2011 Annual Report
Bruker Corporation
Innovation with Integrity
Bruker Corporation
Dear Fellow Bruker Stockholders,
Bruker’s emphasis on product innovation, fast
organic growth, disciplined acquisitions, a conser-
vative balance sheet and high RoIC allowed Bruker
to report good financial progress in the year 2011:
Bruker achieved record revenue of $1.65 billion,
which was 26.6% higher than in the previous year
2010, or 20.5% higher on a currency-adjusted
basis. Even with significant investments in our
new Chemical & Applied Markets (CAM) division,
the Bruker Scientific Instruments (BSI) seg-
ment reported adjusted EPS of $0.91 in 2011, an
increase of 12% compared to 2010. Excluding our
investments in CAM, our BSI adjusted EPS would
have increased 23% year-over-year.
We are pleased that despite two sizeable acquisi-
tions in 2010, our balance sheet remained solid,
with an intangible asset ratio at an industry-lead-
ing low level of 14%, and our debt leverage ratio
at a conservative 1.2x as of December 31, 2011.
Moreover, our BSI segment achieved Return on
Invested Capital (RoIC) of 22% in fiscal 2011, or
25% excluding our CAM investments. We believe
that our present investments in our new CAM
division and our BEST segment will contribute to
further profitable growth in revenue, EPS, RoIC
and shareholder value in the future. Our backlog
grew to over $1 billion for the first time ever, and
we have good visibility into the first half of 2012
due to our high backlog and continued strong
order rates in the second half of 2011.
Our October 2010 acquisition of the Bruker Nano
Surfaces (BNS) division exceeded our expecta-
tions, providing revenue greater than $160 million
and greater than 20% adjusted operating margins
in 2011. Our May 2010 acquisition of the Bruker
CAM division met our first full year revenue goal
with more than $80 million in revenue in 2011.
During the year 2011, we made major investments
in CAM, with three factory moves, significant new
product launches, invigorated R&D investments
and further expansion of CAM’s international
distribution capabilities. We believe the CAM
product lines in GC and LC separations and mass
spectrometry (GC-MS, ICP/MS, LC-MS) for applied
markets in food safety, forensics, doping, metabo-
lomics, environmental and chemistry/petrochem
applications open up $2 billion per annum in addi-
tional potential market opportunities for Bruker.
During 2011 and in early 2012, Bruker Energy and
Supercon Technologies (BEST) segment received
long-term low temperature superconductor (LTS)
contracts totaling more that $110 million, sig-
nificantly increasing BEST’s multi-year external
backlog. BEST had strong year-over-year revenue
growth of 25%, recording $113 million of revenue,
and achieved break-even adjusted EBIT in 2011.
Throughout 2011, we continued to strengthen
our market position by remaining true to our core
competencies of delivering innovative, high per-
formance and customer-focused life-science and
analytical instruments. We introduced a record
forty new products across all divisions, many
of which were unique and some of which repre-
sented technological breakthroughs. An excellent
example is our new Atomic Force Microscope
(AFM) called Dimension FastScan, which offers a
breakthrough in AFM imaging speed without sac-
rificing nanoscale resolution, and produces results
in seconds/minutes instead of hours/days.
With the increasing breadth of our high-perfor-
mance scientific instruments, we believe our
BSI segment can serve greater than $8 billion
in addressable markets, which has allowed our
businesses to continue to take market share and
significantly increase revenue and backlog in 2011.
We will continue to make our Operational Excel-
lence initiative a high priority for 2012 and 2013,
as we drive for further gross margin and operat-
ing margin improvements, higher efficiency of
our operations, reduced working capital ratios,
increased outsourcing and faster and more seam-
less process execution, all while retaining our high
customer satisfaction standards.
Bruker Corporation
With strong momentum, record backlog, and good
geographic and end market diversification, we
expect to generate significant further improve-
ments in our financial performance in 2012 and
beyond. We believe that Bruker is well positioned
to capitalize on strong demand tailwinds from a
number of important secular trends, including
accelerating shifts to post-genomic research and
epigenetics, functional and imaging proteomics,
structural biology, biologic drugs, a paradigm
shift in clinical microbiology, protein and metabo-
lite molecular diagnostics, fast and quantitative
microscopy, 450 mm semiconductor FABs, shrink-
ing semicon and nanotech feature sizes, and
further adoption of superconductivity-enabled
products in research, healthcare and energy/grid
applications.
We are continuing to build a company that can
deliver meaningful value to our customers and
stockholders for the long-term, as we continue to
focus on growing our market share and drive fur-
ther profitable growth in revenue and earnings per
share. Bruker remains a unique company and all
of us at Bruker look forward to the coming years
with excitement. Thank you for your continued
interest and investment in Bruker Corporation.
Sincerely,
Frank H. Laukien, Ph.D.
Chairman, President and Chief Executive Officer
March 30, 2012
We use certain non-GAAP financial measures, including adjusted operating
income and adjusted earnings per share. 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 this report.
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, 2011
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:2) 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,
2011 (the last business day of the registrant’s most recently completed second fiscal quarter) was $1,732,467,887, based
on the reported last sale price on the Nasdaq Global Select Market. This amount excludes an aggregate of 85,091,743
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, 2011. 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, 2012 was 165,871,574.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the information required by Part III of this report (Items 10, 11, 12, 13 and 14) are incorporated by
reference from the registrant’s definitive Proxy Statement for its 2012 Annual Meeting of Stockholders to be filed within
120 days of the close of the registrant’s fiscal year.
BRUKER CORPORATION
ANNUAL REPORT ON FORM 10-K
TABLE OF CONTENTS
Part I
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1
Item 1A Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2
Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 3
Mine Safety Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 Auditing 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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39
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66
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116
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Exhibits, Financial Statements and Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Signatures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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121
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 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, the outcome of any actions
that may be taken by government agencies in connection with FCPA compliance matters that we have
reported to them, risks and uncertainties related to adverse changes in the economic and political
conditions in the countries in which we operate, 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
1
Item 13
Item 14
Part IV
Item 15
fluctuations and other factors, many of which are described in 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.
2
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. Our corporate
headquarters are located in Billerica, Massachusetts. We maintain major technical and manufacturing
centers in Europe, North America, and Japan, and we have sales offices located throughout the world.
Strategy and Competitive Strengths
Our business strategy is to capitalize on our ability to innovate and generate 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, 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 brands;
(cid:129) extensive intellectual property portfolio; and
(cid:129) global manufacturing, distribution, and logistics networks.
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 and
gas chromatography instruments and solutions for life sciences, including proteomics, metabolomics,
and clinical research applications. Our mass spectrometry and gas chromatography instruments also
provide solutions for applied markets that include food safety, environmental analysis and fuel analysis.
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, combustion
analysis, atomic force microscopy and stylus and optical metrology 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
3
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 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; 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, 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
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
4
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 used in conducting tests, or assays, and 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 also supply 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.
The Bruker MAT operating segment manufactures and distributes Bruker AXS advanced X-ray
and spark optical emission spectroscopy, or spark-OES, systems, as well as Bruker Nano atomic force
microscopy, or AFM, and stylus and optical metrology, or 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. Spark-OES
systems are used to analyze the concentration of elements in metallic samples. The Bruker MAT
portfolio also includes carbon, sulfur, oxygen, nitrogen and hydrogen, or CS/ONH, analyzers based on
combustion or heat extraction with infrared and thermal conductivity technology. 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 our 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.
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. 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. BEST
also develops, manufactures and markets ceramic high temperature superconductors for fusion energy
5
research and other applications. Additionally, BEST offers non-superconducting CuponalTM materials
and wires, based on co-extruded copper and aluminum, used in the power and transport industries.
BEST also develops, manufactures and markets devices based primarily on superconductivity that
utilize 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. BEST also manufactures and sells 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. If completed, 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. As a result of market and economic factors, the timing of the BEST initial
public offering, if any, is uncertain.
Products and Solutions
We believe that our products and solutions offer the following advantages to our customers:
(cid:129) high performance and precision;
(cid:129) integrated solutions for specific applications;
(cid:129) reliability and increased productivity;
(cid:129) high-quality results; and
(cid:129) cost-efficiency.
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 2011, we launched a number of new products in the BioSpin product line,
including Prodigy, a cost-efficient CryoProbe providing a three time enhancement in sensitivity. We also
extended our range of Ascend magnets, a series of compact magnets designed to reduce cryogen
consumption which allows for lower operating costs and sustainability, and made a number of
improvements to our Avance console architecture and TopSpin software to improve productivity and
quality control.
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
6
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 an 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 the emerging field of protein molecular diagnostics. During 2011, we
expanded the Bruker Daltonics product lines with a number of new products and applications in our
MaXis series of quadrupole time-of-flight mass spectrometers that are designed to increase speed,
resolution and sensitivity. We also introduced the SCION series of gas chromatography-mass
spectrometry systems that are designed to provide ease of use and increased sensitivity. In addition, we
acquired a liquid chromatography-mass spectrometry business in April 2011 to expand our mass
spectrometry product line.
Bruker Daltonics’ instruments 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) GC—Gas chromatography;
(cid:129) GC-MS—Gas chromatography-mass spectrometry systems utilizing single or triple-quadrupole
time-of-flight mass spectrometry;
(cid:129) LC-MS—Liquid chromatography-mass spectrometry; and
(cid:129) ICP-MS—Inductively coupled plasma mass spectrometry.
7
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:
oligonucleotide and synthetic polymer analysis; protein identification and quantification; peptide de
novo sequencing; determination of post-translational modifications of proteins; interaction proteomics
and protein function analysis; drug discovery and development; and fast body fluid and tissue peptide
or protein biomarker detection. MALDI mass spectrometry allows users to classify and identify
microorganisms quickly and reliably with 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:
identification, protein analysis and functional complex analysis in proteomics and protein function;
molecular identification in metabonomics, natural product and drug metabolite analysis; combinatorial
chemistry high throughput screening; and 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: the study of structure and
function of biomolecules, including proteins, DNA, and natural products; complex mixture analysis
including body fluids or combinatorial libraries; high-throughput proteomics and metabonomics; and
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
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: sequencing and
identification based on peptide structural analysis; quantitative liquid chromatography—mass
spectrometry; identification of combinatorial libraries; and generally enhancing the speed and efficiency
of the drug discovery and development process.
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 GC systems can be utilized in a variety of configurations and are designed to
enhance system efficiency and performance and to provide analysts with flexibility in choosing their
platform or customizing their system to meet their particular application need. Our GC systems are
particularly useful for applications in petroleum, fuel and hydrocarbon analysis, food and product safety
and forensics and environmental 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
8
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.
LC-MS systems combine the separation features of liquid chromatography with the molecular
identification features of mass spectrometry to separate, identify and quantify different substances
within a test sample. As a complimentary technique to GC-MS, which analyzes volatile compounds,
LC-MS can be used to analyze a wide range of non-volatile compounds in complex samples. Our
LC-MS systems are available in a wide range of configurations to suit a user’s specific needs. Although
primarily used for life science applications, our LC-MS systems also have applications in food and
product safety, forensics, clinical and toxicology testing, as well as environmental, pharmaceutical and
chemical analysis.
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.
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
2011, we introduced new X-ray crystallography systems for structural biology that are equipped with
new X-ray sources and feature increased intensity. We also introduced a number of new atomic force
microscopy systems, including the Dimension FastScan, which is designed to significantly reduce
operating time while maintaining accurate, high-resolution results. In addition, we acquired a tribology
and mechanical testing business in October 2011 which expanded our AFM business into adjacent
markets where we previously did not compete.
Bruker MAT 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) EDS—Energy dispersive X-ray spectroscopy on electron microscopes;
(cid:129) EBSD—Electron backscatter diffraction on electron microscopes;
(cid:129) S-OES—Spark optical emission spectroscopy;
(cid:129) CS/ONH—Combustion analysis for carbon, sulfur, oxygen, nitrogen, and hydrogen in solids;
(cid:129) AFM—Atomic force microscopy;
(cid:129) SOM—Stylus and optical metrology; and
(cid:129) TMT—Tribology and mechanical test systems for analysis of friction and wear.
9
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.
EDS 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 our spectrometer allows the determination of the
qualitative and quantitative chemical sample composition at the current beam position. EDS systems
allow for simultaneous analysis of all elements in the periodic table, beginning with atomic number 4
(beryllium). Our EDS systems are used for a range of applications, including nanotechnology and
advanced materials research, as well as materials analysis and quality control. Customers for EDS
systems include industrial customers, academia, and government research facilities.
EBSD systems are used to perform quantitative microstructure analysis of crystalline samples in
electron microscopes. The microscope’s electron beam strikes the tilted sample and diffracted electrons
form a pattern on a fluorescent screen. This pattern is characteristic of the crystal structure and
orientation of the sample region from which it was generated. It provides the absolute crystal
orientation with sub-micron resolution. EBSD can be used to characterize materials with regard to
crystal orientation, texture, stress, strain, and grain size. EBSD also allows the identification of
crystalline phases and their distribution, and is applied to many industries such as metals processing,
aerospace, automotive, microelectronics, and earth sciences.
S-OES instruments are used for analyzing metals. S-OES covers 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. S-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
10
composition of the material. This technique is widely used in production control laboratories of
foundries and steel mills.
CS/ONH carrier gas systems incorporate a furnace and infrared or thermal conductivity detection
to analyze inorganic materials for the determination of carbon, sulfur, nitrogen, oxygen and hydrogen.
Combustion and inert gas fusion analyzers are used for applications in metal production and
processing, chemicals, 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 reproducibility 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.
TMT systems provide a platform for all types of common mechanical, friction, durability, scratch
and indentation tests for a wide spectrum of materials. Tribology systems are utilized for both academic
research of the fundamental material properties and industrial applications in the semiconductor,
aerospace, petroleum, automotive and other industries.
Bruker Optics’ research, analytical, and process analysis instruments are 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 spectrometry
product line is complemented by a range of sampling accessories and techniques to help users find the
best solution to analyze samples effectively. During 2011, we expanded the Bruker Optics product line
with a number of new products targeted for food and pharmaceutical production control and for
remote sensing of gases from long distances.
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.
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
11
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. The BEST product line also includes
non-superconducting materials and conventional devices. 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.
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, molecular diagnostics, food/feed/agricultural, and fine chemical companies,
as well as commercial laboratories, university laboratories, medical schools, and other not-for-profit
research institutions and government laboratories. We also sell 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 do not depend on any single
customer and no single customer accounted for more than 10% of revenue in any of the last three
fiscal years.
12
Competition
Our existing products and solutions and any products and solutions that we develop in the future
may compete in multiple, highly competitive markets. In addition, there has been a trend towards
consolidation in our industry and many of our competitors have substantially greater financial,
technical, and marketing resources than we do. Our competitors may succeed in developing and
offering 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 our target markets in a timely manner and are
technologically superior to and/or less expensive, or more cost effective, than 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 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,
Thermo Fisher Scientific, Ametek’s Spectro and Edax divisions, PANalytical, Jordan Valley 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.
13
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, an
international quality standard. 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 Europe and California, U.S.A. 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 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.
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 $177.2 million, $141.4 million and
$126.4 million in 2011, 2010 and 2009, 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. 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. We have also accepted some sponsored research contracts from
private sources.
14
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 solid
state Dynamic Nuclear Polarization technologies, an ongoing development that enables gains in
sensitivity for NMR, high field EPR instrumentation with dedicated cryogen free magnets, high field
magnet technology for preclinical research and quadruple tuned CryoProbes for biological research.
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 an integrated
multidimensional solution for proteomics that provides enhanced protein identification, structural
information and distribution and quantitative information. Bruker Daltonics also developed an
automated headspace sampler that compliments its gas chromatography products by allowing analysis of
potentially toxic volatile organic compounds. Bruker MAT maintains technical competencies in core
X-ray technologies and capabilities, including detectors used to sense X-ray and 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 TXRF system for trace element analysis in semiconductor applications, 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. Bruker Optics maintains technical competencies in core vibrational spectroscopy
technologies and capabilities, including FT-IR, NIR, and Raman. Recent advancements include the
TANGO FT-NIR, which is Bruker Optics’ next generation of pre-calibrated analyzers.
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.
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,
15
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 AXS, Bruker BioSpin, Bruker CAM, Bruker Daltonics, Bruker Detection, Bruker
Elemental, Bruker MAT, 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.
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.
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Internal Investigation and Compliance Matters
As previously reported, in 2011 the Audit Committee of our Board of Directors commenced an
internal investigation, with the assistance of independent outside counsel and an independent forensic
consulting firm, in response to certain anonymous communications received by us alleging improper
conduct in connection with the China operations of our Bruker Optics subsidiary. The Audit
Committee’s investigation, which included a review of compliance by Bruker Optics and its employees
in China and Hong Kong with the requirements of the Foreign Corrupt Practices Act (FCPA) and
other applicable laws and regulations, has been completed.
The investigation found evidence indicating that payments were made that improperly benefited
employees or agents of government-owned enterprises in China. The investigation also has found
evidence that certain employees of Bruker Optics in China and Hong Kong failed to comply with our
corporate policies and standards of conduct. As a result, we have taken personnel actions, including the
termination of certain individuals. We have also terminated our business relationships with certain third
party agents, implemented an enhanced FCPA compliance program, and strengthened the financial
controls and oversight at our subsidiaries operating in China and Hong Kong. We have also initiated a
review of the China operations of our other subsidiaries, which is being conducted with the assistance
of an independent audit firm.
We voluntarily contacted the United States Securities and Exchange Commission (SEC) and the
United States Department of Justice (DOJ) in August 2011 to advise both agencies of the internal
investigation by the Audit Committee. In October 2011, we also reported the existence of the internal
investigation to the Hong Kong Joint Financial Intelligence Unit and Independent Commission Against
Corruption (ICAC). We have cooperated with the United States federal agencies and Hong Kong
government authorities with respect to their inquiries and have provided documents and/or made
witnesses available in response to requests from the governmental authorities reviewing this matter. We
intend to continue to cooperate with these agencies in connection with their inquiries. As was
previously the case, at this time we cannot reasonably assess the timing or outcome of these matters or
their effect, if any, on our business.
The FCPA and related statutes and regulations provide for potential monetary penalties as well as
criminal and civil sanctions in connection with FCPA violations. It is possible that monetary penalties
and other sanctions could be assessed by the Federal government in connection with these matters.
Additionally, to the extent any payments are determined to be illegal by local government authorities,
civil or criminal penalties may be assessed by such authorities and our ability to conduct business in
that jurisdiction may be negatively impacted. At this time, we cannot predict the extent to which the
SEC, the DOJ, the ICAC or any other governmental authorities will pursue administrative, civil
injunctive or criminal proceedings, the imposition of fines or penalties or other remedies or sanctions.
We cannot reasonably estimate the potential liability, if any, related to these matters resulting from any
proceedings that may be commenced by the SEC, the DOJ, the ICAC or any other governmental
authorities. Accordingly, no provision with respect to such matters has been recorded in the
accompanying consolidated financial statements.
It is not possible to predict at this time when the government inquiries concerning the investigation
will be completed, or what actions, if any, will be taken by governmental authorities with regard to
these matters. In the fiscal year ended December 31, 2011, $4.3 million was recorded for legal and
other professional services incurred related to the internal investigation of these matters.
Working Capital Requirements
There are no credit terms extended to customers that would have a material adverse effect on our
working capital.
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We typically recognize revenue from system sales upon customer acceptance. To effectively operate
our business, we are required to hold a significant number of systems that have been shipped to
customers but are not yet accepted by the customer, or finished goods in-transit. As a result, a
significant percentage of our inventory represents finished goods in-transit. Finished goods in-transit
were $116.8 million and $85.3 million at December 31, 2011 and 2010, 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
$56.0 million and $48.6 million of demonstration inventory at December 31, 2011 and 2010,
respectively.
Backlog
Our backlog consists of firm orders under non-cancellable purchase orders received from
customers. Total system backlog at December 31, 2011 and 2010 was $1,086.5 million and
$910.4 million, respectively. We anticipate that approximately 80% of the backlog as of December 31,
2011 will be filled in 2012. We experience 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.
As a result, backlog on any particular date can be indicative of our short-term revenue performance,
but is not necessarily a reliable indicator of long-term revenue performance.
Employees
As of December 31, 2011 and 2010, we had approximately 6,000 and 5,400 full-time employees
worldwide, respectively. Of these employees, approximately 1,100 and 1,050 were located in the United
States as of December 31, 2011 and 2010, 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 and the workers’
councils.
As of December 31, 2011 we had approximately 2,930 full-time employees in production and
distribution, 1,420 full-time employees in selling and marketing and 1,000 full-time employees in
research and development. 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.
Financial Information about Geographic Areas and Segments
Financial information about our geographic areas and segments may be found in Note 20 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 SEC pursuant to Section 13(a) or 15(d) of
the Securities Exchange Act of 1934, as amended, (the Exchange Act), as soon as reasonably
practicable after they are electronically filed with or furnished to the SEC.
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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.
The Audit Committee of our Board of Directors has completed its investigation into allegations of improper
conduct by persons associated with the operations of our Bruker Optics subsidiary in China and Hong Kong
and we could be exposed to liabilities under the Foreign Corrupt Practices Act, or FCPA, and other laws and
regulations, including foreign laws.
As a result of our international operations, we are subject to compliance with various laws and
regulations, including the FCPA and other anti-bribery laws in the jurisdictions in which we do business,
which generally prohibit companies and their intermediaries or agents from engaging in bribery or
making improper payments to foreign officials or their agents. The FCPA also requires proper record
keeping and characterization of such payments in our reports filed with the SEC. Despite maintaining
policies and procedures that require our employees to comply with these laws and our standards of
ethical conduct, we cannot ensure that these policies and procedures will always protect us from
intentional, reckless or negligent acts committed by our employees or agents.
In response to certain anonymous allegations of improper conduct in connection with the China
operations of our Bruker Optics subsidiary, in 2011 the Audit Committee of our Board of Directors
conducted an internal investigation, with the assistance of independent outside counsel and an
independent forensic consulting firm. The investigation, which included a review of compliance by
Bruker Optics and its employees in China and Hong Kong with the requirements of the FCPA and
other applicable laws and regulations, found evidence indicating that payments were made that
improperly benefited employees or agents of government-owned enterprises in China and Hong Kong.
The investigation also found evidence that certain employees of Bruker Optics in China and Hong
Kong failed to comply with our policies and standards of conduct. We are also conducting a review,
with the assistance of an independent audit firm, of the China operations of our other subsidiaries.
We voluntarily contacted the SEC and the DOJ in August 2011 to advise both agencies of the
internal investigation by the Audit Committee. In October 2011, we also reported the existence of the
internal investigation to the Hong Kong Joint Financial Intelligence Unit and Independent Commission
Against Corruption. We have cooperated with the United States federal agencies and Hong Kong
government authorities with respect to their inquiries and have provided documents and/or made
witnesses available in response to requests from the governmental authorities reviewing this matter. We
intend to continue cooperating with these agencies in connection with their inquiries. At this time, we
cannot predict when any of these inquiries will be completed or what the outcome of any of these
inquiries will be. These inquiries, and any proceedings that may result from these inquiries, could harm
relationships with existing customers, distributors and agents and our ability to obtain new customers
and partners. If the SEC or the DOJ makes a determination that we have violated federal laws, we
may face severe criminal and civil sanctions, including, but not limited to, fines, penalties,
disgorgement, an injunction or other equitable relief. These inquiries also could result in regulatory
proceedings, and thus potentially adverse findings, that could require us to pay damages or penalties or
have other remedies imposed upon us. In addition, it is possible that the findings and outcome of any
of these inquiries and any subsequent regulatory proceedings could result in other lawsuits being
brought against the Company and its officers and directors. Additionally, to the extent any payments
are determined to be illegal by Hong Kong or other local government authorities, civil or criminal
penalties may be assessed by such authorities and our ability to continue to conduct business in that
jurisdiction may be negatively impacted. Thus, any adverse findings or other negative outcomes in any
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of these inquiries could adversely affect our business, reputation, results of operations, financial
position and cash flows, and ultimately our stock price.
Unfavorable economic or political 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 and political conditions. Many of the countries in which we operate, including particularly the
United States and countries in Europe, have experienced and continue to experience uncertain
economic conditions. Our business or financial results may be adversely impacted by unfavorable
changes in economic or political conditions in these countries, 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. Our revenue from U.S. operations
represented approximately 19% and 20% of total consolidated revenue for fiscal 2011 and 2010,
respectively. Our revenue from operations in Europe represented 41% and 43% of total consolidated
revenue for the corresponding periods. Our revenue from operations in the Asia Pacific region
represented 30% and 26% of total consolidated revenue for the respective periods. If economic growth
in the U.S. and other countries slows or does not improve, or if current economic conditions in Europe
do not improve or deteriorate further, or if the level of government funding for scientific research is
reduced, our current or potential customers may 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 or local 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 or political instability 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.
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 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
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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. 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. 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
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 includes expanding our technology base through selected 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
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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 sales and marketing,
distribution, and accounting 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
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 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.
22
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
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.
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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. 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 elemental analysis business 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.
Increasing prices of 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. 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 helium has also 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 periodic supply shortages, 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.
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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 claims.
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.
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
25
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. In addition,
as a result of our international operations, we are subject to compliance with various laws and
regulations, including the United States Foreign Corrupt Practices Act and other anti-bribery laws in
the jurisdictions in which we do business, which generally prohibit companies and their intermediaries
or agents from engaging in bribery or making improper payments to foreign officials or their agents.
Violations of these laws and regulations could result in severe fines and penalties, criminal sanctions,
and restrictions on our business conduct and on our ability to offer our products in one or more
countries, and could also materially affect our reputation, our relationships with existing customers,
distributors and agents, our ability to obtain new customers and partners and our operating results.
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. 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
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
26
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
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
27
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
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
global 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
economic instability in the United States, Europe and elsewhere. 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 revenue from non-U.S. operations represented approximately 81% and 80% of our
total consolidated revenue for fiscal 2011 and 2010, respectively. Our international operations are, and
will continue to be, subject to a variety of risks associated with conducting business internationally,
28
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. and local laws affecting the activities of U.S. companies abroad, including the Foreign
Corrupt Practices Act and local anti-bribery laws.
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
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 could cause
significant fluctuations in our reported results. Moreover, as exchange rates vary, revenue and other
operating results may differ materially from our expectations.
29
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.
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
30
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.
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. 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
31
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, 2012, our majority stockholders, including our Chairman, President and Chief
Executive Officer Frank Laukien, and Director and Executive Chairman of the Bruker BioSpin Group
Joerg Laukien and other Laukien family members owned, in the aggregate, approximately 48% 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.
32
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 2011 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, Canada, China, Czech Republic, Estonia, Finland, France, Germany, Hong Kong,
India, Israel, Italy, Japan, Malaysia, Mexico, Netherlands, Poland, Portugal, 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 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 270,000 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.
Bruker MAT’s five principal facilities are located in Karlsruhe, Berlin and Kalkar, Germany;
Madison, Wisconsin, U.S.A.; and Santa Barbara, California, U.S.A. These facilities, which incorporate
33
manufacturing, research and development, application and demonstration, marketing and sales and
administration functions for the businesses of Bruker MAT, include:
(cid:129) an owned 97,000 square foot facility and an owned 35,000 square foot facility in Karlsruhe,
Germany;
(cid:129) an owned 155,000 square foot facility in Berlin, Germany;
(cid:129) an owned 100,000 square foot facility in Santa Barbara, California, U.S.A.;
(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 128,000 square foot facility in Hanau, Germany;
(cid:129) a leased 66,000 square foot facility in Bergisch Gladbach, Germany; and
(cid:129) a leased 31,000 square foot facility in Alzenau, Germany.
We are expanding our operations to support our planned future growth and we expect to add an
additional 43,000 square feet of leased space in K¨oln-Dellbr¨uck, Germany by the end of 2012.
ITEM 3 LEGAL PROCEEDINGS
As previously reported, in September 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 MAT subsidiary 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 the court-appointed receiver elected to proceed with the litigation. In
May 2011, the independent software expert provided its opinion, suggesting findings that may support
certain of the allegations made by RAA. This matter was resolved in the fourth quarter of 2011.
On November 4, 2011, Hyphenated Systems, LLC filed an action in California Superior Court,
Santa Clara County, against the Company and Veeco Metrology, Inc. in connection with certain
agreements entered into prior and subsequent to the Company’s acquisition of all of the shares of
Veeco Metrology, Inc. in October 2010. Upon the closing of the acquisition, Veeco Metrology, Inc. was
34
renamed Bruker Nano, Inc. (‘‘Bruker Nano’’). The suit, which also names two employees of Bruker
Nano, claims unspecified damages for breach of contract, fraud and unfair competition in connection
with the performance of the agreements. The Company believes the claims to be without merit and
intends to vigorously defend this action.
As previously reported, in 2011 the Audit Committee of the Company’s Board of Directors
commenced an internal investigation, with the assistance of independent outside counsel and an
independent forensic consulting firm, in response to certain anonymous communications received by
the Company alleging improper conduct in connection with the China operations of the Company’s
Bruker Optics subsidiary. The Audit Committee’s investigation, which included a review of compliance
by Bruker Optics and its employees in China and Hong Kong with the requirements of the Foreign
Corrupt Practices Act, or FCPA, and other applicable laws and regulations, has been completed.
The investigation found evidence indicating that payments were made that improperly benefited
employees or agents of government-owned enterprises in China and Hong Kong. The investigation also
has found evidence that certain employees of Bruker Optics in China and Hong Kong failed to comply
with the Company’s policies and standards of conduct. As a result, the Company has taken personnel
actions, including the termination of certain individuals. The Company has also terminated its business
relationships with certain third party agents, implemented an enhanced FCPA compliance program, and
strengthened the financial controls and oversight at its subsidiaries operating in China and Hong Kong.
Company management has also initiated a review of the China operations of its other subsidiaries,
which is being conducted with the assistance of an independent audit firm.
The Company voluntarily contacted the United States Securities and Exchange Commission and
the United States Department of Justice in August 2011 to advise both agencies of the internal
investigation by the Audit Committee. In October 2011, the Company also reported the existence of the
internal investigation to the Hong Kong Joint Financial Intelligence Unit and Independent Commission
Against Corruption, or ICAC. The Company has cooperated with the United States federal agencies
and Hong Kong government authorities with respect to their inquiries and has provided documents
and/or made witnesses available in response to requests from the governmental authorities reviewing
this matter. The Company intends to continue to cooperate with these agencies in connection with their
inquiries. As was previously the case, at this time the Company cannot reasonably assess the timing or
outcome of these matters or their effect, if any, on the Company’s business.
The FCPA and related statutes and regulations provide for potential monetary penalties as well as
criminal and civil sanctions in connection with FCPA violations. It is possible that monetary penalties
and other sanctions could be assessed by the Federal government in connection with these matters.
Additionally, to the extent any payments are determined to be illegal by local government authorities,
civil or criminal penalties may be assessed by such authorities and the Company’s ability to conduct
business in that jurisdiction may be negatively impacted. At this time, the Company cannot predict the
extent to which the SEC, the DOJ, the ICAC or any other governmental authorities will pursue
administrative, civil injunctive or criminal proceedings, the imposition of fines or penalties or other
remedies or sanctions. The Company cannot reasonably estimate the potential liability, if any, related
to these matters resulting from any proceedings that may be commenced by the SEC, the DOJ, the
ICAC or any other governmental authorities. Accordingly, no provision with respect to such matters
has been recorded in the accompanying consolidated financial statements.
It is not possible to predict at this time when the government inquiries concerning the investigation
will be completed, or what actions, if any, will be taken by governmental authorities with regard to
these matters. In the fiscal year ended December 31, 2011, $4.3 million was recorded for legal and
other professional services incurred related to the internal investigation of these matters.
ITEM 4 MINE SAFETY DISCLOSURE
Not applicable.
35
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 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
First Quarter 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Second Quarter 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Third Quarter 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fourth Quarter 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
High
Low
$20.92
21.65
21.30
15.70
$14.98
15.85
14.47
17.65
$15.96
17.21
12.28
11.48
$12.08
11.73
10.52
13.93
As of February 22, 2012, there were approximately 110 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, 2012, as reported by the Nasdaq Global Select Market, was $16.05.
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 2011.
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
2011.
36
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, 2006 and
ending on December 31, 2011, 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.
Comparison of 5 Year Cumulative Total Return
Assumes Initial Investment of $100
December 2011
250.00
200.00
150.00
100.00
50.00
0.00
2006
2007
2008
2009
2010
2011
Bruker Corporation
NASDAQ Stock Market (US Companies)
NASDAQ Stocks (SIC 3800-3899)
24FEB201208345491
Cumulative Total Return Index for:
2006
2007
2008
2009
2010
2011
Bruker Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $100.0 $177.1 $53.8 $160.6 $221.0 $165.4
113.8
NASDAQ Stock Market (US companies)
. . . . . . . . . . . . . . . . . . . . . .
NASDAQ Stock Market (US companies , SIC 3800-3899— . . . . . . . . . . .
112.8
measuring instruments, photo, med & optical goods, timepieces)
113.2
107.7
108.5
131.1
100.0
100.0
95.4
90.0
66.4
66.4
The data for this performance graph was compiled by Zack’s Investment Research, Inc. and is
used with their permission.
37
ITEM 6 SELECTED FINANCIAL DATA
On February 26, 2008, we completed our acquisition of Bruker BioSpin. The Company and Bruker
BioSpin were majority owned by affiliated stockholders prior to the acquisition. As a result, our
acquisition of Bruker BioSpin was considered a business combination of entities under common control
and was 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. The consolidated statements of income data
for each of the years ended December 31, 2011, 2010 and 2009, and the consolidated balance sheet
data as of December 31, 2011 and 2010, 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 and Bruker BioSpin.
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 thereto, and ‘‘Management’s Discussion and
Analysis of Financial Condition and Results of Operations’’ included elsewhere in this annual report on
Form 10-K.
Consolidated/Combined Statements of
Operation Data:
Product revenue . . . . . . . . . . . . . . . . . . . . . . . . .
Service revenue . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total costs and operating expenses . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Bruker Corporation . .
Net income per common share attributable to
Bruker Corporation shareholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2011
2010
2009
2008
2007
(in millions, except per share data)
$1,445.6
194.8
11.3
1,651.7
1,496.1
155.6
92.3
$1,145.4
151.1
8.4
1,304.9
1,149.2
155.7
95.4
$ 985.3
122.4
6.8
1,114.5
977.8
136.7
81.2
$ 974.9
126.9
5.3
1,107.1
998.9
108.2
64.9
$ 913.2
115.4
3.8
1,032.4
894.7
137.7
98.9
$
$
0.56
0.55
$
$
0.58
0.58
$
$
0.50
0.49
$
$
0.40
0.39
$
$
0.61
0.60
In 2011, we recorded acquisition-related costs of $4.2 million related to our recently completed
acquisitions, $4.3 million of costs related to our internal investigation into the China operations of
Bruker Optics, $1.3 million of restructuring charges related to the Berlin operations of our atomic force
microscopy business and $0.2 million of other charges during 2011. In 2011, we also wrote-off
$3.4 million of deferred offering costs because the timing of a future initial public offering for our
BEST subsidiary is uncertain. Our provision for income taxes in 2011 includes approximately
$6.3 million of tax expense associated with on-going tax audits in Germany and Switzerland offset by
tax benefits associated with reversing certain valuation allowances in the United States.
In 2010, we recorded $4.6 million of acquisition-related costs in connection with our acquisitions of
the chemical analysis business from Agilent Technologies, Inc. and the nano surfaces business from
Veeco Instruments Inc. In addition, we recorded a loss of $1.0 million in connection with the
divestiture of a business and $0.2 million of restructuring charges in 2010.
In 2009, we recorded a gain of $1.3 million in connection with the acquisition of the research
instruments business from Varian Medical Systems, Inc. and acquisition-related costs in connection with
38
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.
In 2008, we recorded acquisition-related charges of $6.2 million related to our acquisition of
Bruker BioSpin and $2.3 million of restructuring charges. Our provision for income taxes in 2008
includes 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.
In 2007, we recorded acquisition-related charges of $7.4 million related to our acquisitions of
Bruker BioSpin and Bruker Optics. We also recorded a tax benefit of $10.1 million related to a change
in tax law that was enacted in Germany.
Year Ended December 31,
2011
2010
2009
2008
2007
(in millions)
Consolidated/Combined Balance Sheet Data:
Cash and cash equivalents, short-term investments
and restricted cash . . . . . . . . . . . . . . . . . . . . .
Working capital
. . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . .
Total shareholders’ equity . . . . . . . . . . . . . . . . . .
$ 248.2
438.3
1,710.5
303.1
110.4
624.9
$ 233.3
219.6
1,549.8
301.0
104.3
527.4
$ 209.1
333.3
1,172.3
137.7
97.3
418.8
$ 167.7
301.0
1,116.3
223.8
101.1
312.7
$ 344.6
472.6
1,310.7
44.2
105.5
635.5
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 Annual 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, 2011 compared to the year
ended December 31, 2010 and for the year ended December 31, 2010 compared to the year
ended December 31, 2009.
(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.
39
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
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. Our
corporate headquarters are located in Billerica, Massachusetts. We maintain major technical and
manufacturing centers in Europe, North America and Japan and we have sales offices located
throughout the world.
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.
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 and
gas chromatography instruments and solutions for life sciences, including proteomics, metabolomics,
and clinical research applications. Our mass spectrometry and gas chromatography instruments also
provide solutions for applied markets that include food safety, environmental analysis and fuel analysis.
Bruker Daltonics also designs, manufactures, and distributes various analytical instruments for CBRNE
detection. Bruker MAT is in the business of designing, manufacturing, and distributing advanced X-ray,
combustion analysis, atomic force microscopy, and stylus and optical metrology 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 technology, atomic force microscopy technology, stylus and
40
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; 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, 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, 2011, our revenue increased by $346.8 million, or 26.6%, to
$1,651.7 million, compared to $1,304.9 million for the year ended December 31, 2010. Included in this
change in revenue is an increase of approximately $78.9 million from the impact of foreign exchange
due to the weakening of the U.S. Dollar versus the Euro, Swiss Franc and other foreign currencies and
an increase of approximately $148.5 million attributable to recent acquisitions. Excluding the effects of
foreign exchange and our recent acquisitions, revenue increased by $119.4 million, or 9.2%. The
increase in revenue on an adjusted basis is attributable to both the Scientific Instruments segment,
which increased by $105.8 million, or 8.6%, and the Energy & Supercon Technologies segment, which
increased by $17.9 million, or 19.8%.
Revenue in the Scientific Instruments segment reflects an increase in sales from many of our core
technologies, particularly X-ray and elemental analysis, magnetic resonance, mass spectrometry and
molecular spectroscopy products. The mix of products sold in the Scientific Instruments segment during
2011 reflects increased demand from academic, government and industrial customers. We attribute the
increase in sales to academic and government customers to increased spending from these customers,
to new product introductions and to stimulus packages implemented by governments of various
countries, particularly the U.S. We continue to closely monitor spending patterns from governments
and academic customers and we believe that funding for our products will remain stable, or grow, in
most of our key markets. The improvement in revenues from our industrial customers reflects
continued growth in these end markets and our new product introductions. Revenues in the Energy &
Supercon Technologies segment increased due to higher demand for low temperature superconducting
wire.
Income from operations for the year ended December 31, 2011 was $155.6 million, resulting in an
operating margin of 9.4%, compared to income from operations of $155.7 million, resulting in an
operating margin of 11.9%, for the year ended December 31, 2010. Included in income from operations
are various charges to inventory, amortization of acquisition-related intangible assets and other
acquisition-related costs, deferred offering costs that have been written-off and legal and other
professional services fees related to our internal FCPA investigation totaling, in the aggregate,
$40.5 million and $22.2 million in 2011 and 2010, respectively. Excluding these charges, operating
margins were 11.9% in 2011 and 13.6% in 2010. Operating margins decreased, despite growth in our
revenues and gross profits, because of the mix of products sold and higher operating expenses.
41
Gross profit for the year ended December 31, 2011 was $752.5 million compared to $604.0 million
for the year ended December 31, 2010. Our gross profit margin for the year ended December 31, 2011
was 45.6%, compared with 46.3% for the year ended December 31, 2010. However, excluding the effect
of inventory reserves related to certain specialty magnets and the effects of recently completed
acquisitions, including amortization expense totaling, in the aggregate $15.1 million and $4.3 million in
2011 and 2010, respectively, gross profit margins decreased to 47.0% in 2011 compared with 47.4% in
2010. Gross profit margins in 2011 benefitted from the higher revenues described above and sales of
our newly introduced products which were designed to carry higher gross margins than our previous
generations of products. In addition, our acquisition of the nano surfaces business had a positive impact
on our gross profit margins in 2011. However, the mix of products sold, including our gas
chromatography and inductively coupled plasma products, negatively impacted our gross profit margins.
The chemical analysis business contributed to lower gross profit margins due to higher than planned
production costs which were caused, in part, by costs and lost production time associated with
relocating factories from former Varian Inc. sites to our own facilities. Changes in foreign currency
exchange rates, primarily the strengthening of the Euro and Swiss Franc, also contributed to the
increase because the majority of our production facilities are located in Europe.
Selling, general and administrative expenses and research and development expenses increased to
$583.8 million, or 35.3% of revenue, in 2011 from $442.5 million, or 33.9% of revenue, in 2010. The
increase in selling, general and administrative expenses and research and development expenses in 2011
is attributable to increases in headcount from our recent acquisitions and increases in headcount to
support planned revenue growth in our existing businesses. We also incurred higher commission
expenses as a result of increases in new orders and revenues. Changes in foreign currency exchange
rates, primarily the strengthening of the Euro and Swiss Franc, also contributed to the increase because
the majority of our employees are located in Europe. We are focused on controlling costs and are
implementing selective cost saving programs with the goal of reducing operating expenses and
improving operating margins in 2012.
We incurred approximately $7.3 million of interest expense during the year ended December 31,
2011 compared to $5.6 million during the year ended December 31, 2010. The increase in interest
expense relates primarily to increases in the amounts borrowed under the revolving portion of our
credit agreement. The increase in outstanding revolving loans is attributable to $167.6 million that we
borrowed in October 2010 to finance the acquisition and short-term working capital requirements of
the nano surfaces business and an additional $31.0 million that we borrowed in September 2011 to
finance the acquisition of the tribology business and for general corporate purposes.
In May 2011, we entered into an amendment and restatement of our credit agreement. The
amended credit agreement increased the maximum commitment on our revolving credit line to
$250.0 million and extended the maturity date on the revolving line of credit to May 2016. In addition,
in January 2012 we entered into a note purchase agreement with a group of accredited institutional
investors. Under the note purchase agreement we issued and sold $240.0 million of senior notes that
consisted of $20.0 million of senior notes due January 18, 2017; $15.0 million of senior notes due
January 18, 2019; $105.0 million of senior notes due January 18, 2022; and $100.0 million of senior
notes due January 18, 2024. We used a portion of the net proceeds from the senior notes to reduce
amounts outstanding under our revolving credit facility and intend to use the remainder for general
corporate purposes.
Our effective tax rate for 2011 was 35.4%, compared to 35.5% for 2010. Our provision for income
taxes in 2011 includes approximately $6.3 million of tax expense from additional reserves recorded in
connection with ongoing tax audits in Germany and Switzerland. In 2010, we recorded reserves of
$2.8 million related to the tax audit in Switzerland. The change in our effective tax rate, excluding the
increase in reserves for tax audits, relates primarily to reversing certain valuation allowances in the
United States.
42
Our net income attributable to the shareholders of Bruker Corporation for the year ended
December 31, 2011 was $92.3 million, or $0.55 per diluted share, compared to $95.4 million, or $0.58
per diluted share, for the year ended December 31, 2010.
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, the
expensing and capitalization of research and developments costs for software, stock-based compensation
expense, restructuring and other related charges, income taxes, including the recoverability of deferred
tax assets, allowances for doubtful accounts, reserves for excess and obsolete inventories, estimated fair
values of long-lived assets used to evaluate the recoverability of intangible assets and goodwill, expected
future cash flows used to evaluate the recoverability of intangible assets and long-lived assets, warranty
costs, derivative financial instruments and contingent liabilities. 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 allocate revenue
to each element based on the relative fair value of each element, using the relative selling price
method. The fair value of each element is based on our vendor specific objective evidence, if available.
If vendor specific objective evidence is not available we use evidence from third-parties or when third-
party evidence is not available, we use management’s best estimate of the selling price. 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 and the milestone method 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.
43
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
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. In
2011, an amendment to the goodwill impairment guidance was issued that provides entities an option
to perform a qualitative assessment to determine whether further impairment testing is necessary
before performing the two-step test that was previously required. The qualitative assessment requires
significant judgments by management about macro-economic conditions including the entity’s operating
environment, its industry and other market considerations; entity-specific events related to financial
performance or loss of key personnel; and other events that could impact the reporting unit. We
adopted the provisions of this amendment for our annual test of impairment as of December 31, 2011
and concluded, based on our qualitative assessment, that no further testing was required. In the future,
if we conclude that further testing is required, the impairment test involves a two-step process. The first
step 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
44
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 exist, 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.
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.
45
RESULTS OF OPERATIONS
Year Ended December 31, 2011 Compared to the Year Ended December 31, 2010
Consolidated Results
The following table presents our results for the years ended December 31, 2011 and 2010 (dollars
in millions, except per share data):
Year Ended
December 31,
2011
2010
Product revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,445.6
194.8
11.3
$1,145.4
151.1
8.4
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,651.7
1,304.9
Cost of product revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses:
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-off of deferred offering costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
792.5
106.7
899.2
752.5
406.6
177.2
3.4
9.7
596.9
155.6
621.5
79.4
700.9
604.0
301.1
141.4
—
5.8
448.3
155.7
Interest and other income (expense), net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(10.1)
(5.6)
Income before income taxes and noncontrolling interest in consolidated
subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to noncontrolling interest in consolidated subsidiaries . . .
Net income attributable to Bruker Corporation . . . . . . . . . . . . . . . . . . . . . . . . . .
$
145.5
51.5
94.0
1.7
92.3
Net income per common share attributable to
Bruker Corporation shareholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
0.56
0.55
150.1
53.3
96.8
1.4
95.4
0.58
0.58
$
$
$
Weighted average common shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
165.4
166.9
164.4
165.7
Revenue
Our revenue increased by $346.8 million, or 26.6%, to $1,651.7 million for the year ended
December 31, 2011, compared to $1,304.9 million for the year ended December 31, 2010. Included in
this change in revenue is an increase of approximately $78.9 million from the impact of foreign
46
exchange due to the weakening of the U.S. Dollar versus the Euro and other foreign currencies and an
increase of approximately $148.5 million attributable to our recent acquisitions. Excluding the effect of
foreign exchange and our recent acquisitions, revenue increased by $119.4 million, or 9.2%. The
increase in revenue, on an adjusted basis, is attributable to both the Scientific Instruments segment,
which increased by $105.8 million, or 8.6%, and the Energy & Supercon Technologies segment, which
increased by $17.9 million, or 19.8%. Revenue in the Scientific Instruments segment reflects an increase
in sales many of our core technologies. Revenue in the Energy & Supercon Technologies segment
increased due to higher demand for low temperature superconducting wire.
Revenue in the Scientific Instruments segment reflects an increase in sales from many of our core
technologies, particularly X-ray and elemental analysis, magnetic resonance, mass spectrometry and
molecular spectroscopy products. The mix of products sold in the Scientific Instruments segment during
2011 reflects increased demand from academic, government and industrial customers. We attribute the
increase in sales of mass spectrometry and magnetic resonance products to spending by academic and
government customers, to new product introductions and to stimulus packages implemented by
governments of various countries, particularly the U.S. 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 announcements from these governments and 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. The improvement in revenues from our industrial customers
reflects an ongoing economic improvement in these end markets. We remain optimistic that the
industrial markets we serve will continue to improve.
Cost of Revenue
Our cost of revenue for the year ended December 31, 2011, was $899.2 million, resulting in a gross
profit margin of 45.6%, compared to cost of product and service revenue of $700.9 million, resulting in
a gross profit margin of 46.3%, for the year ended December 31, 2010. The increase in cost of revenue
is primarily a function of the higher material costs that result from the higher revenues described
above. However, the increase in costs is also attributable to increases in headcount from our recent
acquisitions and increases in headcount to support our current production requirements. The chemical
analysis business also contributed to the increase in cost of revenue because of the costs associated with
relocating factories from former Varian Inc. sites to our own facilities. Changes in foreign currency
exchange rates, primarily the strengthening of the Euro and Swiss Franc, also contributed to the
increase in cost of revenue because the majority of our production facilities are located in Europe.
We recorded $15.1 million of amortization expense in cost of revenue associated with technology-
related intangible assets and an additional $4.5 million representing the difference between the fair
value and historical cost of inventories acquired in business combinations and sold in 2011. Our cost of
revenue in 2011 also includes $4.6 million of inventory reserves for the rework of certain specialty
magnets that did not meet customer specifications. In 2010, we recorded $4.3 million of amortization
expense in cost of revenue, $7.2 million related to the fair value of inventories acquired in recent
acquisitions and $3.4 million related to the specialty magnets that did not meet customer specifications.
Selling, General and Administrative
Our selling, general and administrative expense for the year ended December 31, 2011 increased to
$406.6 million, or 24.6% of revenue, from $301.1 million, or 23.1% of revenue, for the year ended
December 31, 2010. The increase in selling, general and administrative expenses is attributable to
increases in headcount from recent acquisitions, primarily the nano surfaces and chemical analysis
businesses, and increases in headcount to support planned revenue growth in our existing businesses. In
addition, an increase in new order bookings and revenue in 2011 resulted in higher commission
47
expense. Changes in foreign currency exchange rates, primarily the strengthening of the Euro, also
negatively impacted 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, 2011 increased to
$177.2 million, or 10.7% of revenue, from $141.4 million, or 10.8% of revenue, for the year ended
December 31, 2010. The increase in research and development expenses is attributable to increases in
headcount from recent acquisitions and increases in headcount and material costs to support future
product introductions in our existing businesses. The increase in research and development expenses is
also attributable to changes in foreign currency exchange rates, primarily the strengthening of the Euro,
which negatively impact our research and development expenses because a majority of our research and
development is performed in Europe.
Write-off of Deferred Offering Costs
In September 2010, we announced plans to sell a minority ownership position in our BEST
subsidiary through an initial public offering of the capital stock of BEST. As a result of economic and
market factors, the timing of the BEST initial public offering is uncertain. Although BEST remains in
registration, because of the current uncertainty in the timing of a future offering, we wrote-off deferred
offering costs totaling $3.4 million in the third quarter of 2011.
Other Charges
Other charges, net of $9.7 million recorded in 2011 consist of charges recorded entirely in the
Scientific Instruments segment. The charges recorded in 2011 consist of $4.2 million of acquisition-
related costs associated with the nano surfaces business, chemical analysis business and other
acquisitions completed during the year. Acquisition-related costs consist of costs incurred under
transition service arrangements we entered into with the sellers of the nano surfaces and chemical
analysis businesses and transaction costs, including legal, accounting and other fees. The transition
services agreements expired in 2011 and we do not expect these costs to recur. Other charges, net for
the year ended December 31, 2011 also includes $4.3 million of legal and other professional service
fees associated with our internal investigation into the China operations of Bruker Optics.
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. 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, Latvia 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.
Interest and Other Income (Expense), Net
Interest and other income (expense), net during the year ended December 31, 2011 was
$(10.1) million, compared to $(5.6) million for the year ended December 31, 2010.
48
During the year ended December 31, 2011, the major components within interest and other
income (expense), net, consisted of net interest expense of $6.3 million and realized and unrealized
losses on foreign currency transactions of $4.4 million. 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.
The increase in interest expense is primarily a function of higher average outstanding debt
balances throughout 2011 and, to a lesser degree, an increase in the average interest rates we pay on
outstanding borrowings. 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, 2011 was $51.5 million compared to an
income tax provision of $53.3 million for the year ended December 31, 2010, representing effective tax
rates of 35.4% and 35.5%, 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 $6.3 million and
$2.8 million for the years ended December 31, 2011 and 2010, respectively. The discrete items recorded
in 2011 and 2010 relate to additional amounts accrued in connection with ongoing tax audits in
Germany and Switzerland. The change in our effective tax rate, excluding the increase in reserves for
tax audits, relates primarily to reversing certain valuation allowances in the United States. We were
able to release a portion of the valuation allowance on our deferred tax assets in the United States
because of deferred tax liabilities arising from the identified intangible assets acquired in connection
with the tribology and HPLC businesses. Because we maintain a full valuation allowance on our
deferred tax assets in the United States, the deferred tax liabilities recorded in connection with these
acquisitions represents a source of future taxable income that allows us to utilize a portion of the
deferred tax assets.
Net Income Attributable to Noncontrolling Interests
Net income attributable to noncontrolling interests for the year ended December 31, 2011 was
$1.7 million compared to $1.4 million for the year ended December 31, 2010. The net income
attributable to noncontrolling interests represents the minority shareholders’ proportionate share of the
net income recorded by our majority-owned indirect subsidiaries.
Net Income Attributable to Bruker Corporation
Our net income for the year ended December 31, 2011 was $92.3 million, or $0.55 per diluted
share, compared to net income of $95.4 million, or $0.58 per diluted share, for 2010.
49
Segment Results
Revenue
The following table presents revenue, change in revenue and revenue growth by reportable
segment for the years ended December 31, 2011 and 2010 (dollars in millions):
Scientific Instruments . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy & Supercon Technologies . . . . . . . . . . . . . . . . .
Eliminations (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,554.1
113.4
(15.8)
$1,225.1
90.5
(10.7)
$1,651.7
$1,304.9
$329.0
22.9
(5.1)
$346.8
2011
2010
Dollar Change
Percentage
Change
26.9%
25.3%
26.6%
(a) Represents product and service revenue between reportable segments.
Scientific Instruments Segment Revenues
Scientific Instruments segment revenue increased by $329.0 million, or 26.9%, to $1,554.1 million
for the year ended December 31, 2011, compared to $1,225.1 million for the year ended December 31,
2010. Included in this change in revenue is an increase of approximately $74.7 million from the impact
of foreign exchange due to the weakening of the U.S. Dollar versus the Euro and other foreign
currencies and an increase of approximately $148.5 million attributable to our recent acquisitions.
Excluding the effect of foreign exchange and the acquisitions, revenue increased by $105.8 million, or
8.6%. The increase in revenue, on an adjusted basis, is attributable to an increase in many of our core
technologies, particularly in X-ray and elemental analysis, magnetic resonance, mass spectrometry and
molecular spectroscopy. The mix of products sold in the Scientific Instruments segment in 2011 reflects
increased demand from academic, government and industrial customers.
System revenue and aftermarket revenue as a percentage of total Scientific Instruments segment
revenue were as follows during the years ended December 31, 2011 and 2010 (dollars in millions):
2011
Revenue
Percentage of
Segment Revenue
System revenue . . . . . . . . . . . . . . . . . . . . . . . .
Aftermarket revenue . . . . . . . . . . . . . . . . . . . . .
$1,238.9
315.2
Total revenue . . . . . . . . . . . . . . . . . . . . . . . .
$1,554.1
79.7%
20.3%
100.0%
2010
Percentage of
Segment Revenue
79.4%
20.6%
100.0%
Revenue
$ 973.2
251.9
$1,225.1
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.
Energy & Supercon Technologies Segment Revenues
Energy & Supercon Technologies segment revenues increased by $22.9 million, or 25.3%, to
$113.4 million for the year ended December 31, 2011, compared to $90.5 million for the year ended
December 31, 2010. Included in this change in revenue is an increase of approximately $5.0 million
from the impact of foreign exchange due to the weakening of the U.S. Dollar versus the Euro and
other foreign currencies. Excluding the effect of foreign exchange, revenue increased by $17.9 million,
50
or 19.8%. 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, 2011 and 2010
(dollars in millions):
System and wire revenue . . . . . . . . . . . . . . . . . . . .
Aftermarket revenue . . . . . . . . . . . . . . . . . . . . . . .
Revenue
$105.3
8.1
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . .
$113.4
2011
2010
Percentage of
Segment Revenue
Revenue
Percentage of
Segment Revenue
92.9%
7.1%
100.0%
$85.9
4.6
$90.5
94.9%
5.1%
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, and grant revenue.
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, 2011 and 2010 (dollars in millions):
2011
2010
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 . . . . . . . . . . . .
$162.8
(4.1)
(3.1)
$155.6
10.5%
(3.6)%
9.4%
$160.5
(2.6)
(2.2)
$155.7
13.1%
(2.9)%
11.9%
(a) Represents corporate costs and eliminations not allocated to the reportable segments.
Scientific Instruments income from operations for the year ended December 31, 2011 was
$162.8 million, resulting in an operating margin of 10.5%, compared to income from operations of
$160.5 million, resulting in an operating margin of 13.1%, for the year ended December 31, 2010.
Income from operations includes $36.8 million and $21.9 million in the years ended December 31, 2011
and 2010, respectively, of various charges to inventory, amortization of acquisition-related intangible
assets and other charges. Excluding these costs, income from operations in Scientific Instruments
segment would have been $199.6 million and $182.4 million, resulting in operating margins of 12.8%
and 14.9%, respectively, for the years ended December 31, 2011 and 2010, respectively. Operating
margins decreased, despite the increase in revenue, because of lower gross profit margins and increases
in operating expenses.
The significant components of charges to inventory, amortization expense and other charges
described above in 2011 include $17.8 million of amortization expense, $4.6 million of inventory
provisions for the rework of certain specialty magnets that did not meet customer specification,
$4.5 million representing the difference between the fair value and historical costs of inventories
acquired in business combinations and sold during the period, $4.3 million of legal and other
professional fees related to our internal FCPA investigation, $4.2 million of acquisition-related costs
51
and $1.3 million of restructuring costs. The significant components of charges to inventory, amortization
expense and other charges in 2010 include $5.5 million of amortization expense, $3.4 million of
inventory provisions for the rework of certain specialty magnets, $7.2 million representing the
difference between the fair value and historical costs of inventories acquired in business combinations
and $4.6 million of acquisition-related costs.
Gross profit margin in the Scientific Instruments segment for the year ended December 31, 2011
was 47.2%, compared with 48.2% for the year ended December 31, 2010. Lower gross profit margins in
2011 were driven in part by $14.8 million of amortization expense, $4.6 million of inventory provisions
for the rework of certain specialty magnets, $4.5 million representing the difference between the fair
value and historical costs of inventories acquired in business combinations and sold in 2011 and
$0.3 million of restructuring costs compared with $4.0 million of amortization expense, $3.4 million of
inventory provisions for the rework of certain specialty magnets and $7.2 million related to difference
between the fair value and historical costs of inventories acquired in business combinations in 2010.
Excluding these costs, gross profit margin in the Scientific Instruments segment was 48.7%, compared
with 49.4% for the year ended December 31, 2010. Lower gross profit margins, on an adjusted basis,
for the year ended December 31, 2011 resulted primarily from changes in product mix, particularly our
gas chromatography and inductively coupled plasma products, which negatively impacted our gross
profit margins. The chemical analysis business contributed to lower gross profit margins due to higher
than planned production costs which were caused, in part, by costs and lost production time associated
with relocating factories from former Varian Inc. sites to our own facilities. Changes in foreign currency
exchange rates, primarily the strengthening of the Euro and Swiss Franc, also contributed to the
decrease because the majority of our production facilities are located in Europe.
In 2011, selling, general and administrative expenses and research and development expenses in
the Scientific Instruments segment increased to $560.8 million, or 36.1% of segment revenue, from
$423.7 million, or 34.6% of segment revenue, for the year ended December 31, 2010. 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 recently completed acquisitions. Changes in foreign currency exchange rates, primarily the
strengthening of the Euro and Swiss Franc, also contributed to the increase because the majority of our
employees are located in Europe.
Energy & Supercon Technologies segment loss from operations for the year ended December 31,
2011 was $4.1 million, resulting in an operating margin of (3.6)%, compared to a loss from operations
of $2.6 million, resulting in an operating margin of (2.9)%, for the year ended December 31, 2010.
Income from operations for the year ended December 31, 2011 includes $3.4 million of deferred
offering costs that were written off in the third quarter of 2011 because of uncertainty in the timing of
a future public offering of BEST capital stock. Excluding the deferred offering costs, the loss from
operations in the Energy & Supercon Technologies segment would have been $0.7 million, or an
operating margin of (0.6)% for the year ended December 31, 2011. The improvement in operating
margin, on an adjusted basis, is primarily the result of the higher revenue described above and higher
gross profit margins offset, in part, by higher operating expenses. The increase in operating expenses is
a function of incremental investments in research and development activities and selling and marketing
activities that we believe will generate future growth.
52
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,304.9
1,114.5
Cost of product revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cost of service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total cost of revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating expenses:
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other charges, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
621.5
79.4
700.9
604.0
301.1
141.4
5.8
448.3
155.7
526.3
70.7
597.0
517.5
254.0
126.4
0.4
380.8
136.7
Interest and other income (expense), net
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5.6)
(7.6)
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
150.1
53.3
96.8
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
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 year ended December 31, 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 acquisitions. Excluding the effect of foreign
53
exchange and 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 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 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.
Cost of Revenue
Our cost of product and service revenue for the year ended December 31, 2010, was
$700.9 million, resulting in a gross profit margin of 46.3%, compared to cost of product and service
revenue of $597.0 million, resulting in a gross profit margin of 46.4%, for the year ended December 31,
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 and $3.4 million of inventory reserves related to certain specialty magnets that did not meet
customer specifications. 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 new products 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 controls in
our manufacturing facilities.
Selling, General and Administrative
Our selling, general and administrative expense for the year ended December 31, 2010 increased to
$301.1 million, or 23.1% of revenue, from $254.0 million, or 22.8% of revenue, for the year ended
December 31, 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 year ended
December 31, 2009. The increase in research and development expenses is attributable to increases in
54
headcount from our acquisitions of the nano surfaces and chemical analysis businesses and increases in
headcount and material costs to support new 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.
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. 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, Latvia 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
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 year ended December 31, 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 year ended December 31, 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
55
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 year ended December 31, 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.
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)
$162.4
30.7
(2.7)
15.3%
51.3%
$1,304.9
$1,114.5
$190.4
17.1%
2010
2009
Dollar
Change
Percentage
Change
(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 year ended December 31,
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 and to stimulus packages implemented by
governments of various countries, including the U.S., Germany, Japan and China. Demand from our
industrial customers also increased as economic conditions improved.
56
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.
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 year ended
December 31, 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, and grant revenue.
57
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 year ended December 31, 2009.
Income from operations in 2010 includes $21.9 million of charges related primarily 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 and $4.6 million of acquisition-related costs. The
remaining charge relates to $5.5 million recorded in amortization of acquisition-related intangibles and
$3.4 million of inventory provisions for the rework of certain specialty magnets that did not meet
customer specifications. Excluding these costs, income from operations in Scientific Instruments
segment would have been $182.4 million, or an operating margin of 14.9%. 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 48.2% from 47.8% for the year ended December 31, 2009.
Higher gross profit margins resulted primarily from changes in product mix, specifically an increase in
revenues from high-end instrumentation, including new 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 $423.7 million, or 34.6%
of segment revenue, from $366.5 million, or 34.5% of segment revenue for the year ended
December 31, 2009. This increase is a function of incremental investments in sales and marketing
activities and research and development activities, 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 year ended December 31, 2009.
The increase in operating margin is primarily the result of the higher revenue described above and the
corresponding improvements in our gross margin.
58
LIQUIDITY AND CAPITAL RESOURCES
We currently anticipate that our existing cash and cash equivalents and credit facilities will be
sufficient to support our operating and investing needs for at least the next twelve months. 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, 2011, net cash provided by operating activities was
$87.7 million, resulting primarily from $189.7 million of consolidated net income adjusted for non-cash
items offset, in part, by $102.0 million of increases in working capital. During the year ended
December 31, 2010, net cash provided by operating activities was $156.1 million, resulting primarily
from $162.5 million of consolidated net income offset, in part, by $6.4 million of increases in working
capital. The increase in working capital for the year ended December 31, 2011 is primarily a function
of higher receivable and inventory levels offset, in part, by an increase in customer deposits. These
changes in working capital are attributable to the growth of our business.
During the year ended December 31, 2011, net cash used by investing activities was $68.7 million,
compared to net cash used by investing activities of $299.0 million during the year ended December 31,
2010. Cash used by investing activities during the year ended December 31, 2011 was attributable
primarily to $54.4 million of capital expenditures and $14.3 million used for acquisitions. Cash used by
investing activities during the year ended December 31, 2010 was attributable primarily to
$269.8 million used for acquisitions and $29.2 million of net capital expenditures. We currently
anticipate that our capital spending will be approximately $50.0 million in 2012.
During the year ended December 31, 2011, net cash provided by financing activities was
$3.3 million, compared to net cash provided by financing activities of $168.3 million during the year
ended December 31, 2010. Cash provided by financing activities during the year ended December 31,
2011 was attributable to $3.3 million of net proceeds from the issuance of common stock. Cash
provided by financing activities during the year ended December 31, 2010 were primarily a function of
$185.0 million borrowed under the revolving loan component of the credit agreement that we used to
fund our acquisition of the nano surfaces business. The cash provided by amounts borrowed under the
revolving loan component of the credit agreement were offset, in part, by $21.6 million of debt
repayments.
At December 31, 2011, we had outstanding debt totaling $303.1 million consisting of $82.5 million
outstanding under the term loan component of our credit facilities, $216.5 million outstanding under
the revolving loan component of our credit facilities, and $4.1 million under capital lease obligations.
At December 31, 2010, we had outstanding debt totaling $301.0 million consisting of $110.6 million
outstanding under the term loan component of our credit facilities, $185.5 million outstanding under
the revolving loan component of our credit facilities, and $4.9 million under capital lease obligations.
On February 26, 2008, we entered into a credit agreement, which we refer to as the Credit
Agreement, with a syndicate of lenders, which provided 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 was payable in quarterly installments through December 2012. Borrowings under
the Credit Agreement accrued 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%.
In May 2011, we entered into an amendment and restatement of the Credit Agreement, or the
Amended Credit Agreement. The Amended Credit Agreement increases the maximum commitment on
our revolving credit line to $250.0 million and extends the maturity date to May 2016. Borrowings
59
under the revolving credit line of the Amended Credit Agreement accrue interest, at our option, at
either (i) the higher of the prime rate, (ii) the federal funds rate plus 0.50%, (iii) adjusted LIBOR plus
1.00% or (iv) LIBOR, plus margins ranging from 0.80% to 1.65% and a facility fee ranging from 0.20%
to 0.35%. The Amended Credit Agreement had no impact on the maturity or pricing of our existing
term loan. As of December 31, 2011, the weighted average interest rate of borrowings under the term
facility of the Amended Credit Agreement was approximately 2.8%.
Borrowings under the Amended Credit Agreement are secured by guarantees from certain
material subsidiaries, as defined in the Amended Credit Agreement, and Bruker Energy & Supercon
Technologies, Inc. The Amended Credit Agreement also requires that we maintain certain financial
ratios related to maximum leverage and minimum interest coverage, as defined in the Amended 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 Amended 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, 2011, the latest measurement date, we
were in compliance with the covenants of the Amended Credit Agreement as our leverage ratio was 1.2
and our interest coverage ratio was 22.4.
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, 2011 (dollars in millions):
Weighted
Average
Interest Rate
Total Amount
Committed by Outstanding
Borrowings
Lenders
Outstanding
Letters of
Credit
Total Amount
Available
Amended Credit Agreement . . . . . . .
Other revolving loans . . . . . . . . . . . .
Total revolving loans . . . . . . . . . . .
1.4%
—
1.4%
$250.0
178.7
$428.7
$216.5
—
$216.5
0.2
$
115.2
$115.4
$33.3
63.5
$96.8
During 2011 we considered various long-term financing alternatives to replace our outstanding
borrowings under the revolving loan component of the Amended Credit Agreement and, in January
2012, we entered into a note purchase agreement with a group of accredited institutional investors.
Under the note purchase agreement we issued and sold $240.0 million of senior notes that consist of
the following:
(cid:129) $20.0 million 3.16% Series 2012A senior notes due January 18, 2017;
(cid:129) $15.0 million 3.74% Series 2012A senior notes due January 18, 2019;
(cid:129) $105.0 million 4.31% Series 2012A senior notes due January 18, 2022; and
(cid:129) $100.0 million 4.46% Series 2012A senior notes due January 18, 2024.
We used a portion of the net proceeds of the senior notes to reduce outstanding indebtedness
under our revolving credit facilities and intend to use the remainder for general corporate purposes.
We currently expect to incur approximately $13.5 million of interest expense in 2012.
As of December 31, 2011, we have approximately $0.2 million of U.S. net operating loss
carryforwards available to reduce future taxable income which expire at various times through 2021 and
approximately $44.3 million of German Trade Tax net operating losses that are carried forward
indefinitely. We also have U.S. tax credits of approximately $14.1 million available to offset future tax
60
liabilities that expire at various dates. These credits include research and development tax credits of
$9.6 million expiring at various times through 2031 and foreign tax credits of $4.5 million expiring at
various times throughout 2021. These U.S. operating loss 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, 2011 (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
$216.5
86.6
1.7
5.1
74.5
48.4
34.6
Less than
1 Year
1-3
Years
4-5
Years
More than
5 Years
$216.5
83.7
1.7
5.1
18.4
2.6
—
$ — $ — $ —
—
1.1
—
—
—
—
16.3
15.0
29.9
9.0
—
—
1.8
—
—
24.8
6.9
34.6
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
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, certain of which are also
members of our Board of Directors. During the years ended December 31, 2011, 2010 and 2009, these
shareholders were paid approximately $2.4 million, $2.4 million and $2.1 million, respectively, which
was estimated to be equal to the fair market value of the rentals.
During the years ended December 31, 2011, 2010 and 2009, we incurred expenses of $3.2 million,
$2.9 million and $1.1 million, respectively, to a law firm in which one of the members of our Board of
Directors is a partner.
During the years ended December 31, 2011, 2010 and 2009, we incurred expenses of $0.5 million,
$0.3 million and $0.6 million, respectively, to a financial services firm in which one of the members of
our Board of Directors is a partner.
RECENT ACCOUNTING PRONOUNCEMENTS
In September 2011, the Financial Accounting Standards Board, or FASB, amended Accounting
Standards Codification, or ASC, 350, Intangibles—Goodwill and Other. This amendment is intended to
reduce the cost and complexity of the annual goodwill impairment test by providing entities an option
to perform a qualitative assessment to determine whether further impairment testing is necessary. The
amended provisions are effective for reporting periods beginning on or after December 15, 2011.
However, early adoption is permitted if an entity’s financial statements for the most recent annual or
interim period have not yet been issued. We adopted the provisions of this amendment for our annual
test of impairment as of December 31, 2011, however, this amendment impacts testing steps only and,
therefore, adoption did not have an impact on our consolidated financial position, results of operations
or cash flows.
In June 2011, the FASB amended ASC 220, Comprehensive Income. This amendment was issued to
enhance comparability between entities that report under GAAP and International Financial Reporting
Standards, or IFRS, and to provide a more consistent method of presenting non-owner transactions
61
that affect an entity’s equity. The amendment requires companies to present the components of net
income and other comprehensive income either as one continuous statement or as two separate but
consecutive statements. It eliminates the option to report other comprehensive income and its
components as part of the statement of changes in shareholders’ equity. The amended provisions are
effective for fiscal years, and interim periods within those years, beginning after December 15, 2011.
Early adoption is permitted, and full retrospective application is required. This amendment impacts
presentation and disclosure only, and therefore adoption will not have an impact on our consolidated
financial position, results of operations or cash flows.
In May 2011, the FASB issued Accounting Standards Update, or ASU, No. 2011-04, Fair Value
Measurement (Topic 820) Amendments to Achieve Common Fair Value Measurement and Disclosure
Requirements in U.S. GAAP and IFRS (ASU No. 2011-04). The amendments in this update apply to all
reporting entities that are required or permitted to measure or disclose the fair value of an asset, a
liability, or an instrument classified in a reporting entity’s shareholders’ equity in the financial
statements. ASU No. 2011-04 does not extend the use of fair value accounting, but provides guidance
on how it should be applied where its use is already required or permitted by other standards within
U.S. GAAP or IFRS. ASU No. 2011-04 changes the wording used to describe many requirements in
U.S. GAAP for measuring fair value and for disclosing information about fair value measurements.
Additionally, ASU No. 2011-04 clarifies the FASB’s intent about the application of existing fair value
measurements. The amendments in this update are to be applied prospectively. For public entities, the
amendments are effective during interim and annual periods beginning after December 15, 2011. Early
application by public entities is not permitted. We do not expect the provisions of ASU No. 2011-04 to
have a material effect on our financial position, results of operations or cash flows.
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. The adoption of this update in the first quarter of 2011 did not have a
material impact on our results of operations, cash flows or 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. The adoption of this update in the
first quarter of 2011 did not have a material impact on our results of operations, cash flows or financial
position.
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
62
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, 2011 and
2010 our revenue by geography was as follows (dollars in millions):
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rest of world . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011
2010
Percentage of
Revenue
Revenue
Percentage of
Revenue
18.7% $ 264.0
565.7
41.1%
342.7
30.3%
132.5
9.9%
20.2%
43.4%
26.3%
10.1%
Revenue
$ 309.2
678.5
500.7
163.3
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,651.7
100.0% $1,304.9
100.0%
Changes in foreign currency exchange rates increased our revenue by approximately 6% in the year
ended December 31, 2011 and decreased revenue by 1% in the year ended December 31, 2010.
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, or historical rates, as
appropriate. 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, 2011 and 2010, we
recorded net gains (losses) from currency translation adjustments of $(14.7) million and $8.1 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 $4.4 million and $1.5 million for years ended December 31, 2011 and 2010, 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.
63
At December 31, 2011 and 2010, we had foreign currency contracts with notional amounts
aggregating $80.2 million and $82.2 million, respectively. At December 31, 2011, the Company had the
following notional amounts outstanding under foreign currency contracts (in millions):
Buy
December 31, 2011:
Euro . . . . . . . . . . . . . .
Euro . . . . . . . . . . . . . .
Swiss Francs . . . . . . . . .
. . . . . . . . .
U.S. Dollars
Notional
Amount in Buy
Currency
Sell
Maturity
Amount in U.S. Fair Value of Fair Value of
Dollars
Assets
Liabilities
Notional
1.5
35.0
24.5
2.5
Australian Dollars
U.S. Dollars
U.S. Dollars
Mexican Pesos
January 2012
January 2012 to
October 2012
January 2012
January 2012 to
November 2012
$ 2.1
48.2
27.4
2.5
$80.2
$—
—
—
—
$—
$0.1
2.9
1.2
—
$4.2
Based on the contractual maturities of these contracts and exchange rates as of December 31,
2011, we anticipate that these contracts will result in net cash flows of $(4.2) million in 2012. At
December 31, 2011, 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 $6.8 million and if the
U.S. Dollar strengthened by 10%, the market value of our foreign currency contracts would decrease by
approximately $6.8 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 Amended Credit
Agreement. At December 31, 2011 and 2010, the outstanding notional amount of this swap was
$49.5 million and $66.4 million, respectively. Based on interest rates as of December 31, 2011, the fair
value of the swap was $(1.1) million. Assuming all variables are constant and because the swap will
mature on December 31, 2012 the interest rate swap will result in a cash outflow of $1.1 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
64
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 products. At December 31, 2011 and December 31, 2010, we had
fixed price commodity contracts with notional amounts aggregating $3.9 million and $2.9 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.
65
ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm . . . . . . . . . . . . .
Consolidated Balance Sheets as of December 31, 2011 and 2010 . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income for the years ended December 31, 2011, 2010 and 2009 . . . .
Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the years
ended December 31, 2011, 2010 and 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009 .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Page
67
68
69
70
73
74
66
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, 2011 and 2010, 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, 2011. 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, 2011 and 2010, and the
consolidated results of its operations and its cash flows for each of the three years in the period ended
December 31, 2011, 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, 2011, based on criteria established in Internal Control-Integrated Framework issued by
the Committee of Sponsoring Organizations of the Treadway Commission and our report dated
February 29, 2012 expressed an unqualified opinion thereon.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 29, 2012
67
BRUKER CORPORATION
CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share data)
Current assets:
ASSETS
Cash and cash equivalents
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term assets
December 31,
2011
2010
$ 246.0
2.2
282.8
576.2
11.5
75.4
1,194.1
249.0
100.2
136.4
17.2
13.6
$ 230.4
2.9
232.9
511.0
8.6
65.3
1,051.1
233.7
98.3
136.1
12.5
18.1
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,710.5
$1,549.8
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
83.7
72.3
268.6
11.2
320.0
Total current liabilities
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued pension . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other long-term liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and contingencies (Note 14)
Shareholders’ equity:
Preferred stock, $0.01 par value 5,000,000 shares authorized, none issued or outstanding at
December 31, 2011 and 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock, $0.01 par value 260,000,000 shares authorized, 165,892,170 and 165,246,426
shares issued and 165,871,905 and 165,229,207 outstanding at December 31, 2011 and
2010, respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock at cost, 20,265 and 17,219 shares at December 31, 2011 and 2010,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
755.8
219.4
32.7
23.8
39.2
14.7
—
1.7
(0.2)
36.0
441.5
142.5
621.5
3.4
624.9
831.5
86.6
29.3
18.8
39.4
16.8
—
1.6
(0.2)
21.7
349.2
152.4
524.7
2.7
527.4
Total liabilities and shareholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,710.5
$1,549.8
The accompanying notes are an integral part of these financial statements.
68
BRUKER CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share data)
Year Ended December 31,
2011
2010
2009
Product revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Service revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,445.6
194.8
11.3
$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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,651.7
792.5
106.7
899.2
752.5
1,304.9
621.5
79.4
700.9
604.0
1,114.5
526.3
70.7
597.0
517.5
Operating expenses:
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Write-off of deferred offering costs . . . . . . . . . . . . . . . . . . . . . . . . . . .
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
406.6
177.2
3.4
9.7
596.9
155.6
(10.1)
145.5
51.5
94.0
301.1
141.4
—
5.8
448.3
155.7
(5.6)
150.1
53.3
96.8
254.0
126.4
—
0.4
380.8
136.7
(7.6)
129.1
48.1
81.0
interest in consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . .
1.7
1.4
(0.2)
Net income attributable to Bruker Corporation . . . . . . . . . . . . . . . . . .
$
92.3
$
95.4
$
81.2
Net income per common share attributable to
Bruker Corporation shareholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
0.56
0.55
$
$
0.58
0.58
$
$
0.50
0.49
Weighted average common shares outstanding:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
165.4
166.9
164.4
165.7
163.5
164.9
The accompanying notes are an integral part of these financial statements.
69
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72
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 inventories to net realizable value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on bargain purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-cash expenses, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Customer deposits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2011
2010
2009
$ 94.0
$ 96.8
$ 81.0
52.9
0.6
38.4
7.9
(4.8)
—
0.7
(52.8)
(111.7)
(7.8)
9.2
31.3
29.8
36.1
0.6
24.4
6.9
(3.6)
—
1.3
(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
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87.7
156.1
149.8
Cash flows from investing activities:
Cash paid for acquisitions, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sales of property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(14.3)
(54.4)
—
(269.8)
(31.9)
2.7
(1.9)
(16.3)
—
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(68.7)
(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 exercise of stock awards . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash payments to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash provided by (used) in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Effect of exchange rate changes on cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . .
Net change in cash and cash equivalents
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash and cash equivalents at beginning of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30.7
—
(29.3)
(1.3)
3.3
0.2
0.1
(0.4)
3.3
(6.7)
15.6
230.4
185.0
—
(21.6)
—
6.0
0.3
(1.3)
(0.1)
168.3
(62.4)
1.6
(23.9)
—
1.5
0.6
(1.5)
—
(84.1)
(2.1)
(6.6)
23.3
207.1
40.9
166.2
Cash and cash equivalents at end of year . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 246.0
$ 230.4
$207.1
Supplemental disclosure of cash flow information:
Cash paid for interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
6.7
$
4.5
$
6.3
Cash paid for taxes
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 69.7
$ 38.7
$ 54.2
Non-cash financing activities:
Issuance of common stock in connection
with acquisition of Michrom Bioresources Inc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2.9
$ — $ —
The accompanying notes are an integral part of these financial statements.
73
BRUKER CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1—Description of Business
Bruker Corporation, together with its consolidated 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 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. The Company also manufactures and distributes a broad range of field analytical systems
for chemical, biological, radiological, nuclear and explosives (‘‘CBRNE’’) detection. The Company
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.
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; 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, 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.
Note 2—Summary of Significant Accounting Policies
The accompanying consolidated financial statements reflect the application of certain significant
accounting policies as described below and elsewhere in these notes to the consolidated financial
statements.
74
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and all
majority and wholly-owned subsidiaries. All intercompany accounts and transactions have been
eliminated.
Noncontrolling Interests
Noncontrolling interests represents the minority shareholders’ proportionate share of the
Company’s majority-owned indirect subsidiaries. The portion of net income or net loss 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
comprehensive income of these subsidiaries is presented in the consolidated statements of shareholders’
equity and comprehensive income.
Subsequent Events
The Company has evaluated all subsequent events and determined that there are no material
recognized or unrecognized subsequent events, except for those disclosed in Note 10—Debt.
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 from the balance sheet date. At December 31, 2011,
the Company had $6.1 million of restricted cash, of which $3.9 million was classified as non-current. At
December 31, 2010, the Company had $6.4 million of restricted cash, of which $3.5 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
75
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
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 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.
The Company has evaluated the estimated fair value of financial instruments using available
market information and management’s estimates. The use of different market assumptions and/or
estimation methodologies could have a significant effect on the estimated fair value amounts.
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
76
within management’s expectations and the allowance for doubtful accounts totaled $5.6 million and
$5.1 million as of December 31, 2011 and 2010, respectively. As of December 31, 2011 and 2010, no
single customer represented 10% of the Company’s accounts receivable. For the years ended
December 31, 2011, 2010 and 2009, no single customer represented 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
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, but is evaluated for impairment on a reporting unit basis annually, or
on an interim basis when events or changes in circumstances indicate that the carrying value may not
be recoverable. In assessing the recoverability of goodwill, the Company must make assumptions
regarding the estimated future cash flows, and other factors, to determine the fair value of these assets.
If these estimates or their related assumptions change in the future, the Company may be required to
record impairment charges against these assets in the reporting period in which the impairment is
determined.
For goodwill, the impairment evaluation includes a comparison of the carrying value of the
reporting unit to the fair value of the reporting unit. If the reporting unit’s estimated fair value exceeds
the reporting unit’s carrying value, no impairment of goodwill exists. If the fair value of the reporting
unit does not exceed its carrying value, then further analysis would be required to determine the
amount of the impairment, if any.
77
For the year ended December 31, 2011, the Company elected to adopt Accounting Standards
Update (‘‘ASU’’) No. 2011-08, Intangibles—Goodwill and Other (Topic 350) Testing Goodwill for
Impairment (‘‘ASU No. 2011-08’’). Under ASU No. 2011-08, the Company has the option to assess
qualitative factors to determine whether the existence of events or circumstances leads to a
determination that it is more likely than not that the fair value of a reporting unit is less than its
carrying amount to determine whether further impairment testing is necessary. Based on the results of
the qualitative review of goodwill performed as of December 31, 2011, the Company did not identify
any indicators of impairment. As such, the two-phase process was not necessary.
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 and distributor relationships . . . . . . .
Trade names . . . . . . . . . . . . . . . . . . . . . . . . . .
3-10 years
5-12 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 seven to 10 years. If an IPR&D project is abandoned before completion
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’s
warranty reserve reflects estimated material and labor costs for potential product issues for which the
Company expects to incur an obligation. The Company’s estimates of anticipated rates of warranty
claims and costs are primarily based on historical information and future forecasts. The Company
assesses the adequacy of the warranty reserve on a quarterly basis and adjusts the amount as necessary.
If the historical data used to calculate the adequacy of the warranty reserve are not indicative of future
requirements, additional or reduced warranty reserves may be required.
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
once the extended warranty period has commenced.
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
78
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. In addition,
the Company is required to record a valuation allowance against net deferred tax assets if, based upon
the available evidence, it is more likely than not that some or all of the deferred tax assets will not 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 systems 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 revenue when the products
have been shipped and the 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.
In September 2009, the Financial Accounting Standards Board (‘‘FASB’’) ratified ASU
No. 2009-13, Revenue Recognition (Topic 605)—Multiple-Deliverable Revenue Arrangements. ASU
No. 2009-13 amends existing revenue recognition accounting standards that are currently within the
scope of Accounting Standards Codification (‘‘ASC’’) 605, Subtopic 25—Multiple-Element Arrangements.
ASU No. 2009-13 provides for three significant changes to the existing guidance for multiple element
arrangements:
(cid:129) Removes the requirement to have objective and reliable evidence of fair value for undelivered
elements in an arrangement. This may result in more deliverables being treated as separate units
of accounting.
(cid:129) Modifies the manner in which arrangement consideration is allocated to the separately identified
deliverables. ASU No. 2009-13 requires an entity to allocate revenue in an arrangement based
on the fair value of each deliverable using its best estimate of selling prices (‘‘ESP’’) of
deliverables if a vendor does not have vendor-specific objective evidence of fair value (‘‘VSOE’’)
or third-party evidence of fair value (‘‘TPE’’), if VSOE is not available.
(cid:129) Eliminates the use of the residual method and requires an entity to allocate revenue using the
relative selling prices method, which results in the discount in the transaction being evenly
allocated to the separate units of accounting.
Additionally, in September 2009, the FASB ratified ASU No. 2009-14, Software (Topic 985)—
Certain Revenue Arrangements That Include Software Elements. The amendments in ASU No. 2009-14
provide that tangible products containing software components and non-software components that
function together to deliver the tangible product’s essential functionality are no longer within the scope
of the software revenue recognition guidance in Accounting Standards Codification (ASC) Topic
79
985-605, Software Revenue Recognition (ASC 985-605) and should follow the guidance in ASU
No. 2009-13 for multiple-element arrangements.
The Company adopted these new accounting standards at the beginning of its first fiscal quarter of
2011 on a prospective basis for transactions originating or materially modified on or after January 1,
2011. These accounting standards generally do not change the units of accounting for the Company’s
revenue transactions, as most products and services qualify as separate units of accounting as was the
case under previous accounting guidance. The impact of adopting these new accounting standards was
not material to the Company’s financial statements for the year ended December 31, 2011, and if
applied in the same manner there would not have been a material impact to revenue recorded in 2010
and 2009 or any interim periods therein.
For transactions entered into subsequent to the adoption of ASU No. 2009-13 that include
multiple elements, arrangement consideration is allocated to each element based on the relative selling
prices of all of the elements in the arrangement using the fair value hierarchy as required by ASU
No. 2009-13. The Company limits the amount of revenue recognized for delivered elements to the
amount that is not contingent on the future delivery of products or services, future performance
obligations, or subject to customer-specific return or refund privileges.
The Company attempts to determine the fair value of its products and services based on VSOE.
The Company determines VSOE based on its normal selling pricing and discounting practices for the
specific product or service when sold on a stand-alone basis. In determining VSOE, the Company’s
policy requires a substantial majority of selling prices for a product or service to be within a reasonably
narrow range. The Company also considers the class of customer, method of distribution and the
geographies into which products and services are being sold when determining VSOE.
If VSOE cannot be established, which may occur in instances where a product or service has not
been sold separately, stand-alone sales are too infrequent or product pricing is not within a sufficiently
narrow range, the Company attempts to establish the selling price based on TPE. TPE is determined
based on competitor prices for similar deliverables when sold separately. The Company is typically not
able to determine TPE for its products or services. TPE is determined based on competitor prices for
similar elements when sold or licensed separately. Generally, the Company’s offerings contain a
significant level of differentiation such that the comparable pricing of products with similar functionality
cannot be determined. Furthermore, the Company is unable to reliably determine the selling prices on
a stand-alone basis of similar products offered by its competitors.
When the Company cannot determine VSOE or TPE, it uses ESP in its allocation of arrangement
consideration. The objective of ESP is to determine the price at which the Company would typically
transact a stand-alone sale of the product or service. ESP is determined by considering a number of
factors including the Company’s pricing policies, internal costs and gross profit objectives, method of
distribution, market research and information, recent technological trends, competitive landscape and
geographies. The Company plans to analyze the selling prices used in its allocation of arrangement
consideration, at a minimum, on an annual basis. Selling prices will be analyzed more frequently if a
significant change in the Company’s business necessitates more frequent analysis or if the Company
experiences significant variances in its selling prices.
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 the Company to make reasonable estimates of the extent of
progress toward completion of the contract and the total costs the Company 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.
80
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 $28.7 million, $20.8 million and
$14.0 million in the years ended December 31, 2011, 2010 and 2009, 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 $8.1 million,
$9.1 million and $6.9 million during the years ended December 31, 2011, 2010 and 2009, 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
stock-based compensation expense for the years ended December 31, 2011, 2010 and 2009, as follows
(in millions):
Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total stock-based compensation pre-tax . . . . . . . . . . . . . . . . .
Tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011
2010
2009
$6.6
1.3
7.9
1.2
$5.8
1.1
6.9
1.1
$5.0
1.3
6.3
1.1
Total stock-based compensation net of tax . . . . . . . . . . . . . . .
$6.7
$5.8
$5.2
Compensation expense is amortized on a straight-line basis over the underlying vesting terms of the
share-based award. Stock options to purchase the Company’s common stock are periodically awarded to
executive officers and other employees of the Company subject to a vesting period of three to five years.
The fair value of each option award is estimated on the date of grant using the Black-Scholes
81
option-pricing model. Assumptions regarding volatility, expected term, dividend yield and risk-free
interest rate are required for the Black-Scholes model and are presented in the table below:
2011
2010
2009
Risk-free interest rate . . . . . . . . . . . .
Expected life . . . . . . . . . . . . . . . . . .
Volatility . . . . . . . . . . . . . . . . . . . . .
Expected dividend yield . . . . . . . . . . .
1.24%-3.12% 1.73%-3.46% 1.71%-3.60%
6.5 years
64.0%
—
6.5 years
62.0%
—
6.5 years
57.2%
—
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. Expected life 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.
Expected volatility is based on a number of factors, but the Company currently believes that the
exclusive use of its historical 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
indebtedness also currently restrict 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 5.2%, 5.4% and 5.8% for the years ended December 31, 2011, 2010 and
2009, respectively, in determining the expense recorded in the accompanying consolidated statements of
income. The weighted average fair values of options granted was $7.89, $8.56 and $5.83 per share for
the years ended December 31, 2011, 2010 and 2009, 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.
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):
2011
2010
2009
Net income attributable to Bruker
Corporation, as reported . . . . . . . . . . . . . . . . . . . . . . .
$ 92.3
$ 95.4
$ 81.2
Weighted average shares outstanding:
Weighted average shares outstanding-basic . . . . . . . . . .
Effect of dilutive securities:
165.4
164.4
163.5
Stock options and restricted stock . . . . . . . . . . . . . . .
1.5
1.3
1.4
Weighted average shares outstanding-diluted . . . . . . . . .
166.9
165.7
164.9
Net income per common share attributable
to Bruker Corporation shareholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.56
$ 0.58
$ 0.50
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 0.55
$ 0.58
$ 0.49
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Stock options to purchase approximately 0.1 million shares, 0.7 million shares and 2.3 million
shares were excluded from the computation of diluted earnings per share in the years ended
December 31, 2011, 2010 and 2009, 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, respectively, in its consolidated
statement of financial position and recognizes changes in the funded status in the year in which the
changes occur through other 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, or historical rates, as
appropriate. 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. The Company may periodically have certain intercompany foreign
currency transactions that are deemed to be of a long-term investment nature; exchange adjustments
related to those transactions are made directly to a separate component of shareholders’ equity.
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
83
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.
Significant estimates and judgments relied upon by management in preparing these financial
statements include revenue recognition, allowances for doubtful accounts, reserves for excess and
obsolete inventory, the expensing and capitalization of research and development costs for software,
estimated fair values of long-lived assets used to record impairment charges related to intangible assets
and goodwill, intangible asset valuations, amortization periods, expected future cash flows used to
evaluate the recoverability of long-lived assets, stock-based compensation expense, warranty allowances,
restructuring and other related charges, contingent liabilities and the recoverability of the Company’s
net deferred tax assets.
Although the Company regularly reassesses the assumptions underlying these estimates, actual
results could differ materially from these estimates. Changes in estimates are recorded in the period in
which they become known. The Company bases its estimates on historical experience and various other
assumptions that it believes to be reasonable under the circumstances. Actual results may differ from
management’s estimates if these results differ from historical experience or other assumptions prove
not to be substantially accurate, even if such assumptions are reasonable when made.
Prior Year Financial Statement Reclassification
The consolidated statement of income for the year ended December 31, 2011, reflects amortization
of certain technology-related intangible assets recorded as a component of cost of revenue. In order to
conform to the current year presentation, the Company has shown $4.3 million and $1.1 million of
amortization expense as a component of cost of revenue for the years ended December 31, 2010 and
2009, respectively, to provide a better reflection of the function of the underlying intangible assets. The
amounts reclassified were previously recorded as selling, general and administrative expense, a
component of operating expenses. The reclassification of these amounts had no effect on the
Company’s previously reported results of operations or cash flows for the years ended December 31,
2010 and 2009.
Note 3—Acquisitions
Acquisitions Completed in 2011
In October 2011, the Company completed the acquisition of Center for Tribology, Inc. (the
‘‘tribology business’’), a privately owned company based in California, U.S. The acquired business
provides nano-mechanical and tribological test instrumentation for basic materials research and
industrial manufacturing in a range of fields, including biomedical, petroleum, microelectronics, energy,
and automotive markets. The tribology business expands the Company’s nano surfaces business into an
adjacent market that the Company could not previously address. The Company acquired the tribology
business for $12.7 million in cash and a contingent consideration arrangement that could require the
Company to pay the former shareholder of the tribology business an additional $1.5 million in each of
the years 2012 and 2013. The former shareholder of the tribology business will earn the contingent
consideration if certain revenue and gross profit margin targets are achieved in 2012 and 2013 and their
employment continues at the Company. Under the purchase agreement $1.6 million of the purchase
price was paid into escrow pending the resolution of indemnification obligations and working capital
obligations of the former shareholder of the acquired business. The Company anticipates the final
settlement of the amounts in escrow to occur in the fourth quarter of 2012.
In April 2011, the Company completed the acquisition of Michrom Bioresources Inc. (the ‘‘HPLC
business’’), a privately owned company based in California, U.S., that provides high performance liquid
chromatography instrumentation, accessories and consumables to the life science market. High
performance liquid chromatography is a chromatographic technique that can separate a mixture of
84
compounds and is often used as the front-end to a mass spectrometer to identify, quantify and purify
the individual components of the sample. The acquisition of the HPLC business expands the
Company’s mass spectrometry businesses. The Company acquired the HPLC business for $1.1 million
in cash, 134,362 shares of unrestricted common stock and 156,823 shares of restricted common stock.
The restricted common stock will vest over a five year period and is contingent on continuing
employment with the Company. Under the purchase agreement $0.1 million of cash and 10% of the
total shares issued were paid into escrow pending the resolution of indemnification obligations and
working capital obligations of the former shareholders of the acquired business. The Company
anticipates the final settlement of the amounts in escrow to occur in the fourth quarter of 2012.
The acquisition of the tribology business and the HPLC business were accounted for under the
acquisition method. The components of the consideration transferred and the allocation of the
consideration transferred for these businesses is as follows (in millions):
Consideration Transferred:
Cash paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock issued . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tribology HPLC
$12.7
—
(0.2)
$ 1.1
2.9
(0.2)
Total consideration transferred . . . . . . . . . . . . . . . . . . . . . . . . .
$12.5
$ 3.8
Allocation of Consideration Transferred:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets:
Existing technology and related patents . . . . . . . . . . . . . . . . . . .
Customer and distributor relationships . . . . . . . . . . . . . . . . . . . .
Tradename . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
In-process research and development . . . . . . . . . . . . . . . . . . . . .
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1.5
1.0
—
$ 0.2
1.3
0.2
12.0
0.6
—
0.1
3.5
(6.2)
1.3
1.5
0.1
—
1.2
(2.0)
Total consideration transferred . . . . . . . . . . . . . . . . . . . . . . . . .
$12.5
$ 3.8
The fair value of the 134,362 shares of unrestricted common stock issued in connection with the
HPLC business was determined based on the closing market price of the Company’s common shares on
the acquisition date, or $21.28 per share.
The fair value contingent consideration arrangement in the acquisition of the tribology business is
not included in the total consideration transferred because it is forfeited if the former shareholder’s
employment is terminated. Similarly, the fair value restricted common stock issued in the acquisition of
the HPLC business is not included in the total consideration transferred because it is forfeited if the
former shareholders’ employment is terminated. Because these arrangements are forfeited if
employment is terminated, the amounts are considered to be compensation for post-combination
service and will be accounted for as compensation expense over the period the contingent amounts are
earned.
The Company has not yet completed the final allocation of the consideration transferred in
connection with the tribology business but expects to complete the final allocation within the
measurement period. The allocation of the consideration transferred in connection with the HPLC
business was completed in the fourth quarter of 2011.
85
The acquisition of the tribology business and the HPLC business were made at prices above the
fair value of the net acquired assets, resulting in $3.5 million and $1.2 million of goodwill, respectively.
The Company was willing to pay these prices based on expectations of synergies that will result from
combining the businesses with the Company’s existing operations. These synergies include expanded
product offerings to adjacent 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 tribology and HPLC 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 multi-period excess-earnings method, a form of the income approach, to
value the existing technology and patents related to the tribology and HPLC businesses. 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 also used the multi-period excess-
earnings method to value the customer relationships acquired in the connection with the HPLC
business and the IPR&D acquired with the tribology business. The multi-period excess-earnings method
was used to value the customer relationships acquired in the connection with the HPLC business
because the customer relationships were deemed to be one of the primary cash generating assets
acquired in the transaction. The Company used the lost-profit/avoided cost method, a form of the
income approach, to value the distributor relationships related to the tribology 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, a
form of the income approach, to value the tradenames acquired in the HPLC business. The principle
behind this method is that the 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 tribology and HPLC businesses are 7.1 years for
existing technology and related patents, 6.8 years for customer and distributor relationships and 1 year
for tradenames. 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.
Transaction costs associated with the acquisition of the tribology and HPLC businesses were
expensed as incurred. The Company incurred $1.1 million in expenses that are included in other
charges, net in the consolidated statements of income for the year ended December 31, 2011. These
costs consist primarily of professional fees.
The results of the tribology and HPLC businesses have been included in the Scientific Instruments
segment from the date of acquisition. Pro forma financial information reflecting the acquisition of these
businesses 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.
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 expanded 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
86
indemnification obligations and working capital obligations of the seller. In October 2011 the escrow
was released to Veeco.
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 its acquisition of
Varian. The Company acquired certain assets and assumed certain liabilities in Varian’s inductively
coupled plasma mass spectrometry instruments business, 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.
The acquisitions of the nano surfaces business and chemical analysis business were accounted for
under the acquisition method. The components of the consideration transferred and the allocation of
the consideration transferred for these businesses, including measurement period adjustments recorded
in 2011, 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
89.7
1.5
21.3
49.0
(12.5)
7.1
15.8
—
0.4
(15.4)
Total consideration transferred . . . . . . . . . . . . . . . . . . . . . . . .
$230.4
$ 37.5
The Company finalized the allocation of the consideration transferred in connection with the nano
surfaces business in the third quarter of 2011. 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 nano surfaces
business in 2011 consisted of a reclassification of $2.0 million from goodwill to intangible assets in
connection with finalizing the fair value of a license agreement that was acquired in the transaction.
The acquisitions 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 $49.0 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 with the Company’s existing operations. 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.
Transaction costs associated with the acquisitions of the nano surfaces and chemical analysis
businesses have been expensed as incurred. The Company incurred $3.1 million and $4.6 million in
87
expenses that are included in other charges, net in the consolidated statements of income for the years
ended December 31, 2011 and 2010, respectively. The costs incurred in 2011 consist primarily of
transition costs whereby Agilent and Veeco are providing administrative services on behalf of the
Company for defined periods. The transition service arrangements expired in 2011. In 2010, transaction
costs include $2.8 million of transition costs provided by Agilent and Veeco 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
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.
Note 4—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, 2011 (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 . . . . . . . . . . . . . . . . . . . . . . . . .
Embedded derivatives in purchase and delivery
contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts . . . . . . . . . . . . . . . . . . . . .
Long-term restricted cash . . . . . . . . . . . . . . . . .
Total
$26.3
2.2
0.6
0.5
3.9
$26.3
2.2
—
—
3.9
Total assets recorded at fair value . . . . . . . . . .
$33.5
$32.4
Liabilities:
Interest rate swap contract . . . . . . . . . . . . . . . . .
Foreign exchange contracts . . . . . . . . . . . . . . . .
Embedded derivatives in purchase and delivery
contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed price commodity contracts . . . . . . . . . . . .
$ 1.1
4.2
0.4
0.5
$ —
—
—
—
Total liabilities recorded at fair value . . . . . . . .
$ 6.2
$ —
88
$ —
—
0.6
0.5
—
$1.1
$1.1
4.2
0.4
0.5
$6.2
$—
—
—
—
—
$—
$—
—
—
—
$—
Derivative financial instruments are classified within level 2 because there is not an active market
for each hedge contract however, the inputs used to calculate the value of the instruments are obtained
from active markets.
The Company measures eligible assets and liabilities at fair value with changes in fair value
recognized in earnings. Fair value treatment may be elected either upon initial recognition of an
eligible asset or liability or, for an existing asset or liability, if an event triggers a new basis of
accounting. The Company did not elect to remeasure any of its existing financial assets or liabilities,
and did not elect the fair value option for any financial assets and liabilities transacted in the year
ended December 31, 2011 or 2010.
Note 5—Accounts Receivable
The following is a summary of trade accounts receivable at December 31, (in millions):
Gross accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Allowance for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . .
$288.4
(5.6)
$238.0
(5.1)
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$282.8
$232.9
2011
2010
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
in estimates are reflected in the period in which they become known. The Company writes off account
balances against the allowance after all means of collection have been exhausted and the potential for
recovery is considered remote. Provisions for doubtful accounts are recorded in general and
administrative expenses.
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
2011 . . . . . . . . . . . . . . . . . . . . .
2010 . . . . . . . . . . . . . . . . . . . . .
2009 . . . . . . . . . . . . . . . . . . . . .
$5.1
5.4
5.4
0.9
0.3
1.2
(0.4)
(0.6)
(1.2)
$5.6
5.1
5.4
Note 6—Inventories
Inventories consisted of the following at December 31, (in millions):
Raw materials . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Work-in-process . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finished goods . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Demonstration units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$175.5
169.4
175.3
56.0
$143.7
174.8
143.9
48.6
Inventories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$576.2
$511.0
2011
2010
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
89
of technological obsolescence. Amounts recorded in cost of revenue related to the write-down of
demonstration units to net realizable value were $30.0 million, $24.4 million and $26.1 million for the
years ended December 31, 2011, 2010 and 2009, 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, 2011 and 2010, inventory-in-transit was $116.8 million and $85.3 million,
respectively.
Note 7—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 . . . . .
$ 32.3
241.3
298.9
$ 28.3
231.5
281.0
Less accumulated depreciation and amortization . . . . . . . . . . . . .
572.5
(323.5)
540.8
(307.1)
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . .
$ 249.0
$ 233.7
2011
2010
Depreciation expense, which includes the amortization of leasehold improvements, for the years
ended December 31, 2011, 2010 and 2009 was $34.8 million, $30.3 million and $27.9 million,
respectively.
Note 8—Goodwill and Other Intangible Assets
The following table sets forth the changes in the carrying amount of goodwill for the years ended
December 31, 2011 and 2010 (in millions):
Balance at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 47.5
52.4
(1.6)
Balance at December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Dispositions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Measurement period adjustments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
98.3
4.7
(0.1)
(2.0)
(0.7)
Balance at December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$100.2
At December 31, 2011 and 2010, all goodwill was allocated to the Scientific Instruments segment.
The goodwill acquired in 2011 relates to the acquisition of the tribology business and the HPLC
business. 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.
No impairment losses were recorded on goodwill during the years ended December 31, 2011, 2010
and 2009.
90
The following is a summary of intangible assets at December 31, (in millions):
2011
2010
Gross
Net
Gross
Net
Carrying Accumulated Carrying Carrying Accumulated Carrying
Amount Amortization Amount Amount Amortization Amount
Existing technology and related patents . . . . . $141.4
22.0
Customer relationships . . . . . . . . . . . . . . . . .
0.2
Trade names . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets subject to amortization . . .
In-process research and development . . . . . . .
163.6
8.0
$(29.9)
(5.1)
(0.2)
(35.2)
—
$111.5 $112.0
20.2
0.4
16.9
—
128.4
8.0
132.6
21.3
$(15.0)
(2.5)
(0.3)
(17.8)
—
$ 97.0
17.7
0.1
114.8
21.3
Intangible assets . . . . . . . . . . . . . . . . . . . . $171.6
$(35.2)
$136.4 $153.9
$(17.8)
$136.1
For the years ended December 31, 2011, 2010 and 2009, the Company recorded amortization
expense of approximately $18.1 million, $5.8 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, 2011, 2010 and 2009.
The estimated future amortization expense related to amortizable intangible assets at
December 31, 2011 is as follows (in millions):
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 19.7
20.7
20.1
19.5
18.6
37.8
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$136.4
Note 9—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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011
2010
$ 83.0
77.5
55.8
27.8
6.2
69.7
$ 70.3
68.8
61.5
28.4
6.8
65.9
Other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$320.0
$301.7
91
The following table sets forth the changes in accrued warranty for the years ended December 31,
2011 and 2010 (in millions):
Balance at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accruals for warranties issued during the year . . . . . . . . . . . . . . . . . . . . .
Settlements of warranty claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accruals for warranties issued during the year . . . . . . . . . . . . . . . . . . . . .
Settlements of warranty claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 22.9
28.6
(22.0)
(1.1)
28.4
29.1
(28.6)
(1.0)
Balance at December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 27.9
Note 10—Debt
The Company’s debt obligations consist of the following as of December 31, (in millions):
U.S. Dollar term loan under the Amended Credit Agreement . . . .
U.S. Dollar revolving loan under the Amended Credit Agreement .
Capital lease obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 82.5
216.5
4.1
$ 110.6
185.5
4.9
2011
2010
Total debt
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Short-term borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . .
303.1
301.0
— (185.5)
(28.9)
(83.7)
Total debt, less current portion . . . . . . . . . . . . . . . . . . . . . . . . . .
$219.4
$ 86.6
In February 2008, the Company entered into a credit agreement, referred to as the Credit
Agreement, with a syndicate of lenders that provided 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 was payable in quarterly installments through December 2012. Borrowings under
the Credit Agreement accrued 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%.
In May 2011, the Company entered into an amendment to and restatement of the Credit
Agreement, referred to as the Amended Credit Agreement. The Company accounted for the
amendment as a modification under FASB ASC No. 470, Debt (‘‘ASC No. 470’’). The Amended Credit
Agreement increases the maximum commitment on the Company’s revolving credit line to
$250.0 million and extends the maturity date to May 2016. Borrowings under the revolving credit line
of the Amended Credit Agreement accrue interest, at the Company’s option, at either (i) the higher of
the prime rate, (ii) the federal funds rate plus 0.50%, (iii) adjusted LIBOR plus 1.00% or (iv) LIBOR,
plus margins ranging from 0.80% to 1.65% and a facility fee ranging from 0.20% to 0.35%. The
Amended Credit Agreement had no impact on the maturity or pricing of the Company’s existing term
loan. As of December 31, 2011, the weighted average interest rate of borrowings under the term facility
of the Amended Credit Agreement was approximately 2.8%.
Borrowings under the Amended Credit Agreement are secured by guarantees from certain
material subsidiaries, as defined in the Amended Credit Agreement, and Bruker Energy & Supercon
Technologies, Inc. The Amended Credit Agreement also requires the Company to maintain certain
financial ratios related to maximum leverage and minimum interest coverage, as defined in the
Amended Credit Agreement. Specifically, the Company’s leverage ratio cannot exceed 3.0 and the
Company’s interest coverage ratio cannot be less than 3.0. In addition to the financial ratios, the
92
Amended 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 its assets; and enter
into certain transactions with affiliates. 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 the Company to prepay that debt before its scheduled
due date.
At December 31, 2011 and 2010, the Company had amounts outstanding totaling $216.5 million
and $185.5 million, respectively, under the revolving loan facility. At December 31, 2011, in accordance
with ASC No. 470, the Company classified the amounts outstanding under the revolving loan facility as
long-term because it had the ability and intent to refinance the short-term obligation on a long-term
basis. The refinancing of the revolving loan amount was completed in January 2012. At December 31,
2010, amounts outstanding under the revolving loan facility were classified as short-term borrowings.
On January 18, 2012, the Company entered into a note purchase agreement, referred to as the
Note Purchase Agreement, with a group of accredited institutional investors. Pursuant to the Note
Purchase Agreement, the Company issued and sold $240.0 million of senior notes, referred to as the
Senior Notes. The Senior Notes issued by the Company in the private placement consist of the
following:
(cid:129) $20 million 3.16% Series 2012A Senior Notes, Tranche A, due January 18, 2017;
(cid:129) $15 million 3.74% Series 2012A Senior Notes, Tranche B, due January 18, 2019;
(cid:129) $105 million 4.31% Series 2012A Senior Notes, Tranche C, due January 18, 2022; and
(cid:129) $100 million 4.46% Series 2012A Senior Notes, Tranche D, due January 18, 2024.
Under the terms of the Note Purchase Agreement, the Company may issue and sell additional
senior notes up to an aggregate principal amount of $600 million, subject to certain conditions.
Interest on the Senior Notes is payable semi-annually on January 18 and July 18 of each year,
commencing July 18, 2012. The Senior Notes are unsecured obligations of the Company and are fully
and unconditionally guaranteed by certain of the Company’s direct and indirect subsidiaries. The Senior
Notes rank pari passu in right of repayment with the Company’s other senior unsecured indebtedness.
The Company may prepay some or all of the Senior Notes at any time in an amount not less than 10%
of the original aggregate principal amount of the Senior Notes to be prepaid, at a price equal to the
sum of (a) 100% of the principal amount thereof, plus accrued and unpaid interest, and (b) the
applicable make-whole amount, upon not less than 30 and no more than 60 days’ written notice to the
holders of the Senior Notes. In the event of a change in control, as defined in the Note Purchase
Agreement, of the Company, the Company may be required to prepay the Notes at a price equal to
100% of the principal amount thereof, plus accrued and unpaid interest.
The Note Purchase Agreement contains affirmative covenants, including, without limitation,
maintenance of corporate existence, compliance with laws, maintenance of insurance and properties,
payment of taxes, addition of subsidiary guarantors and furnishing notices and other information. The
Note Purchase Agreement also contains certain restrictive covenants that restrict the Company’s ability
to, among other things, incur liens, transfer or sell assets, engage in certain mergers and consolidations
and enter into transactions with affiliates. The Note Purchase Agreement also includes customary
representations and warranties and events of default. In the case of an event of default arising from
specified events of bankruptcy or insolvency, all outstanding Senior Notes will become due and payable
immediately without further action or notice. In the case of payment events of defaults, any holder of
Senior Notes affected thereby may declare all Senior Notes held by it due and payable immediately. In
the case of any other event of default, a majority of the holders of the Senior Notes may declare all the
Senior Notes to be due and payable immediately. Pursuant to the Note Purchase Agreement, so long as
any Senior Notes are outstanding the Company will not permit (i) its leverage ratio, as determined
93
pursuant to the Note Purchase Agreement, as of the end of any fiscal quarter to exceed 3.50 to 1.00,
(ii) its interest coverage ratio as determined pursuant to the Note Purchase Agreement as of the end of
any fiscal quarter for any period of four consecutive fiscal quarters to be less than 2.50 to 1 or
(iii) priority debt at any time to exceed 25% of consolidated net worth, as determined pursuant to the
Note Purchase Agreement.
Annual maturities of long-term debt outstanding at December 31, 2011, excluding the amounts
outstanding under the revolving loan facility of the Amended Credit Agreement that were refinanced in
January 2012, are as follows (in millions):
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$83.7
1.1
0.7
0.5
0.6
—
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$86.6
Interest expense for the years ended December 31, 2011, 2010 and 2009, was $7.3 million,
$5.6 million and $7.5 million, respectively.
The following is a summary of the maximum commitments and the net amounts available to the
Company under revolving loan arrangements as of December 31, 2011 (in millions):
Weighted
Average
Interest Rate
Total Amount
Committed by Outstanding
Borrowings
Lenders
Outstanding
Letters of
Credit
Total Amount
Available
Amended Credit Agreement . . . . . . .
Other revolving loans . . . . . . . . . . . .
Total revolving loans . . . . . . . . . . .
1.4%
—
1.4%
$250.0
178.7
$428.7
$216.5
—
$216.5
$
0.2
115.2
$115.4
$33.3
63.5
$96.8
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 11—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 Amended 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 pays a fixed rate of approximately 3.8% and receives 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 Amended Credit Agreement through
December 2012. At December 31, 2011 and 2010, the notional amount of this interest rate swap was
$49.5 million and $66.4 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
94
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. The Company periodically enters
into foreign currency contracts in order to minimize the volatility that fluctuations in exchange rates
have on its cash flows. 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 of income. The Company had the following notional
amounts outstanding under foreign currency contracts at December 31, (in millions):
Buy
December 31, 2011:
Euro . . . . . . . . . . .
Euro . . . . . . . . . . .
Swiss Francs . . . . . .
U.S. Dollars . . . . . .
December 31, 2010:
Euro . . . . . . . . . . .
Euro . . . . . . . . . . .
Euro . . . . . . . . . . .
Swiss Francs . . . . . .
Swiss Francs . . . . . .
U.S. Dollars . . . . . .
Notional
Amount in
Buy Currency
Sell
Maturity
Notional
Amount in Fair Value
of Assets
U.S. Dollars
Fair Value
of Liabilities
1.5
35.0
24.5
2.5
1.5
13.3
14.5
13.6
18.0
8.9
Australian Dollars
U.S. Dollars
U.S. Dollars
Mexican Pesos
January 2012
January 2012 to
October 2012
January 2012
January 2012 to
November 2012
$ 2.1
48.2
27.4
2.5
$ —
—
—
—
$0.1
2.9
1.2
—
$80.2
$ —
$4.2
Australian Dollars
Swiss Francs
U.S. Dollars
U.S. Dollars
Euro
Euro
January 2011
January 2011
January 2011 to
May 2012
January 2011
January 2011
January 2011 to
January 2012
$ 2.2
19.3
19.6
13.9
18.5
8.7
$ —
—
0.1
0.7
1.2
0.1
$0.2
1.1
0.4
—
—
—
$82.2
$2.1
$1.7
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 $34.8 million for the delivery of products and $4.9 million for the purchase of products at
December 31, 2011 and $16.1 million for the delivery of products and $0.3 million for the purchase of
products at December 31, 2010. 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.
95
Commodity Price Risk Management
The Company has an arrangement with a customer under which it 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, 2011 and 2010, the Company had fixed price
commodity contracts with notional amounts aggregating $3.9 million and $2.9 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.
The fair value of the derivative instruments described above are recorded in our consolidated
balance sheets for the years ending December 31, 2011 and 2010 as follows (in millions):
Balance Sheet Location
2011
2010
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
0.6
0.6
0.5
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
$4.2
1.1
0.4
0.5
$1.7
3.0
1.5
0.6
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
. . . . . . . . . . . . . . . . . . . . . . . . . .
$(0.3) $(2.1) $(1.2)
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):
2011
2010
2009
2011
2010
2009
Interest rate swap contract
. . . . . . . . . . . . . . . . . . . . . . . . . .
$(2.2) $(2.6) $(2.5)
The Company expects $1.1 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, 2011, 2010 and 2009, respectively.
The impact on net income of unrealized gains and losses resulting from changes in the fair value
of derivative instruments not designated as hedging instruments for the years ending December 31, are
as follows (in millions):
Foreign exchange contracts . . . . . . . . . . . . . . . . . . . . . . . . . . .
Embedded derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(4.6) $0.4
0.1
1.6
Income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(3.0) $0.5
$ —
0.7
$0.7
2011
2010
2009
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.
96
Note 12—Income Taxes
The domestic and foreign components of income before taxes are as follows for the years ended
December 31, (in millions):
Domestic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (25.3) $ (12.5) $ (11.5)
140.6
162.6
170.8
2011
2010
2009
$145.5
$150.1
$129.1
The components of the income tax provision are as follows for the years ended December 31, (in
millions):
2011
2010
2009
Current income tax (benefit) expense:
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (0.6) $ 0.3
—
56.6
0.2
56.7
$ 1.6
0.8
47.8
Total current income tax expense, net . . . . . . . . . . . . . . .
56.3
56.9
50.2
Deferred income tax (benefit):
Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred income tax (benefit) . . . . . . . . . . . . . . . .
(3.8)
(0.9)
(0.1)
(4.8)
0.3
—
(3.9)
(3.6)
(0.4)
—
(1.7)
(2.1)
Income tax provision . . . . . . . . . . . . . . . . . . . . . . . . . . .
$51.5
$53.3
$48.1
A reconciliation of the United States federal statutory rate to the effective income tax rate is as
follows for the years ended December 31:
2011
2010
2009
35.0% 35.0% 35.0%
Statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(5.7)
(8.0)
Foreign tax rate differential . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.8
0.3
Permanent differences
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.4
6.1
Tax contingencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in tax rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.1
0.2
Withholding taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — (1.3)
State income taxes, net of federal benefits . . . . . . . . . . . . . . . . .
Purchase accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(9.9)
3.0
2.4
0.1
0.2
(0.3) — 0.5
0.2 —
(3.0)
3.2
(0.5)
(1.5)
Effective tax rate before valuation allowance . . . . . . . . . . . . . .
Change in valuation allowance for unbenefitted losses . . . . . . . .
28.8% 34.0% 34.5%
6.6% 1.5% 2.8%
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35.4% 35.5% 37.3%
97
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):
Deferred tax assets:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net operating loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . .
Capital loss carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign tax and other tax credit carryforwards . . . . . . . . . . . . . .
Foreign statutory reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Warranty reserve . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011
2010
$ — $ 0.8
5.1
4.3
2.5
2.6
4.3
15.5
4.3
8.0
3.6
5.3
2.0
6.1
8.2
4.2
—
4.4
15.3
0.3
14.8
4.9
2.9
1.3
Gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
62.4
(33.7)
58.3
(37.2)
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
28.7
21.1
Deferred tax liabilities:
Accounts receivable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign statutory reserves . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangibles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . .
1.0
4.0
12.5
2.5
0.6
7.6
3.8
3.0
35.0
0.5
4.0
18.2
—
1.3
—
0.8
3.2
28.0
Net deferred tax liability . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (6.3) $ (6.9)
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 2012 represents
sufficient negative evidence to record a valuation allowance against certain deferred tax assets.
As of December 31, 2011, the Company has approximately $0.2 million of U.S. net operating loss
carryforwards available to reduce future taxable income which expire at various times through 2021 and
approximately $44.3 million of German Trade Tax net operating losses that are carried forward
indefinitely. The Company also has U.S. tax credits of approximately $14.1 million available to offset
future tax liabilities that expire at various dates, which include research and development tax credits of
$9.6 million expiring at various times through 2031 and foreign tax credits of $4.5 million expiring at
various times through 2021. The U.S. operating loss and tax credit carryforwards may be subject to
limitations under provisions of the Internal Revenue Code. The Company was able to release a portion
of the valuation allowance on its deferred tax assets in the U.S. because of deferred tax liabilities
arising from the identified intangible assets acquired in connection with the tribology and HPLC
businesses. Because the Company maintains a full valuation allowance on its deferred tax assets in the
98
U.S., the deferred tax liabilities recorded in connection with these acquisitions represents a source of
future taxable income that allows us to utilize a portion of the deferred tax assets.
The Company has permanently reinvested the earnings of its subsidiaries in the cumulative amount
of approximately $920.7 million as of December 31, 2011, 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 $34.6 million as of December 31,
2011, of which $27.7 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, 2009 . . . . . . . . . . . . . . . . .
Gross increases—tax positions in prior periods . . . . . . . . . . . . . . . . . . . . .
Gross decreases—tax positions in prior periods . . . . . . . . . . . . . . . . . . . . .
Gross increases—current period tax positions . . . . . . . . . . . . . . . . . . . . . .
Gross unrecognized tax benefits at December 31, 2010 . . . . . . . . . . . . . . . . .
Gross increases—tax positions in prior periods . . . . . . . . . . . . . . . . . . . . .
Gross decreases—tax positions in prior periods . . . . . . . . . . . . . . . . . . . . .
Gross increases—current period tax positions . . . . . . . . . . . . . . . . . . . . . .
Gross decreases—current period tax positions . . . . . . . . . . . . . . . . . . . . . .
$23.2
3.1
(1.4)
2.1
27.0
5.5
(0.6)
3.1
(0.4)
Gross unrecognized tax benefits at December 31, 2011 . . . . . . . . . . . . . . . . .
$34.6
The Company recognizes penalties and interest related to unrecognized tax benefits in the
provision for income taxes. As of December 31, 2011, the Company had approximately $5.6 million of
accrued penalties and interest related to uncertain tax positions included in other current liabilities in
the consolidated balance sheet, of which $1.3 million was recorded during the year ended
December 31, 2011.
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 2011 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 2012. 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 2012. The Company recorded an additional $6.3 million and $2.8 million of
reserves related to these audits in 2011 and 2010, respectively.
Note 13—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.
99
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 . . . . . . . . . . . . . . . . . . .
$ 5.5
4.9
(4.1)
1.3
$ 3.9
4.4
(3.4)
0.6
$ 4.2
5.3
(3.5)
1.0
Net periodic benefit costs . . . . . . . . . . . . . . . . . . . . . . . .
$ 7.6
$ 5.5
$ 7.0
2011
2010
2009
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
pension plans, accumulated benefit obligation and funded status of the plans were as follows at
December 31, (in millions):
2011
2010
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 . . . . . . . . . . . . . . . . .
$151.7
5.5
4.9
3.4
(3.3)
(7.7)
(1.0)
$124.9
3.9
4.4
2.7
(4.2)
11.1
8.9
Benefit obligation at end of year . . . . . . . . . . . . . . . . . . . . . .
153.5
151.7
Change in plan assets:
Fair value of plan assets at beginning of year . . . . . . . . . . . . . . .
Actuarial return on plan assets . . . . . . . . . . . . . . . . . . . . . . . . .
Plan participation and employer contributions . . . . . . . . . . . . . .
Benefits paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of foreign currency exchange rates . . . . . . . . . . . . . . . . .
111.3
(2.1)
7.6
(3.3)
(0.6)
95.7
1.8
7.4
(4.2)
10.6
Fair value of plan assets at end of year . . . . . . . . . . . . . . . . . .
112.9
111.3
Net funded status . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (40.6) $ (40.4)
The accumulated benefit obligation for the defined benefit pension plans is $145.5 million and
$144.8 million at December 31, 2011 and 2010, respectively. All defined benefit pension plans have an
accumulated benefit obligation and projected benefit obligation in excess of plan assets at
December 31, 2011 and 2010.
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (1.4) $ (1.0)
(39.4)
(39.2)
Net benefit obligation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(40.6) $(40.4)
2011
2010
100
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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011
2010
$ — $ —
—
(25.8)
—
(22.2)
Accumulated other comprehensive income (loss) . . . . . . . . . . . . .
.
Accumulated contributions in excess of net periodic benefit cost
(22.2)
(18.4)
(25.8)
(14.6)
Net amount recognized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(40.6) $(40.4)
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 . . . .
1.1%-5.5% 1.2%-5.6% 2.0%-5.9%
3.4%-4.0% 3.5%-4.3% 3.5%-4.3%
1.0%-3.8% 1.0%-3.0% 1.0%-3.0%
2011
2010
2009
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, 2011, by asset category and
by level in the fair value hierarchy, 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
$
8.3
$ 8.3
Plan Assets:
Cash and cash equivalents . . . . . . . . . .
Debt securities:
Foreign corporations . . . . . . . . . . . . .
Foreign governments . . . . . . . . . . . . .
Equity Securities:
Foreign corporations . . . . . . . . . . . . .
U.S. corporations . . . . . . . . . . . . . . .
Real estate . . . . . . . . . . . . . . . . . . . . .
Mortgage and other asset-backed
12.5
36.9
49.4
28.6
6.0
34.6
13.9
—
—
—
28.6
6.0
34.6
—
—
securities . . . . . . . . . . . . . . . . . . . . .
6.7
Total plan assets . . . . . . . . . . . . . . . .
$112.9
$42.9
101
$ —
12.5
36.9
49.4
—
—
—
13.9
6.7
$70.0
$—
—
—
—
—
—
—
—
—
$—
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.
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, 2011. The following benefit payments reflect future
employee service as appropriate (in millions):
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2017-2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 2.6
3.0
3.9
4.1
4.9
29.9
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 $3.7 million, $2.5 million and $2.7 million to such plans in the years ended
December 31, 2011, 2010 and 2009, respectively.
Note 14—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 $18.5 million, $15.8 million and
$13.8 million during the years ended December 31, 2011, 2010 and 2009, respectively. Future minimum
lease payments under non-cancelable operating leases at December 31, 2011, for each of the next five
years are as follows (in millions):
2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2013 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$18.4
14.1
10.7
8.5
6.5
16.3
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$74.5
Capital Leases
The Company leases certain buildings under agreements that are classified as capital leases. The
cost of the buildings under the capital leases is included in the consolidated balance sheets as property,
102
plant and equipment and was $9.9 million and $10.1 million at December 31, 2011 and 2010,
respectively. Accumulated amortization of the leased buildings at December 31, 2011 and 2010 was
$2.6 million and $2.2 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 of its patents and related technologies over periods ranging from 21 to
30 years. Income from these agreements for the years ended December 31, 2011, 2010 and 2009 was
$2.9 million, $3.2 million and $2.3 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, 2011, 2010 and 2009, were $2.8 million, $1.8 million and $2.1 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 2012 and 2015. Amounts received under these grants during the years ended
December 31, 2011, 2010 and 2009, totaled $4.0 million, $3.8 million and $4.5 million, respectively, and
are classified as other revenue in the consolidated statement of income. Total expenditures related to
these grants were $5.5 million, $4.5 million and $5.8 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,
individually and in the aggregate, if any, will not have a material impact on the Company’s financial
position or results of operations. As of December 31, 2011 and 2010, no accruals have been recorded
for such potential contingencies.
Internal Investigation and Compliance Matters
As previously reported, in 2011 the Audit Committee of the Company’s Board of Directors
commenced an internal investigation, with the assistance of independent outside counsel and an
independent forensic consulting firm, in response to certain anonymous communications received by
the Company alleging improper conduct in connection with the China operations of the Company’s
Bruker Optics subsidiary. The Audit Committee’s investigation, which included a review of compliance
by Bruker Optics and its employees in China and Hong Kong with the requirements of the Foreign
Corrupt Practices Act (‘‘FCPA’’) and other applicable laws and regulations, has been completed.
103
The investigation found evidence indicating that payments were made that improperly benefited
employees or agents of government-owned enterprises in China and Hong Kong. The investigation also
has found evidence that certain employees of Bruker Optics in China and Hong Kong failed to comply
with the Company’s policies and standards of conduct. As a result, the Company has taken personnel
actions, including the termination of certain individuals. The Company has also terminated its business
relationships with certain third party agents, implemented an enhanced FCPA compliance program, and
strengthened the financial controls and oversight at its subsidiaries operating in China and Hong Kong.
Company management has also initiated a review of the China operations of its other subsidiaries,
which is being conducted with the assistance of an independent audit firm.
The Company voluntarily contacted the United States Securities and Exchange Commission and
the United States Department of Justice in August 2011 to advise both agencies of the internal
investigation by the Audit Committee. In October 2011, the Company also reported the existence of the
internal investigation to the Hong Kong Joint Financial Intelligence Unit and Independent Commission
Against Corruption (‘‘ICAC’’). The Company has cooperated with the United States federal agencies
and Hong Kong government authorities with respect to their inquiries and has provided documents
and/or made witnesses available in response to requests from the governmental authorities reviewing
this matter. The Company intends to continue to cooperate with these agencies in connection with their
inquiries. As was previously the case, at this time the Company cannot reasonably assess the timing or
outcome of these matters or their effect, if any, on the Company’s business.
The FCPA and related statutes and regulations provide for potential monetary penalties as well as
criminal and civil sanctions in connection with FCPA violations. It is possible that monetary penalties
and other sanctions could be assessed by the Federal government in connection with these matters.
Additionally, to the extent any payments are determined to be illegal by local government authorities,
civil or criminal penalties may be assessed by such authorities and the Company’s ability to conduct
business in that jurisdiction may be negatively impacted. At this time, the Company cannot predict the
extent to which the SEC, the DOJ, the ICAC or any other governmental authorities will pursue
administrative, civil injunctive or criminal proceedings, the imposition of fines or penalties or other
remedies or sanctions. Given the current status of the inquiries from these agencies, the Company
cannot reasonably estimate the possible loss or range of possible loss which may result from any
proceedings that may be commenced by the SEC, the DOJ, the ICAC or any other governmental
authorities. Accordingly, no provision with respect to such matters has been recorded in the
accompanying consolidated financial statements. Any adverse findings or other negative outcomes from
any such proceedings could have a material impact on the Company’s consolidated financial statements
in future periods.
Letters of Credit and Guarantees
At December 31, 2011 and 2010, the Company had bank guarantees of $115.4 million and
$108.8 million, respectively, related primarily to customer advances and warranty obligations. These
arrangements guarantee the refund of advance payments received from customers in the event that the
merchandise is not delivered or warranty obligations are not fulfilled in compliance with the terms of
the contract. 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
104
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
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 Santa Barbara, California, which serves as the
headquarters for the Company’s nano surfaces business, has disclosed that there are hazardous
substances present in the ground under the building. Management believes that the comprehensive
indemnification clause included in the purchase agreement related to the acquisition of the nano
surfaces business provides adequate protection against any environmental issues that may arise.
Note 15—Shareholders’ Equity
Public Offerings of Common Stock
In 2010, the Company 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. As a result of economic and market factors the completion and timing of this
offering is uncertain.
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, or 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, or 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.
105
Stock option activity for the year ended December 31, 2011, was as follows:
Shares
Subject to
Options
Weighted
Average
Option Price
Weighted Average
Remaining Contractual
Term (Yrs)
Aggregate
Intrinsic Value
(in millions) (b)
Outstanding at December 31, 2010 . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . .
Exercised . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . .
4,718,648
904,244
(354,559)
(172,080)
Outstanding at December 31, 2011 . . . . .
5,096,253
Vested at December 31, 2011 . . . . . . . . .
2,769,107
$ 9.99
13.91
9.29
12.76
$10.64
$ 8.79
Vested and expected to vest at
December 31, 2011 (a) . . . . . . . . . . . .
4,975,241
$10.59
$ 3.2
$11.8
$10.4
$11.7
6.3
4.8
6.3
(a) In addition to the options that are vested at December 31, 2011, the Company expects a portion of
the unvested options to vest 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, 2011.
(b) The aggregate intrinsic value is based on the positive difference between the fair value of the
Company’s common stock price of $12.42 on December 31, 2011, or the date of exercises, as
appropriate, and the exercise price of the underlying stock options.
Unrecognized pre-tax stock-based compensation expense of $14.1 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 stock options outstanding at December 31, 2011.
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-based 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, 2011:
Outstanding at December 31, 2010 . . . . . . . . . . . . . . . . . . . .
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Shares
Subject to
Restriction
247,258
156,823
(167,549)
(300)
Outstanding at December 31, 2011 . . . . . . . . . . . . . . . . . . . .
236,232
Weighted
Average
Grant Date
Fair Value
$ 8.02
21.28
6.70
7.55
$17.76
Unrecognized pre-tax stock-based compensation expense of $3.3 million related to restricted stock
awarded under the 2000 Plan is expected to be recognized over the weighted average remaining service
period of 3.3 years for awards outstanding at December 31, 2011.
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, or the BEST Plan. The BEST Plan provides for the
106
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, 2011 and
2010, 800,000 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. In
March 2011, the Compensation Committee of the BEST Board of Directors approved additional option
grants for 384,000 shares to be issued to certain key employees, to be effective upon and subject to the
closing of an initial public offering of the capital stock of BEST. If awarded, the exercise price of the
option grants will be equal to the closing price of shares of BEST common stock on the NASDAQ
Global Market on the first day of trading following the closing of a BEST initial public offering. As of
December 31, 2011, no restricted stock has been awarded under the BEST Plan.
In 2011 and 2010, the Company recorded approximately $0.5 million and $0.5 million, respectively,
of pre-tax stock-based compensation expense related to awards granted under the BEST Plan.
Unrecognized pre-tax stock-based compensation expense of $1.2 million related to stock options
awarded under the BEST Plan is expected to be recognized over the weighted average remaining
service period of 2.3 years for awards outstanding at December 31, 2011.
Note 16—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):
Foreign
Currency
Translation
Unrealized
Losses on
Cash Flow
Hedges
Pension
Liability
Adjustment
Accumulated
Other
Comprehensive
Income
Balance at December 31, 2008 . . . . . . . . . . . . . . . . .
Other comprehensive income . . . . . . . . . . . . . . . .
Realized loss on reclassification . . . . . . . . . . . . . . .
$158.9
8.6
—
Balance at December 31, 2009 . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) . . . . . . . . . . . .
Realized loss on reclassification . . . . . . . . . . . . . . .
Balance at December 31, 2010 . . . . . . . . . . . . . . . . .
Other comprehensive income (loss) . . . . . . . . . . . .
Realized loss on reclassification . . . . . . . . . . . . . . .
167.5
8.3
—
175.8
(14.7)
—
$(4.8)
(1.2)
2.5
(3.5)
(2.1)
2.6
(3.0)
(0.3)
2.2
$(16.3)
5.8
—
(10.5)
(9.9)
—
(20.4)
2.9
—
$137.8
13.2
2.5
153.5
(3.7)
2.6
152.4
(12.1)
2.2
Balance at December 31, 2011 . . . . . . . . . . . . . . . . .
$161.1
$(1.1)
$(17.5)
$142.5
Note 17—Deferred Offering Costs
In September 2010, the Company announced plans to sell a minority ownership position in its
BEST subsidiary through an initial public offering of the capital stock of BEST. As a result of economic
and market factors the timing of the BEST initial public offering is uncertain. Although BEST remains
in registration, the Company expensed $3.4 million of deferred offering costs in 2011 based on the
uncertainty in the timing of a future offering. These costs are recorded in write-off of deferred offering
costs in the consolidated statements of income.
107
Note 18—Other Charges, Net
The components of other charges, net for the years ended December 31, 2011, 2010 and 2009,
were as follows (in millions):
Acquisition-related charges (Note 3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transition-related charges incurred in connection with acquired businesses
2011
2010
2009
$1.2
$1.8
$ 0.8
(Note 3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Gain on bargain purchase . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — — (1.3)
4.3 —
Professional fees incurred in connection with internal investigation (Note 14) . . . .
—
0.2
Restructuring charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.2
1.0
—
Loss on divestiture of business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — 1.0
0.7
Impairment charges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . — —
—
0.2 —
Other charges, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.0
2.8
$9.7
$5.8
$ 0.4
In 2011, the Company initiated a plan to eliminate its atomic force microscopy operations in
Berlin, Germany and consolidate them with the nano surfaces business at its facility in Santa Barbara,
California. In connection with this plan, which is referred to in the table below as the Berlin program,
the Company recorded restructuring charges of $1.3 million in the fourth quarter of 2011, consisting of
$0.9 million of severance costs, $0.3 million provisions for excess and obsolete inventory and
$0.1 million of fees in connection with implementing this plan. The restructuring charges relate entirely
to the Scientific Instruments. The provision for excess inventory has been recorded as a component of
cost of product revenue in the consolidated statement of income. The remaining charges are recorded
as a component of other charges, net in the consolidated statement of income. The Company expects
to record an additional $0.7 million in connection with this plan in 2012, consisting of $0.4 million of
severance for employees that are required to provide services beyond a minimum retention period and
$0.3 million of costs related to the relocation.
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, which is referred to in the table below as 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.
The following table sets forth the changes in the reserves for restructuring charges (in millions):
Balance at December 31, 2009 . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges related to the Herzogenrath program .
Cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency impact . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance at December 31, 2010 . . . . . . . . . . . . . . . . . . . . . . . .
Restructuring charges related to the Berlin program . . . . . . .
Cash payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Foreign currency impact . . . . . . . . . . . . . . . . . . . . . . . . . . .
Provisions
for Excess
Inventory
Severance
Exit Costs
$ —
—
—
—
—
0.3
—
—
$ —
0.2
(0.2)
—
—
0.9
—
—
$ —
—
—
—
—
0.1
—
—
Total
$ —
0.2
(0.2)
—
—
1.3
—
—
Balance at December 31, 2011 . . . . . . . . . . . . . . . . . . . . . . . .
$ 1.3
$0.3
$ 0.9
$0.1
108
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.
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 19—Interest and Other Income (Expense), Net
The components of interest and other income (expense), net for the years ended December 31,
2011, 2010 and 2009, were as follows (in millions):
Interest income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Exchange losses on foreign currency transactions . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 1.0
(7.3)
(4.4)
0.6
$ 0.9
(5.6)
(1.5)
0.6
$ 1.0
(7.5)
(1.9)
0.8
Interest and other income (expense), net . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(10.1) $(5.6) $(7.6)
2011
2010
2009
Note 20—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
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
109
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) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,554.1
113.4
(15.8)
$1,225.1
90.5
(10.7)
$1,062.7
59.8
(8.0)
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,651.7
$1,304.9
$1,114.5
2011
2010
2009
Operating Income (Loss):
Scientific Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy & Supercon Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Corporate, eliminations and other (b) . . . . . . . . . . . . . . . . . . . . . . . . .
$ 162.8
(4.1)
(3.1)
$ 160.5
(2.6)
(2.2)
$ 141.7
(6.3)
1.3
Total operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 155.6
$ 155.7
$ 136.7
(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) . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,675.0
104.4
(68.9)
$1,515.8
84.4
(50.4)
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,710.5
$1,549.8
2011
2010
(a) Assets not allocated to the reportable segments and eliminations of intercompany
transactions.
Total capital expenditures and depreciation and amortization by segment are presented below for
the years ended December 31, (in millions):
2011
2010
2009
Capital Expenditures:
Scientific Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy & Supercon Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$45.1
9.3
$26.6
5.3
$14.1
2.2
Total capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$54.4
$31.9
$16.3
Depreciation and Amortization:
Scientific Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy & Supercon Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$49.1
3.8
$32.8
3.3
$26.6
3.1
Total depreciation and amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$52.9
$36.1
$29.7
110
Revenue and property, plant and equipment by geographical area as of and for the year ended
December 31, are as follows (in millions):
Revenue:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rest of Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 309.2
195.3
483.2
500.7
163.3
$ 264.0
181.6
384.1
342.7
132.5
$ 209.2
192.2
340.8
264.9
107.4
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,651.7
$1,304.9
$1,114.5
2011
2010
2009
Property, plant and equipment:
United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Germany . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rest of Europe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asia Pacific . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2011
2010
$ 44.9
132.2
60.3
7.3
4.3
$ 40.0
126.0
59.2
5.6
2.9
Total property, plant and equipment . . . . . . . . . . . . . . . . . . . . .
$249.0
$233.7
Note 21—Related Parties
The Company rents office space from certain of its principal shareholders, certain of which are
also members of our Board of Directors, under multiple leases, which have expiration dates ranging
from 2012 to 2021. Total rent expense under these leases was $2.4 million, $2.4 million and $2.1 million
for the years ended December 31, 2011, 2010 and 2009, respectively.
During the years ended December 31, 2011, 2010 and 2009, the Company incurred expenses of
$3.2 million, $2.9 million and $1.1 million, respectively, to a law firm in which one of the members of
its Board of Directors is a partner.
During the years ended December 31, 2011, 2010 and 2009, the Company incurred expenses of
$0.5 million, $0.3 million and $0.6 million, respectively, to a financial services firm in which one of the
members of its Board of Directors is a partner.
Note 22—Recent Accounting Pronouncements
In September 2011, the FASB amended ASC 350, Intangibles—Goodwill and Other. This
amendment is intended to reduce the cost and complexity of the annual goodwill impairment test by
providing entities an option to perform a qualitative assessment to determine whether further
impairment testing is necessary. The amended provisions are effective for reporting periods beginning
on or after December 15, 2011. However, early adoption is permitted if an entity’s financial statements
for the most recent annual or interim period have not yet been issued. The Company adopted the
provisions of this amendment for its annual test of impairment as of December 31, 2011; however, this
amendment impacts testing steps only and, therefore, adoption did not have an impact on the
Company’s consolidated financial position, results of operations or cash flows.
In June 2011, the FASB amended ASC 220, Comprehensive Income. This amendment was issued to
enhance comparability between entities that report under GAAP and International Financial Reporting
Standards (‘‘IFRS’’) and to provide a more consistent method of presenting non-owner transactions
that affect an entity’s equity. The amendment requires companies to present the components of net
111
income and other comprehensive income either as one continuous statement or as two separate but
consecutive statements. It eliminates the option to report other comprehensive income and its
components as part of the statement of changes in shareholders’ equity. The amended provisions are
effective for fiscal years, and interim periods within those years, beginning after December 15, 2011.
Early adoption is permitted, and full retrospective application is required. This amendment impacts
presentation and disclosure only, and therefore adoption will not have an impact on the Company’s
consolidated financial position, results of operations or cash flows.
In May 2011, the FASB issued ASU No. 2011-04, Fair Value Measurement (Topic 820) Amendments
to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS
(‘‘ASU No. 2011-04’’). The amendments in this update apply to all reporting entities that are required
or permitted to measure or disclose the fair value of an asset, a liability, or an instrument classified in
a reporting entity’s shareholders’ equity in the financial statements. ASU No. 2011-04 does not extend
the use of fair value accounting, but provides guidance on how it should be applied where its use is
already required or permitted by other standards within U.S. GAAP or IFRS. ASU No. 2011-04
changes the wording used to describe many requirements in U.S. GAAP for measuring fair value and
for disclosing information about fair value measurements. Additionally, ASU No. 2011-04 clarifies the
FASB’s intent about the application of existing fair value measurements. The amendments in this
update are to be applied prospectively. For public entities, the amendments are effective during interim
and annual periods beginning after December 15, 2011. Early application by public entities is not
permitted. The Company does not expect the provisions of ASU No. 2011-04 to have a material effect
on its financial position, results of operations or cash flows.
Note 23—Quarterly Financial Data (Unaudited)
A summary of operating results for the quarterly periods in the years ended December 31, 2011
and 2010, is set forth below (in millions, except per share data):
Quarter Ended
March 31
June 30
September 30
December 31
Year ended December 31, 2011
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Bruker Corporation . . . . . . . .
Net income per common share attributable to Bruker
Corporation shareholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended December 31, 2010
Net revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gross profit
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income attributable to Bruker Corporation . . . . . . . .
Net income per common share attributable to Bruker
Corporation shareholders:
Basic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$357.0
161.8
25.7
11.3
$401.2
183.6
38.7
22.1
$418.4
189.4
37.5
19.8
$ 0.07
$ 0.07
$ 0.13
$ 0.13
$ 0.12
$ 0.12
$277.7
126.1
26.9
16.1
$300.9
135.3
37.9
22.6
$310.2
146.5
39.3
27.4
$475.1
217.7
53.7
39.1
$ 0.24
$ 0.23
$416.1
196.1
51.6
29.3
$ 0.10
$ 0.10
$ 0.14
$ 0.14
$ 0.17
$ 0.17
$ 0.18
$ 0.18
112
ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON AUDITING 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, 2011.
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, 2011 to ensure that the
information required to be disclosed by us in the reports that we file or submit under the Securities
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, 2011, 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, 2011.
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, 2011 that materially affected, or are reasonably likely to affect, our
internal control over financial reporting.
113
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,
2011, 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, 2011, 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, 2011 and 2010, 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, 2011 of Bruker Corporation and our report dated February 29, 2012 expressed an
unqualified opinion thereon.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 29, 2012
ITEM 9B OTHER INFORMATION
None.
114
PART III
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.
Information regarding our executive officers may be found under the caption ‘‘Executive Officers’’
in our definitive proxy statement for our 2012 Annual Meeting of Stockholders. Information regarding
our directors, including committees of our Board of Directors and our Audit Committee Financial
Experts, may be found under the captions ‘‘Proposal No. 1—Election of Directors,’’ ‘‘Board Meetings,
Committees and Compensation’’ and ‘‘Audit Committee Report’’ in our definitive proxy statement for our
2012 Annual Meeting of Stockholders. Information regarding compliance with Section 16(a) of the
Exchange Act may be found in our definitive proxy statement for our 2012 Annual Meeting of
Stockholders under the caption ‘‘Section 16(a) Beneficial Ownership Reporting Compliance.’’ Information
regarding the procedures by which security holders may recommend nominees to our Board of
Directors may be found in our definitive proxy statement for our 2012 Annual Meeting of Stockholders
under the caption ‘‘Director Nominations.’’ Such information is incorporated herein by reference.
ITEM 11 EXECUTIVE COMPENSATION
Information regarding executive compensation may be found under the captions ‘‘Compensation of
Directors,’’ ‘‘Compensation Discussion and Analysis,’’ ‘‘Summary of Executive Compensation,’’
‘‘Compensation Committee Interlocks and Insider Participation’’ and ‘‘Compensation Committee Report’’ in
our definitive proxy statement for our 2012 Annual Meeting of Stockholders. Such information is
incorporated herein 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, 2011:
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))
5,332,485
N/A
5,332,485
$10.96
N/A
$10.96
6,440,756
N/A
6,440,756
The Bruker Corporation 2010 Incentive Compensation Plan, or the 2010 Plan, was approved by
our stockholders in May 2010. The 2010 Plan has a term of ten years and provides for the issuance of
up to 8,000,000 shares of the Company’s common stock.
115
The information contained in our definitive proxy statement for our 2012 Annual Meeting of
Stockholders under the caption ‘‘Security Ownership of Certain Beneficial Owners and Management’’ is
incorporated herein by reference.
ITEM 13 CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information contained in our definitive proxy statement for our 2012 Annual Meeting of
Stockholders under the captions ‘‘Related Persons Transactions’’ and ‘‘Board Meetings, Committees and
Compensation’’ is incorporated herein by reference.
ITEM 14 PRINCIPAL ACCOUNTING FEES AND SERVICES
The information contained in our definitive proxy statement for our 2012 Annual Meeting of
Stockholders under the captions ‘‘Independent Registered Public Accounting Firm’’ and ‘‘Proposal No. 2—
Ratification of Independent Registered Public Accounting’’ is incorporated herein by reference.
116
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 Ernst & Young LLP, Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2011 and 2010
Consolidated Statements of Income for the years ended December 31, 2011, 2010 and 2009
Consolidated Statements of Shareholders’ Equity and Comprehensive Income for the years ended
December 31, 2011, 2010 and 2009
Consolidated Statements of Cash Flows for the years ended December 31, 2011, 2010 and 2009
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 (1)
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
117
Exhibit
No.
2.6
3.1
3.2
4.1
10.1†
10.2†
10.3†
10.4†
10.11*
10.12*
10.19*
10.25†
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
Contract dated October 1, 1998 between Bruker
AXS GmbH and GKSS Forschungszentrum
Geesthacht GmbH, as amended
Contract dated July 31, 1997 between Bruker
AXS GmbH and Siemens Aktiengesellschaft
Berlin und Munchen Bereich Medizinische
Technik
Agreement on Development, Supply and
Marketing dated August 2, 2001 between Bruker
AXS GmbH and Siemens Medical Solutions
Rontgenwerk Rudolstadt
Employment Offer Letter dated as of
September 25, 2004 from Bruker BioSciences
Corporation to William J. Knight
Filed
Herewith
Incorporated by Reference (1)
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
S-1
December 31, 2001
S-1
December 31, 2001
S-1
December 31, 2001
8-K
October 12, 2004
118
Filed
Herewith
Incorporated by Reference (1)
Form
8-K
Date
May 25, 2011
Exhibit
No.
10.30
Description
Amended and Restated Credit Agreement dated
as of May 24, 2011 among the Company, 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, Deutsche Bank Securities Inc.,
Commerzbank Ag, New York, Grand Cayman
And Stuttgart Branches and RBS Citizens,
National Association, as Co-Documentation
Agents, Bank of America, N.A. as Syndication
Agent and JPMorgan Chase Bank, N.A., as
Administrative Agent
10.31** Note Purchase Agreement dated as of January 18,
8-K
January 18, 2012
10-K
December 31, 2009
10-K
December 31, 2009
10-K
December 31, 2009
10.34†
10.35†
10.36†
21.1
23.1
24.1
31.1
31.2
32.1
32.2
2012.
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
X
X
X
X
X
X
X
119
Incorporated by Reference (1)
Form
Date
Filed
Herewith
X
Exhibit
No.
101
Description
The following materials from the Bruker
Corporation Annual Report on Form 10-K for the
fiscal year ended December 31, 2011 formatted in
Extensible Business Reporting Language (XBRL):
(i) the Consolidated Balance Sheets,
(ii) Consolidated Statements of Income,
(iii) Consolidated Statements of Shareholders’
Equity and Comprehensive Income,
(iv) Consolidated Statements of Cash Flows and
(iv) Notes to the Condensed Consolidated
Financial Statements(2)
*
Certain portions have been omitted pursuant to an order granting confidential treatment and have
been filed separately with the Securities and Exchange Commission.
** Confidential treatment requested as to certain portions, which portions have been omitted and
filed separately with the Securities and Exchange Commission.
† Designates management contract or compensatory plan or arrangement.
(1) In accordance with Rule 12b-32 under the Exchange Act 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.
(2) In accordance with Rule 406T of Regulation S-T, the XBRL-related information in Exhibit 101 to
this Annual Report on Form 10-K is deemed not part of a registration statement or prospectus for
purposes of sections 11 or 12 of the Securities Act, is deemed not filed for purposes of Section 18
of the Exchange Act, and otherwise is not subject to liability under these sections.
120
Pursuant to the requirements of Section 13 or 15(d) of the Securities 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
Date: February 29, 2012
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 Exchange 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 Officer)
February 29, 2012
/s/ WILLIAM J. KNIGHT
William J. Knight
Chief Financial Officer
(Principal Financial and
Accounting Officer)
February 29, 2012
/s/ WOLF-DIETER EMMERICH, PH.D.
Wolf-Dieter Emmerich, Ph.D.
Director
February 29, 2012
/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
February 29, 2012
Director
February 29, 2012
Director
February 29, 2012
121
Name
Title
Date
/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
February 29, 2012
Director
February 29, 2012
Director
February 29, 2012
Director
February 29, 2012
Director
February 29, 2012
Director
February 29, 2012
Director
February 29, 2012
Director
February 29, 2012
122
SUBSIDIARIES OF BRUKER CORPORATION
EXHIBIT 21.1
Name of Subsidiary
Jurisdiction of Incorporation
Bruker Energy & Supercon Technologies, Inc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Delaware, U.S.A.
Bruker HTS GmbH (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker Advanced Supercon GmbH (2)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker EAS GmbH (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Hydrostatic Extrusions Ltd. (1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom
RI Research Instruments GmbH (3)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker AXS Inc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Delaware, U.S.A.
Bruker AXS GmbH (4) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Austria
Bruker Austria GmbH (5)
Bruker AXS Analytical Instruments Pvt. Ltd. (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker AXS Nordic AB (5)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker AXS Pte Ltd (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker AXS SAS (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Baltic OU (5)
Bruker do Brasil Ltda. (5)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Elemental GmbH (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker Nano GmbH (6) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
India
Sweden
Singapore
France
Estonia
Brazil
Bruker Mexicana S.A. de C.V. (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Mexico
Poland
Bruker Polska Sp. Z o.o. (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker South Africa (Pty) Ltd. (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
South Africa
MRI Physikalische Gerate GmbH (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
InCoaTec GmbH (7) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker AXS Handheld Inc. (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Delaware, U.S.A.
Bruker AXS K.K. (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker AXS B.V. (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Netherlands
Bruker Nano, Inc. (8) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Arizona, U.S.A
Japan
Bruker TMT Inc. (9) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
California, U.S.A.
Bruker BioSciences Security Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Massachusetts, U.S.A.
Bruker BioSpin Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Massachusetts, U.S.A.
Switzerland
Switzerland
Spain
Switzerland
China
Bruker BioSpin Invest AG (10) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin AG (11)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Espanola S.A. (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin International AG (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker (Beijing) Technologies & Services Co. Ltd. (12) . . . . . . . . . . . . . . . . . . . . . . .
Bruker (Malaysia) SDN BHD (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Malaysia
Bruker BioSpin Pte Ltd. (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker—Rossia, LLC (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Russia
Bruker India Scientific PVT, Ltd. (12) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker India Suppliers PVT, Ltd. (13) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin K.K. (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin Korea Co. Ltd. (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin MRI GmbH (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker BioSpin MRI Inc. (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Massachusetts, U.S.A.
Bruker BioSpin MRI Ltd. (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom
Bruker BioSpin Scandinavia AB (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin B.V. (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Netherlands
Bruker Ltd. (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker UK Ltd. (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom
Bruker AXS Ltd. (14) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom
Oxford Research Systems Ltd. (15)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom
Bruker BioSpin PTY Ltd. (16) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Australia
India
India
Japan
Korea
Singapore
Sweden
Canada
Bruker BioSpin S.A. (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSpin S.A./N.V. (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Italia S.r.l. (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Portugal Unipessoal LDA (11) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Scientific Israel Ltd. (11)
France
Belgium
Italy
Portugal
Israel
Bruker Physik GmbH (17) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker BioSpin GmbH (18)
Perch Solutions OY (19) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Finland
Bruker Daltonics Inc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Delaware, U.S.A.
Bruker Daltonik GmbH (20) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker Daltonics s.r.o. (21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Saxonia Mechanik GmbH (21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Bruker Daltonics Pvt. Ltd. (21) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker BioSciences Korea Co., Ltd. (22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Taiwan Co. Ltd. (22)
India
South Korea
Taiwan
Czech Republic
Name of Subsidiary
Jurisdiction of Incorporation
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 BioSciences Pty. Ltd. (23) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Australia
Japan
Singapore
South Africa
Sweden
Belgium
Bruker Daltonics GmbH (22) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Italy
France
Switzerland
Bruker-Michrom Inc.
Bruker Optics Inc.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
California, U.S.A.
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Delaware, U.S.A.
Bruker Optics K.K. (24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Optics Korea (25) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Optics GmbH (24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
RPD Tool AG (26) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Optics LTD (24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Optics Ltd. (24)
Bruker Optik GmbH (24) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Germany
Japan
South Korea
Switzerland
Switzerland
Canada
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . United Kingdom
Bruker Instruments Ltd. (27) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Optics AB (27)
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Optics Ukraine (27)
Bruker Optics B.V. (27) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Netherlands
Bruker Optik Asia Pacific Limited (27) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Hong Kong
China
Sweden
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ukraine
Bruker Optics Taiwan Ltd. (28) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Optik Southeast Asia Pte Ltd (28) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bruker Optique SA (27) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Taiwan
Singapore
France
(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 GmbH.
(6) Bruker Nano GmbH is a wholly-owned subsidiary of Bruker Elemental GmbH.
(7)
InCoaTec GmbH is an indirect subsidiary of Bruker AXS GmbH. InCoaTec GmbH is owned 66% by Bruker AXS GmbH.
(8) These entities are wholly-owned subsidiaries of Bruker AXS Inc.
(9) Bruker TMT Inc. is a wholly-owned subsidiary of Bruker Nano, Inc.
(10) Bruker BioSpin Invest AG is 90% owned by Bruker BioSpin Corp. and 10% owned by Bruker Corporation.
(11) These entities are wholly-owned subsidiaries of Bruker BioSpin Invest AG.
(12) These entities are wholly-owned subsidiaries are Bruker BioSpin International AG.
(13) Bruker India Suppliers PVT, Ltd. is wholly-owned subsidiaries of Bruker India Scientific PVT, Ltd.
(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 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.
(18) Bruker BioSpin GmbH is a wholly-owned subsidiary of Bruker Physik GmbH.
(19) Perch Solution OY is an indirect subsidiary of Bruker BioSpin GmbH. Perch Solution OY GmbH is 51% owned by Bruker
BioSpin GmbH.
(20) Bruker Daltonik GmbH is 90% owned by Bruker Daltonics Inc. and 10% by Bruker Corporation.
(21) These entities are wholly-owned subsidiaries of Bruker Daltonik GmbH.
(22) These entities are wholly-owned subsidiaries of Bruker Daltonics Inc.
(23) Bruker BioSciences Pty. Ltd. is a wholly-owned subsidiary of Bruker Chemical Analysis B.V.
(24) These entities are wholly-owned subsidiaries of Bruker Optics Inc.
(25) Bruker Optics Korea is a wholly-owned subsidiary of Bruker Optics K.K.
(26) RPD Tool AG is an indirect subsidiary of Bruker Optik GmbH. RPD Tool AG is owned 19% by Bruker Optics GmbH.
(27) These entities are wholly-owned subsidiaries of Bruker Optik GmbH.
(28) These entities are wholly-owned subsidiaries of Bruker Optik Asia Pacific Limited.
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 February 29, 2012, 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) of Bruker Corporation for the year ended December 31,
2011.
Boston, Massachusetts
February 29, 2012
/s/ Ernst & Young LLP
CERTIFICATION
EXHIBIT 31.1
I, Frank H. Laukien, certify that:
1.
I have reviewed this annual report on Form 10-K of Bruker Corporation;
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.
b.
c.
d.
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;
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;
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
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: February 29, 2012
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, William J. Knight, 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.
b.
c.
d.
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;
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;
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
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: February 29, 2012
By: /s/ WILLIAM J. KNIGHT
William J. Knight
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 907 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, 2011, 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 907 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: February 29, 2012
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 907 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, 2011, as filed with the Securities and Exchange Commission on the date
hereof (the ‘‘Report’’), I, William J. Knight, as Chief Financial Officer of the Company, certify,
pursuant to 18 U.S.C. section 1350, as adopted pursuant to Section 907 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: February 29, 2012
By: /s/ WILLIAM J. KNIGHT
William J. Knight
Chief Financial Officer
(Principal Financial and Accounting Officer)
Reconciliation of Non-GAAP Financial Measures
(in Millions, Except Per Share Data)
Twelve Months Ended December 31, 2011:
Bruker Scientific
Instruments
Bruker Energy &
Supercon Technologies
Corporate Adjustments
& Eliminations
Consolidated
Bruker Corporation
Revenue (a)
Gross profit - GAAP (a)
Cost of revenues charges (c)
Stock-based compensation expense (d)
Amortization of acquisition-related intangible assets (d)
Gross profit - adjusted (b)
Gross profit margin - adjusted
Operating income (loss) - GAAP (a)
Cost of revenues charges (c)
Stock-based compensation expense (d)
Amortization of acquisition-related intangible assets (d)
Other charges (e)
Operating income (loss) - adjusted (b)
Operating margin - adjusted
Net income (loss) - attributable to Bruker Corporation - GAAP
(a)
Cost of revenues charges (c)
Stock-based compensation expense (d)
Amortization of acquisition-related intangible assets (d)
Other charges (e)
Net income (loss) - attributable to Bruker Corporation -
adjusted (b)
Diluted net income (loss) per common share attributable to
Bruker Coporation - GAAP (a)
Cost of revenues credits (c)
Stock-based compensation expense (d)
Amortization of acquisition-related intangible assets (d)
Other charges (e)
Diluted net income (loss) per common share attributable to
Bruker Corporation - adjusted (b)
Weighted average shares outstanding:
$1,554.1
$733.3
9.3
1.1
14.8
$758.5
48.8%
$162.8
9.3
7.4
17.8
10.4
$207.7
13.4%
$113.4
$22.4
-
-
0.3
$22.7
20.0%
$(4.1)
-
0.5
0.3
3.4
$0.1
0.1%
$(15.8)
$(3.2)
-
-
-
$(3.2)
$(3.1)
-
-
-
-
$(3.1)
$104.1
$(8.9)
$(2.9)
7.9
6.3
17.1
16.0
-
0.4
0.3
3.4
-
-
-
-
$151.4
$(4.8)
$(2.9)
$0.62
0.05
0.04
0.10
0.10
$0.91
166.9
$(0.05)
$(0.02)
-
-
-
0.02
$(0.03)
165.4
-
-
-
-
$(0.02)
165.4
$1,651.7
$752.5
9.3
1.1
15.1
$778.0
47.1%
$155.6
9.3
7.9
18.1
13.8
$204.7
12.4%
$92.3
7.9
6.7
17.4
19.4
$143.7
$0.55
0.05
0.04
0.10
0.12
$0.86
166.9
Reconciliation of Non-GAAP Financial Measures
(in Millions, Except Per Share Data), continued
Twelve Months Ended December 31, 2010:
Bruker Scientific
Instruments
Bruker Energy &
Supercon Technologies
Corporate Adjustments
& Eliminations
Consolidated
Bruker Corporation
Revenue (a)
Gross profit - GAAP (a)
Cost of revenues credits (c)
Stock-based compensation expense (d)
Amortization of acquisition-related intangible assets (d)
Gross profit margin - adjusted (b)
Gross profit margin - adjusted
Operating income (loss) - GAAP (a)
Cost of revenues charges (c)
Stock-based compensation expense (d)
Amortization of acquisition-related intangible assets (d)
Other charges (e)
Operating income (loss) - adjusted (b)
Operating margin - adjusted
$1,225.1
$587.7
10.6
1.0
4.0
$603.3
49.2%
$160.5
10.6
6.5
5.5
8.6
$191.7
15.6%
$90.5
$16.3
-
-
0.3
$16.6
18.3%
$(2.6)
-
0.4
0.3
-
$(1.9)
(2.1%)
$(10.7)
$(2.3)
-
-
-
$(2.3)
$(2.2)
-
-
-
-
$(2.2)
$1,304.9
$601.7
10.6
1.0
4.3
$617.6
47.3%
$155.7
10.6
6.9
5.8
8.6
$187.6
14.4%
Twelve Months Ended December 31, 2010:
Bruker Scientific
Instruments
Bruker Energy &
Supercon Technologies
Corporate Adjustments
& Eliminations
Consolidated
Bruker Corporation
Net income (loss) attributable to Bruker Corporation - GAAP (a)
$103.4
Cost of revenues charges (c)
Stock-based compensation expense (d)
Amortization of acquisition-related intangible assets (d)
Other charges (e)
Net income (loss) attributable to Bruker Corporation - adjusted
(b)
Diluted net income (loss) per common share attributable to
Bruker Corporation - GAAP (a)
Cost of revenues charges (c)
Stock-based compensation expense (d)
Amortization of acquisition-related intangible assets (d)
Other charges (e)
Diluted net income (loss) per common share attributable to
Bruker Corporation - adjusted (b)
Weighted average shares outstanding:
9.3
5.5
5.1
11.0
$134.3
0.62
0.06
0.03
0.03
0.07
$0.81
165.7
$(6.4)
-
0.4
0.3
-
$(5.7)
$(0.04)
-
-
-
-
$(0.04)
164.4
$(1.6)
-
-
-
-
$(1.6)
-
-
-
-
-
-
164.4
$95.4
9.3
5.9
5.4
11.0
$127.0
0.58
0.06
0.03
0.03
0.07
$0.77
165.7
(a) “GAAP” (reported) results were determined in accordance with U.S. generally accepted accounting principles (GAAP).
(b) Adjusted results are non-GAAP measures and for income measures exclude certain charges to cost of revenues (see note c for
details); amortization of acquisition-related intangible assets and stock-based compensation (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 2011 and 2010 include charges for the sale of inventories revalued at the date of acquisition as well as charges
to cost of goods sold attributable to manufacturing engineering modifications associated with certain specialty magnets.
For the full years 2011 and 2010, charges attributable to these specialty magnets were $4.6 million and $3.4 million, respectively.
(d) Reported results in 2011 and 2010 include non-cash charges for the amortization of acquisition-related intangible assets and
stock-based compensation.
(e) In 2011, reported results include $4.6 million of fees associated with legal compliance and examinations, $4.9 million of
acquisition-related costs, $3.4 million of deferred BEST public offering costs and $0.9 million of restructuring costs. In 2010,
reported results include $7.4 million of acquisition-related costs and $1.2 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 for the three and twelve months ended December 31, 2011, include $3.3 million and $5.8 mil-
lion, respectively, of provisions for income tax related to historical tax periods under audit.
Executive Officers
Board of Directors
Frank H. Laukien, Ph.D.
President & Chief Executive Officer
Frank H. Laukien, Ph.D.
Chairman
Corporate & Investor
Information
Corporate Headquarters:
Bruker Corporation
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”
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
William J. Knight, CPA
Chief Financial Officer
Michael G. Knell, CPA
Vice President of Finance & Chief
Accounting Officer
Mark R. Munch, Ph.D.
President, Bruker Nano Inc.
Burkhard A. Prause, Ph.D.
President & Chief Executive
Officer, Bruker Energy & Supercon
Technologies, Inc.
Stephan F. Westermann
Executive Vice President – Order
Execution, Production & Logistics,
BSI Segment & Executive Vice
President - Operations, Bruker
BioSpin Group
Brenda J. Furlong
Former Managing Director,
Columbia Management Group
Treasurer and Director of
Investor Relations:
Stacey L. Desrochers, CTP
Secretary:
Richard M. Stein
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
Tony W. Keller, Ph.D.
Former Executive 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 & Chief Executive Officer,
Promega Corporation
Richard A. Packer
Chief Executive Officer,
ZOLL Medical Corporation
Richard M. Stein
Partner, Nixon Peabody LLP
Charles F. Wagner, Jr.
Former Executive Vice President
Finance & Administration & Chief
Financial Officer, Progress Software
Corporation
Bernhard Wangler
Partner, Kanzlei Wangler
Bruker Corporation
info@bruker.com
www.bruker.com
Bruker Corporation
info@bruker.com
www.bruker.com