter, to determine whether our derivatives are
highly effective in offsetting changes in the value of the hedged items. Any changes in the fair value
resulting from hedge ineffectiveness are immediately recognized as income or expense.
RESULTS OF OPERATIONS
Year Ended December 31, 2010 Compared to the Year Ended December 31, 2009
Consolidated Results
The following table presents our results for the years ended December 31, 2010 and 2009 (dollars
in millions, except per share data):
Year Ended
December 31,
2010
2009
Product revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,145.4
151.1
8.4
$ 985.3
122.4
6.8
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of product revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,304.9
619.5
79.4
698.9
606.0
1,114.5
525.2
70.7
595.9
518.6
Operating expenses:
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of acquisition-related intangible assets . . . . . . . . . . . . . . . . . . . . . .
Other charges, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest and other income (expense), net
Income before income taxes and noncontrolling interest in consolidated
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) attributable to noncontrolling interest in consolidated
297.3
141.4
5.8
5.8
450.3
155.7
(5.6)
150.1
53.3
96.8
253.3
126.4
1.8
0.4
381.9
136.7
(7.6)
129.1
48.1
81.0
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.4
(0.2)
Net income attributable to Bruker Corporation . . . . . . . . . . . . . . . . . . . . . . . . . .
$
95.4
$
81.2
Net income per common share attributable to
Bruker Corporation shareholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
0.58
0.58
$
$
0.50
0.49
Weighted average common shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
164.4
165.7
163.5
164.9
44
Revenue
Our revenue increased by $190.4 million, or 17.1%, to $1,304.9 million for the year ended
December 31, 2010, compared to $1,114.5 million for the comparable period in 2009. Included in this
change in revenue is a reduction of approximately $18.1 million from the impact of foreign exchange
due to the strengthening of the U.S. Dollar versus the Euro and other foreign currencies and an
increase of approximately $67.1 million attributable to our recent acquisitions. Excluding the effect of
foreign exchange and our recent acquisitions, revenue increased by $141.4 million, or 12.7%. The
increase in revenue, on an adjusted basis, is attributable to both the Scientific Instruments segment,
which increased by $115.3 million, or 10.8%, and the Energy & Supercon Technologies segment, which
increased by $28.8 million, or 48.2%. Revenue in the Scientific Instruments segment reflects an increase
in sales of all our core technologies, particularly in magnetic resonance, X-ray and mass spectrometry.
Revenue in the Energy & Supercon Technologies segment increased due to higher demand for low
temperature superconducting wire.
The mix of products sold in the Scientific Instruments segment during 2010 reflects increased
demand from academic, government and industrial customers. We attribute the increase in sales of
magnetic resonance and mass spectrometry products and spending by academic and government
customers to our new product introductions over the last twelve to eighteen months and to stimulus
packages implemented by governments of various countries, including the U.S., Germany, Japan and
China. The improvement in revenues from our industrial customers reflects an ongoing economic
improvement in these end markets. In general, the spending patterns of our industrial customers were
negatively impacted by the global recession through the first half of 2009. In the second half of 2009, as
the global economy improved, we began to see indicators of improvement in the industrial markets we
serve and experienced an increase in demand from our industrial customers in 2010. Additionally, while
many European governments have announced their intentions to reduce overall spending, a number of
our key European markets, including Germany, France and the U.K., have announced that research
spending will remain stable, or grow in some cases. Based on the recent announcements from these
governments and recent announcements from the European Union, we believe that funding for the
majority of our products and markets will remain stable, or grow, in most of our key European
markets.
Cost of Revenue
Our cost of product and service revenue for the year ended December 31, 2010, was
$698.9 million, resulting in a gross profit margin of 46.4%, compared to cost of product and service
revenue of $595.9 million, resulting in a gross profit margin of 46.5%, for the comparable period in
2009. The increase in cost of revenue is primarily a function of the higher revenues described above.
Our cost of revenue in 2010 includes charges of $7.2 million representing the difference between the
fair value and historical costs of inventories acquired with the nano surfaces and chemical analysis
businesses. Excluding these charges our gross profit margin for 2010 was 47.0%. There were no similar
charges in our cost of revenue for 2009. Higher gross profit margins, on an adjusted basis, resulted
from changes in product mix, specifically an increase in revenues from high-end instrumentation,
including our newly introduced products which were designed to carry higher gross margins than our
previous generations of products, and the weakening of the Euro, which favorably impacts our gross
profit margins because a majority of our production is performed in Europe. The increase in revenue
also allowed us to better utilize our production facilities and leverage our fixed production costs. We
also reduced production costs through various cost saving initiatives and strict cost control in our
manufacturing facilities.
45
Selling, General and Administrative
Our selling, general and administrative expense for the year ended December 31, 2010 increased to
$297.3 million, or 22.8% of revenue, from $253.3 million, or 22.7% of revenue, for the comparable
period in 2009. The increase in selling, general and administrative expenses is attributable to increases
in headcount from our acquisitions of the nano surfaces and chemical analysis businesses and increases
in headcount to support planned revenue growth in our existing businesses. The increases in headcount
were offset, in part, by changes in foreign currency exchange rates, primarily the weakening of the
Euro, which favorably impacts our selling, general and administrative expenses because a majority of
our selling and marketing employees are located in Europe.
Research and Development
Our research and development expense for the year ended December 31, 2010 increased to
$141.4 million, or 10.8% of revenue, from $126.4 million, or 11.3% of revenue, for the comparable
period in 2009. The increase in research and development expenses is attributable to increases in
headcount from our acquisitions of the nano surfaces and chemical analysis businesses and increases in
headcount and material costs to support future product introductions in our existing businesses. The
increases in research and development expenses were offset, in part, by changes in foreign currency
exchange rates, primarily the weakening of the Euro, which favorably impacts our research and
development expenses because a majority of our research and development is performed in Europe.
Amortization of Acquisition-Related Intangibles
Our amortization expense from acquisition-related intangible assets for the year ended
December 31, 2010 increased to $5.8 million from $1.8 million for the comparable period in 2009. The
increase in amortization of acquisition-related intangible assets relates to intangible assets acquired in
connection with the purchase of the nano surfaces and chemical analysis businesses.
Other Charges, Net
Other charges, net of $5.8 million recorded in 2010 consist of charges recorded entirely in the
Scientific Instruments segment. The charges recorded in 2010 consist of $4.6 million of acquisition-
related costs, $0.2 million of restructuring charges and a loss of $1.0 million recorded in connection
with the divestiture of a business. Acquisition-related costs recorded in 2010 relate to our acquisitions
of the nano surfaces and chemical analysis businesses and consist of costs incurred under transition
service arrangements we entered into with the sellers and transaction costs, including legal, accounting
and other fees. We do not expect transition costs to recur after the end of the transition services
agreements. Restructuring charges related primarily to severance incurred in connection with closing a
production facility in Herzogenrath, Germany and the loss on the sale of investment is associated with
our investment in Bruker Baltic, Ltd., a manufacturing site located in Riga, Lativa that was engaged in
the production of certain components used in our X-ray product lines. The restructuring charges and
loss on investment were incurred as part of a broader corporate strategy of reducing costs and
consolidating critical production know-how in certain key production sites.
Other charges, net of $0.4 million recorded in 2009 consist of $0.2 million of charges recorded in
the Scientific Instruments segment and $0.2 million of charges recorded in the Energy & Supercon
Technologies segment. The charge recorded in the Scientific Instruments segment consists entirely of
restructuring charges and relates to additional amounts recorded in connection with a restructuring
program that began in the fourth quarter of 2008, under which approximately 30 employees located in
the Netherlands left the Company. The charges recorded in the Energy & Supercon Technologies
segment consist of $0.8 million of transaction costs incurred in connection with the acquisition of the
research instruments business from Varian Medical Systems, Inc. and $0.7 million of impairment
46
charges associated with fixed assets used in the production of certain superconducting wire offset, in
part, by a bargain purchase gain of $1.3 million recorded in connection with the acquisition of the
research instruments business.
Interest and Other Income (Expense), Net
Interest and other income (expense), net during the year ended December 31, 2010 was $(5.6)
million, compared to $(7.6) million for the comparable period of 2009.
During the year ended December 31, 2010, the major components within interest and other
income (expense), net, consisted of net interest expense of $4.7 million and realized and unrealized
losses on foreign currency transactions of $1.5 million. During the year ended December 31, 2009, the
major components within interest and other income (expense), net, consisted of net interest expense of
$6.5 million and realized and unrealized losses on foreign currency transactions of $1.9 million.
The decrease in interest expense is a function of lower average outstanding debt balances
throughout 2010. Losses on foreign currency exchange rates were primarily a function of changes in
exchange rates between the Euro and the Swiss Franc against the U.S. Dollar.
Provision for Income Taxes
The income tax provision for the year ended December 31, 2010 was $53.3 million compared to an
income tax provision of $48.1 million for the comparable period of 2009, representing effective tax rates
of 35.5% and 37.3%, respectively. Our tax rate may change over time as the amount and mix of income
and taxes outside the U.S. changes. In addition to the amount and mix of income and taxes outside the
United States, our income tax provision can be impacted by discrete items of a non-recurring nature.
Discrete items of this nature resulted in tax expense of $2.8 million and $4.3 million for the years
ended December 31, 2010 and 2009, respectively. The amounts recorded in 2010 relate to additional
amounts accrued in connection with ongoing tax audits in Germany and Switzerland. Discrete amounts
recorded in 2009 related to cash that we repatriated from certain foreign locations into the U.S. in
order to reduce our outstanding debt, as well as certain other transactions that were taxable in the U.S.
Net Income (Loss) Attributable to Noncontrolling Interests
Net income (loss) attributable to noncontrolling interests for the year ended December 31, 2010
was $1.4 million compared to $(0.2) million for the comparable period of 2009. The net income (loss)
attributable to noncontrolling interests represents the minority shareholders’ proportionate share of the
net income (loss) recorded by our majority-owned indirect subsidiaries.
Net Income Attributable to Bruker Corporation
Our net income for the year ended December 31, 2010 was $95.4 million, or $0.58 per diluted
share, compared to net income of $81.2 million, or $0.49 per diluted share, for 2009.
47
Segment Results
Revenue
The following table presents revenue, change in revenue and revenue growth by reportable
segment for the years ended December 31, 2010 and 2009 (dollars in millions):
Scientific Instruments . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy & Supercon Technologies . . . . . . . . . . . . . . . . .
Eliminations (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,225.1
90.5
(10.7)
$1,062.7
59.8
(8.0)
$1,304.9
$1,114.5
$162.4
30.7
(2.7)
$190.4
2010
2009
Dollar Change
Percentage
Change
15.3%
51.3%
17.1%
(a) Represents product and service revenue between reportable segments.
Scientific Instruments Segment Revenues
Scientific Instruments segment revenue increased by $162.4 million, or 15.3%, to $1,225.1 million
for the year ended December 31, 2010, compared to $1,062.7 million for the comparable period in
2009. Included in this change in revenue is a reduction of approximately $13.2 million from the impact
of foreign exchange due to the strengthening of the U.S. Dollar versus the Euro and other foreign
currencies and an increase of approximately $60.3 million attributable the acquisitions of the nano
surfaces and chemical analysis businesses. Excluding the effect of foreign exchange and the acquisitions,
revenue increased by $115.3 million, or 10.8%. The increase in revenue, on an adjusted basis, is
attributable to an increase in sales of all our core technologies, particularly in magnetic resonance,
X-ray and mass spectrometry. The mix of products sold in the Scientific Instruments segment in 2010
reflects increased demand from academic, government and industrial customers. We attribute the
increase in sales of magnetic resonance and mass spectrometry products and spending by academic and
government customers to our new product introductions over the last twelve to eighteen months and to
stimulus packages implemented by governments of various countries, including the U.S., Germany,
Japan and China. We have also seen increased demand from our industrial customers as economic
conditions have improved.
System revenue and aftermarket revenue as a percentage of total Scientific Instruments segment
revenue were as follows during the years ended December 31, 2010 and 2009 (dollars in millions):
2010
Revenue
Percentage of
Segment Revenue
System revenue . . . . . . . . . . . . . . . . . . . . . . . .
Aftermarket revenue . . . . . . . . . . . . . . . . . . . . .
$ 973.2
251.9
Total revenue . . . . . . . . . . . . . . . . . . . . . . . .
$1,225.1
79.4%
20.6%
100.0%
2009
Percentage of
Segment Revenue
79.9%
20.1%
100.0%
Revenue
$ 849.2
213.5
$1,062.7
System revenue in the Scientific Instruments segment includes nuclear magnetic resonance systems,
magnetic resonance imaging systems, electron paramagnetic imaging systems, mass spectrometry
systems, gas chromatography systems, CBRNE detection systems X-ray systems, spark-optical emission
spectroscopy systems, atomic force microscopy systems, stylus and optical metrology systems and
molecular spectroscopy systems. Aftermarket revenues in the Scientific Instruments segment include
accessory sales, consumables, training and services.
48
Energy & Supercon Technologies Segment Revenues
Energy & Supercon Technologies segment revenues increased by $30.7 million, or 51.3%, to
$90.5 million for the year ended December 31, 2010, compared to $59.8 million for the comparable
period in 2009. Included in this change in revenue is a reduction of approximately $4.9 million from the
impact of foreign exchange due to the strengthening of the U.S. Dollar versus the Euro and other
foreign currencies and an increase of approximately $6.8 million attributable to the acquisition of the
research instruments business. Excluding the effect of foreign exchange and acquisition, revenue
increased by $28.8 million, or 48.2%. The increase in revenue, on an adjusted basis, is attributable to
higher demand for low temperature superconducting wire.
System and wire revenue and aftermarket revenue as a percentage of total Energy & Supercon
Technologies segment revenue were as follows during the years ended December 31, 2010 and 2009
(dollars in millions):
2010
2009
Revenue
Percentage of
Segment Revenue
Revenue
Percentage of
Segment Revenue
System and wire revenue . . . . . . . . . . . . . . . . . . . .
Aftermarket revenue . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . .
$85.9
4.6
$90.5
94.9%
5.1%
100.0%
$57.6
2.2
$59.8
96.3%
3.7%
100.0%
System and wire revenue in the Energy & Supercon Technologies segment includes low and high
temperature superconducting wire and superconducting devices, including magnets, linear accelerators
and radio frequency cavities. Aftermarket revenues in the Energy & Supercon Technologies segment
consist primarily of sales of CuponalTM, a bimetallic, non-superconducting material we sell to the power
and transport industries.
Income (Loss) from Operations
The following table presents income (loss) from operations and operating margins on revenue by
reportable segment for the years ended December 31, 2010 and 2009 (dollars in millions):
2010
2009
Operating
Income (Loss)
Percentage of
Segment Revenue
Operating
Income (Loss)
Percentage of
Segment Revenue
Scientific Instruments . . . . . . . . . . . . . . .
Energy & Supercon Technologies . . . . . .
Corporate, eliminations and other (a) . . .
Total operating income . . . . . . . . . . . .
$160.5
(2.6)
(2.2)
$155.7
13.1%
(2.9)%
11.9%
$141.7
(6.3)
1.3
$136.7
13.3%
(10.5)%
12.3%
(a) Represents corporate costs and eliminations not allocated to the reportable segments.
Scientific Instruments segment income from operations for the year ended December 31, 2010 was
$160.5 million, resulting in an operating margin of 13.1%, compared to income from operations of
$141.7 million, resulting in an operating margin of 13.3%, for the comparable period in 2009. Income
from operations in 2010 includes $16.2 million of charges related to the acquisition of the nano
surfaces and chemical analysis businesses. These charges include $7.2 million recorded in cost of
revenue that represents the difference between the fair value and historical costs of inventories
acquired in the acquisitions and sold during 2010, $4.6 million of acquisition-related costs and
$4.4 million recorded in amortization of acquisition-related intangibles. Excluding these costs income
from operations in Scientific Instruments segment would have been $176.7 million, or an operating
49
margin of 14.4%. Income from operations, on an adjusted basis, improved as a result of the higher
revenues described above and an improvement in gross profit margins.
In the year ended December 31, 2010, gross profit margin as a percentage of revenue in the
Scientific Instruments segment increased to 48.3% from 47.9% for the comparable period in 2009.
Higher gross profit margins resulted primarily from changes in product mix, specifically an increase in
revenues from high-end instrumentation, including our newly introduced products which were designed
to carry higher gross margins than our previous generations of products, and the weakening of the
Euro, which favorably impacts our gross profit margins as a majority of our production is performed in
Europe. The increase in revenue also allowed us to better utilize our production facilities and leverage
our fixed production costs. We also reduced production costs through various cost saving initiatives.
In the year ended December 31, 2010, selling, general and administrative expenses and research
and development expenses in the Scientific Instruments segment increased to $419.7 million, or 34.3%
of segment revenue, from $365.6 million, or 34.4% of segment revenue for the comparable period in
2009. This increase is a function of incremental investments in sales and marketing activities and
research and development activities that we believe will generate future growth, as well as increases in
operating expenses related to acquisitions completed in 2010. Changes in foreign currency exchange
rates partially offset the increase in operating expenses.
Energy & Supercon Technologies segment loss from operations for the year ended December 31,
2010 was $2.6 million, resulting in an operating margin of (2.9)%, compared to a loss from operations
of $6.3 million, resulting in an operating margin of (10.5)%, for the comparable period in 2009. The
increase in operating margin is primarily the result of the higher revenue described above and the
corresponding improvements in our gross margin.
50
Year Ended December 31, 2009 Compared to the Year Ended December 31, 2008
Consolidated Results
The following table presents our results for the years ended December 31, 2009 and 2008 (dollars
in millions, except per share data):
Year Ended
December 31,
2009
2008
Product revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 985.3
122.4
6.8
$ 974.9
126.9
5.3
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,114.5
1,107.1
Cost of product revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses:
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development
Amortization of acquisition-related intangible assets . . . . . . . . . . . . . . . . . . . . . .
Other charges, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
525.2
70.7
595.9
518.6
253.3
126.4
1.8
0.4
381.9
136.7
527.5
74.6
602.1
505.0
252.7
133.8
1.8
8.5
396.8
108.2
Interest and other income (expense), net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7.6)
(15.0)
Income before income taxes and noncontrolling interest in consolidated
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) attributable to noncontrolling interest in consolidated
129.1
48.1
81.0
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(0.2)
93.2
28.0
65.2
0.3
Net income attributable to Bruker Corporation . . . . . . . . . . . . . . . . . . . . . . . . . .
$
81.2
$
64.9
Net income per common share attributable to
Bruker Corporation shareholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
0.50
0.49
$
$
0.40
0.39
Weighted average common shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
163.5
164.9
162.7
165.6
Revenue
Our revenue increased by $7.4 million, or 0.7%, to $1,114.5 million for the year ended
December 31, 2009, compared to $1,107.1 million for the comparable period in 2008. Included in this
change in revenue is a reduction of approximately $14.7 million from the impact of foreign exchange
due to the strengthening of the U.S. Dollar versus the Euro and other foreign currencies. Excluding the
51
effect of foreign exchange, revenue increased by 2.0%. Revenues from the Scientific Instruments
segment increased modestly on a currency adjusted basis, increasing by $1.7 million, or 0.2%. Revenue
in the Scientific Instruments segment reflects higher sales of mass spectrometry systems offset by lower
sales of X-ray and optical emission spectroscopy systems. Revenues from the Energy & Supercon
Technologies segment increased, on a currency adjusted basis, by $17.9 million, or 41.1%. The increase
in revenue, excluding the effect of foreign exchange, is attributable to the acquisition of the research
instruments business offset in part by lower demand for certain types of superconducting wire.
The mix of products sold in the Scientific Instruments segment reflects an increase in revenues
from academic and government customers offset by lower sales to industrial customers. We attribute
the increases in spending by academic and government customers to new product introductions and
stimulus packages implemented by governments of various countries, including the U.S., Germany,
Japan and China. We attribute the overall decreases in spending by industrial customers to the
worldwide recession.
Cost of Revenue
Our cost of product and service revenue for the year ended December 31, 2009, was
$595.9 million, resulting in a gross profit margin of 46.5%, compared to cost of product and service
revenue of $602.1 million, resulting in a gross profit margin of 45.6%, for the comparable period in
2008. Higher gross profit margins on certain nuclear magnetic resonance products and our newly
introduced mass spectrometry products, combined with productivity initiatives, the benefits of cost
cutting and changes in foreign currency exchange rates allowed us to improve our gross profit margins
without a significant increase in volume. While product mix and initiatives designed to increase gross
profits drove the increase in gross profit margins, the installation of the 1 Gigahertz nuclear magnetic
resonance spectrometer in the fourth quarter of 2009 also contributed approximately 0.6% to the
year-over-year improvement in gross profit margin. Because of the high degree of risk associated with
the 1 Gigahertz project, the majority of costs incurred in connection with this project were charged to
research and development expense as incurred, rather than capitalized as inventory. As a result, the
sale carried gross profit margins that were significantly higher than those of our other nuclear magnetic
resonance spectrometers.
Selling, General and Administrative
Our selling, general and administrative expense for the year ended December 31, 2009 increased to
$253.3 million, or 22.7% of revenue, from $252.7 million, or 22.8% of revenue, for the comparable
period in 2008. The increase in selling, general and administrative expenses is attributable to increases
in headcount in support of planned revenue growth and as a result of certain acquisitions. Increases in
sales and marketing expenses were offset, in part, by various cost saving initiatives. Changes in foreign
currency exchange rates, primarily the weakening of the Euro, also offset cost increases because the
majority of our selling and marketing employees are located in Europe.
Research and Development
Our research and development expense for the year ended December 31, 2009 decreased to
$126.4 million, or 11.4% of product and service revenue, from $133.8 million, or 12.1% of product and
service revenue, for the comparable period in 2008. The decrease in research and development
expenses is attributable primarily to changes in foreign currency exchange rates, primarily the
weakening of the Euro, as a majority of our research and development is performed in Europe. Cost
saving initiatives in certain areas of our research and development organization also contributed to the
decrease. However, we also continued to make incremental investments in research and development
that we believe will generate future growth.
52
Amortization of Acquisition-Related Intangibles
Our amortization expense from acquisition-related intangible assets for each of the years ended
December 31, 2009 and 2008 was $1.8 million.
Other Charges, Net
Other charges, net of $0.4 million recorded in 2009 consist of $0.2 million of charges recorded in
the Scientific Instruments segment and $0.2 million of charges recorded in the Energy & Supercon
Technologies segment. The charge recorded in the Scientific Instruments segment consists entirely of
restructuring charges and relates to additional amounts recorded in connection with a restructuring
program that began in the fourth quarter of 2008, under which approximately 30 employees located in
the Netherlands left the Company. The charges recorded in the Energy & Supercon Technologies
segment consist of $0.8 million of transaction costs incurred in connection with the acquisition of the
research instruments business from Varian Medical Systems, Inc. and $0.7 million of impairment
charges associated with fixed assets used in the production of certain superconducting wire offset, in
part, by a bargain purchase gain of $1.3 million recorded in connection with the acquisition of the
research instruments business.
Other charges, net of $8.5 million recorded in 2008 related entirely to the Scientific Instruments
segment. The charges consist of $6.2 million of transaction costs incurred in connection with the
acquisition of the Bruker BioSpin and $2.3 million of restructuring charges. Transaction costs incurred
in connection with the acquisition of Bruker BioSpin were expensed because the acquisition
represented a combination of companies under common control due to a majority of ownership of both
Bruker Corporation and Bruker BioSpin by the same individuals. The restructuring charges incurred
related primarily to an involuntary severance program affecting 30 employees in the Netherlands. The
actions taken in the Netherlands reduced the number of employees in sales and marketing and research
and development and consolidated and focused the selling and development efforts of our single crystal
X-ray diffraction products.
Interest and Other Income (Expense), Net
Interest and other income (expense), net during the year ended December 31, 2009, was $(7.6)
million, compared to $(15.0) million for the comparable period of 2008.
During the year ended December 31, 2009, the major components within interest and other
income (expense), net, consisted of net interest expense of $6.5 million and realized and unrealized
losses on foreign currency transactions of $1.9 million. During the year ended December 31, 2008, the
major components within interest and other income (expense), net, were realized and unrealized losses
on foreign currency transactions of $11.2 million and net interest expense of $6.8 million.
The losses on foreign currency transactions in 2008 resulted from the re-measurement of certain
foreign currency denominated assets, principally cash, inter-company receivables and a short-term inter-
company loan into the functional currency of the affected entities. We implemented various programs
to reduce our exposure from re-measurement of foreign currencies. These programs contributed to the
decrease in realized and unrealized losses on foreign currency transactions.
Provision for Income Taxes
The income tax provision for the year ended December 31, 2009 was $48.1 million compared to an
income tax provision of $28.0 million for the comparable period of 2008, representing effective tax rates
of 37.3% and 30.0%, respectively. Our tax rate may change over time as the amount and mix of income
and taxes outside the U.S. changes. In addition to the amount and mix of income and taxes outside the
United States, our income tax provision can be impacted by discrete items of a non-recurring nature.
53
Discrete items resulted in tax expense of $4.3 million for the year ended December 31, 2009 and
related to cash that we repatriated from certain foreign locations into the U.S. in order to reduce our
outstanding debt, as well as certain other transactions that were taxable in the U.S. Excluding this
amount, our tax rate for 2009 would have been 33.9%. Discrete items impacting the provision for
income taxes in 2008 included tax benefits of $10.8 million and related primarily to reversing certain
valuation allowances and reaching the more-likely-than-not threshold for recognizing certain tax
receivables. The tax benefits described were offset by $1.3 million of income taxes incurred in
connection with the liquidation of a tax ineffective entity within the Scientific Instruments segment. In
addition, acquisition-related costs did not generate significant tax benefits for us because they were
incurred primarily in the U.S. and our foreign currency exchange losses did not generate significant tax
benefits for us because they occurred in foreign locations with relatively low statutory tax rates.
Excluding these amounts, our tax rate for 2008 would have been 40.2%.
Net Income (Loss) Attributable to Noncontrolling Interests
Net income (loss) attributable to noncontrolling interests for the year ended December 31, 2009
was $(0.2) million compared to $0.3 million for the comparable period of 2008. The net income (loss)
attributable to noncontrolling interests represents the minority shareholders’ proportionate share of the
net income (loss) recorded by our majority-owned indirect subsidiaries.
Net Income Attributable to Bruker Corporation
Our net income for the year ended December 31, 2009, was $81.2 million, or $0.49 per diluted
share, compared to net income of $64.9 million, or $0.39 per diluted share, for 2008.
Segment Results
Revenue
The following table presents revenue, change in revenue and revenue growth by reportable
segment for the years ended December 31, 2009 and 2008 (dollars in millions):
Scientific Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy & Supercon Technologies . . . . . . . . . . . . . . . . . . . . .
Eliminations (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,062.7
59.8
(8.0)
$1,074.1
43.5
(10.5)
$(11.4)
16.3
2.5
(1.1)%
37.5%
$1,114.5
$1,107.1
$ 7.4
0.7%
2009
2008
Dollar
Change
Percentage
Change
(a) Represents product and service revenue between reportable segments.
Scientific Instruments Segment Revenues
Scientific Instruments segment revenue decreased by $11.4 million, or 1.1%, to $1,062.7 million for
the year ended December 31, 2009, compared to $1,074.1 million for the comparable period in 2008.
Included in this change in revenue is a reduction of approximately $13.1 million from the impact of
foreign exchange due to the strengthening of the U.S. Dollar versus the Euro and other foreign
currencies. Excluding the effect of foreign exchange, revenue increased by 0.2%. Revenue in the
Scientific Instruments segment reflects higher sales of mass spectrometry systems offset by lower sales
of X-ray and optical emission spectroscopy systems. The mix of products sold in the Scientific
Instruments segment reflects an increase in revenues from academic and government customers offset
by lower sales to industrial customers. We attribute the increases in spending by academic and
government customers to new product introductions and stimulus packages implemented by
54
governments of various countries, including the U.S., Germany, Japan and China. We attribute the
overall decreases in spending by industrial customers to the worldwide recession.
System revenue and aftermarket revenue as a percentage of total Scientific Instruments segment
revenue were as follows during the years ended December 31, 2009 and 2008 (dollars in millions):
2009
Revenue
Percentage of
Segment Revenue
System revenue . . . . . . . . . . . . . . . . . . . . . . . .
Aftermarket revenue . . . . . . . . . . . . . . . . . . . . .
$ 849.2
213.5
Total revenue . . . . . . . . . . . . . . . . . . . . . . . .
$1,062.7
79.9%
20.1%
100.0%
2008
Percentage of
Segment Revenue
79.5%
20.5%
100.0%
Revenue
$ 853.6
220.5
$1,074.1
System revenue in the Scientific Instruments segment includes X-ray systems, spark-optical
emission spectroscopy systems, atomic force microscopy systems, nuclear magnetic resonance systems,
magnetic resonance imaging systems, electron paramagnetic imaging systems, mass spectrometry
systems, CBRNE detection systems and molecular spectroscopy systems. Aftermarket revenues in the
Scientific Instruments segment include accessory sales, consumables, training and services.
Energy & Supercon Technologies Segment Revenues
Energy & Supercon Technologies segment revenue increased by $16.3 million, or 37.5%, to
$59.8 million for the year ended December 31, 2009, compared to $43.5 million for the comparable
period in 2008. Included in this change in revenue is a reduction of approximately $1.6 million from the
impact of foreign exchange due to the strengthening of the U.S. Dollar versus the Euro and other
foreign currencies. Excluding the effect of foreign exchange, revenue increased by 41.1%. The increase
in revenue, excluding the effect of foreign exchange, is attributable to the acquisition of the research
instruments business in 2009 offset, in part, by lower demand for certain types of superconducting wire.
System and wire revenue and aftermarket revenue as a percentage of total Energy & Supercon
Technologies segment revenue were as follows during the years ended December 31, 2009 and 2008
(dollars in millions):
2009
2008
Revenue
Percentage of
Segment Revenue
Revenue
Percentage of
Segment Revenue
System and wire revenue . . . . . . . . . . . . . . . . . . . .
Aftermarket revenue . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . .
$57.6
2.2
$59.8
96.3%
3.7%
100.0%
$40.0
3.5
$43.5
92.0%
8.0%
100.0%
System and wire revenue in the Energy & Supercon Technologies segment includes low and high
temperature superconducting wire and superconducting devices, including magnets, linear accelerators
and radio frequency cavities. Aftermarket revenues in the Energy & Supercon Technologies segment
consist primarily of sales of CuponalTM, a bimetallic, non-superconducting material we sell to the power
and transport industries.
55
Income (Loss) from Operations
The following table presents income (loss) from operations and operating margins on revenue by
reportable segment for the years ended December 31, 2009 and 2008 (dollars in millions):
2009
2008
Operating
Income (Loss)
Percentage of
Segment Revenue
Operating
Income (Loss)
Percentage of
Segment Revenue
Scientific Instruments . . . . . . . . . . . . . . .
Energy & Supercon Technologies . . . . . .
Corporate, eliminations and other (a) . . .
Total operating income . . . . . . . . . . . .
$141.7
(6.3)
1.3
$136.7
13.3%
(10.5)%
12.3%
$116.2
(8.2)
0.2
$108.2
10.8%
(18.9)%
9.8%
(a) Represents corporate costs and eliminations not allocated to the reportable segments.
Scientific Instruments segment income from operations for the year ended December 31, 2009 was
$141.7 million, resulting in an operating margin of 13.3%, compared to income from operations of
$116.2 million, resulting in an operating margin of 10.8%, for the comparable period in 2008. Income
from operations in the Scientific Instruments segment increased as a result of an improvement in our
gross profit margins and lower operating expenses.
In 2009, gross profit margin as a percentage of revenue in the Scientific Instruments segment
increased to 47.9% from 46.9% for the comparable period in 2008. Higher gross profit margins on
certain nuclear magnetic resonance products and our newly introduced mass spectrometry products,
combined with productivity initiatives, the benefits of cost cutting and changes in foreign currency
exchange rates allowed us to improve our gross profit margins without a significant increase in volume.
While product mix and initiatives designed to increase gross profits drove the increase in gross profit
margins, the installation of the 1 Gigahertz nuclear magnetic resonance spectrometer in the fourth
quarter of 2009 also contributed to the year-over-year improvement. Because of the high degree of risk
associated with a project of this magnitude, the majority of costs incurred in connection with this
project were charged to research and development expense as incurred, rather than capitalized as
inventory. As a result, the sale carried gross profit margins that were significantly higher than those of
our other nuclear magnetic resonance spectrometers.
Selling, general and administrative costs and research and development costs in the Scientific
Instruments segment decreased to 34.4% of revenue for the year ended December 31, 2009 from
35.1% of revenue for the comparable period of 2008. The decrease in selling, general and
administrative costs and research and development costs as a percentage of revenue is a result of
various cost saving initiatives and changes in foreign currency exchange rates offset, in part, by
incremental investments in market-specific development efforts that we believe will generate future
growth.
Energy & Supercon Technologies segment loss from operations for the year ended December 31,
2009 was $6.3 million, resulting in an operating margin of (10.5)%, compared to a loss from operations
of $8.2 million, resulting in an operating margin of (18.9)%, for the comparable period in 2008. The
decrease in the loss from operations was a result of the higher revenues described above and an
improvement in gross profit margin as a percentage of revenue.
56
LIQUIDITY AND CAPITAL RESOURCES
We currently anticipate that our existing cash and credit facilities will be sufficient to support our
operating and investing needs for at least the next twelve months, but this depends on our profitability
and our ability to manage working capital requirements. Our future cash requirements will also be
affected by acquisitions that we may make in the future. Historically, we have financed our growth
through cash flow generation and a combination of debt financings and issuances of common stock. In
the future, there are no assurances that additional financing alternatives will be available to us if
required, or if available, will be obtained on terms favorable to us.
During the year ended December 31, 2010, net cash provided by operating activities was
$156.1 million, resulting primarily from $96.8 million of consolidated net income. During the year
ended December 31, 2009, net cash provided by operating activities was $149.8 million, resulting
primarily from $81.0 million of consolidated net income.
During the year ended December 31, 2010, net cash used by investing activities was $299.0 million,
compared to net cash used by investing activities of $18.2 million during the year ended December 31,
2009. Cash used by investing activities during the year ended December 31, 2010 was attributable
primarily to $269.8 million used for acquisitions and $31.9 million of capital expenditures. Cash used by
investing activities during the year ended December 31, 2009 was attributable primarily to $16.3 million
of capital expenditures and $1.9 million used for acquisitions. We currently anticipate that our capital
spending will be between $45 million and $50 million in 2011.
During the year ended December 31, 2010, net cash provided by financing activities was
$168.3 million, compared to net cash used by financing activities of $84.1 million during the year ended
December 31, 2009. Cash provided by financing activities during the year ended December 31, 2010
was attributable to $163.4 million of net borrowings under various long-term and short-term
arrangements. The net borrowings were primarily a function of $167.6 million borrowed under the
revolving loan component of the credit agreement that we used to fund our acquisition of the nano
surfaces business. Cash used by financing activities during the year ended December 31, 2009 was
attributable to $84.7 million of net debt repayments under various long-term and short-term
arrangements.
At December 31, 2010, we had outstanding debt totaling $301.0 million consisting of $110.6 million
outstanding under the term loan component of the Credit Agreement, $185.5 million outstanding under
the revolving loan component of the Credit Agreement, and $4.9 million under capital lease
obligations. At December 31, 2009, we had outstanding debt totaling $137.7 million consisting of
$131.3 million outstanding under the term loan component of the Credit Agreement, $0.3 million
outstanding under other long-term debt arrangements, $0.1 million outstanding under other revolving
lines of credit and $6.0 million under capital lease obligations.
On February 26, 2008, we entered into a credit facility, which we refer to as the Credit Agreement.
The Credit Agreement, which is with a syndication of lenders, provides for a revolving credit line with
a maximum commitment of $230.0 million and a term loan facility of $150.0 million. The outstanding
principal under the term loan is payable in quarterly installments through December 2012. Borrowings
under the Credit Agreement bear interest, at our option, at either (i) the higher of the prime rate or
the federal funds rate plus 0.50%, or (ii) adjusted LIBOR, plus margins ranging from 0.40% to 1.25%
and a facility fee ranging from 0.10% to 0.20%. As of December 31, 2010, the weighted average
interest rate of borrowings under the term facility of the Credit Agreement was approximately 2.6%.
Borrowings under the Credit Agreement are secured by the pledge to the banks of 100% of the
capital stock of each of our wholly-owned domestic subsidiaries and 65% of the capital stock of certain
of our wholly-owned direct or indirect foreign subsidiaries. The Credit Agreement also requires that we
maintain certain financial ratios related to maximum leverage and minimum interest coverage, as
57
defined in the Credit Agreement. Specifically, our leverage ratio cannot exceed 3.0 and our interest
coverage ratio cannot be less than 3.0. In addition to the financial ratios, the Credit Agreement
restricts, among other things, our ability to do the following: make certain payments; incur additional
debt; incur certain liens; make certain investments, including derivative agreements; merge, consolidate,
sell or transfer all or substantially all of our assets; and enter into certain transactions with affiliates.
Our failure to comply with any of these restrictions or covenants may result in an event of default
under the applicable debt instrument, which could permit acceleration of the debt under that
instrument and require us to prepay that debt before its scheduled due date. As of December 31, 2010,
the latest measurement date, we were in compliance with the covenants of the Credit Agreement as
our leverage ratio was 1.4 and our interest coverage ratio was 29.1.
Other revolving loans are with various financial institutions located primarily in Germany,
Switzerland and France. The following is a summary of the maximum commitments and net amounts
available to the Company under revolving loans as of December 31, 2010 (dollars in millions):
Weighted
Average
Interest Rate
Total Amount
Committed by Outstanding
Borrowings
Lenders
Outstanding
Letters of
Credit
Total Amount
Available
Credit Agreement
. . . . . . . . . . . . . .
Other revolving loans . . . . . . . . . . . .
Total revolving loans . . . . . . . . . . .
0.7%
0.0%
0.7%
$230.0
146.8
$376.8
$185.5
—
$185.5
$
0.1
108.7
$108.8
$44.4
38.1
$82.5
We are currently considering various long-term financing alternatives to replace the outstanding
borrowings under the revolving loan component of the Credit Agreement and we expect to have an
agreement in place during the first half of 2011. However, if additional financing alternatives are not
available to us, or if available, are not on terms favorable to us, we expect that we would meet our
obligation through a combination of cash on hand and future cash flow generation.
As of December 31, 2010, we have approximately $7.6 million of net operating loss carryforwards
available to reduce future U.S. taxable income; however, these losses are limited in terms of their use.
The Company also has approximately $45.6 million of German Trade Tax net operating losses that are
carried forward indefinitely and U.S. tax credits of approximately $5.7 million available to offset future
tax liabilities that expire at various dates. U.S. tax credits, after filing the 2009 U.S. Federal tax return,
include research and development tax credits of $5.6 million expiring at various dates through 2025 and
other credits of $0.1 million. These operating losses and tax credit carryforwards may be subject to
limitations under provisions of the Internal Revenue Code.
The following table summarizes maturities for our significant financial obligations as of
December 31, 2010 (dollars in millions):
Contractual Obligations
Revolving lines of credit . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt, including current portion . . . . . . . . . . .
. . . . . . . . . . . . . . . .
Interest payable on long-term debt
Derivative liabilities, net . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease obligations . . . . . . . . . . . . . . . . . . . . . .
Pension liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Uncertain tax contingencies . . . . . . . . . . . . . . . . . . . . . .
Total
$185.5
115.5
4.5
4.0
57.4
48.1
27.0
Less than
1 Year
1-3
Years
4-5
Years
More than
5 Years
$185.5
28.9
2.7
2.8
15.0
2.4
—
$ — $ — $ —
0.5
1.3
84.8
—
—
1.8
—
—
1.2
5.1
15.0
22.3
29.7
9.4
6.6
—
—
27.0
Uncertain tax contingencies are positions taken or expected to be taken on an income tax return
that may result in additional payments to tax authorities. The total amount of uncertain tax
contingencies is included in the ‘‘1-3 Years’’ column as we are not able to reasonably estimate the
58
timing of potential future payments. If a tax authority agrees with the tax position taken or expected to
be taken or the applicable statute of limitations expires, then additional payments will not be necessary.
TRANSACTIONS WITH RELATED PARTIES
We lease certain office space from certain of our principal shareholders. During the years ended
December 31, 2010, 2009 and 2008, these shareholders were paid approximately $2.4 million,
$2.1 million and $1.8 million, respectively, which was estimated to be equal to the fair market value.
During the years ended December 31, 2010, 2009 and 2008, we incurred expenses of $2.9 million,
$1.1 million and $2.3 million, respectively, to a law firm in which one of our directors is a partner.
During the years ended December 31, 2010, 2009 and 2008, we incurred expenses of $0.3 million,
$0.6 million and $0.9 million, respectively, to a financial services firm in which one of our directors is a
partner.
RECENT ACCOUNTING PRONOUNCEMENTS
In September 2009, the Emerging Issues Task Force, or EITF, reached consensus on the Financial
Accounting Standards Board, or FASB, Accounting Standards Update, or ASU, 2009-14, Software
(Topic 985)—Certain Revenue Arrangements That Include Software Elements. FASB ASU 2009-14 changes
the accounting model for revenue arrangements that include both tangible products and software
elements. Under this guidance, tangible products containing software components and non-software
components that function together to deliver the tangible product’s essential functionality are excluded
from the software revenue guidance in Subtopic No. 985-605, Software-Revenue Recognition. In addition,
hardware components of a tangible product containing software components are always excluded from
the software revenue guidance. FASB ASU 2009-14 is effective prospectively for revenue arrangements
entered into or materially modified in fiscal years beginning on or after June 15, 2010. We do not
expect the adoption of this update to have a material impact on our results of operations and financial
position.
In September 2009, the EITF reached consensus on FASB ASU 2009-13, Revenue Recognition
(Topic 605)—Multiple-Deliverable Revenue Arrangements. FASB ASU 2009-13 addresses the accounting
for multiple-deliverable arrangements to enable vendors to account for products or services separately
rather than as a combined unit. Specifically, this guidance amends the criteria in Subtopic No. 605-25,
Revenue Recognition-Multiple-Element Arrangements, for separating consideration in multiple-deliverable
arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a
deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or
(c) estimates. This guidance also eliminates the residual method of allocation and requires that
arrangement consideration be allocated at the inception of the arrangement to all deliverables using the
relative selling price method. In addition, this guidance significantly expands required disclosures
related to a vendor’s multiple-deliverable revenue arrangements. FASB ASU 2009-13 is effective
prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on
or after June 15, 2010. We do not expect the adoption of this update to have a material impact on our
results of operations and financial position.
59
ITEM 7A QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are potentially exposed to market risks associated with changes in foreign exchange rates,
interest rates and commodity prices. We selectively use financial instruments to reduce these risks. All
transactions related to risk management techniques are authorized and executed pursuant to our
policies and procedures. Analytical techniques used to manage and monitor foreign exchange and
interest rate risk include market valuations and sensitivity analysis.
Impact of Foreign Currencies
We generate a substantial portion of our revenues in international markets, principally Germany
and other countries in the European Union, Switzerland and Japan, which exposes our operations to
the risk of exchange rate fluctuations. The impact of currency exchange rate movement can be positive
or negative in any period. Our costs related to sales in foreign currencies are largely denominated in
the same respective currencies, limiting our transaction risk exposure. However, for sales not
denominated in U.S. Dollars, if there is an increase in the rate at which a foreign currency is
exchanged for U.S. Dollars, it will require more of the foreign currency to equal a specified amount of
U.S. Dollars than before the rate increase. In such cases, if we price our products in the foreign
currency, we will receive less in U.S. Dollars than we did before the rate increase went into effect. If
we price our products in U.S. Dollars and competitors price their products in local currency, an
increase in the relative strength of the U.S. Dollar could result in our prices not being competitive in a
market where business is transacted in the local currency. In the years ended December 31, 2010 and
2009 our revenue by geography was as follows (dollars in millions):
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rest of world . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010
2009
Percentage
of Revenue
Revenue
Percentage
of Revenue
20.2% $ 209.2
514.9
42.1%
295.5
29.3%
94.9
8.4%
18.8%
46.2%
26.5%
8.5%
Revenue
$ 264.0
549.8
381.8
109.3
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,304.9
100.0% $1,114.5
100.0%
Changes in foreign currency exchange rates decreased our revenue by approximately 1% in each of
the years ended December 31, 2010 and 2009.
Assets and liabilities of our foreign subsidiaries, where the functional currency is the local
currency, are translated into U.S. dollars using year-end exchange rates. Revenues and expenses of
foreign subsidiaries are translated at the average exchange rates in effect during the year. Adjustments
resulting from financial statement translations are included as a separate component of shareholders’
equity. In the years ended December 31, 2010 and 2009, we recorded net gains from currency
translation adjustments of $8.1 million and $8.6 million, respectively. Gains and losses resulting from
foreign currency transactions are reported in interest and other income (expense), net in the
consolidated statements of income. Our foreign exchange losses, net were $1.5 million and $1.9 million
for years ended December 31, 2010 and 2009, respectively.
From time to time, we have entered into foreign currency contracts in order to minimize the
volatility that fluctuations in exchange rates have on our cash flows related to purchases and sales
denominated in foreign currencies. Under these arrangements, we agree to purchase a fixed amount of
a foreign currency in exchange for a fixed amount of U.S. Dollars or other currencies on specified
dates typically with maturities of less than twelve months. These transactions do not qualify for hedge
accounting and, accordingly, the instrument is recorded at fair value with the corresponding gains and
losses recorded in interest and other income (expense), net in the consolidated statements of income.
60
At December 31, 2010 and 2009, we had foreign currency contracts with notional amounts aggregating
$82.2 million and $25.3 million, respectively. At December 31, 2010, the Company had the following
notional amounts outstanding under foreign currency contracts (in millions):
Buy
December 31, 2010:
Euro . . . . . . . .
Euro . . . . . . . .
Euro . . . . . . . .
Euro . . . . . . . .
Swiss Francs . . .
Swiss Francs . . .
U.S. Dollars . . .
U.S. Dollars . . .
Notional
Amount in
Buy Currency
Sell
Maturity
Notional
Amount in
U.S. Dollars
Fair Value
of Assets
Fair Value
of Liabilities
1.5
13.3
11.1
3.4
13.6
18.0
8.0
0.9
Australian Dollars
Swiss Francs
U.S. Dollars
U.S. Dollars
U.S. Dollars
Euro
Euro
Euro
January 2011
January 2011
January 2011 to December 2011
January 2012 to May 2012
January 2011
January 2011
January 2011
January 2012
$ 2.2
19.3
14.8
4.8
13.9
18.5
7.7
1.0
$82.2
$ —
—
0.1
—
0.7
1.2
0.1
—
$2.1
$0.2
1.1
0.1
0.3
—
—
—
—
$1.7
Based on the contractual maturities of these contracts and exchange rates as of December 31,
2010, we anticipate that these contracts will result in net cash flows of $0.7 million in 2011 and $(0.3)
million in 2012. At December 31, 2010, assuming all other variables are constant, if the U.S. Dollar
weakened by 10%, the market value of our foreign currency contracts would increase by approximately
$2.6 million and if the U.S. Dollar strengthened by 10%, the market value of our foreign currency
contracts would decrease by approximately $2.6 million.
We will continue to evaluate our currency risks and in the future may utilize foreign currency
contracts more frequently as part of a transactional hedging program.
Impact of Interest Rates
We regularly invest excess cash in short-term investments that are subject to changes in interest
rates. We believe that the market risk arising from holding these financial instruments is minimal
because of our policy of investing in short-term financial instruments issued by highly rated financial
institutions.
Our exposure related to adverse movements in interest rates is derived primarily from outstanding
floating rate debt instruments that are indexed to short-term market rates. Our objective in managing
our exposure to interest rates is to decrease the volatility that changes in interest rates might have on
our earnings and cash flows. To achieve this objective we have entered into an interest rate swap. A
10% increase or decrease in the average cost of our variable rate debt would not result in a material
change in interest expense because we have determined that the interest rate swap is an effective hedge
of the variability of cash flows of the interest payments. Under our interest rate swap arrangement we
pay a fixed interest rate of approximately 3.8% and receive a variable interest rate based on three
month LIBOR through December 31, 2012. The initial notional amount of this interest swap was
$90.0 million and amortizes in proportion to the term debt component of our Credit Agreement. At
December 31, 2010 and December 31, 2009, the outstanding notional amount of this swap was
$66.4 million and $78.8 million, respectively. Based on interest rates as of December 31, 2010, the fair
value of the swap was $(3.0) million and we anticipate that the interest rate swap will result in net cash
flows of $(2.1) million in 2011 and $(0.9) million in 2012.
Impact of Commodity Prices
We are exposed to certain commodity risks associated with prices for various raw materials. The
prices of copper and certain other raw materials, particularly niobium, used to manufacture
superconductors have increased significantly over the last decade. Copper and niobium tin are the main
61
components of low temperature superconductors and continued commodity price increases for copper
and niobium as well as other raw materials may negatively affect our profitability. Periodically, we enter
into commodity forward purchase contracts to minimize the volatility that fluctuations in the price of
copper have on our sales of these commodities. At December 31, 2010 and December 31, 2009, we had
fixed price commodity contracts with notional amounts aggregating $2.9 million and $0.9 million,
respectively. We will continue to evaluate our commodity risks and may utilize commodity forward
purchase contracts more frequently in the future.
Inflation
We do not believe inflation had a material impact on our business or operating results during any
of the periods presented.
62
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm . . . . . . . . . . . . .
Consolidated Balance Sheets as of December 31, 2010 and 2009 . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income for the years ended December 31, 2010, 2009 and 2008 . . . .
Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the years
ended December 31, 2010, 2009 and 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008 .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page
64
65
66
67
70
71
63
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Board of Directors and Shareholders of
Bruker Corporation
We have audited the accompanying consolidated balance sheets of Bruker Corporation as of
December 31, 2010 and 2009, and the related consolidated statements of income, shareholders’ equity
and comprehensive income, and cash flows for each of the three years in the period ended
December 31, 2010. These financial statements are the responsibility of the Company’s management.
Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material misstatement. An
audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the
financial statements. An audit also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects,
the consolidated financial position of Bruker Corporation at December 31, 2010 and 2009, and the
consolidated results of its operations and its cash flows for each of the three years in the period ended
December 31, 2010, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), Bruker Corporation’s internal control over financial reporting as of
December 31, 2010, based on criteria established in Internal Control-Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission and our report dated
March 1, 2011 expressed an unqualified opinion thereon.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
March 1, 2011
64
BRUKER CORPORATION
CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share data)
December 31,
2010
2009
Current assets:
ASSETS
Cash and cash equivalents
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 230.4
2.9
232.9
511.0
8.6
65.3
$ 207.1
2.0
184.1
422.8
7.9
49.9
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,051.1
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term assets
233.7
98.3
136.1
12.5
18.1
873.8
223.4
47.5
4.9
13.4
9.3
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,549.8
$1,172.3
Current liabilities:
LIABILITIES AND SHAREHOLDERS’ EQUITY
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer advances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 185.5
28.9
64.0
242.2
9.2
301.7
$
Total current liabilities
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
831.5
Long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and contingencies (Note 15)
86.6
29.3
18.8
39.4
16.8
0.1
21.9
49.8
219.2
13.3
236.2
540.5
115.7
34.1
25.2
27.7
10.3
Shareholders’ equity:
Preferred stock, $0.01 par value 5,000,000 shares authorized, none issued or outstanding at
December 31, 2010 and 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock, $0.01 par value 260,000,000 shares authorized, 165,246,426 and 164,384,679
shares issued and 165,229,207 and 164,371,384 outstanding at December 31, 2010 and
2009, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock at cost, 17,219 at December 31, 2010 and 13,295 at December 31, 2009 . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total shareholders’ equity attributable to Bruker Corporation . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interest in consolidated subsidiaries
Total shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
1.6
(0.2)
21.7
349.2
152.4
524.7
2.7
527.4
1.6
(0.1)
8.4
253.8
153.5
417.2
1.6
418.8
Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,549.8
$1,172.3
The accompanying notes are an integral part of these financial statements.
65
BRUKER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
Year Ended December 31,
2010
2009
2008
Product revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,145.4
151.1
8.4
$ 985.3
122.4
6.8
$ 974.9
126.9
5.3
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,304.9
1,114.5
1,107.1
Cost of product revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses:
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of acquisition-related intangible assets . . . . . . . . . . . . . .
Other charges, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
619.5
79.4
698.9
606.0
297.3
141.4
5.8
5.8
450.3
155.7
525.2
70.7
595.9
518.6
253.3
126.4
1.8
0.4
381.9
136.7
527.5
74.6
602.1
505.0
252.7
133.8
1.8
8.5
396.8
108.2
Interest and other income (expense), net . . . . . . . . . . . . . . . . . . . . . . .
(5.6)
(7.6)
(15.0)
Income before income taxes and noncontrolling interest in consolidated
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income (loss) attributable to noncontrolling interest in consolidated
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
150.1
53.3
96.8
129.1
48.1
81.0
1.4
(0.2)
93.2
28.0
65.2
0.3
Net income attributable to Bruker Corporation . . . . . . . . . . . . . . . . . .
$
95.4
$
81.2
$
64.9
Net income per common share attributable to
Bruker Corporation shareholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
0.58
0.58
$
$
0.50
0.49
$
$
0.40
0.39
Weighted average common shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
164.4
165.7
163.5
164.9
162.7
165.6
The accompanying notes are an integral part of these financial statements.
66
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T
BRUKER CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
Cash flows from operating activities:
Consolidated net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Adjustments to reconcile consolidated net income to cash flows from operating activities:
Depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of deferred financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write down of demonstration inventories to net realizable value . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on bargain purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on divestiture of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-cash expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2010
2009
2008
$ 96.8
$ 81.0
$ 65.2
36.1
0.6
24.4
6.9
(3.6)
—
1.0
0.3
(27.3)
(68.0)
(11.5)
6.5
27.9
66.0
29.7
0.7
26.1
6.3
(2.1)
(1.3)
—
(0.2)
(9.4)
(4.4)
2.0
5.7
8.5
7.2
29.3
0.6
24.5
4.5
(1.0)
—
—
(0.6)
33.0
(16.5)
5.4
(39.3)
(27.1)
28.9
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
156.1
149.8
106.9
Cash flows from investing activities:
Acquisitions, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Redemption of short-term investments, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments in connection with the acquisition of Bruker BioSpin . . . . . . . . . . . . . . . . . . . . . .
(269.8)
(31.9)
2.7
—
—
(1.9)
(16.3)
—
—
—
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(299.0)
(18.2)
Cash flows from financing activities:
Proceeds from revolving lines of credit, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Repayment of term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment of deferred financing costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of common stock, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Excess tax benefit related to stock option plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deemed dividend in connection with the acquisition of Bruker BioSpin . . . . . . . . . . . . . . . .
Cash payments to shareholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
185.0
—
(21.6)
—
6.0
0.3
(1.3)
—
(0.1)
(62.4)
1.6
(23.9)
—
1.5
0.6
(1.5)
—
—
(4.6)
(47.4)
—
9.7
(6.8)
(49.1)
33.1
166.1
(26.2)
(2.9)
3.7
0.5
1.4
(386.0)
(23.4)
Net cash provided by (used) in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
168.3
(84.1)
(233.7)
Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . .
(2.1)
(6.6)
9.7
Net change in cash and cash equivalents
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23.3
207.1
40.9
166.2
(166.2)
332.4
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 230.4
$207.1
$ 166.2
Supplemental disclosure of cash flow information:
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash paid for taxes
$
4.5
38.7
$
6.3
54.2
$ 10.8
38.7
Non-cash investing and financing activities:
Issuance of common stock in connection with acquisition of Bruker BioSpin . . . . . . . . . . . . .
$ — $ — $ 526.0
The accompanying notes are an integral part of these financial statements.
70
BRUKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(In millions, except per share data)
Note 1—Description of Business
Bruker Corporation and its wholly-owned subsidiaries (‘‘Bruker’’ or the ‘‘Company’’) is a designer
and manufacturer of proprietary life science and materials research systems and associated products
that address the rapidly evolving needs of a diverse array of customers in life science, pharmaceutical,
biotechnology, clinical and molecular diagnostics research, as well as in materials and chemical analysis
in various industries and government applications. The Company’s core technology platforms include
X-ray technologies, magnetic resonance technologies, mass spectrometry technologies, optical emission
spectroscopy and infrared and Raman molecular spectroscopy technologies. The Company also
manufactures and distributes a broad range of field analytical systems for chemical, biological,
radiological, nuclear and explosives, or CBRNE, detection. The Company also develops and
manufactures superconducting and non-superconducting materials and devices for use in renewable
energy, energy infrastructure, healthcare and ‘‘big science’’ research. The Company maintains major
technical and manufacturing centers in Europe, North America and Japan, and has sales offices located
throughout the world. The Company’s diverse customer base includes life science, pharmaceutical,
biotechnology and molecular diagnostic research companies, academic institutions, advanced materials
and semiconductor manufacturers and government agencies.
In February 2008, the Company completed the acquisition of the Bruker BioSpin Group (‘‘Bruker
BioSpin’’). Both the Company and Bruker BioSpin were majority owned by six affiliated shareholders
prior to the acquisition. As a result, the acquisition of Bruker BioSpin was considered a business
combination of companies under common control and was accounted for at historical carrying values at
the date of the acquisition. The consolidated statement of income and statement of cash flows for the
year ended December 31, 2008 presented herein have been restated by combining the historical
consolidated financial statements of the Company with those of Bruker BioSpin.
Management reports results on the basis of the following two segments:
(cid:129) Scientific Instruments. The operations of this segment include the design, manufacture and
distribution of advanced instrumentation and automated solutions based on magnetic resonance
technology, mass spectrometry technology, gas chromatography technology, X-ray technology,
spark-optical emission spectroscopy technology, atomic force microscopy technology, stylus and
optical metrology technology, and infrared and Raman molecular spectroscopy technology.
Typical customers of the Scientific Instruments segment include: pharmaceutical, biotechnology
and molecular diagnostic companies; academic institutions, medical schools and other non-profit
organizations, and clinical microbiology laboratories; government departments and agencies;
nanotechnology, semiconductor, chemical, cement, metals and petroleum companies; and food,
beverage and agricultural analysis companies and laboratories.
(cid:129) Energy & Supercon Technologies. The operations of this segment include the design, manufacture
and marketing of superconducting materials, primarily metallic low temperature superconductors,
for use in magnetic resonance imaging, nuclear magnetic resonance, fusion energy research and
other applications, and ceramic high temperature superconductors primarily for fusion energy
research applications. Typical customers of the Energy & Supercon Technologies segment include
companies in the medical industry, private and public research and development laboratories in
the fields of fundamental and applied sciences and energy research and academic institutions
and government agencies. The Energy & Supercon Technologies segment is also developing
superconductors and superconducting-enabled devices for applications in power and energy, as
well as industrial processing industries.
71
Note 2—Summary of Significant Accounting Policies
Principles of Consolidation
The financial statements include the accounts of the Company and all majority and wholly-owned
subsidiaries. All intercompany accounts and transactions have been eliminated.
Subsequent Events
The Company has evaluated all subsequent events and determined that there are no material
recognized or unrecognized subsequent events. Refer to Note 25 for additional discussions of
subsequent events disclosed.
Cash and Cash Equivalents
Cash and cash equivalents consist primarily of highly liquid investments with original maturities of
three months or less at the date of acquisition. Cash and cash equivalents primarily include cash on
hand, money market funds and time deposits. Time deposits represent amounts on deposit in banks
and temporarily invested in instruments with maturities of three months or less at the time of purchase.
Certain of these investments represent deposits which are not insured by the FDIC or any other
government agency. Cash equivalents are carried at cost, which approximates market value.
Restricted Cash
Certain customers require the Company to provide bank guarantees on customer advances.
Generally, lines of credit satisfy this requirement. However, to the extent the required guarantee
exceeds the available local line of credit, the Company maintains restricted cash balances. Restricted
cash balances are classified as non-current unless, under the terms of the various agreements, the funds
will be released from restrictions within one year. At December 31, 2010, the Company had
$6.4 million of restricted cash, of which $3.5 million was classified as non-current. At December 31,
2009, the Company had $5.0 million of restricted cash, of which $3.0 million was classified as
non-current.
Derivative Financial Instruments
All derivatives, whether designated in a hedging relationship or not, are recorded on the
consolidated balance sheets at fair value. The accounting for changes in fair value of a derivative
instrument depends on whether it has been designated and qualifies as part of a hedging relationship
and further, on the type of hedging relationship. For those derivative instruments that are designated
and qualify as hedging instruments, the Company must designate the hedging instrument, based on the
exposure being hedged, as a fair value hedge, cash flow hedge or a hedge of a net investment in a
foreign operation.
A fair value hedge is a derivative instrument designated for the purpose of hedging the exposure
of changes in fair value of an asset or a liability resulting from a particular risk. If the derivative is
designated as a fair value hedge, the changes in the fair value of the derivative and of the hedged item
attributable to the hedged risk are both recognized in the same caption in the consolidated statements
of income. A cash flow hedge is a derivative instrument designated for the purpose of hedging the
exposure to variability in future cash flows resulting from a particular risk. If the derivative is
designated as a cash flow hedge, the effective portions of changes in the fair value of the derivative are
recorded in accumulated other comprehensive income and are recognized in the results of operations
when the hedged item affects earnings. Ineffective portions of changes in the fair value of cash flow
hedges are recognized in the results of operations. A hedge of a net investment in a foreign operation
is achieved through a derivative instrument designated for the purpose of hedging the exposure of
changes in value of investments in foreign subsidiaries. If the derivative is designated as a hedge of a
72
net investment in a foreign operation, the effective portions of changes in the fair value of the
derivative are recorded in other comprehensive income as a part of the currency translation adjustment.
Ineffective portions of net investment hedges are recognized in the results of operations. For derivative
instruments not designated as hedging instruments, changes in fair value are recognized in the results
of operations in the current period.
Fair Value
The Company applies the following hierarchy, which prioritizes the inputs used to measure fair
value into three levels and bases the categorization within the hierarchy upon the lowest level of input
that is available and significant to the fair value measurement. The levels in the hierarchy are defined
as follows:
(cid:129) Level 1: Inputs to the valuation methodology are quoted prices (unadjusted) for identical assets
or liabilities in active markets.
(cid:129) Level 2: Inputs to the valuation methodology include quoted prices for similar assets and
liabilities in active markets, and inputs that are observable for the asset or liability, either
directly or indirectly, for substantially the full term of the financial instrument.
(cid:129) Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value
measurement.
The Company’s financial instruments consist primarily of cash equivalents, restricted cash,
derivative instruments consisting of forward foreign exchange contracts, commodity contracts,
derivatives embedded in certain purchase and sale contracts and an interest rate swap, accounts
receivable, short-term borrowings, accounts payable and long-term debt. The carrying amounts of the
Company’s cash equivalents, short-term investments and restricted cash, accounts receivable, short-term
borrowings and accounts payable approximate fair value due to their short-term nature. Derivative
assets and liabilities are measured at fair value on a recurring basis. The Company’s long-term debt
consists of variable rate arrangements with interest rates that reset every three months and as a result,
reflect currently available terms and conditions. Consequently, the carrying value of the Company’s
long-term debt approximates fair value.
Concentration of Credit Risk
Financial instruments which subject the Company to credit risk consist of cash and cash
equivalents, derivative instruments and accounts receivables. The risk with respect to cash and cash
equivalents is minimized by the Company’s policy of investing in short-term financial instruments issued
by highly-rated financial institutions. The risk with respect to derivative instruments is minimized by the
Company’s policy of entering into arrangements with highly-rated financial institutions. The risk with
respect to accounts receivables is minimized by the creditworthiness and diversity of the Company’s
customers. The Company performs periodic credit evaluations of its customers’ financial condition and
generally requires an advanced deposit for a portion of the purchase price. Credit losses have been
within management’s expectations and the allowance for doubtful accounts totaled $5.1 million and
$5.4 million as of December 31, 2010 and 2009, respectively. As of December 31, 2010 and 2009, no
single customer exceeded 10% of the Company’s accounts receivable. For the years ended
December 31, 2010, 2009 and 2008, no single customer exceeded 10% of the Company’s revenue.
Inventories
Components of inventory include raw materials, work-in-process, demonstration units and finished
goods. Demonstration units include systems which are located in the Company’s demonstration
laboratories or installed at the sites of potential customers and are considered available for sale.
Finished goods include in-transit systems that have been shipped to the Company’s customers, but not
73
yet installed and accepted by the customer. All inventories are stated at the lower of cost or market.
Cost is determined principally by the first-in, first-out method for a majority of subsidiaries and by
average-cost for certain international subsidiaries. The Company reduces the carrying value of its
inventories for differences between cost and estimated net realizable value, taking into consideration
usage in the preceding twelve months, expected demand, technological obsolescence and other
information including the physical condition of demonstration and in-transit inventories. The Company
records a charge to cost of revenue for the amount required to reduce the carrying value of inventory
to net realizable value. Costs associated with the procurement and warehousing of inventories, such as
inbound freight charges and purchasing and receiving costs, are also included in the cost of revenue
line item within the consolidated statements of income.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation and amortization.
Major improvements are capitalized while expenditures for maintenance, repairs and minor
improvements are charged to expense as incurred. When assets are retired or otherwise disposed of,
the assets and related accumulated depreciation and amortization are eliminated from the accounts and
any resulting gain or loss is reflected in the consolidated statements of income. Depreciation and
amortization are calculated on a straight-line basis over the estimated useful lives of the assets as
follows:
Buildings . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Machinery and equipment . . . . . . . . . . . . . . . .
Computer equipment and software . . . . . . . . .
Furniture and fixtures . . . . . . . . . . . . . . . . . . .
Leasehold improvements . . . . . . . . . . . . . . . . . Lesser of 15 years or the remaining lease term
25-40 years
3-10 years
3-5 years
3-10 years
Goodwill and Intangible Assets
Goodwill is not amortized, instead goodwill is tested for impairment on a reporting unit basis
annually, or on an interim basis when events or changes in circumstances warrant. The goodwill
impairment test involves a two-step process. The first step of the impairment test involves comparing
the fair values of the applicable reporting units with their aggregate carrying values, including goodwill.
The Company generally determines the fair value of its reporting units using an income approach
methodology of valuation that includes the discounted cash flow method. Estimating the fair value of
the reporting units requires significant judgment by management about the future cash flows. If the
carrying amount of a reporting unit exceeds the fair value of the reporting unit, we perform the second
step of the goodwill impairment test to measure the amount of the impairment. In the second step of
the goodwill impairment test we compare the implied fair value of the reporting unit’s goodwill with
the carrying value of that goodwill. The Company performs its annual test of impairment as of
December 31st each year.
Intangible assets with a finite useful life are amortized on a straight-line basis over their estimated
useful lives as follows:
Existing technology and related patents . . . . . .
Customer relationships . . . . . . . . . . . . . . . . . .
Tradenames . . . . . . . . . . . . . . . . . . . . . . . . . .
3-10 years
5-10 years
5-10 years
Acquired in process research and development (‘‘IPR&D’’) represents ongoing development work
associated with enhancements to existing products, as well as the development of next generation
products. IPR&D is initially capitalized at fair value as an intangible asset with an indefinite life and
assessed for impairment on an annual basis, or when indicators of impairment are identified. When the
IPR&D project is complete, it is reclassified as a finite-lived intangible asset and is amortized over its
estimated useful life, typically three to 10 years. If an IPR&D project is abandoned before completion
74
or determined to be impaired, the value of the asset or the amount of the impairment is charged to the
consolidated statements of income in the period the project is abandoned or impaired.
Impairment of Long-Lived Assets
Impairment losses are recorded on long-lived assets used in operations when indicators of
impairment are present and the quoted market price, if available, or the estimated undiscounted
operating cash flows generated by those assets are less than the assets’ carrying value. Impairment
losses are charged to the consolidated statements of income for the difference between the fair value
and carrying value of the asset.
Warranty Costs and Deferred Revenue
The Company typically provides a one year parts and labor warranty with the purchase of
equipment. The anticipated cost for this warranty is accrued upon recognition of the sale and is
included as a current liability on the accompanying consolidated balance sheets. The Company also
offers to its customers extended warranty and service agreements extending beyond the initial warranty
for a fee. These fees are recorded as deferred revenue, based on their relative fair value, and
recognized ratably into income over the life of the extended warranty contract.
Income Taxes
The Company accounts for income taxes using the asset and liability approach by recognizing
deferred tax assets and liabilities for the expected future tax consequences of differences between the
financial statement basis and the tax basis of assets and liabilities, calculated using enacted tax rates in
effect for the year in which the differences are expected to be reflected in the tax return. The Company
records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not
to be realized. In addition, the Company accounts for uncertain tax positions that have reached a
minimum recognition threshold.
Customer Advances
The Company typically requires an advance deposit under the terms and conditions of contracts
with customers. These deposits are recorded as a liability until revenue is recognized on the specific
contract in accordance with the Company’s revenue recognition policy.
Revenue Recognition
The Company recognizes revenue from system sales when persuasive evidence of an arrangement
exists, the price is fixed or determinable, title and risk of loss has been transferred to the customer and
collectability of the resulting receivable is reasonably assured. Title and risk of loss is generally
transferred to the customer upon receipt of signed customer acceptance for a system that has been
shipped, installed, and for which the customer has been trained. As a result, the timing of customer
acceptance or readiness could cause the Company’s reported revenues to differ materially from
expectations. When products are sold through an independent distributor or a strategic distribution
partner that assumes responsibility for installation, the Company recognizes the system as revenue when
the product has been shipped and title and risk of loss has been transferred. The Company’s
distributors do not have price protection rights or rights of return; however, products are warranted to
be free from defect for a period that is typically one year. Revenue is deferred until cash is received
when collectability is not reasonably assured, such as when a significant portion of the fee is due over
one year after delivery, installation and acceptance of a system. For arrangements with multiple
elements, the Company recognizes revenue for each element based on the relative fair value of the
elements, provided all other criteria for revenue recognition have been met. The fair value for each
element provided in multiple element arrangements is typically determined by reference to the prices
75
charged when the element is sold separately. If there is objective and reliable evidence of the fair value
of the undelivered items in an arrangement, but no such evidence for the delivered items, the Company
uses the residual method to allocate the arrangement consideration. Changes in the Company’s ability
to establish the fair value for each element in multiple element arrangements could affect the timing of
revenue recognition.
Revenue from the sale of accessories and parts is recognized upon shipment and service revenue is
recognized as the services are performed.
The Company also has contracts for which it applies the percentage-of-completion model of
revenue recognition and the milestone model of revenue recognition. Application of the
percentage-of-completion method requires us to make reasonable estimates of the extent of progress
toward completion of the contract and the total costs we will incur under the contract. Changes in the
estimates of progress toward completion of the contract and the total costs could affect the timing of
revenue recognition.
Other revenues are comprised primarily of research grants and licensing arrangements. Grant
revenue is recognized when the requirements in the grant agreement are achieved. Licensing revenue is
recognized ratably over the term of the related contract.
Shipping and Handling Costs
The Company records costs incurred in connection with shipping and handling products as
marketing and selling expenses. Shipping and handling costs were $18.5 million, $14.0 million and
$14.7 million in the years ended December 31, 2010, 2009 and 2008, respectively. Amounts billed to
customers in connection with these costs are included in revenues.
Research and Development
Research and development costs are expensed as incurred and include salaries, wages and other
personnel related costs, material costs and depreciation, consulting costs and facility costs.
Software Costs
Purchased software is capitalized at cost and is amortized over the estimated useful life, generally
three years. Software developed for use in the Company’s products is expensed as incurred until
technological feasibility is reasonably assured and is classified as research and development expense.
Subsequent to the achievement of technological feasibility, amounts are capitalizable, however, to date
such amounts have not been material.
Advertising
The Company expenses advertising costs as incurred. Advertising expenses were $9.1 million,
$6.9 million and $6.2 million during the years ended December 31, 2010, 2009 and 2008, respectively.
Stock-Based Compensation
The Company recognizes stock-based compensation expense in the consolidated statements of
income based on the fair value of the share-based award at the grant date. The Company’s primary
types of share-based compensation are stock options and restricted stock. The Company recorded
76
stock-based compensation expense for the years ended December 31, 2010, 2009 and 2008, as follows
(in millions):
Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stock-based compensation pre-tax . . . . . . . . . . . . . . . . .
Tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010
2009
2008
$5.8
1.1
6.9
1.1
$5.0
1.3
6.3
1.1
$3.8
0.7
4.5
0.7
Total stock-based compensation net of tax . . . . . . . . . . . . . . .
$5.8
$5.2
$3.8
Stock-based compensation expense is amortized on a straight-line basis over the underlying vesting
terms of the share-based award. The fair value of each option award is estimated on the date of grant
using the Black-Scholes option-pricing model. Assumptions regarding volatility, expected term, dividend
yield and risk-free interest rate are required for the Black-Scholes model. The assumptions for
volatility, expected life, dividend yield and risk-free interest rate are presented in the table below:
2010
2009
2008
Risk-free interest rate . . . . . . . . . . . .
Expected life . . . . . . . . . . . . . . . . . .
Volatility . . . . . . . . . . . . . . . . . . . . .
Expected dividend yield . . . . . . . . . . .
1.73%-3.46% 1.71%-3.60% 1.59%-3.95%
6.5 years
72.0%
0.0%
6.5 years
64.0%
0.0%
6.5 years
62.0%
0.0%
The risk-free interest rate is based on the yield on zero-coupon U.S. Treasury securities for a
period that is commensurate with the expected life assumption. The expected term is determined
through the simplified method as defined in the Securities and Exchange Commission Staff Accounting
Bulletin No. 110. The Company believes that this is the best estimate of the expected term of a new
option because the acquisition of Bruker BioSpin might alter historical exercise patterns. Expected
volatility is based on a number of factors. The Company currently believes that the exclusive use of
implied volatility results in the best estimate of the grant-date fair value of employee stock options
because it reflects the market’s current expectations of future volatility. The expected dividend yield
was not considered in the option pricing formula since the Company does not pay dividends and has no
current plans to do so in the future. The terms of some of the Company’s debt facilities also currently
restricts its ability to pay dividends to its shareholders.
In addition, the Company utilizes an estimated forfeiture rate when calculating the stock-based
compensation expense for the period. The Company has applied estimated forfeiture rates derived from
an analysis of historical data of 5.4%, 5.8% and 6.2% for the years ended December 31, 2010, 2009 and
2008, respectively, in determining the expense recorded in the accompanying consolidated statements of
income. The weighted average fair values of options granted were $8.56, $5.83 and $8.17 for the years
ended December 31, 2010, 2009 and 2008, respectively.
Earnings Per Share
Net income per common share attributable to Bruker Corporation shareholders is calculated by
dividing net income attributable to Bruker Corporation by the weighted-average shares outstanding
during the period. The diluted net income per share computation includes the effect of shares which
would be issuable upon the exercise of outstanding stock options and the vesting of restricted stock,
reduced by the number of shares which are assumed to be purchased by the Company under the
treasury stock method.
77
The following table sets forth the computation of basic and diluted weighted average shares
outstanding for the years ended December 31, (in millions, except per share data):
2010
2009
2008
Net income attributable to Bruker Corporation, as
reported . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 95.4
$ 81.2
$ 64.9
Weighted average shares outstanding:
Weighted average shares outstanding—basic . . . . . . . . .
Effect of dilutive securities:
164.4
163.5
162.7
Stock options and restricted stock . . . . . . . . . . . . . . .
1.3
1.4
2.9
165.7
164.9
165.6
Net income per common share attributable to Bruker
Corporation shareholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.58
$ 0.50
$ 0.40
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.58
$ 0.49
$ 0.39
Stock options to purchase approximately 0.7 million shares, 2.3 million shares and 1.9 million
shares were excluded from the computation of diluted earnings per share in the years ended
December 31, 2010, 2009 and 2008, respectively, because their effect would have been anti-dilutive.
Employee Retirement Plans
The Company recognizes the over-funded or under-funded status of defined benefit pension and
other postretirement defined benefit plans as an asset or liability in its statement of financial position
and recognizes changes in that funded status in the year in which the changes occur through
comprehensive income.
Other Comprehensive Income
Other comprehensive income refers to revenues, expenses, gains and losses that under accounting
principles generally accepted in the United States are included in other comprehensive income, but are
excluded from net income as these amounts are recorded directly as an adjustment to shareholders’
equity, net of tax. The Company’s other comprehensive income is composed primarily of foreign
currency translation adjustments, changes in the funded status of defined benefit pension plans and
changes in the fair value of derivatives that have been designated as cash flow hedges.
Foreign Currency Translation
Assets and liabilities of the Company’s foreign subsidiaries, where the functional currency is the
local currency, are translated into U.S. dollars using year-end exchange rates. Revenues and expenses of
foreign subsidiaries are translated at the average exchange rates in effect during the year. Adjustments
resulting from financial statement translations are included as a separate component of shareholders’
equity. Gains and losses resulting from foreign currency transactions are reported in interest and other
income (expense), net in the consolidated statements of income for all periods presented.
Noncontrolling Interests
Noncontrolling interests represents the minority shareholders’ proportionate share of the
Company’s majority-owned indirect subsidiaries. Beginning on January 1, 2009, noncontrolling interests
are reported as a separate component of shareholders’ equity. The portion of net income attributable
to non-controlling interests is presented as net income (loss) attributable to noncontrolling interests in
consolidated subsidiaries in the consolidated statements of income, and the portion of other
78
comprehensive income of these subsidiaries is presented in the consolidated statements of shareholders’
equity and comprehensive income.
Risk and Uncertainties
The Company is subject to risks common to its industry including, but not limited to, global
economic conditions, rapid technological change, spending patterns from its customers, protection of its
intellectual property, availability of key raw materials and components, compliance with existing and
future regulation by government agencies, dependence on key personnel and fluctuations in foreign
currency exchange rates.
Contingencies
The Company is subject to proceedings, lawsuits and other claims related to patents, product and
other matters. The Company assesses the likelihood of any adverse judgments or outcomes to these
matters as well as potential ranges of probable losses. A determination of the amount of reserves
required, if any, for these contingencies is made after careful analysis of each individual issue. The
required reserves may change in the future due to new developments in each situation or changes in
settlement strategy in dealing with these matters.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted
in the United States requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the
financial statements and reported amounts of revenues and expenses during the reporting period.
Actual results could differ from such estimates.
Prior Year Financial Statement Reclassification
The consolidated balance sheet at December 31, 2009 reflects amounts related to commodity
hedge contracts net of the associated fixed price commodity contract. In order to conform to the
current year presentation, the Company has shown $0.3 million of commodity hedge contracts as other
current assets and $0.3 million of fixed price commodity contracts as other current liabilities to provide
a better reflection of the assets and liabilities. The reclassification of these amounts had no effect on
the Company’s previously reported results of operations or cash flows for the year ended December 31,
2009.
Additionally, certain amounts totaling $19.2 million in the consolidated balance sheet for the year
ended December 31, 2009, related to prepaid income taxes, have been reclassified from deferred tax
assets to other current assets to conform to the current period presentation. The reclassification had no
impact on the Company’s previously reported results of operations or cash flows for the years ended
December 31, 2009 or 2008.
Note 3—Acquisition of Bruker BioSpin
In February 2008, the Company completed the acquisition of all of the outstanding capital stock of
Bruker BioSpin in accordance with the terms of various stock purchase agreements dated as of
December 2, 2007. The acquisition of Bruker BioSpin represented a combination of companies under
common control due to the majority ownership of both companies by six related individuals as an
affiliated shareholder group. As a result, the acquisition of Bruker BioSpin was accounted for at
historical carrying values. The technologies of Bruker BioSpin are complementary to the Company’s
accurate-mass electrospray time-of-flight mass spectrometers and single-crystal diffraction X-ray
spectrometers and continue to provide revenue synergies and opportunities to supply customers with
equipment packages that have a broader range of applications and value. The addition of Bruker
BioSpin enhanced the Company’s worldwide distribution and sales and service infrastructure.
79
At the completion of this acquisition, the Company paid an aggregate of $914.0 million of
consideration to the shareholders of Bruker BioSpin, which was financed with 57,544,872 shares of
unregistered common stock valued at $526.0 million, $351.0 million of cash obtained under a credit
facility and the balance with cash on hand. The value of the shares of common stock issued in
connection with the merger was determined using a trailing average of the closing market prices of the
Company’s stock for a period of ten consecutive trading days ending two days prior to the signing of
the various stock purchase agreements.
Under the stock purchase agreements, $98.8 million of the purchase price was paid into escrow
accounts pending the resolution of indemnification obligations and working capital obligations of the
sellers. A working capital escrow of $6.8 million was released to the sellers in May 2008 following the
receipt of combined audited financial statements of Bruker BioSpin for the fiscal year ended
December 31, 2007. An indemnity escrow of $92.0 million was to be released to the sellers at the later
of (1) the 30th day following the receipt by the Company of audited financial statements of the
Company for the year ended December 31, 2008, or (2) the resolution of any claim for indemnification
of which the sellers have received notice prior to the conclusion of the 30 day period described in
(1) above. In April 2009, the indemnity escrow was released following the receipt of the audited
financial statements of the Company, including Bruker BioSpin, for the year ended December 31, 2008.
Note 4—Other Acquisitions
Other Acquisitions Completed in 2010
In October 2010, the Company completed the acquisition of Veeco Metrology Inc., a scanning
probe microscopy and optical industrial metrology instruments business (the ‘‘nano surfaces business’’),
from Veeco Instruments Inc. (‘‘Veeco’’) for cash consideration of $230.4 million. The Company
financed the acquisition with $167.6 million borrowed under a revolving credit agreement and the
balance with cash on hand. The acquired business complements the Company’s existing atomic force
microscopy products and expands the Company’s offerings to industrial and applied markets,
specifically, in the fields of materials and nanotechnology research and analysis. Under the purchase
agreement $22.9 million of the purchase price was paid into escrow pending the resolution of
indemnification obligations and working capital obligations of the seller. At December 31, 2010, the
Company has not completed the local business transfer of the part of the acquired business in China
because it is in the process of establishing a legal entity. The Company paid approximately $7.2 million
to Veeco for the net assets in China and has recorded this amount in other current assets because the
Company expects to complete the local business transfer in the next twelve months.
In May 2010, the Company completed the acquisition of three former Varian, Inc. (‘‘Varian’’)
product lines which Agilent Technologies, Inc. (‘‘Agilent’’) divested in connection with obtaining
regulatory approval for its acquisition of Varian. The Company acquired certain assets and assumed
certain liabilities in Varian’s inductively coupled plasma mass spectrometry instruments business,
laboratory gas chromatography instruments business, and gas chromatography triple-quadrupole mass
spectrometry instruments business (collectively, the ‘‘chemical analysis business’’) for cash consideration
of $37.5 million. The acquired business complements the Company’s existing mass spectrometry
products and expands the Company’s offerings to industrial and applied markets.
80
The acquisition of the nano surfaces business and chemical analysis business are being accounted
for under the acquisition method. The components of the consideration transferred and the allocation
of the consideration transferred for these businesses are as follows (in millions):
Nano
Surfaces
Chemical
Analysis
Consideration Transferred:
Cash paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$230.4
Total consideration transferred . . . . . . . . . . . . . . . . . . . . . . . .
$230.4
Allocation of Consideration Transferred:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets:
Existing technology and related patents . . . . . . . . . . . . . . . . . .
Customer and distributor relationships . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . .
In-process research and development
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 37.5
$ 37.5
$ —
10.3
16.9
—
2.4
$ 21.8
—
33.5
8.1
18.0
87.7
1.5
21.3
51.0
(12.5)
7.1
15.8
—
0.4
(15.4)
Total consideration transferred . . . . . . . . . . . . . . . . . . . . . . . .
$230.4
$ 37.5
The Company has not yet completed the final allocation of the consideration transferred in
connection with the nano surfaces business but will complete the final allocation within the
measurement period. The Company finalized the allocation of the consideration transferred in
connection with the chemical analysis business in the fourth quarter of 2010. Measurement period
adjustments made to the acquisition date fair values of the chemical analysis business in the fourth
quarter of 2010 were not material.
The acquisition of the nano surfaces business and the chemical analysis business were made at
prices above the fair value of the net acquired assets, resulting in $51.0 million and $0.4 million of
goodwill, respectively. The Company was willing to pay these prices based on expectations of synergies
that will result from combining the businesses. These synergies include expanded product offerings to
applied analytical markets that the Company was previously not able to address in a comprehensive
manner and leveraging selling, general and administrative expenses.
In performing the purchase price allocation, the Company considered, among other factors, its
intention for future use of the acquired assets, analyses of historical financial performance, and
estimates of future cash flows from the nano surfaces and chemical analysis business’ products and
services. The purchase price was allocated based upon the fair value of the identified assets acquired
and liabilities assumed as of the acquisition date from a market participant’s perspective. The Company
used the excess-earnings method, a form of the income approach, to value the existing technology and
patents related to the nano surfaces business and for the customer and distributor relationships related
to the chemical analysis business. The principle behind this method is that the value of the intangible
asset is equal to the present value of the after-tax cash flows attributable to the intangible asset only.
The Company used the lost-profit/avoided cost method, a form of the income approach, to value the
distributor relationships related to the nano surfaces business. The principle behind this method is that
the economic value of an asset can be estimated based on the total costs that were avoided by having
the asset in place. The Company used the relief from royalty method to value the existing technology
and patents related to the chemical analysis business. The principle behind this method is that the
81
value of the intangible asset is equal to the present value of the after-tax royalty savings attributable to
owning the intangible asset. The weighted-average amortization periods for intangible assets acquired in
connection with the nano surfaces business and the chemical analysis business are 8.5 years for existing
technology and related patents and 9.6 years for customer and distributor relationships. Acquired
IPR&D was valued using the discounted cash flows approach. IPR&D is carried at its initial fair value
and will be amortized to expense upon completion of development. If further development becomes
unfeasible or is abandoned, the carrying value of the IPR&D will be expensed in the period it occurs.
Additionally, the Company assumed certain liabilities in the acquisition, including deferred revenue
which was recorded at fair value using a cost-plus profit approach.
Transaction costs associated with the acquisition of the nano surfaces and chemical analysis
businesses have been expensed as incurred. The Company incurred $4.6 million in expenses that are
included in other charges, net in the consolidated statements of income for the year ended
December 31, 2010. These costs include $2.8 million of transition costs whereby Agilent and Veeco are
providing administrative services on behalf of the Company for defined periods and transaction
expenses of $1.8 million consisting of various professional fees.
The results of the nano surfaces business and the chemical analysis business have been included in
the Scientific Instruments segment from the date of acquisition.
The following table sets forth pro forma financial information reflecting the acquisition of the
nano surfaces business as if the acquisition had occurred on January 1, 2009, for the years ended
December 31, (in millions, except per share date):
Revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Bruker Corporation . . . . . . . . . . . .
Net income per common share attributable to Bruker
Corporation shareholders:
Basic and diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010
2009
$1,410.7
97.0
$1,211.8
55.3
$
0.59
$
0.34
From the date of acquisition through December 31, 2010, the nano surfaces business generated
revenues of $20.8 million, net losses attributable to Bruker Corporation of $(8.8) million and net loss
per diluted common share attributable to Bruker Corporation of $(0.05).
Pro forma financial information reflecting the acquisition of the chemical analysis business has not
been presented because the impact on revenues, net income and net income per common share
attributable to Bruker Corporation shareholders is not material.
Other Acquisitions Completed in 2009
In April 2009, the Company acquired substantially all of the assets of the research instruments
portion of ACCEL Instruments GmbH (the ‘‘RI business’’) from Varian Medical Systems, Inc. The
acquisition of the RI business was accounted for under the acquisition method. The RI business,
located in Bergisch Gladbach, Germany, consists of the development and manufacture of electron and
ion linear accelerators, superconducting and normal conducting accelerator cavities, insertion devices,
superconducting fault current limiters, other accelerator components and specialty superconducting
magnets for physics and energy research and a variety of other scientific applications. The consideration
transferred in acquiring the RI business was approximately $0.4 million and consisted entirely of cash.
The Company acquired approximately $2.8 million of receivables, $4.4 million of inventory, $2.2 million
of other current assets and $4.9 million of property, plant and equipment in this acquisition and
assumed approximately $12.1 million of current liabilities. The Company also recorded $0.5 million
representing the fair value of a noncontrolling interest. In 2009, in connection with the acquisition of
82
the RI business, the Company recorded a gain of approximately $1.3 million that was recorded as a
component of acquisition-related charges in the consolidated statements of income. A gain of
$2.1 million was initially recorded in the second quarter of 2009 based on a preliminary purchase price
allocation, but was subsequently reduced by $0.8 million in the fourth quarter of 2009 based on the
final allocation. The results of the RI business have been included in the Energy & Supercon
Technologies segment from the date of acquisition. Pro forma financial information reflecting the
acquisition of the RI business has not been presented because the impact on revenues, net income
attributable to Bruker Corporation and net income per common share attributable to Bruker
Corporation shareholders is not material.
Note 5—Fair Value of Financial Instruments
The Company measures the following financial assets and liabilities at fair value on a recurring
basis. The following table sets forth the Company’s financial instruments and presents them within the
fair value hierarchy using the lowest level of input that is significant to the fair value measurement at
December 31, 2010 (in millions):
Quoted Prices in
Active Markets
Available
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Assets:
Cash equivalents . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . .
Embedded derivatives in purchase and delivery
contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts . . . . . . . . . . . . . . . . . . . . .
Long-term restricted cash . . . . . . . . . . . . . . . . .
Total
$88.3
2.9
2.1
0.1
0.6
3.5
$88.3
2.9
—
—
—
3.5
Total assets recorded at fair value . . . . . . . . . .
$97.5
$94.7
Liabilities:
Interest rate swap contract . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . .
Embedded derivatives in purchase and delivery
contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed price commodity contracts . . . . . . . . . . . .
$ 3.0
1.7
1.5
0.6
$ —
—
—
—
Total liabilities recorded at fair value . . . . . . . .
$ 6.8
$ —
Note 6—Accounts Receivable
$ —
—
2.1
0.1
0.6
—
$2.8
$3.0
1.7
1.5
0.6
$6.8
$—
—
—
—
—
—
$—
$—
—
—
—
$—
The following is a summary of trade accounts receivable at December 31, (in millions):
Gross accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . .
$238.0
(5.1)
$189.5
(5.4)
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$232.9
$184.1
2010
2009
The allowance for doubtful accounts is management’s estimate of credit losses in the accounts
receivable. The allowance for doubtful accounts is based on a number of factors, including an
evaluation of customer credit worthiness, the age of the outstanding receivable, economic trends and
historical experience. The allowance for doubtful accounts is reviewed on a quarterly basis and changes
83
in estimates are reflected in the period in which they become known. The Company writes off account
balances against the allowance when it becomes probable that the receivable will not be collected.
The following is a summary of the activity in the Company’s allowance for doubtful accounts at
December 31, (in millions):
Balance at
Beginning of
Period
Additions
Charged to
Expense
Deductions
Amounts
Written Off
Balance
at End
of Period
2010 . . . . . . . . . . . . . . . . . . . . . . . .
2009 . . . . . . . . . . . . . . . . . . . . . . . .
2008 . . . . . . . . . . . . . . . . . . . . . . . .
$5.4
5.4
6.1
$0.3
1.2
0.4
$(0.6)
(1.2)
(1.1)
$5.1
5.4
5.4
Note 7—Inventories
Inventories consisted of the following at December 31, (in millions):
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Work-in-process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Demonstration units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$143.7
174.8
48.6
143.9
$108.8
134.6
41.3
138.1
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$511.0
$422.8
2010
2009
The Company reduces the carrying value of its demonstration inventories for differences between
its cost and estimated net realizable value through a charge to cost of product revenue that is based on
a number of factors including, the age of the unit, the physical condition of the unit and an assessment
of technological obsolescence. Amounts recorded in cost of revenue related to the write-down of
demonstration units to net realizable value were $24.4 million, $26.1 million and $24.5 million for the
years ended December 31, 2010, 2009 and 2008, respectively. Finished goods include in-transit systems
that have been shipped to the Company’s customers but not yet installed and accepted by the customer.
As of December 31, 2010 and 2009, inventory-in-transit was $85.3 million and $80.8 million,
respectively.
Note 8—Property, Plant and Equipment
The following is a summary of property, plant and equipment by major asset class at December 31,
(in millions):
Land . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Building and leasehold improvements . . . . . . . . . . . . . . . . . . . . .
Machinery, equipment, software and furniture and fixtures . . . . .
$ 28.3
231.5
281.0
$ 29.1
233.8
254.5
Less accumulated depreciation and amortization . . . . . . . . . . . . .
540.8
(307.1)
517.4
(294.0)
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . .
$ 233.7
$ 223.4
2010
2009
Depreciation expense, which includes the amortization of leasehold improvements, for the years
ended December 31, 2010, 2009 and 2008 approximated $30.3 million, $27.9 million and $27.5 million,
respectively.
84
Note 9—Goodwill and Other Intangible Assets
The following table sets forth the changes in the carrying amount of goodwill for the years ended
December 31, 2010 and 2009 (in millions):
Balance at December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill acquired during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency impact
$46.4
0.5
0.6
Balance at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill acquired during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency impact
47.5
52.4
(1.6)
Balance at December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$98.3
At December 31, 2010 and 2009, all goodwill was allocated to the Scientific Instruments segment.
The goodwill acquired in 2010 relates to the acquisition of the nano surfaces business, the chemical
analysis business and approximately $1.0 million related to other individually insignificant acquisitions.
The goodwill acquired in 2009 related to a number of individually insignificant acquisitions. No
impairment losses were recorded on goodwill during the years ended December 31, 2010, 2009 and
2008.
The following is a summary of intangible assets at December 31, (in millions):
2010
2009
Gross
Net
Gross
Net
Carrying Accumulated Carrying Carrying Accumulated Carrying
Amount Amortization Amount Amount Amortization Amount
Existing technology and related patents . . . . . . $112.0
20.2
Customer relationships . . . . . . . . . . . . . . . . . .
0.4
Trade names . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets subject to amortization . . . .
In-process research and development . . . . . . . .
132.6
21.3
$(15.0)
(2.5)
(0.3)
(17.8)
—
$ 97.0
17.7
0.1
114.8
21.3
$14.4
2.0
0.4
16.8
—
$(10.7)
(0.9)
(0.3)
(11.9)
—
$3.7
1.1
0.1
4.9
—
Intangible assets . . . . . . . . . . . . . . . . . . . . . $153.9
$(17.8)
$136.1
$16.8
$(11.9)
$4.9
For the years ended December 31, 2010, 2009 and 2008, the Company recorded amortization
expense of approximately $5.8 million, $1.8 million and $1.8 million, respectively, in the consolidated
statements of income. No impairment losses were recorded related to definite-lived intangible assets
during the years ended December 31, 2010, 2009 and 2008.
The estimated future amortization expense related to amortizable intangible assets at
December 31, 2010 is as follows (in millions):
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 15.2
16.8
16.7
16.4
16.1
54.9
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$136.1
85
Note 10—Other Current Liabilities
The following is a summary of other current liabilities at December 31, (in millions):
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income taxes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued warranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010
2009
$ 70.3
68.8
61.5
28.4
6.8
65.9
$ 51.1
55.2
39.2
22.9
5.3
62.5
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$301.7
$236.2
The following table sets forth the changes in accrued warranty for the years ended December 31,
2010 and 2009 (in millions):
Balance at December 31, 2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accruals for warranties issued during the year . . . . . . . . . . . . . . . . . . . . .
Settlements of warranty claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accruals for warranties issued during the year . . . . . . . . . . . . . . . . . . . . .
Settlements of warranty claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 24.5
20.9
(23.0)
0.5
22.9
28.6
(22.0)
(1.1)
Balance at December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 28.4
Note 11—Debt
The Company’s debt obligations consist of the following as of December 31, (in millions):
US Dollar term loan under the Credit Agreement . . . . . . . . . . . . .
Euro bank loans at fixed rate of 2.95%, collateralized by land and
buildings of Bruker Daltonik GmbH, quarterly principal
payments and monthly interest payments due and payable
through 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010
2009
$110.6
$131.3
—
4.9
0.3
6.0
Total long-term debt
Current portion of long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . .
115.5
(28.9)
137.6
(21.9)
Total long-term debt, less current portion . . . . . . . . . . . . . . . . . . .
$ 86.6
$115.7
86
Annual maturities of long-term debt at December 31, 2010 are as follows (in millions):
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 28.9
83.7
1.1
0.7
0.6
0.5
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$115.5
The Company entered into a credit agreement with a syndication of lenders (the ‘‘Credit
Agreement’’) which provides for a revolving credit line with a maximum commitment of $230.0 million
and a term facility of $150.0 million. The outstanding principal and interest under the term loan is
payable in quarterly installments through December 2012. Borrowings under the Credit Agreement
bear interest, at the Company’s option, at either (i) the higher of the prime rate or the federal funds
rate plus 0.50%, or (ii) adjusted LIBOR, plus margins ranging from 0.40% to 1.25% and a facility fee
ranging from 0.10% to 0.20%. As of December 31, 2010, the weighted average interest rate of
borrowings under the term facility of the Credit Agreement was approximately 2.6%.
Borrowings under the Credit Agreement are secured by the pledge to the banks of 100% of the
capital stock of each of the Company’s wholly-owned domestic subsidiaries and 65% of the capital
stock of certain of the Company’s direct or indirect wholly-owned foreign subsidiaries. The Credit
Agreement also requires the Company to maintain certain financial ratios related to leverage ratios and
interest coverage ratios as defined in the Credit Agreement. In addition to the financial ratios, the
Credit Agreement restricts, among other things, the Company’s ability to do the following: make
certain payments; incur additional debt; incur certain liens; make certain investments, including
derivative agreements; merge, consolidate, sell or transfer all or substantially all of the Company’s
assets; and enter into certain transactions with affiliates. As of December 31, 2010, the latest
measurement date, the Company was in compliance with the covenants under the Credit Agreement.
In addition to its long-term arrangements, the Company had the following amounts outstanding
under revolving loan arrangements as of December 31, (in millions):
Euro revolving loans under the Credit Agreement . . . . . . . . . . . . . . .
Other revolving loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$185.5
$ —
— 0.1
Total short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$185.5
$0.1
2010
2009
Interest expense under long-term and revolving loan arrangements for the years ended
December 31, 2010, 2009 and 2008, was $5.6 million, $7.5 million and $11.7 million, respectively.
The following is a summary of the maximum commitments and the net amounts available to the
Company under revolving loans as of December 31, 2010 (in millions):
Weighted
Average
Interest Rate
Total Amount
Committed by Outstanding
Borrowings
Lenders
Outstanding
Letters of
Credit
Total Amount
Available
. . . . . . . . . . . . . .
Credit Agreement
Other revolving loans . . . . . . . . . . . .
Total revolving loans . . . . . . . . . . .
0.7%
0.0%
0.7%
$230.0
146.8
$376.8
$185.5
—
$185.5
0.1
$
108.7
$108.8
$44.4
38.1
$82.5
87
Other revolving loans are with various financial institutions located primarily in Germany,
Switzerland and France. The Company’s other revolving lines of credit are typically due upon demand
with interest payable monthly. Certain of these lines of credit are unsecured while others are secured
by the accounts receivable and inventory of the related subsidiary.
Note 12—Derivative Instruments and Hedging Activities
Interest Rate Risks
The Company’s exposure to interest rate risk relates primarily to outstanding variable rate debt
and adverse movements in the related short-term market rates. The most significant component of the
Company’s interest rate risk relates to amounts outstanding under the Credit Agreement. In April
2008, the Company entered into an interest rate swap arrangement to manage its exposure to interest
rate movements and the related effect on its variable rate debt. Under this interest rate swap
arrangement, the Company will pay a fixed rate of approximately 3.8% and receive a variable rate
based on three month LIBOR. The initial notional amount of this interest rate swap was $90.0 million
and it amortizes in proportion to the term debt component of the Credit Agreement through
December 2012. At December 31, 2010 and 2009, the notional amount of this interest rate swap was
$66.4 million and $78.8 million, respectively. The Company concluded that this swap met the criteria to
qualify as an effective hedge of the variability of cash flows of the interest payments and accounts for
the interest rate swap as a cash flow hedge. Accordingly, the Company reflects changes in the fair value
of the effective portion of this interest rate swap in accumulated other comprehensive income, a
separate component of shareholders’ equity. Amounts recorded in accumulated other comprehensive
income are reclassified to interest and other income (expense), net in the consolidated statement of
income when either the forecasted transaction occurs or it becomes probable that the forecasted
transaction will not occur.
Foreign Exchange Rate Risk Management
The Company generates a substantial portion of its revenues and expenses in international
markets, principally Germany and other countries in the European Union, Switzerland and Japan,
which subjects its operations to the exposure of exchange rate fluctuations. The impact of currency
exchange rate movement can be positive or negative in any period. Under these arrangements, the
Company typically agrees to purchase a fixed amount of a foreign currency in exchange for a fixed
amount of U.S. Dollars or other currencies on specified dates with maturities of less than twelve
months. These transactions do not qualify for hedge accounting and, accordingly, the instrument is
recorded at fair value with the corresponding gains and losses recorded in the consolidated statements
88
of income. The Company had the following notional amounts outstanding under foreign currency
contracts at December 31, (in millions):
Buy
December 31, 2010:
Euro . . . . . . . . . . . . . . . . . . . . .
Euro . . . . . . . . . . . . . . . . . . . . .
Euro . . . . . . . . . . . . . . . . . . . . .
Swiss Francs . . . . . . . . . . . . . . . .
Swiss Francs . . . . . . . . . . . . . . . .
U.S. Dollars . . . . . . . . . . . . . . . .
December 31, 2009:
Swiss Francs . . . . . . . . . . . . . . . .
U.S. Dollars . . . . . . . . . . . . . . . .
Euro . . . . . . . . . . . . . . . . . . . . .
Notional
Amount in
Buy Currency
Sell
Notional
Amount in
U.S. Dollars
1.5
13.3
14.5
13.6
18.0
8.9
13.6
1.1
7.7
Australian Dollars . . . . . . . . . . . . .
Swiss Francs . . . . . . . . . . . . . . . . .
U.S. Dollars . . . . . . . . . . . . . . . . .
U.S. Dollars . . . . . . . . . . . . . . . . .
Euro . . . . . . . . . . . . . . . . . . . . . . .
Euro . . . . . . . . . . . . . . . . . . . . . . .
U.S. Dollars . . . . . . . . . . . . . . . . .
Euro . . . . . . . . . . . . . . . . . . . . . . .
U.S. Dollars . . . . . . . . . . . . . . . . .
$ 2.2
19.3
19.6
13.9
18.5
8.7
$82.2
$13.1
1.1
11.1
$25.3
In addition, the Company periodically enters into purchase and sales contracts denominated in
currencies other than the functional currency of the parties to the transaction. The Company accounts
for these transactions separately valuing the ‘‘embedded derivative’’ component of these contracts. The
contracts, denominated in currencies other than the functional currency of the transacting parties,
amounted to $16.1 million for the delivery of products and $0.3 million for the purchase of products at
December 31, 2010 and $30.4 million for the delivery of products and $0.2 million for the purchase of
products at December 31, 2009. The changes in the fair value of these embedded derivatives are
recorded in interest and other income (expense), net in the consolidated statements of income.
Commodity Price Risk Management
The Company has an arrangement with a customer under which the Company has a firm
commitment to deliver copper based superconductors at a fixed price. In order to minimize the
volatility that fluctuations in the price of copper have on the Company’s sales of these commodities, the
Company enters into commodity hedge contracts. At December 31, 2010 and 2009, the Company had
fixed price commodity contracts with notional amounts aggregating $2.9 million and $0.9 million,
respectively. The changes in the fair value of these commodity contracts are recorded in interest and
other income (expense), net in the consolidated statements of income.
89
The fair value of the derivative instruments described above are recorded in our consolidated
balance sheets for the years ending December 31, 2010 and 2009 as follows (in millions):
Balance Sheet Location
2010
2009
Derivative assets:
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . Other current assets
Embedded derivatives in purchase and delivery contracts . . . . Other current assets
Commodity contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Other current assets
$2.1
$ —
0.1 —
0.3
0.6
Derivative liabilities:
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . Other current liabilities
Interest rate swap contract . . . . . . . . . . . . . . . . . . . . . . . . . . Other current liabilities
Embedded derivatives in purchase and delivery contracts . . . . Other current liabilities
Fixed price commodity contracts . . . . . . . . . . . . . . . . . . . . . . Other current liabilities
$1.7
3.0
1.5
0.6
$ —
3.5
1.5
0.3
The losses recognized in other comprehensive income related to the effective portion of the
interest rate swap designated as a hedging instrument for the years ending December 31, are as follows
(in millions):
Interest rate swap contract
. . . . . . . . . . . . . . . . . . . . . . . . . .
$(2.1) $(1.2) $(5.2)
The losses related to the effective portion of the interest rate swap designated as a hedging
instrument that were reclassified from other comprehensive income and recognized in net income for
the years ending December 31, are as follows (in millions):
2010
2009
2008
2010
2009
2008
Interest rate swap contract
. . . . . . . . . . . . . . . . . . . . . . . . . .
$(2.6) $(2.5) $(0.4)
The Company expects $2.1 million of accumulated losses to be reclassified into earnings over the
next twelve months.
The Company did not recognize any amounts related to ineffectiveness in the results of operations
for the years ended December 31, 2010, 2009 and 2008, respectively.
The impact on net income of changes in the fair value of derivative instruments not designated as
hedging instruments for the years ending December 31, are as follows (in millions):
2010
2009
2008
$ — $(0.1)
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1.8)
Embedded derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest rate derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (0.5)
$0.4
0.1
0.7
Income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$0.5
$0.7
$(2.4)
The amounts recorded in the results of operations related to derivative instruments not designated
as hedging instruments are recorded in interest and other income (expense), net.
90
Note 13—Income Taxes
The domestic and foreign components of income before taxes are as follows for the years ended
December 31, (in millions):
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (12.5) $ (11.5) $ (17.1)
110.3
140.6
162.6
2010
2009
2008
$150.1
$129.1
$ 93.2
The components of the income tax provision are as follows for the years ended December 31, (in
millions):
2010
2009
2008
Current income tax expense:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.3
—
56.6
$ 1.6
0.8
47.8
$ 0.2
0.4
28.4
Total current income tax expense . . . . . . . . . . . . . . . . . .
56.9
50.2
29.0
Deferred income tax (benefit):
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred income tax (benefit) . . . . . . . . . . . . . . . .
0.3
—
(3.9)
(3.6)
(0.4)
—
(1.7)
(2.1)
0.6
0.3
(1.9)
(1.0)
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . .
$53.3
$48.1
$28.0
A reconciliation of the United States federal statutory rate to the effective income tax rate is as
follows for the years ended December 31:
2010
2009
2008
Statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35.0% 35.0% 35.0%
Foreign tax rate differential . . . . . . . . . . . . . . . . . . . . . . . . .
(9.9)
(5.7)
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Permanent differences
3.0
1.8
Tax contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.4
4.4
Change in tax rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.1
0.1
0.2
Withholding taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1.3)
0.7
0.7
State income taxes, net of federal benefits . . . . . . . . . . . . . .
—
Restructuring of wire business . . . . . . . . . . . . . . . . . . . . . . . —
—
Acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . —
3.0
(1.0)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(7.0)
0.6
2.3
—
(3.3)
0.5
(7.9)
2.1
(1.0)
Effective tax rate before valuation allowance . . . . . . . . . . .
Change in valuation allowance for unbenefitted losses . . . . .
34.0% 34.5% 21.3%
1.5% 2.8% 8.7%
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35.5% 37.3% 30.0%
91
The tax effect of temporary items that give rise to significant portions of the deferred tax assets
and liabilities are as follows as of December 31, (in millions):
2010
2009
Deferred tax assets:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . .
Capital loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign tax and other tax credit carryforwards . . . . . . . . . . . . . .
Foreign statutory reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Warranty reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.8
5.1
4.3
6.5
2.6
0.1
4.3
15.5
4.3
8.0
3.6
5.3
1.9
$ 0.6
3.6
4.6
5.9
1.7
—
5.2
14.4
4.3
3.2
5.0
4.2
2.9
Gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
62.3
(41.2)
55.6
(34.3)
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21.1
21.3
Deferred tax liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign statutory reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .
0.5
4.0
18.2
1.3
—
0.8
3.2
28.0
0.8
3.6
20.4
1.1
3.2
5.4
4.0
38.5
Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (6.9) $(17.2)
The valuation allowance was determined through an assessment of both positive and negative
evidence as to whether it is more likely than not that deferred tax assets are recoverable. The
Company’s assessment was made on a jurisdiction-by-jurisdiction basis. The Company fully reserved all
U.S. net deferred tax assets, which are predominantly net operating losses and tax credit carryforwards.
The Company’s inability to project future profitability in the U.S. beyond fiscal year 2011 represents
sufficient negative evidence to record a valuation allowance against certain deferred tax assets.
As of December 31, 2010, the Company has approximately $7.6 million of U.S. net operating loss
carryforwards available to reduce future taxable income which expire at various times through 2021.
The Company also has approximately $45.6 million of German Trade Tax net operating losses that are
carried forward indefinitely. The Company also has U.S. tax credits of approximately $5.7 million
available to offset future tax liabilities that expire at various dates. These credits include research and
development tax credits of $5.6 million expiring at various times through 2025 and other credits of
$0.1 million. These operating loss and tax credit carryforwards may be subject to limitations under
provisions of the Internal Revenue Code.
In 2008, two German subsidiaries in the Scientific Instruments segment were merged into a third
German subsidiary. As a result of the merger, the Company will be able to use certain net operating
92
loss carryforwards that existed in the merged entities but had previously been fully reserved. The
valuation allowance related to these net operating loss carryforwards was reversed in 2008 and resulted
in a tax benefit of approximately $6.5 million. Additionally, the Company established a profit and loss
sharing agreement between two other German subsidiaries in the Scientific Instruments segment during
the third quarter of 2008. This agreement allows the losses of one entity to reduce the taxable income
of the other entity. Prior to this agreement being put in place, certain deferred tax assets related to
these entities had full valuation allowances. These valuation allowances were reversed in 2008, resulting
in a tax benefit of approximately $1.2 million.
Additionally, the Company received a $0.5 million refund of French taxes on inter-corporate
dividends during the third quarter of 2008 which was recorded as a tax benefit. This refund related to
withholding taxes paid in connection with dividends paid by a French subsidiary to its Swiss parent
company in 2005 and 2006. At the end of 2007, as a result of a tax law change in France, the Company
determined that a refund of these withholding taxes was uncertain and did not meet the
more-likely-than-not threshold for recording a tax receivable. As such, the 2005, 2006 and 2007 taxes
paid on dividends from the French subsidiary to its Swiss parent were expensed through the income tax
provision with no corresponding tax receivable recorded. Because the facts and circumstances around
the dividends and the withholding taxes were the same for all three years and the 2005 and 2006
withholding taxes were refunded by the French government, the Company concluded that it was more
likely than not that the 2007 French withholding taxes would also be refunded. As such, the Company
also recorded a tax benefit of approximately $2.7 million during the third quarter of 2008 for the 2007
withholding tax receivable. The Company received the refund of these withholding taxes in the third
quarter of 2009.
The Company has permanently reinvested the earnings of its subsidiaries in the cumulative amount
of approximately $846.0 million as of December 31, 2010, and therefore has not provided for U.S.
income taxes that could result from the distribution of such earnings to the U.S. parent. If these
earnings were ultimately distributed to the U.S. in the form of dividends or otherwise, or if the shares
of the subsidiaries were sold or transferred, the Company would likely be subject to additional U.S.
income taxes, net of the impact of any available foreign tax credits. It is not practical to estimate the
amount of unrecognized deferred U.S. income taxes on these undistributed earnings.
The Company has unrecognized tax benefits of approximately $27.0 million as of December 31,
2010, of which $18.8 million, if recognized, would result in a reduction of the Company’s effective tax
rate. A tabular reconciliation of the beginning and ending amount of unrecognized tax benefits is as
follows (in millions):
Gross unrecognized tax benefits at December 31, 2008 . . . . . . . . . . . . . . . . .
Gross increases—tax positions in prior periods . . . . . . . . . . . . . . . . . . . . .
Gross increases—current period tax positions . . . . . . . . . . . . . . . . . . . . . .
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lapse of statutory limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross unrecognized tax benefits at December 31, 2009 . . . . . . . . . . . . . . . . .
Gross increases—tax positions in prior periods . . . . . . . . . . . . . . . . . . . . .
Gross decreases—tax positions in prior periods . . . . . . . . . . . . . . . . . . . . .
Gross increases—current period tax positions . . . . . . . . . . . . . . . . . . . . . .
$20.1
1.6
2.0
(0.4)
(0.1)
23.2
3.1
(1.4)
2.1
Gross unrecognized tax benefits at December 31, 2010 . . . . . . . . . . . . . . . . .
$27.0
The Company recognizes penalties and interest related to unrecognized tax benefits in the
provision for income taxes. As of December 31, 2010, the Company had approximately $4.3 million of
accrued penalties and interest related to uncertain tax positions included in other current liabilities on
93
the consolidated balance sheets, of which $0.5 million was recorded during the year ended
December 31, 2010.
The Company files returns in many foreign and state jurisdictions with varying statutes of
limitations and considers Germany, the United States and Switzerland to be its significant tax
jurisdictions. The tax years 2003 to 2010 are open tax years in these major taxing jurisdictions. One of
the Company’s Swiss entities is currently being audited for the tax years 2003-2006 and the audit is
expected to be completed in the first half of 2011. In addition, all of the Company’s significant German
subsidiaries are under tax audit for the years 2003-2008 and these audits are expected to be completed
in the second half of 2011. The Company recorded an additional $2.8 million of reserves related to
these audits in 2010.
Note 14—Employee Benefit Plans
Defined Benefit Plans
Substantially all of the Company’s employees in Switzerland, France and Japan, as well as certain
employees in Germany, are covered by Company-sponsored defined benefit pension plans. Retirement
benefits are generally earned based on years of service and compensation during active employment.
Eligibility is generally determined in accordance with local statutory requirements however, the level of
benefits and terms of vesting varies among plans.
Net Periodic Pension Cost
The components of net periodic pension costs for the years ended December 31, are as follows (in
millions):
Components of net periodic benefit costs:
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . . . . . . . . . . . . . .
Amortization of prior service costs . . . . . . . . . . . . . . . . . . .
$ 3.9
4.4
(3.4)
0.6
$ 4.2
5.3
(3.5)
1.0
$ 3.4
4.0
(4.0)
—
Net periodic benefit costs . . . . . . . . . . . . . . . . . . . . . . . .
$ 5.5
$ 7.0
$ 3.4
2010
2009
2008
The Company measures its benefit obligation and the fair value of plan assets as of
December 31st each year. The changes in benefit obligations and plan assets under the defined benefit
94
pension plans, accumulated benefit obligation and funded status of the plans were as follows at
December 31, (in millions):
2010
2009
Change in benefit obligation:
Benefit obligation at beginning of year . . . . . . . . . . . . . . . . . . .
Service cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Plan participant contributions . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Actuarial loss (gain) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of foreign currency exchange rates . . . . . . . . . . . . . . . . .
$124.9
3.9
4.4
2.7
(4.2)
11.1
8.9
$113.6
4.2
5.3
3.2
(3.5)
(3.0)
5.1
Benefit obligation at end of year . . . . . . . . . . . . . . . . . . . . . .
151.7
124.9
Change in plan assets:
Fair value of plan assets at beginning of year . . . . . . . . . . . . . . .
Actuarial return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . .
Employer contributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of foreign currency exchange rates . . . . . . . . . . . . . . . . .
95.7
1.8
7.4
(4.2)
10.6
Fair value of plan assets at end of year . . . . . . . . . . . . . . . . . .
111.3
80.9
8.3
6.1
(3.0)
3.4
95.7
Net funded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (40.4) $ (29.2)
The accumulated benefit obligation for the defined benefit pension plans is $144.8 million and
$118.0 million at December 31, 2010 and 2009, respectively. All defined benefit pension plans have an
accumulated benefit obligation and projected benefit obligation in excess of plan assets at
December 31, 2010 and 2009.
The following amounts were recognized in the accompanying consolidated balance sheets for the
Company’s defined benefit plans at December 31, (in millions):
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (1.0) $ (1.5)
(27.7)
(39.4)
Net benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(40.4) $(29.2)
2010
2009
The following pre-tax amounts were recognized in accumulated other comprehensive income for
the Company’s defined benefit plans at December 31, (in millions):
Reconciliation of amounts recognized in the statement of financial
position:
Initial net obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prior service cost (credit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net gain (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010
2009
$ — $ —
—
(12.2)
—
(25.8)
Accumulated other comprehensive income (loss) . . . . . . . . . . . . .
.
Accumulated contributions in excess of net periodic benefit cost
(25.8)
(14.6)
(12.2)
(17.0)
Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(40.4) $(29.2)
95
The range of assumptions used for defined benefit pension plans reflects the different economic
environments within the various countries. The range of assumptions used to determine the projected
benefit obligations for the years ended December 31, are as follows:
Discount rate . . . . . . . . . . . . . . . . . . . . . . .
Expected return on plan assets . . . . . . . . . .
Expected rate of compensation increase . . . .
1.2%-5.6% 2.0%-5.9% 2.0%-5.7%
3.5%-4.3% 3.5%-4.3% 4.3%-4.5%
1.0%-3.0% 1.0%-3.0% 1.5%-3.0%
2010
2009
2008
To determine the expected long-term rate of return on pension plan assets, the Company considers
the current and expected asset allocations, as well as historical and expected returns on various asset
categories of plan assets. For the principal pension plans, the Company applies the expected rate of
return to a market-related value of assets, which stabilizes variability in assets to which the expected
return is applied.
Asset Allocations by Asset Category
The fair value of the Company’s pension plan assets at December 31, 2010, by asset category and
by level, is as follows (in millions):
Quoted Prices in
Active Markets
Available
(Level 1)
Significant Other
Observable
Inputs
(Level 2)
Significant
Unobservable
Inputs
(Level 3)
Total
$
8.1
$ 8.1
$ —
$—
Plan Assets:
Cash and cash equivalents . . . . . . . . . . . . . . . .
Debt securities:
Foreign corporations . . . . . . . . . . . . . . . . . . .
Foreign governments . . . . . . . . . . . . . . . . . .
U.S. corporations . . . . . . . . . . . . . . . . . . . . .
Equity Securities:
Foreign corporations . . . . . . . . . . . . . . . . . . .
U.S. corporations . . . . . . . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mortgage and other asset-backed securities . . . .
33.6
14.1
0.2
47.9
30.1
5.8
35.9
13.0
6.4
33.6
14.1
0.2
47.9
30.1
5.8
35.9
—
6.4
Total plan assets . . . . . . . . . . . . . . . . . . . . . .
$111.3
$98.3
—
—
—
—
—
—
—
13.0
—
$13.0
—
—
—
—
—
—
—
—
—
$—
The Managing Directors of the subsidiaries are responsible for setting the policy that serves as the
framework for allocating plan assets. The policy defines an investment strategy, including the asset
allocation ranges, which is designed to ensure that the benefit obligations of the plans can be met when
they are due. The investment strategy also is targeted at optimizing the return on investment within the
risk constraints of the plans. The Managing Directors appoint the plan fiduciaries, who oversee the
investment allocation process, which includes selecting investment managers, setting long-term strategic
targets and monitoring asset allocations. The target allocations are 40% bonds, including cash, 35%
equity investments and 25% real estate and mortgages. Target allocation ranges are guidelines, not
limitations, and occasionally plan fiduciaries will approve allocations above or below a target range
based on a number of factors, including market conditions.
96
Estimated Future Benefit Payments
The estimated future benefit payments are based on the same assumptions used to measure the
Company’s benefit obligation at December 31, 2010. The following benefit payments reflect future
employee service as appropriate (in millions):
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016-2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 2.4
3.1
3.5
4.5
4.9
29.7
Other Benefit Plans
The Company sponsors various defined contribution plans that cover certain domestic and
international employees. The Company may make contributions to these plans at its discretion. The
Company contributed $2.5 million, $2.7 million and $2.6 million to such plans in the years ended
December 31, 2010, 2009 and 2008, respectively.
Note 15—Commitments and Contingencies
Operating Leases
Certain buildings, office equipment and vehicles are leased under agreements that are accounted
for as operating leases. Total rental expense under operating leases was $15.8 million, $13.8 million and
$10.7 million during the years ended December 31, 2010, 2009 and 2008, respectively. Future minimum
lease payments under non-cancelable operating leases at December 31, 2010, for each of the next five
years are as follows (in millions):
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$15.0
12.6
9.7
8.0
7.0
5.1
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$57.4
Capital Leases
The Company leases certain buildings and equipment under agreements that are classified as
capital leases. The cost of the buildings and equipment under the capital leases are included in the
consolidated balance sheets as property, plant and equipment and were $10.1 million and $10.4 million
at December 31, 2010 and 2009, respectively. Accumulated amortization of the leased buildings at
December 31, 2010 and 2009 was $2.2 million and $1.8 million, respectively. Amortization expense
related to assets under capital leases is included in depreciation expense. The obligations related to
capital leases are recorded as a component of long-term debt or the current portion of long-term debt
in the consolidated balance sheets, depending on when the lease payments are due.
License Agreements
The Company has entered into cross-licensing agreements for various technologies that allow other
companies to utilize certain patents and related technologies over periods ranging from 21 to 30 years.
97
Income from these agreements for the years ended December 31, 2010, 2009 and 2008 was
$3.2 million, $2.3 million and $2.4 million, respectively, and is classified in other revenue in the
consolidated statements of income. The unearned portions of proceeds from the cross-licensing
agreements are classified as short-term or long-term deferred revenue depending on when the revenue
will be earned.
The Company has also entered into license agreements allowing it to utilize certain patents. If
these patents are used in connection with a commercial product sale, the Company pays royalties
ranging from 0.15% to 5.00% on the related product revenues. Licensing fees for the years ended
December 31, 2010, 2009 and 2008, were $1.8 million, $2.1 million and $1.7 million, respectively, and
are recorded in cost of product revenue in the consolidated statements of income.
Grants
The Company has received certain grants from government authorities in the United States and
Germany. The grants were made in connection with the Company’s development of specific magnetic
resonance core technology equipment, spectrometers and related components and a standalone monitor
for chemical agents. The agreements under which these grants were awarded have expiration dates
ranging between 2011 and 2014. Amounts received under these grants during the years ended
December 31, 2010, 2009 and 2008, totaled $3.8 million, $4.5 million and $2.9 million, respectively, and
are classified as other revenue in the consolidated statement of income. Total expenditures related to
these grants were $4.5 million, $5.8 million and $5.9 million, respectively, and are classified as research
and development expenses in the consolidated statements of income.
Legal
Lawsuits, claims and proceedings of a nature considered normal to its businesses may be pending
from time to time against the Company. The Company believes the outcome of these proceedings, if
any, will not have a material impact on the Company’s financial position or results of operations. As of
December 31, 2010 and 2009, no accruals have been recorded for such potential contingencies.
Letters of Credit and Guarantees
At December 31, 2010 and 2009, the Company had bank guarantees of $108.8 million and
$87.0 million, respectively, for its customer advances. These arrangements guarantee the refund of
advance payments received from customers in the event that the merchandise is not delivered in
compliance with the terms of the contract. Certain of these guarantees affect the availability of the
Company’s lines of credit.
Indemnifications
The Company enters into standard indemnification arrangements in the Company’s ordinary
course of business. Pursuant to these arrangements, the Company indemnifies, holds harmless, and
agrees to reimburse the indemnified parties for losses suffered or incurred by the indemnified party,
generally the Company’s business partners or customers, in connection with any patent, or any
copyright or other intellectual property infringement claim by any third party with respect to its
products. The term of these indemnification agreements is generally perpetual anytime after the
execution of the agreement. The maximum potential amount of future payments the Company could be
required to make under these agreements is unlimited. The Company has never incurred costs to
defend lawsuits or settle claims related to these indemnification agreements. As a result, the Company
believes the estimated fair value of these agreements is minimal.
The Company has entered into indemnification agreements with its directors and officers that may
require the Company to: indemnify its directors and officers against liabilities that may arise by reason
98
of their status or service as directors or officers, other than liabilities arising from willful misconduct of
a culpable nature; advance their expenses incurred as a result of any proceeding against them as to
which they could be indemnified; and obtain directors’ and officers’ insurance if available on reasonable
terms, which the Company currently has in place.
Environmental Remediation
A former owner of the land and building in which the Santa Barbara, California nano surfaces
business is headquartered has disclosed that there are hazardous substances present in the ground
under the building. Management believes that the comprehensive indemnification clause that is part of
the purchase agreement related to the acquisition of the nano surfaces business provides adequate
protection against any environmental issues that may arise.
Note 16—Shareholders’ Equity
Public Offerings of Common Stock
The Company has announced plans to sell a minority ownership position in its Bruker Energy &
Supercon Technologies, Inc. (‘‘BEST’’) subsidiary through an initial public offering of the capital stock
of BEST. The Company believes the offering will provide Bruker shareholders greater visibility into
BEST’s performance and growth and strengthen BEST’s access to financing for its revenue growth
initiatives, including the development of products for the renewable energy and energy infrastructure
markets.
Dividends
The terms of some of the Company’s indebtedness currently restrict the Company’s ability to pay
dividends to its shareholders.
Stock Plans
Bruker Corporation Stock Plan
In February 2010, the Bruker BioSciences Corporation Amended and Restated 2000 Stock Option
Plan (the ‘‘2000 Plan’’) expired at the end of its scheduled ten-year term. On March 9, 2010, the
Company’s Board of Directors unanimously approved and adopted the Bruker Corporation 2010
Incentive Compensation Plan (the ‘‘2010 Plan’’) and on May 14, 2010, the 2010 Plan was approved by
the Company’s stockholders. The 2010 Plan provides for the issuance of up to 8,000,000 shares of the
Company’s common stock. The Plan allows a committee of the Board of Directors (the ‘‘Committee’’)
to grant incentive stock options, non-qualified stock options and restricted stock awards. The
Committee has the authority to determine which employees will receive the awards, the amount of the
awards and other terms and conditions of the award. Awards granted by the Committee typically vest
over a period of three to five years.
99
Stock option activity for the year ended December 31, 2010, was as follows:
Shares
Subject to
Options
Weighted
Average
Option Price
Weighted Average
Remaining
Aggregate
Contractual Term Intrinsic Value
(in millions)
(Yrs)
Outstanding at December 31, 2009 . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . .
5,060,043
700,000
(861,747)
(179,648)
Outstanding at December 31, 2010 . . . . . . . . .
4,718,648
$ 8.83
14.23
7.02
7.90
$ 9.99
Exercisable at December 31, 2010 . . . . . . . . . .
2,383,028
$ 8.57
Exercisable and expected to vest at
December 31, 2010 (a) . . . . . . . . . . . . . . . .
4,601,867
$ 9.96
$ 6.8
$31.3
$19.3
$30.7
6.2
4.7
6.1
(a) In addition to the options that are exercisable at December 31, 2010, the Company expects a
portion of the unvested options to become exercisable in the future. Options expected to vest in
the future are determined by applying an estimated forfeiture rate to the options that are unvested
as of December 31, 2010.
The aggregate intrinsic value is based on the positive difference between the fair value of the
Company’s common stock price of $16.60 on December 31, 2010, or the date of exercises, as
appropriate, and the exercise price of the underlying stock options.
Unrecognized pre-tax expense of $13.8 million related to stock options awarded under the 2000
and 2010 Plans is expected to be recognized over the weighted average remaining service period of
2.2 years for awards outstanding at December 31, 2010.
Restricted shares of the Company’s common stock are periodically awarded to executive officers,
directors and certain key employees of the Company, subject to service restrictions which expire ratably
over periods of three to five years. The restricted shares of common stock may not be sold or
transferred during the restriction period. Stock compensation for restricted stock is recorded based on
the stock price on the grant date and charged to expense ratably through the restriction period. The
following table summarizes information about restricted stock activity during the year ended
December 31, 2010:
Outstanding at December 31, 2009 . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
417,425
(170,097)
(70)
Outstanding at December 31, 2010 . . . . . . . . . . . . . . . .
247,258
$7.49
6.73
5.00
$8.02
Shares
Subject to
Restriction
Weighted Average
Grant Date
Fair Value
Unrecognized pre-tax expense of $1.4 million related to restricted stock awarded under the 2000
Plan is expected to be recognized over the weighted average remaining service period of 1.3 years for
awards outstanding at December 31, 2010.
Bruker Energy & Supercon Technologies Stock Plan
In October 2009, the Board of Directors of BEST adopted the Bruker Energy & Supercon
Technologies, Inc. 2009 Stock Option Plan (the ‘‘BEST Plan’’). The BEST Plan provides for the
100
issuance of up to 1,600,000 shares of BEST common stock in connection with awards under the BEST
Plan. The BEST Plan allows a committee of the BEST Board of Directors to grant incentive stock
options, non-qualified stock options and restricted stock awards The Compensation Committee of the
BEST Board of Directors has the authority to determine which employees will receive the awards, the
amount of the awards and other terms and conditions of the awards. As of December 31, 2010 and
2009, 800,000 and 730,000 incentive stock options and non-qualified stock options, respectively, had
been awarded to key employees and directors of the Company with vesting periods of three to five
years. As of December 31, 2010, no restricted stock has been awarded under the BEST Plan.
In 2010 and 2009, the Company recorded approximately $0.5 million and $0.1 million, respectively,
of pre-tax compensation expense related to awards granted under the BEST Plan. Unrecognized
pre-tax expense of $1.7 million related to stock options awarded under the BEST Plan is expected to
be recognized over the weighted average remaining service period of 3.3 years for awards outstanding
at December 31, 2010.
Note 17—Accumulated Other Comprehensive Income
The following is a summary of the components of accumulated other comprehensive income, net
of tax, at December 31, (in millions):
Balance at December 31, 2007 . . . . .
Other comprehensive income . . . .
Realized (gain) loss on
Foreign
Currency
Translation
$150.8
8.1
reclassification . . . . . . . . . . . . .
—
Balance at December 31, 2008 . . . . .
158.9
Other comprehensive income
(loss) . . . . . . . . . . . . . . . . . . . .
Realized loss on reclassification . .
8.6
—
Balance at December 31, 2009 . . . . .
167.5
Other comprehensive income
(loss) . . . . . . . . . . . . . . . . . . . .
Realized loss on reclassification . .
8.3
—
Balance at December 31, 2010 . . . . .
$175.8
Unrealized
Losses on
Cash Flow
Hedges
Unrealized
Gains on
Available-for-Sale
Securities
Pension
Liability
Adjustment
$ (3.7)
(12.6)
Accumulated
Other
Comprehensive
Income
$148.5
(9.7)
—
(16.3)
5.8
—
(10.5)
(9.9)
—
(1.0)
137.8
13.2
2.5
153.5
(3.7)
2.6
$ 1.4
—
(1.4)
—
—
—
—
—
—
$ —
$(20.4)
$152.4
$ —
(5.2)
0.4
(4.8)
(1.2)
2.5
(3.5)
(2.1)
2.6
$(3.0)
101
Note 18—Other Charges, Net
The components of other charges, net for the years ended December 31, 2010, 2009 and 2008,
were as follows (in millions):
Acquisition-related charges (Note 4) . . . . . . . . . . . . . . . . . . . . .
Transition-related charges incurred in connection with acquired
2010
2009
2008
$1.8
$ 0.8
$6.2
— —
2.8
businesses (Note 4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— —
1.0
Loss on divestiture of business . . . . . . . . . . . . . . . . . . . . . . . . .
0.2
2.3
Restructuring charges (Note 19) . . . . . . . . . . . . . . . . . . . . . . . .
0.2
Impairment charges (Note 20) . . . . . . . . . . . . . . . . . . . . . . . . . —
0.7 —
Gain on bargain purchase (Note 4) . . . . . . . . . . . . . . . . . . . . . — (1.3) —
$5.8
$ 0.4
$8.5
Note 19—Restructuring Activities
In 2010, the Company recorded restructuring charges of $0.2 million, which related primarily to
severance incurred in connection with the closing of a production facility in Herzogenrath, Germany
and relocating the associated operations (the ‘‘Herzogenrath Program’’). These charges, which relate
entirely to the Scientific Instruments segment, were recorded as a component of other charges, net in
the consolidated statement of income. The Company does not expect to incur any additional costs
related to this move and all of the related severance payments had been paid at December 31, 2010.
In 2008, the Company recorded restructuring charges of $2.3 million which consisted primarily of
severance costs associated with a restructuring of certain operations in the Netherlands (the
‘‘Netherlands Program’’). These charges, which relate entirely to the Scientific Instruments segment,
were recorded as a component of other charges, net in the consolidated statement of income.
Approximately $2.2 million of the restructuring charges related to an involuntary severance program
under which approximately 30 employees left the Company and the balance related to exit costs
associated with terminating certain leases. In 2009, the Company recorded an additional $0.2 million of
net restructuring charges related to the involuntary severance component of the Netherlands Program
that was recorded as a component of other charges, net in the consolidated statement of income. The
impact of this program reduced the number of employees in sales and marketing and research and
development and consolidated the selling and developments efforts of the Company’s single crystal
X-ray diffraction products.
102
The following table sets forth the changes in the reserves for restructuring charges for the years
ended December 31, 2010 and 2009 (in millions):
Total
Severance
Exit Costs
Balance at December 31, 2008 . . . . . . . . . . . . . . . . . . .
$ 2.3
$ 2.2
$ 0.1
Restructuring charges related to the Netherlands
program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.3
0.3
—
Reversal of restructuring charges related to the
Netherlands program . . . . . . . . . . . . . . . . . . . . . .
Cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency impact . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2009 . . . . . . . . . . . . . . . . . . .
Restructuring charges related to the Herzogenrath
program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency impact . . . . . . . . . . . . . . . . . . . . . .
(0.1)
(2.6)
0.1
—
0.2
(0.2)
—
(0.1)
(2.5)
0.1
—
0.2
(0.2)
—
—
(0.1)
—
—
—
—
—
Balance at December 31, 2010 . . . . . . . . . . . . . . . . . . .
$ — $ —
$ —
Note 20—Impairment Charges
In 2009, the Company recorded an impairment charge of $0.7 million, which consisted of
equipment used in the production of certain superconducting wire. The impairment loss was recorded
because the Company determined that the carrying value of the assets exceeded the estimated
undiscounted operating cash flows generated by the asset group. The amount of the impairment charge
was determined by comparing the fair value of this asset group to its carrying value. The Company
determined the fair value of the asset group by using an income approach methodology of valuation
that includes the discounted cash flow method. The impairment charge was allocated to the Energy &
Supercon Technologies segment and has been recorded as a component of other charges, net in the
consolidated statements of income.
Note 21—Interest and Other Income (Expense), Net
The components of interest and other income (expense), net for the years ended December 31,
2010, 2009 and 2008, were as follows (in millions):
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange losses on foreign currency transactions . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.9
(5.6)
(1.5)
0.6
$ 1.0
(7.5)
(1.9)
0.8
$ 4.9
(11.7)
(11.2)
3.0
Interest and other income (expense), net . . . . . . . . . . . . . .
$(5.6) $(7.6) $(15.0)
2010
2009
2008
Note 22—Business Segment Information
The Company has determined that it has five operating segments based on the information
reviewed by the Chief Operating Decision Maker, representing each of its five divisions: Bruker
BioSpin, Bruker Daltonics, Bruker MAT, Bruker Optics and Bruker Energy & Supercon Technologies.
Bruker BioSpin is in the business of designing, manufacturing and distributing enabling life science
tools based on magnetic resonance technology. Bruker Daltonics is in the business of manufacturing
and distributing mass spectrometry and gas chromatography instruments that can be integrated and
103
used along with other analytical instruments and the Company’s CBRNE detection products. Bruker
MAT is in the business of manufacturing and distributing advanced X-ray, spark-optical emission
spectroscopy, atomic force microscopy and stylus and optical metrology instrumentation used in
non-destructive molecular and elemental analysis. Bruker Optics is in the business of manufacturing
and distributing research, analytical and process analysis instruments and solutions based on infrared
and Raman molecular spectroscopy technologies. Bruker Energy & Supercon Technologies is in the
business of developing and producing low temperature superconductor and high temperature
superconductor materials for use in advanced magnet technology and energy applications as well as
linear accelerators, accelerator cavities, insertion devices, superconducting fault current limiters, other
accelerator components and specialty superconducting magnets for physics and energy research and a
variety of other scientific applications.
The Company’s reportable segments are organized by the types of products and services provided.
The Company has combined the Bruker BioSpin, Bruker Daltonics, Bruker MAT and Bruker Optics
operating segments into the Scientific Instruments reporting segment because each has similar
economic characteristics, product processes and services, types and classes of customers, methods of
distribution and regulatory environments.
Management evaluates segment operating performance and allocates resources based on operating
income (loss). The Company uses this measure because it helps provide an understanding of its core
operating results. Selected business segment information is presented below for the years ended
December 31, (in millions):
Revenue:
Scientific Instruments . . . . . . . . . . . . . . . . . . . . . . .
Energy & Supercon Technologies . . . . . . . . . . . . . . .
Eliminations (a) . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,225.1
90.5
(10.7)
$1,062.7
59.8
(8.0)
$1,074.1
43.5
(10.5)
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,304.9
$1,114.5
$1,107.1
2010
2009
2008
Operating Income (Loss):
Scientific Instruments . . . . . . . . . . . . . . . . . . . . . . .
Energy & Supercon Technologies . . . . . . . . . . . . . . .
Corporate, eliminations and other (b) . . . . . . . . . . .
$ 160.5
(2.6)
(2.2)
$ 141.7
(6.3)
1.3
$ 116.2
(8.2)
0.2
Total operating income . . . . . . . . . . . . . . . . . . . . .
$ 155.7
$ 136.7
$ 108.2
(a) Represents product and service revenue between reportable segments.
(b) Represents corporate costs and eliminations not allocated to the reportable segments.
Total assets by segment as of and for the years ended December 31, are as follows (in millions):
Assets:
Scientific Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy & Supercon Technologies . . . . . . . . . . . . . . . . . . . . . . .
Eliminations and other (a) . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,515.8
84.4
(50.4)
$1,139.7
70.6
(38.0)
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,549.8
$1,172.3
2010
2009
(a) Assets not allocated to the reportable segments and eliminations of intercompany
transactions.
104
Total capital expenditures and depreciation and amortization by segment as of and for the years
ended December 31, 2010, 2009 and 2008, are as follows (in millions):
2010
2009
2008
Capital Expenditures:
Scientific Instruments
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy & Supercon Technologies . . . . . . . . . . . . . . . . . . . . .
$26.6
5.3
$14.1
2.2
$45.1
2.3
Total capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . .
$31.9
$16.3
$47.4
Depreciation and Amortization:
Scientific Instruments
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy & Supercon Technologies . . . . . . . . . . . . . . . . . . . . .
$32.8
3.3
$26.7
3.0
$27.0
2.3
Total depreciation and amortization . . . . . . . . . . . . . . . . . .
$36.1
$29.7
$29.3
Revenue and long-lived assets by geographical area as of and for the years ended December 31,
2010, 2009 and 2008, were as follows (in millions):
2010
2009
2008
Revenue:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rest of Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 264.0
181.6
368.2
381.8
109.3
$ 209.2
192.2
322.7
295.5
94.9
$ 232.2
235.2
316.3
227.6
95.8
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,304.9
$1,114.5
$1,107.1
Long-lived assets:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rest of Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2010
2009
$ 40.0
126.0
59.2
5.6
2.9
$ 22.2
133.9
57.6
6.7
3.0
Total long-lived assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$233.7
$223.4
The geographic information presented above reflects revenue based on location of the customer
and net long-lived assets based on the physical location of the asset.
Note 23—Related Parties
The Company rents office space from certain of its principal shareholders under multiple leases,
which have expiration dates ranging from 2011 to 2017. Total rent expense under these leases was
$2.4 million, $2.1 million and $1.8 million for the years ended December 31, 2010, 2009 and 2008,
respectively.
During the years ended December 31, 2010, 2009 and 2008, the Company incurred expenses of
$2.9 million, $1.1 million and $2.3 million, respectively, to a law firm in which one of its directors is a
partner.
105
During the years ended December 31, 2010, 2009 and 2008, the Company incurred expenses of
$0.3 million, $0.6 million, $0.9 million, respectively, to a financial services firm in which one of its
directors is a partner.
Note 24—Recent Accounting Pronouncements
In September 2009, the Emerging Issues Task Force (‘‘EITF’’) reached consensus on Financial
Accounting Standards Board (‘‘FASB’’) Accounting Standards Update (‘‘ASU’’) 2009-14, Software
(Topic 985)—Certain Revenue Arrangements That Include Software Elements. FASB ASU 2009-14
changes the accounting model for revenue arrangements that include both tangible products and
software elements. Under this guidance, tangible products containing software components and
non-software components that function together to deliver the tangible product’s essential functionality
are excluded from the software revenue guidance in Subtopic 985-605, Software-Revenue Recognition. In
addition, hardware components of a tangible product containing software components are always
excluded from the software revenue guidance. FASB ASU 2009-14 is effective prospectively for revenue
arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010,
however, early adoption is permitted. The Company does not expect the adoption of this update to
have a material impact on its results of operations and financial position.
In September 2009, the EITF reached consensus on FASB ASU 2009-13, Revenue Recognition
(Topic 605)—Multiple-Deliverable Revenue Arrangements. FASB ASU 2009-13 addresses the accounting
for multiple-deliverable arrangements to enable vendors to account for products or services separately
rather than as a combined unit. Specifically, this guidance amends the criteria in Subtopic 605-25,
Revenue Recognition-Multiple-Element Arrangements, for separating consideration in multiple-deliverable
arrangements. This guidance establishes a selling price hierarchy for determining the selling price of a
deliverable, which is based on: (a) vendor-specific objective evidence; (b) third-party evidence; or
(c) estimates. This guidance also eliminates the residual method of allocation and requires that
arrangement consideration be allocated at the inception of the arrangement to all deliverables using the
relative selling price method. In addition, this guidance significantly expands required disclosures
related to a vendor’s multiple-deliverable revenue arrangements. FASB ASU 2009-13 is effective
prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on
or after June 15, 2010, however, early adoption is permitted. The Company does not expect the
adoption of this update to have a material impact on its results of operations and financial position.
Note 25—Subsequent Events (Unaudited)
In February 2011, the Company entered into a definitive merger agreement to acquire Michrom
Bioresources, Inc., a privately owned company based in California, U.S.A. that provides high
performance liquid chromatography instrumentation, accessories, and consumables to the life science
market. The acquisition is subject to customary closing conditions and the Company expects to
complete the acquisition in April 2011.
106
Note 26—Quarterly Financial Data (Unaudited)
A summary of operating results for the quarterly periods in the two years ended December 31,
2010 and 2009, is set forth below (in millions, except per share data):
Quarter Ended
March 31 June 30 September 30 December 31
Year ended December 31, 2010
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $277.7 $300.9
135.7
Gross profit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
37.9
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Bruker Corporation . . . . . . . . . . . .
22.6
Net income per common share attributable to Bruker
126.3
26.9
16.1
Corporation shareholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.10 $ 0.14
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.10 $ 0.14
Year ended December 31, 2009
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $230.5 $252.5
111.2
Gross profit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
20.2
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12.9
Net income attributable to Bruker Corporation . . . . . . . . . . . .
Net income per common share attributable
to Bruker Corporation shareholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.05 $ 0.08
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.05 $ 0.08
102.7
14.3
8.4
$310.2
146.9
39.3
27.4
$416.1
197.1
51.6
29.3
$ 0.17
$ 0.17
$ 0.18
$ 0.18
$265.1
119.2
26.0
16.4
$366.4
185.5
76.2
43.5
$ 0.10
$ 0.10
$ 0.27
$ 0.26
107
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
ITEM 9A CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We have established disclosure controls and procedures that are designed to ensure that material
information relating to us, including our consolidated subsidiaries, is made known to our Chief
Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer)
by others within our organization. Under the supervision and with the participation of our
management, including our Chief Executive Officer and Chief Financial Officer, we conducted an
evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2010.
Based on this evaluation our Chief Executive Officer and Chief Financial Officer concluded that our
disclosure controls and procedures were effective as of December 31, 2010, to ensure that the
information required to be disclosed by us in the reports that we file or submit under the Securities
and Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods
specified in the SEC’s rules and forms.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting. Under the supervision and with the participation of our management, including our
Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of
our internal control over financial reporting as of December 31, 2010, based on the criteria established
in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Based on this evaluation, our management has concluded that our
internal control over financial reporting was effective as of December 31, 2010.
The audited consolidated financial statements of the Company include the results of the nano
surfaces business acquired from Veeco Instruments Inc. in October 2010 and the chemical analysis
business acquired from Agilent Technologies, Inc. in May 2010 (collectively, the ‘‘acquired businesses’’).
Upon consideration of the date of the acquisition and the time constraints under which our
management’s assessment would have to be made, management determined that it would not be
possible to conduct a sufficiently comprehensive assessment of the acquired businesses controls over
financial reporting. Accordingly, these operations have been excluded from the scope of management’s
assessment of internal controls. The Company’s consolidated sales for the year ended December 31,
2010 were $1,304.9 million, of which the acquired businesses represented $60.3 million. The Company’s
total assets as of December 31, 2010 were $1,549.8 million, of which the acquired businesses
represented $245.5 million. The Company’s net assets as of December 31, 2010 were $527.4 million, of
which the acquired businesses represented $(20.8) million.
The attestation report issued by Ernst & Young LLP, our independent registered public accounting
firm, on our internal control over financial reporting is included herein.
Changes in Control over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during the
quarter ended December 31, 2010 that materially affected, or are reasonably likely to affect, our
internal control over financial reporting.
108
Report of Independent Registered Public Accounting Firm
The Board of Directors and Shareholders of
Bruker Corporation
We have audited Bruker Corporation’s internal control over financial reporting as of December 31,
2010, based on criteria established in Internal Control—Integrated Framework issued by the Committee
of Sponsoring Organizations of the Treadway Commission (the COSO criteria). Bruker Corporation’s
management is responsible for maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting included in the
accompanying Management’s Report on Internal Control over Financial Reporting. Our responsibility is
to express an opinion on the Company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained
in all material respects. Our audit included obtaining an understanding of internal control over
financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk, and performing such other
procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are
recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only
in accordance with authorizations of management and directors of the company; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or
detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject
to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.
In our opinion, Bruker Corporation maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2010, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting
Oversight Board (United States), the consolidated balance sheets of Bruker Corporation as of
December 31, 2010 and 2009, and the related consolidated statements of income, shareholders’ equity
and comprehensive income, and cash flows for each of the three years in the period ended
December 31, 2010 and our report dated March 1, 2011 expressed an unqualified opinion thereon.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
March 1, 2011
ITEM 9B OTHER INFORMATION
None.
109
PART III
In accordance with General Instruction G(3) to Form 10-K, except as set forth below, the
information called for by Items 10, 11, 12, 13 and 14 is incorporated by reference from the registrant’s
definitive proxy statement for the Annual Meeting of Stockholders to be held on May 12, 2011.
ITEM 10 DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The full text of the Company’s code of ethics, which applies to its principal executive officer,
principal financial officer, principal accounting officer, controller and board of directors is published on
the Company’s Investor Relations web site at www.bruker.com. We intend to disclose future
amendments to certain provisions of our Code, or waivers of such provisions granted to executive
officers and directors, on the web site within four business days following the date of such amendment
or waiver.
The additional information required by this Item 10 pursuant to Items 401, 405 and 407(c)(3),
(d)(4) and (d)(5) of Regulation S-K is contained in the proxy statement for our annual meeting of
stockholders to be held on May 12, 2011, and is incorporated in this annual report on Form 10-K by
reference.
ITEM 11 EXECUTIVE COMPENSATION
The information required to be disclosed by this Item 11 pursuant to Items 402 and 407(e)(4) and
(e)(5) of Regulation S-K is contained in the proxy statement for our annual meeting of stockholders to
be held on May 12, 2011, under the captions ‘‘Summary of Executive Compensation,’’ ‘‘Compensation
Committee Interlocks and Insider Participation’’ and ‘‘Compensation Committee Report,’’ respectively,
and is incorporated in this annual report on Form 10-K by reference.
ITEM 12 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table summarizes information about our equity compensation plans as of
December 31, 2010:
Period
Equity compensation plans approved by
security holders . . . . . . . . . . . . . . . . . . .
Equity compensation plans not approved by
security holders . . . . . . . . . . . . . . . . . . .
Number of Securities
to be Issued
Upon Exercise of
Weighted-Average
Exercise Price of
Outstanding Options, Outstanding Options,
Warrants and Rights Warrants and Rights
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation
Plans (excluding
securities reflected
in column (a))
4,965,906
N/A
4,965,906
$9.89
N/A
$9.89
7,345,000
N/A
7,345,000
In February 2010, the Bruker BioSciences Corporation Amended and Restated 2000 Stock Option
Plan (the ‘‘2000 Plan’’) expired at the end of its scheduled ten-year term. In May 2010, the Bruker
Corporation 2010 Incentive Compensation Plan (the ‘‘2010 Plan’’) was approved by our stockholders.
The 2010 Plan provides for the issuance of up to 8,000,000 shares of the Company’s common stock.
The 2010 Plan has a term of ten years.
The additional information required by this Item 12 pursuant to Item 403 of Regulation S-K is
contained in the proxy statement for our annual meeting of stockholders to be held on May 12, 2011,
110
under the caption ‘‘Security Ownership of Certain Beneficial Owners and Management’’ and is
incorporated in this annual report on Form 10-K by reference.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, DIRECTOR
INDEPENDENCE
The information required to be disclosed by this Item 13 pursuant to Items 404 and 407(a) of
Regulation S-K is contained in the proxy statement for our annual meeting of stockholders to be held
on May 12, 2011, under the captions ‘‘Certain Relationships and Related Transactions’’ and ‘‘Board
Compensation, Meetings and Committees’’ and is incorporated in this annual report on Form 10-K by
reference.
ITEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required to be disclosed by this Item 14 pursuant to Item 9(e) of Schedule 14A is
contained in the proxy statement for our annual meeting of stockholders to be held on May 12, 2011,
under the caption ‘‘Report of the Audit Committee’’ and is incorporated in this annual report on
Form 10-K by reference.
111
ITEM 15 EXHIBITS, FINANCIAL STATEMENTS AND SCHEDULES
PART IV
(a) Financial Statements and Schedules
(1) Financial Statements
The following consolidated financial statements of Bruker Corporation are filed as part of this
report under Item 8.—Financial Statements and Supplementary Data:
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheet as of December 31, 2010 and 2009
Consolidated Statements of Income for the years ended December 31, 2010, 2009 and 2008
Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the years ended
December 31, 2010, 2009 and 2008
Consolidated Statements of Cash Flows for the years ended December 31, 2010, 2009 and 2008
Notes to Consolidated Financial Statements
(2) Financial Statement Schedules
All schedules have been omitted because they are not required or because the required
information is provided in the Consolidated Financial Statements or Notes thereto set forth under
Item 8 above.
(3) Exhibits
(b) List of Exhibits
Exhibit
No.
2.1
2.2
2.3
2.4
2.5
Description
Stock Purchase Agreement, dated April 17, 2006, by
and among Bruker BioSciences Corporation, Bruker
Optics Inc. and the stockholders of Bruker
Optics Inc.
U.S. Stock Purchase Agreement, dated December 2,
2007, by and among the Registrant, Bruker
BioSpin Inc. and the stockholders of Bruker
BioSpin Inc.
German Share Purchase Agreement, dated
December 2, 2007, by and among the Registrant,
Bruker Physik GmbH, Techneon AG and the
shareholders of Bruker Physik GmbH
Agreement and Plan of Merger dated as of
December 2, 2007 by and among the Registrant,
Bruker BioSpin Invest AG, Bruker BioSpin
Beteiligungs AG and the shareholders of Bruker
BioSpin Invest AG
Asset Purchase Agreement dated as of March 9,
2010 between Agilent Technologies Inc. and Bruker
Corporation
Filed
Herewith
Incorporated by Reference**
Form
8-K
Date
April 18, 2006
8-K
December 3, 2007
8-K
December 3, 2007
8-K
December 3, 2007
10-Q/A
March 31, 2010
112
Exhibit
No.
2.6
3.1
3.2
4.1
10.1
10.2
10.3
10.4
Description
Stock Purchase Agreement dated as of August 15,
2010 among Veeco Instruments Inc., Veeco
Metrology Inc. and Bruker Corporation
Amended Certificate of Incorporation of the
Registrant
Bylaws of the Registrant
Specimen stock certificate representing shares of
common stock of the Registrant
Bruker Corporation 2010 Incentive Compensation
Plan
Bruker Corporation 2010 Incentive Compensation
Plan Form of Incentive Stock Option Agreement
Bruker Corporation 2010 Incentive Compensation
Plan Form of Non-Qualified Stock Option
Agreement
Bruker Corporation 2010 Incentive Compensation
Plan Form of Restricted Stock Agreement
Filed
Herewith
Incorporated by Reference**
Form
8-K
Date
October 7, 2010
10-K
December 31, 2007
S-1
S-3
S-8
August 3, 2000
April 22, 2004
June 4, 2010
10-Q
June 30, 2010
10-Q
June 30, 2010
10-Q
June 30, 2010
10.11* Contract dated October 1, 1998 between Bruker
S-1
December 31, 2001
AXS GmbH and GKSS Forschungszentrum
Geesthacht GmbH, as amended
10.12* Contract dated July 31, 1997 between Bruker
S-1
December 31, 2001
S-1
December 31, 2001
8-K
October 12, 2004
8-K
February 27, 2008
AXS GmbH and Siemens Aktiengesellschaft Berlin
und Munchen Bereich Medizinische Technik
10.19* Agreement on Development, Supply and Marketing
dated August 2, 2001 between Bruker AXS GmbH
and Siemens Medical Solutions Rontgenwerk
Rudolstadt
10.25
10.33
Employment Offer Letter dated as of September 25,
2004 from Bruker BioSciences Corporation to
William J. Knight
Credit Agreement dated as of February 26, 2008
among the Registrant, Bruker AXS GmbH, Bruker
Daltonik GmbH, Bruker Optik GmbH, Bruker
Physik GmbH, Bruker BioSpin Invest AG, Bruker
BioSpin AG and Bruker BioSpin International AG,
the other foreign subsidiary borrowers from time to
time party thereto, the lenders from time to time
party thereto, Citibank, N.A. as Syndication Agent,
and RBS Citizens, National Association, Deutsche
Bank AG and Dresdner Bank AG as
Co-Documentation Agents, and JPMorgan Chase
Bank, N.A., as Administrative Agent
113
Exhibit
No.
10.34
10.35
10.36
21.1
23.1
24.1
31.1
31.2
32.1
32.2
*
**
Description
Bruker Energy & Supercon Technologies, Inc. 2009
Stock Option Plan
Form of Bruker Energy & Supercon
Technologies, Inc. Incentive Stock Option
Agreement
Form of Bruker Energy & Supercon
Technologies, Inc. Non-Qualified Stock Option
Agreement
Subsidiaries of the Registrant
Consent of Ernst & Young LLP, Independent
Registered Public Accounting Firm
Power of attorney (included on signature page
hereto)
Certification by Chief Executive Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Certification by Chief Financial Officer pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
Certification by Chief Executive Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Certification by Chief Financial Officer pursuant to
18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
Filed
Herewith
Incorporated by Reference**
Form
10-K
Date
December 31, 2009
10-K
December 31, 2009
10-K
December 31, 2009
X
X
X
X
X
X
X
Confidential treatment requested as to certain portions, which portions have been omitted and
filed separately with the Securities and Exchange Commission.
In accordance with Rule 12b-32 under the Securities and Exchange Act of 1934, as amended,
reference is made to the documents previously filed with the Securities and Exchange Commission,
which documents are hereby incorporated by reference. The dates listed for Forms 8-K are dates
the respective forms were filed on, the dates listed for Forms 10-Q, Forms 10-K and Forms 10-K/A
are for the quarterly or annual period ended dates and the dates listed for Forms S-1, Forms S-3
and Forms S-4 are dates on which the Securities and Exchange Commission declared them
effective.
114
Pursuant to the requirements of Section 13 or 15(d) of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SIGNATURES
BRUKER CORPORATION
By: /s/ FRANK H. LAUKIEN, PH.D.
Name: Frank H. Laukien, Ph.D.
Title: President, Chief Executive Officer and
Chairman
We, the undersigned officers and directors of Bruker Corporation, hereby severally constitute and
appoint Frank H. Laukien, Ph.D. to sign for us and in our names in the capacities indicated below, the
report on Form 10-K filed herewith and any and all amendments to such report, and to file the same,
with all exhibits thereto and other documents in connection therewith, in each case, with the Securities
and Exchange Commission, and generally to do all such things in our names and on our behalf in our
capacities consistent with the provisions of the Securities Act of 1934, as amended, and all
requirements of the Securities and Exchange Commission.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates
indicated.
Name
Title
Date
/s/ FRANK H. LAUKIEN, PH.D.
Frank H. Laukien, Ph.D.
President, Chief Executive Officer
and Chairman (Principal Executive March 1, 2011
Officer)
/s/ BRIAN P. MONAHAN
Brian P. Monahan
Chief Financial Officer (Principal
Financial and Accounting Officer)
March 1, 2011
/s/ WOLF-DIETER EMMERICH, PH.D.
Wolf-Dieter Emmerich, Ph.D.
/s/ STEPHEN W. FESIK, PH.D.
Stephen W. Fesik, Ph.D.
/s/ BRENDA J. FURLONG
Brenda J. Furlong
/s/ TONY W. KELLER, PH.D.
Tony W. Keller, Ph.D.
Director
Director
Director
Director
115
March 1, 2011
March 1, 2011
March 1, 2011
March 1, 2011
Name
Title
Date
March 1, 2011
March 1, 2011
March 1, 2011
March 1, 2011
March 1, 2011
March 1, 2011
March 1, 2011
March 1, 2011
/s/ RICHARD D. KNISS
Richard D. Kniss
/s/ DIRK D. LAUKIEN, PH.D.
Dirk D. Laukien, Ph.D.
/s/ JOERG C. LAUKIEN
Joerg C. Laukien
/s/ WILLIAM A. LINTON
William A. Linton
/s/ RICHARD A. PACKER
Richard A. Packer
/s/ RICHARD M. STEIN
Richard M. Stein
/s/ CHARLES F. WAGNER, JR.
Charles F. Wagner, Jr.
/s/ BERNHARD WANGLER
Bernhard Wangler
Director
Director
Director
Director
Director
Director
Director
Director
116
SUBSIDIARIES OF BRUKER CORPORATION
EXHIBIT 21.1
Name of Subsidiary
Jurisdiction of Incorporation
Japan
India
Sweden
Singapore
France
Estonia
Brazil
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Delaware, U.S.A.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Delaware, U.S.A.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Delaware, U.S.A.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Delaware, U.S.A.
Bruker Energy & Supercon Technologies, Inc.
Bruker AXS Inc.
Bruker BioSciences Security Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Massachusetts, U.S.A.
Bruker BioSpin Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Massachusetts, U.S.A.
Bruker Daltonics Inc.
Bruker Optics Inc.
Bruker HTS GmbH(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Hydrostatic Extrusions Ltd.(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom
Bruker Advanced Supercon GmbH(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker EAS GmbH(2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
RI Research Instruments GmbH(3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker AXS GmbH(4)
Bruker AXS Handheld Inc.(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Delaware, U.S.A.
Bruker AXS K.K.(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker AXS B.V.(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Netherlands
Bruker Nano, Inc.(5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Arizona, U.S.A.
Bruker Austria GmbH(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Austria
Bruker AXS Analytical Instruments Pvt. Ltd.(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker AXS Nordic AB(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker AXS Pte Ltd(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker AXS SAS(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Baltic OU(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker do Brasil Ltda.(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Elemental GmbH(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker Mexicana S.A. de C.V.(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mexico
Poland
Bruker Polska Sp. Z o.o.(6)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker South Africa (Pty) Ltd.(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Africa
MRI Physikalische Gerate GmbH(6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker Nano GmbH(7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
S.I.S. Inc.(8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
InCoaTec GmbH(9)
Spectral Solutions AB(10)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin Invest AG(11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin AG(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin Espanola S.A.(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin International AG(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin K.K.(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin Korea Co. Ltd.(12)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin MRI GmbH(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker BioSpin MRI Inc.(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Massachusetts, U.S.A.
Bruker BioSpin MRI Ltd.(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom
Bruker BioSpin Scandinavia AB(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin B.V.(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Netherlands
Bruker BioSpin Ltd.(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin Ltd.(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin S.A.(12)
Bruker BioSpin S.A./N.V.(12)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin S.r.l.(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Scientific Israel Ltd.(12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker (Beijing) Technologies & Services Co. Ltd.(13)
. . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker (Malaysia) SDN BHD(13)
Bruker BioSpin Pte Ltd.(13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Ltd.(13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Russia
Bruker India Scientific PVT, Ltd.(13)
Bruker AXS Ltd.(14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom
Oxford Research Systems Ltd.(15) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom
Bruker BioSpin PTY Ltd.(16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Australia
Bruker India Suppliers PVT, Ltd.(17)
Bruker Physik GmbH(18) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker BioSpin GmbH(19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Perch Solutions OY(20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Daltonik GmbH(21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker BioSciences Espanola S.A.(22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSciences Korea Co., Ltd.(22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSciences Pty. Ltd.(22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Australia
Bruker Taiwan Co. Ltd.(22)
Sweden
Switzerland
Switzerland
Spain
Switzerland
Japan
Korea
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Malaysia
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
France
Belgium
Italy
Israel
China
Spain
South Korea
California, U.S.A.
Singapore
Sweden
Finland
Canada
Taiwan
India
India
Name of Subsidiary
Jurisdiction of Incorporation
Japan
Singapore
South Africa
Sweden
Belgium
Bruker Daltonics K.K.(22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Daltonics Pte Ltd(22)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Daltonics Pty Ltd.(22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Daltonics Scandinavia AB(22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Daltonics SPRL/BVBA(22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Chemical Analysis B.V.(22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Netherlands
Bruker Daltonics GmbH(22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Switzerland
Bruker Daltonics Ltd.(22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom
Bruker Daltonics S.r.l.(22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Daltonique S.A.(22)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Detection Corporation(22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Massachusetts, U.S.A.
Bruker Daltonics s.r.o.(23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Saxonia Mechanik GmbH(23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker Daltonics Pvt. Ltd.(23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Optics K.K.(24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Optics GmbH(24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Optics LTD(24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Optics Ltd.(24)
Bruker Optik GmbH(24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
China
Bruker Instruments Ltd.(25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Optics AB(25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sweden
Bruker Optics Ukraine(25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ukraine
Bruker Optics B.V.(25)
Bruker Optics S.r.l.(25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Optik Asia Pacific Limited(25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hong Kong
Bruker Optique SA(25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Sigma GmbH(25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker Optics Korea(26) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Optics Taiwan Ltd.(27) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Optik Southeast Asia Pte Ltd(27) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RPD Tool AG(28)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Netherlands
South Korea
Taiwan
Singapore
Switzerland
India
Japan
Switzerland
Canada
Czech Republic
Italy
France
France
Italy
(1) These entities are wholly-owned subsidiaries of Bruker Energy & Supercon Technologies, Inc.
(2) These entities are wholly-owned subsidiaries of Bruker HTS GmbH.
(3) RI Research Instruments GmbH is an indirect subsidiary of Bruker Energy & Supercon Technologies, Inc. RI Research
Instruments GmbH is 51% owned by Bruker Energy & Supercon Technologies, Inc.
(4) Bruker AXS GmbH is 90% owned by Bruker AXS Inc. and 10% by Bruker Corporation.
(5) These entities are wholly-owned subsidiaries of Bruker AXS Inc.
(6) These entities are wholly-owned subsidiaries of Bruker AXS GmbH.
(7) Bruker Nano GmbH is a wholly-owned subsidiary of Bruker Elemental GmbH.
(8)
(9)
S.I.S. Inc. is a wholly-owned subsidiary of Bruker Nano GmbH.
InCoaTec GmbH is an indirect subsidiary of Bruker AXS GmbH. InCoaTec GmbH is owned 51% by Bruker AXS GmbH.
(10) Spectral Solutions AB is a wholly-owned subsidiary of Bruker AXS Nordic AB.
(11) Bruker BioSpin Invest AG is 90% owned by Bruker BioSpin Corp. and 10% owned by Bruker Corporation.
(12) These entities are wholly-owned subsidiaries of Bruker BioSpin Invest AG.
(13) These entities are wholly-owned subsidiaries are Bruker BioSpin International AG.
(14) Bruker AXS Ltd. is a wholly-owned subsidiary of Bruker BioSpin Ltd.
(15) Oxford Research Systems, Ltd. is 50% owned by Bruker BioSpin Invest AG and 50% owned by Bruker BioSpin Ltd.
(16) Bruker BioSpin PTY Ltd. is 99.99% owned by Bruker BioSpin Invest AG and 0.01% owned by Oxford Research
Systems, Ltd.
(17) Bruker India Suppliers PVT, Ltd. is wholly-owned subsidiaries of Bruker India Scientific PVT, Ltd.
(18) Bruker Physik GmbH is 50.5% owned by Bruker BioSpin Corporation, 24.75% owned by Bruker Daltonik GmbH and
24.75% owned by Bruker Optik GmbH.
(19) Bruker BioSpin GmbH is a wholly-owned subsidiary of Bruker Physik GmbH.
(20) Perch Solution OY is an indirect subsidiary of Bruker BioSpin GmbH. Perch Solution OY GmbH is 51% owned by Bruker
BioSpin GmbH.
(21) Bruker Daltonik GmbH is 90% owned by Bruker Daltonics Inc. and 10% by Bruker Corporation.
(22) These entities are wholly-owned subsidiaries of Bruker Daltonics Inc.
(23) These entities are wholly-owned subsidiaries of Bruker Daltonik GmbH.
(24) These entities are wholly-owned subsidiaries of Bruker Optics Inc.
(25) These entities are wholly-owned subsidiaries of Bruker Optik GmbH.
(26) Bruker Optics Korea is a wholly-owned subsidiary of Bruker Optics K.K.
(27) These entities are wholly-owned subsidiaries of Bruker Optik Asia Pacific Limited.
(28) RPD Tool AG is an indirect subsidiary of Bruker Optik GmbH. RPD Tool AG is owned 19% by Bruker Optics GmbH.
(This page has been left blank intentionally.)
EXHIBIT 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statement (Form S-8, No. 333-167333) pertaining to the Bruker Corporation 2010
Incentive Compensation Plan,
(2) Registration Statement (Form S-3, No. 333-159982) and related Prospectus of Bruker
Corporation for the registration of 70,000,000 shares of its common stock, and
(3) Registration Statements (Form S-8, Nos. 333-150430, 333-137090, 333-107294, and 333-47836)
pertaining to the Bruker BioSciences Corporation Amended and Restated 2000 Stock Option
Plan;
of our reports dated March 1, 2011, with respect to the consolidated financial statements of Bruker
Corporation and the effectiveness of internal control over financial reporting of Bruker Corporation
included in this Annual Report (Form 10-K) for the year ended December 31, 2010.
/s/ ERNST & YOUNG LLP
Boston, Massachusetts
March 1, 2011
(This page has been left blank intentionally.)
EXHIBIT 31.1
I, Frank H. Laukien, certify that:
1.
I have reviewed this annual report on Form 10-K of Bruker Corporation;
CERTIFICATION
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the registrant’s auditors and the audit committee of
registrant’s board of directors (or persons performing the equivalent functions):
a)
b)
all significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: March 1, 2011
By: /s/ FRANK H. LAUKIEN, PH.D.
Frank H. Laukien, Ph.D.
President, Chief Executive Officer and Chairman
(Principal Executive Officer)
EXHIBIT 31.2
I, Brian P. Monahan, certify that:
1.
I have reviewed this annual report on Form 10-K of Bruker Corporation;
CERTIFICATION
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this
report;
3. Based on my knowledge, the financial statements, and other financial information included in this
report, fairly present in all material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining
disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and
15d-15(f)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls and
procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this report is being prepared;
b) designed such internal control over financial reporting, or caused such internal control over
financial reporting to be designed under our supervision, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles;
c)
evaluated the effectiveness of the registrant’s disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls and
procedures, as of the end of the period covered by this report based on such evaluation; and
d) disclosed in this report any change in the registrant’s internal control over financial reporting
that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal
quarter in the case of an annual report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation
of internal control over financial reporting, to the registrant’s auditors and the audit committee of
registrant’s board of directors (or persons performing the equivalent functions):
a)
b)
all significant deficiencies and material weaknesses in the design or operation of internal
control over financial reporting which are reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial information; and
any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: March 1, 2011
By: /s/ BRIAN P. MONAHAN
Brian P. Monahan
Chief Financial Officer
(Principal Financial and Accounting Officer)
EXHIBIT 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Bruker Corporation (the ‘‘Company’’) on Form 10-K for
the year ended December 31, 2010, as filed with the Securities and Exchange Commission on the date
hereof (the ‘‘Report’’), I, Frank H. Laukien, as President, Chief Executive Officer and Chairman of the
Board of Directors of the Company, certify, pursuant to 18 U.S.C. section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) of the Securities Exchange
Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Date: March 1, 2011
By: /s/ FRANK H. LAUKIEN, PH.D.
Frank H. Laukien, Ph.D.
President, Chief Executive Officer and Chairman
(Principal Executive Officer)
EXHIBIT 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Bruker Corporation (the ‘‘Company’’) on Form 10-K for
the year ended December 31, 2010, as filed with the Securities and Exchange Commission on the date
hereof (the ‘‘Report’’), I, Brian P. Monahan, as Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that to the best of my knowledge:
(1) The Report fully complies with the requirements of section 13(a) of the Securities Exchange
Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial
condition and results of operations of the Company.
Date: March 1, 2011
By: /s/ BRIAN P. MONAHAN
Brian P. Monahan
Chief Financial Officer
(Principal Financial and Accounting Officer)
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Reconciliation of Non-GAAP Financial Measures (a)(b)
(in Millions, Except Per Share Data)
Twelve Months Ended December 31, 2010:
Bruker Scientific
Instruments
Bruker Energy &
Supercon Technologies
Corporate Adjustments
& Eliminations
Bruker
Corporation
Revenue
Operating income (loss) - GAAP
Cost of revenues credits (c)
Amortization of acquisition-related intangible assets (d)
Other charges (e)
Operating income (loss) - adjusted
Operating margin - adjusted
$1,225.1
$160.5
7.2
5.5
8.6
$181.8
14.8%
Net income (loss) attributable to Bruker Corporation - GAAP
$103.4
Cost of revenues credits (c)
Amortization of acquisition-related intangible assets (d)
Other charges (e)
Net income (loss) attributable to Bruker Corporation -
adjusted
Diluted net income (loss) per common share attributable to
Bruker Coporation - GAAP
Cost of revenues credits (c)
Amortization of acquisition-related intangible assets (d)
Other charges (e)
Diluted net income (loss) per common share attributable to
Bruker Corporation - adjusted
Weighted average shares outstanding:
6.9
5.0
11.1
$126.4
$0.62
0.04
0.03
0.07
$0.76
165.7
$90.5
$(2.6)
-
0.3
-
$(2.3)
(2.5%)
$(6.4)
-
0.3
-
$(6.1)
$(10.7)
$(2.2)
-
-
-
$(2.2)
$(1.6)
-
-
-
$(1.6)
$(0.04)
$(0.00)
-
-
-
-
-
-
$(0.04)
$(0.00)
164.4
164.4
$1,304.9
$155.7
7.2
5.8
8.6
$177.3
13.6%
$95.4
6.9
5.3
11.1
$118.7
$0.58
0.04
0.03
0.07
$0.72
165.7
Twelve Months Ended December 31, 2009:
Bruker Scientific
Instruments
Bruker Energy &
Supercon Technologies
Corporate Adjustments
& Eliminations
Bruker
Corporation
Revenue
Operating income (loss) - GAAP
Cost of revenues credits (c)
Amortization of acquisition-related intangible assets (d)
Other charges, net (e)
Operating income (loss) - adjusted
Operating margin - adjusted
Net income (loss) attributable to Bruker Corporation - GAAP
Cost of revenues credits (c)
Amortization of acquisition-related intangible assets (d)
Other charges, net (e)
Net income (loss) attributable to Bruker Corporation -
adjusted
Diluted net income (loss) per common share attributable to
Bruker Coporation - GAAP
Cost of revenues credits (c)
Amortization of acquisition-related intangible assets (d)
Other charges, net (e)
Diluted net income (loss) per common share attributable to
Bruker Corporation - adjusted
Weighted average shares outstanding:
$1,062.7
$141.7
(6.7)
1.4
0.2
$136.6
12.9%
$87.2
(4.7)
1.2
0.2
$83.9
$0.53
(0.03)
0.01
-
$0.51
164.9
$59.8
$(6.3)
-
0.4
0.2
$(5.7)
(9.5%)
$(6.9)
-
0.4
0.2
$(6.3)
$(0.04)
-
-
-
$(0.04)
163.5
$(8.0)
$1.3
-
-
-
$1.3
$0.9
-
-
-
$0.9
-
-
-
-
-
164.9
$1,114.5
$136.7
(6.7)
1.8
0.4
$132.2
11.9%
$81.2
(4.7)
1.6
0.4
$78.5
$0.49
(0.03)
0.01
-
$0.47
164.9
Reconciliation of Non-GAAP Financial Measures (a)(b)
(in Millions, Except Per Share Data), continued
Twelve Months Ended December 31, 2008:
Bruker Scientific
Instruments
Bruker Energy &
Supercon Technologies
Corporate Adjustments
& Eliminations
Bruker
Corporation
Revenue
Operating income (loss) - GAAP
Amortization of acquisition-related intangible assets (d)
Other charges, net (e)
Operating income (loss) - adjusted
Operating margin - adjusted
Net income (loss) attributable to Bruker Corporation - GAAP
Amortization of acquisition-related intangible assets (d)
Other charges, net (e)
Net income (loss) attributable to Bruker Corporation -
adjusted
Diluted net income (loss) per common share attributable to
Bruker Coporation - GAAP
Amortization of acquisition-related intangible assets (d)
Other charges, net (e)
Diluted net income (loss) per common share attributable to
Bruker Corporation - adjusted
Weighted average shares outstanding:
$1,074.1
$116.2
1.4
8.5
$126.1
11.7%
$73.5
1.2
8.5
$83.2
$0.44
0.01
0.05
$0.50
165.6
$43.5
$(8.2)
0.4
-
$(7.8)
(17.9%)
$(8.9)
0.4
-
$(8.5)
$(0.05)
-
-
$(0.05)
162.7
$(10.5)
$0.2
-
-
$0.2
$0.3
-
-
$0.3
-
-
-
-
165.6
$1,107.1
$108.2
1.8
8.5
$118.5
10.7%
$64.9
1.6
8.5
$75.0
$0.39
0.01
0.05
$0.45
165.6
(a) GAAP results were determined in accordance with U.S. generally accepted accounting principles.
(b) Adjusted results are non-GAAP measures and exclude certain charges to cost of revenues (see note c for details); amortization of
acquisition-related intangible assets (see note d for details); restructuring and other charges (see note e for details); and the tax
consequences of the preceding items.
(c) Reported results in 2010 include charges for the sale of inventories revalued at the date of acquisition. Reported results in 2009
contain a favorable impact for the recognition of a system in which a majority of costs were expensed in historical periods through
research and development expense.
(d) Reported results in 2010, 2009 and 2008 include charges for the amortization of acquisition-related intangible assets.
(e) Reported results within other charges in 2010 include $7.4 million of costs incurred in connection with acquisitions, $1.0 million of
charges associated with the divestiture of a manufacturing facility and $0.2 million of restructuring costs. Reported results within
other charges in 2009 included a net loss of $0.2 million incurred in connection with the acquisition of ACCEL Instruments and
$0.2 million of restructuring costs. Reported results within other charges in 2008 included $6.3 million of costs incurred in
connection with the acquisition of Bruker BioSpin and $2.3 million of restructuring costs.
The charges described in notes c, d and e have been tax effected using enacted tax rates in the jurisdiction in which the charge was
recorded. In addition, reported results in 2010 include charges of $3.1 million associated with income taxes for historical periods under
audit.
(This page has been left blank intentionally.)
Bruker Corporation
Management
Board of Directors
Shareholder Information
Corporate Headquarters:
40 Manning Road
Billerica, Massachusetts 01821
Common Stock Listing:
Common stock of Bruker
Corporation is traded on
the NASDAQ Global Select
Market under the
symbol “BRKR”
Legal Counsel:
Nixon Peabody LLP
100 Summer Street
Boston, Massachusetts 02110
Independent Registered Public
Accounting Firm:
Ernst & Young LLP
200 Clarendon Street
Boston, Massachusetts 02116
Transfer Agent:
American Stock Transfer
& Trust Company
59 Maiden Lane
New York, New York 10038
Frank H. Laukien, Ph.D.
President and Chief Executive
Officer
Frank H. Laukien, Ph.D.
Chairman
William J. Knight, CPA
Chief Operating Officer
Brian P. Monahan, CPA
Chief Financial Officer
Stacey L. Desrochers, CTP
Treasurer and Director
of Investor Relations
Richard M. Stein
Secretary
Wolf-Dieter Emmerich, Ph.D.
Former Member of the Executive
Board, Netzsch Group
Stephen W. Fesik, Ph.D.
Professor, Department of
Biochemistry, Vanderbilt University
School of Medicine
Brenda J. Furlong
Former Managing Director,
Columbia Management Group
Tony W. Keller, Ph.D.
Honorary Chairman,
Bruker BioSpin Group
Richard D. Kniss
Former Senior Vice President,
Agilent Technologies, Inc.
Dirk D. Laukien, Ph.D.
Senior Scientific Fellow,
Bruker Corporation
Joerg C. Laukien
Executive Chairman,
Bruker BioSpin Group
William A. Linton
Chairman and Chief Executive Officer,
Promega Corporation
Richard A. Packer
Chairman and Chief Executive Officer,
ZOLL Medical Corporation
Richard M. Stein
Partner, Nixon Peabody LLP
Charles F. Wagner, Jr.
Executive Vice President of Finance
and Administration and Chief
Financial Officer, Progress
Software Corporation
Bernhard Wangler
Partner, Kanzlei Wangler
Bruker Corporation
info@bruker.com
www.bruker.com