these financial statements

BRUKER CORPORATION

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, ~~2021~~2022

Description of Business

1.	~~Description of Business~~

Bruker Corporation, together with its consolidated subsidiaries (Bruker or the Company), develops, manufactures and distributes high-performance scientific instruments and analytical and diagnostic solutions that enable its customers to explore life and materials at microscopic, molecular and cellular levels. Many of the Company’s products are used to detect, measure and visualize structural characteristics of chemical, biological and industrial material samples. The Company’s products address the rapidly evolving needs of a diverse array of customers in life science research, pharmaceuticals, biotechnology, applied markets, cell biology, clinical research, microbiology,

~~in-vitro~~

in vitro diagnostics, nanotechnology and materials science research.

The Company has 4 operating segments,

Bruker BioSpin Group, Bruker CALID Group, Bruker Scientific Instruments (BSI) Nano Segment

and

Bruker Energy

& Supercon Technologies (BEST)

. The Company has 3 reportable segments,

BSI Life Science, ~~Segment,~~ BSI ~~NANO Segment~~

Nano, and

BEST

For financial reporting purposes, the Bruker BioSpin Group and Bruker CALID Group operating segments are aggregated into the reportable BSI Life Science ~~Segment~~segment because each has similar economic characteristics, production processes, service offerings, types and classes of customers, methods of distribution and regulatory environments.

Bruker BioSpin

— The Bruker BioSpin Group designs, manufactures and distributes enabling life science tools based on magnetic resonance technology. Bruker BioSpin Group’s revenues are generated by academic and government research customers, pharmaceutical and biotechnology companies and nonprofit laboratories, as well as chemical, food and beverage, clinical and other industrial companies.

Bruker CALID (Chemicals, Applied Markets, Life Science,

~~In-Vitro~~

In Vitro Diagnostics, Detection)

- — The Bruker CALID Group designs, manufactures and distributes life science mass spectrometry and ion mobility spectrometry solutions, analytical and process analysis instruments and solutions based on infrared and Raman molecular spectroscopy technologies and radiological/nuclear detectors for Chemical, Biological, Radiological, Nuclear and Explosive (CBRNE) detection. Customers of the Bruker CALID Group ~~include:~~include academic institutions and medical schools; pharmaceutical, biotechnology and diagnostics companies; contract research organizations; nonprofit and

for-profit

forensics laboratories; agriculture, food and beverage safety laboratories; environmental and clinical microbiology laboratories; and hospitals and government departments and agencies.

The BSI ~~NANO Segment~~Nano segment designs, manufactures and distributes advanced

X-ray

instruments; atomic force microscopy instrumentation; advanced fluorescence optical microscopy instruments; analytical tools for electron microscopes and

X-ray

metrology; defect-detection equipment for semiconductor process control; handheld, portable and mobile

X-ray

fluorescence spectrometry instruments; spark optical emission spectroscopy systems; chip cytometry products and services for targeted spatial proteomics, multi-omic ~~services,~~services; and products and services for spatial genomics research. Customers of the BSI ~~NANO Segment~~Nano segment include academic institutions, governmental customers, nanotechnology companies, semiconductor companies, raw material manufacturers, industrial companies, biotechnology and pharmaceutical companies and other businesses involved in materials research and life science research analysis.

The BEST reportable segment develops and manufactures superconducting and

non-superconducting

materials and devices for use in renewable energy, energy infrastructure, healthcare and “big science” research. The segment focuses on metallic low temperature superconductors for use in magnetic resonance imaging, nuclear magnetic resonance, fusion energy research and other applications.

The unaudited condensed consolidated financial statements represent the consolidated accounts of the Company. All intercompany accounts and transactions have been eliminated in consolidation. The unaudited condensed consolidated financial statements as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, and for the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial information and pursuant to the rules and regulations of the Securities and Exchange Commission (SEC) ~~for Quarterly Reports on Form~~

~~10-Q~~

~~and Article 10 of Regulation~~

~~S-X.~~

. Accordingly, the financial information presented herein does not include all of the information and footnotes required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal recurring adjustments, considered necessary for a fair statement have been included. The results for interim periods are not necessarily indicative of the results expected for any other interim period or the full year.

At March 31, ~~2021,~~2022, the Company’s significant accounting policies, ~~and estimates,~~ which are detailed in the Company’s Annual Report on Form

10-K

for the year ended December 31, ~~2020,~~2021, have not changed.

~~Table of Contents~~

Risks ~~and~~& Uncertainties

The Company is subject to risks common to its industry including, but not limited to, global economic conditions, (including increasing inflation), rapid technological change, government and academic funding levels, the impact of the

COVID-19

coronavirus, geopolitical uncertainties, changes in commodity prices, spending patterns of its customers, protection of its intellectual property, availability of key raw materials and components, compliance with existing and future regulation by government agencies and fluctuations in foreign currency exchange rates and interest rates.

The impact of the

COVID-19

worldwide pandemic has been and will likely continue to be extensive in certain geographies and aspects of society. The pandemic has resulted in and will likely continue to result in significant disruptions to the global economy, global supply chains, as well as businesses and capital markets around the world.

Impacts to the Company’s business since the beginning of the pandemic have included temporary closures ~~in 2020~~ of many of the Company’s government and university customers and suppliers, disruptions or restrictions on employees’ and customers’ ability to travel, and delays in product installations or shipments to and from affected countries. In an effort to halt the outbreak of

COVID-19,

a number of countries, including the United States, ~~have~~ implemented and some continue to implement, significant restrictions on travel, shelter in place or stay at home orders, and business closures. While ~~some~~many of these restrictions ~~are loosening~~have loosened in certain jurisdictions, including the United States and Europe, some markets have returned and others may return to restrictions in the face of increases in new

COVID-19

cases, particularly if additional or ~~new strains of the virus. A number of states, including California, Massachusetts and New Jersey where the Company has significant operations have implemented phased~~

~~re-opening~~

~~policies as vaccines to protect against the virus continue to be administered. However, many of the Company’s employees in these areas continue to work remotely, and any~~

~~re-openings~~

~~may be delayed or pulled back if the virus continues to spread or as new~~more contagious strains of the virus ~~emerge,~~emerge. Many of the Company's employees in ~~particular if existing vaccines are determined~~jurisdictions in which it has significant operations continue to ~~be less effective against these new strains than against earlier strains.~~work remotely. In addition, ~~a number of~~certain Asia Pacific geographies where the ~~Company’s production facilities had~~Company operates are continuing to ~~either temporarily close or operate on a reduced capacity in 2020.~~experience significant COVID-19 disruptions, including extensive and sustained lockdowns. Much of the commercial activity in sales and marketing, and customer demonstrations and applications training, is still either being conducted remotely or postponed. ~~Many customer purchasing departments are still operating at reduced capacity, and many customers could delay or cut capital expenditures and operating budgets due to pandemic-related concerns.~~ Even where customers have

re-opened

their sites, ~~many~~some still operate at productivity levels that are below

pre-pandemic

levels in an effort to accommodate safety ~~protocols.~~protocols and as a result of pandemic-related supply chain disruptions. Any resurgence of the virus or the emergence of new strains of the virus, particularly any new strains which are more easily transmitted or which are resistant to existing vaccines, may require the Company or its customers to close or partially close operations once again. These travel restrictions, business closures and operating reductions at Bruker, customers, distributors, and/or suppliers have in the past adversely impacted and may continue to adversely impact the Company’s operations worldwide, including the ability to manufacture, sell or distribute products, as well as cause temporary closures of foreign distributors, or the facilities of suppliers or customers. Global supply chains, including for semiconductor chips, components and ~~other component products,~~raw materials such as copper, have been disrupted, causing shortages, which ~~could impact~~has impacted the Company’s ability to manufacture or supply its products. The Company could also experience increased compensation expenses associated with employee recruiting and employee retention to the extent employment opportunities continue to multiply post-pandemic, causing the search for and retention of talent to become more competitive. This disruption of the Company’s employees, distributors, suppliers and customers has historically impacted and may continue to impact the Company’s global sales and operating results.

Further, while the Company is not currently subject to any vaccine mandate, any requirement to mandate COVID-19 vaccination of its workforce or require the Company’s unvaccinated employees to be tested weekly could result in employee attrition and difficulty securing future labor needs and may have an adverse effect on future operations. It continues to be the Company's policy to encourage each of its employees to be fully vaccinated against COVID-19.

The Company is continuing to monitor and assess the effects of the

COVID-19

pandemic on commercial operations ~~including its impact on revenue~~ in ~~2021.~~2022. However, the Company cannot at this time accurately predict what effects these conditions will ultimately have on future operations due to uncertainties relating to ~~the severity of the disease,~~ the duration of the outbreak, including the impact of any resurgence of the virus or the continued emergence of new strains of the virus, the effectiveness and availability of vaccines, (including to protect against any new strains of the virus), the willingness of individuals to receive vaccines and boosters, and the length or severity of ~~the~~ travel restrictions, business closures and other safety and precautionary measures imposed by the governments of impacted countries. The pandemic has also adversely affected the economies and financial markets of many countries, which has affected and likely will continue to affect demand for the ~~Company’s~~Company's products and its operating results.

The Company has experienced supply chain interruptions as a result of the COVID-19 pandemic, general global economic conditions, a tighter labor market and other factors including natural events and disasters. Various factors, including increased demand for certain components and production delays, are contributing to shortages of certain components used in the Company’s products and increased difficulties in the Company’s ability to obtain a consistent supply of materials at stable pricing levels. Supply shortages and longer lead times for components used in the Company’s products, including limited source components, can result in significant additional costs and inefficiencies in manufacturing. A shortage of key components may cause a significant disruption to the Company’s production activities, which could have a substantial adverse effect on the Company’s financial condition or results of operations. If the Company is unsuccessful in resolving any such component shortages in a timely manner, the Company could experience a significant adverse impact on the timing of its revenue, a possible loss of revenue, or an increase in manufacturing costs, any of which could have a material adverse impact on the Company’s operating results.

Additionally, geopolitical tensions, such as Russia's ongoing incursion into Ukraine, ongoing conflicts between the United States and China, tariff and trade policy changes, economic sanctions, and increasing potential of conflict involving countries in Asia that are critical to the Company's supply chain operations, such as Taiwan and China, have resulted in increasing global tensions and create uncertainty for global commerce. In addition to experiencing adverse economic impacts resulting from economic sanctions on Russia, the Company has largely suspended its' Russian operations. Sustained or worsening global economic conditions and increasing inflation and geopolitical tensions have increased the Company's cost of doing business, materially disrupted the Company's supply chain operations, caused certain of the Company's customers to reduce or delay spending and further intensified pricing pressures. Any or all of these factors could negatively affect demand for the Company's products and its business, financial condition and result of operations.

The preparation of the unaudited condensed consolidated financial statements requires the Company to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities. On an ongoing basis the Company evaluates estimates, judgments and methodologies. Changes in estimates are recorded in the period in which they become known. The Company bases estimates on historical experience and on various other assumptions that ~~it believes~~they believe are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenues and expenses. The full extent to which the

COVID-19

pandemic, global supply chain interruptions, and geopolitical instability will directly or indirectly impact ~~the~~ future business, results of operations and financial condition, including sales, expenses, reserves and allowances, manufacturing, research and development costs and employee-related amounts, ~~depends~~will depend on future developments that are highly uncertain, including as a result of new ~~information that may emerge~~developments concerning

~~COVID-19,~~

the ~~effectiveness~~COVID-19 pandemic, global supply chain and ~~availability of~~

~~COVID-19~~

vaccines or individuals’ willingness to receive vaccines, and the actions taken to contain or treat the virus, as well as the economic impact on local, regional, national and international customers and markets.various global conflicts. The Company has made estimates of the impact of

COVID-19

within the financial statements and there may be changes to those estimates in future periods. Actual results may differ from management’s estimates if these results differ from historical experience.

Recent Accounting Pronouncements

~~Table of Contents~~

2.	~~Recent Accounting Pronouncements~~

In March 2020, the ~~FASB~~Financial Accounting Standards Board ("FASB") issued Accounting Standards ~~Updates (“ASU”~~Update ("ASU")

No. 2020-04,

Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting

(“ (“ASU

2020-04”),

which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform. The guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met. These transactions include: contract modifications, hedging relationships, and sale or transfer of debt securities classified as

held-to-maturity.

In January 2021, the FASB issued ASU

2021-01,

Reference Rate Reform (Topic 848)

: Scope, to clarify that certain optional expedients and exceptions under the reference rate reform guidance for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. Specifically, certain provisions in the reference rate reform guidance, if elected by an entity, apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform. This temporary guidance is effective for all entities as of March 12, 2020 through December 31, 2022. The Company may elect to apply this guidance for all contract modifications or eligible hedging relationships during that time period subject to certain criteria. The Company is still evaluating the impact of reference rate reform and whether this guidance will be adopted.

Revenue

~~In January 2020, the FASB issued ASU~~

~~2020-01-~~

Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 (a consensus of the Emerging Issues Task Force)

, which clarifies the interaction of the accounting for certain equity securities, equity method investments, and certain forward contracts and purchased options. The guidance clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying measurement principles for certain equity securities immediately before applying or discontinuing the equity method. The Company adopted this guidance using a prospective method. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

~~In December 2019, the FASB issued ASU~~

~~2019-12~~

~~- Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~

. The guidance simplifies the accounting for income taxes by removing certain exceptions within the current guidance; including the approach for intra-period tax allocation, the methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences. The amendment also improves consistent application by clarifying and amending existing guidance related to aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step up in the tax basis of goodwill. This guidance is effective for annual and interim periods beginning after December 15, 2020 and early adoption was permitted. The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

3.	~~Revenue~~

The following table presents the Company’s revenues by Group and End Customer Geography ~~(dollars in~~(in millions):

Three Months Ended
March 31,


2021

2020

Revenue by Group:

Bruker BioSpin
   $ 159.4    $ 120.9
Bruker CALID
   192.4    140.5
Bruker Nano
   154.4    120.1
BEST
   52.4    46.2
Eliminations
   (3.9 )    (3.7 )

Total revenue
   $ 554.7    $ 424.0

~~Table of Contents~~

Three Months Ended
March 31,


2021

2020

Revenue by End Customer Geography:

United States
   $ 119.0    $ 109.4
Germany
   70.1    40.9
Rest of Europe
   149.8    104.0
Asia Pacific
   180.5    137.2
Other
   35.3    32.5

Total revenue
   $ 554.7    $ 424.0


	Three Months Ended March 31,
	2022			2021
Revenue by Group:
Bruker BioSpin	$	157.8		$	159.4
Bruker CALID		203.2			192.4
Bruker Nano		178.5			154.4
BEST		59.7			52.4
Eliminations		(4.2	)		(3.9	)
Total revenue	$	595.0		$	554.7

	Three Months Ended March 31,
	2022			2021
Revenue by End Customer Geography:
United States	$	155.0		$	119.0
Germany		58.5			70.1
Rest of Europe		143.4			149.8
China		86.3			66.8
Rest of Asia Pacific		102.6			113.7
Other		49.2			35.3
Total revenue	$	595.0		$	554.7

Revenue for the Company recognized at a point in time versus over time is as follows ~~(dollars in~~(in millions):


	Three Months Ended March 31,
	2022		2021
Revenue recognized at a point in time	$	514.0	$	480.0
Revenue recognized over time		81.0		74.7
Total revenue	$	595.0	$	554.7

Three Months Ended
March 31,


2021

2020

Revenue recognized at a point in time
   $ 480.0    $ 367.7
Revenue recognized over time
   74.7    56.3

Total revenue
   $ 554.7    $ 424.0

Remaining Performance Obligations

Remaining performance obligations represent the aggregate transaction price allocated to a promise to transfer a good or service that is fully or partially unsatisfied at the end of the period. As of March 31, ~~2021,~~2022, remaining performance obligations were approximately ~~$1,940.3~~$2,114.9 million. The Company expects to recognize revenue on approximately ~~65.7%~~74% of the remaining performance obligations over the next twelve months and the remaining performance obligations primarily within one to three ~~years.~~

years.

Contract Balances

The timing of revenue recognition, billings and cash collections results in billed accounts receivable, unbilled receivables (contract assets) and deferred revenue, customer deposits and billings in excess of revenue recognized (contract liabilities) on the Company’s unaudited condensed consolidated balance sheets.

Contract assets—

Most of the Company’s long-term contracts are billed as work progresses in accordance with the contract terms and conditions, either at periodic intervals or upon achievement of certain milestones. Billing often occurs subsequent to revenue recognition, resulting in contract assets. Contract assets are generally classified as other current assets in the unaudited condensed consolidated balance sheets. The balance of contract assets as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021 was ~~$48.8~~$46.4 million and ~~$41.8~~$46.1 million, ~~respectively~~

respectively.

Contract liabilities—

The Company often receives cash payments from customers in advance of the Company’s performance, resulting in contract liabilities. These contract liabilities are classified as either current or long-term in the unaudited condensed consolidated balance ~~sheet~~sheets based on the timing of when revenue recognition is expected. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the contract liabilities were ~~$407.5~~$467.9 million and ~~$399.4~~$430.8 million, respectively. The increase in the contract liability balance during the three months ended March 31, ~~2021~~2022 is primarily the result of ~~a delay in installations due to~~new performance obligations entered into during the ~~impact of~~

~~COVID-19~~

~~on the global economy.~~period. Approximately ~~$121.4~~$126.0 million of the contract liability balance on December 31, ~~2020~~2021 was recognized as revenue during the three months ended March 31, ~~2021.~~2022.

Acquisitions

4.	~~Acquisitions~~

The impact of all acquisitions and investments in other entities during the three months ended March 31, 2021, individually and collectively, on revenues, net income and total assets was not material and accordingly, pro

Pro forma financial information reflecting all acquisitions has not been ~~presented.~~

~~Table~~presented because the impact, individually and collectively, on revenues and net income is not material. Amounts allocated to goodwill that are attributable to expected synergies are not expected to be deductible for tax purposes.

2022

PreOmics GmbH

On January 18, 2022, the Company acquired a 74.15% interest in PreOmics GmbH, (“PreOmics”), a privately held company, for a purchase price of ~~Contents~~EUR 46.1 million (approximately $52.1 million). PreOmics is a leading provider of sample preparation and automation solutions for proteomic analysis by mass spectrometry systems. PreOmics is located in Munich, Germany and was integrated into Bruker CALID Group within the BSI Life Science Segment.

Concurrent with the acquisition, the Company entered into an agreement with the noncontrolling interest holders that provides the Company with the right to purchase, and the noncontrolling interest holders with the right to sell, the remaining 25.85% of PreOmics for cash at a contractually defined redemption value for both the original founders and other shareholders of PreOmics, exercisable beginning in 2026. The fair value of these rights has been bifurcated into two financial instruments to separately account for the amounts attributable to the founders and the amount attributable to other shareholders.

The rights (embedded derivative) associated with the founders can be accelerated, at a discounted redemption value, upon certain events related to post combination services. As the options are tied to continued employment, and the Company classified the hybrid instrument (noncontrolling interest with an embedded derivative) as a long-term liability on the condensed consolidated balance sheet. The hybrid instrument associated with the founders is initially measured at fair value and subsequent to the acquisition, the carrying value of the hybrid instrument is remeasured to fair value with changes recorded to stock-based compensation expense in proportion to the requisite service period vested.

The rights associated with the other noncontrolling interest shareholders are contingently redeemable at the option of the other noncontrolling interest shareholders. As redemption of the rights is contingently redeemable at the option of the noncontrolling interest shareholders, the Company classifies the carrying amount of the redeemable noncontrolling interest in the mezzanine section on the consolidated balance sheet, which is presented above the equity section and below liabilities. The redeemable noncontrolling interest is initially measured at fair value and subsequently at the greater of the amount that would be paid if settlement occurred as of the balance sheet date based on the contractually defined redemption value and its carrying amount adjusted for net income (loss) attributable to the noncontrolling interest. Adjustments to the carrying value of the redeemable noncontrolling interest are recorded through retained earnings.

The Company expects to complete the fair value allocation during the measurement period. The amortization period for the intangible assets acquired is nine years for technology, and twelve years for the trade name and customer relationships.

The components and fair value allocation of the consideration transferred in connection with the acquisition are as follows (in millions):


Consideration Transferred:
Cash paid	$	52.1
Cash acquired		(16.0	)
Fair value of hybrid financial instrument - founders		20.9
Fair value of redeemable noncontrolling interest - other shareholders		6.8
Total consideration transferred	$	63.8
Allocation of Consideration Transferred:
Accounts receivable	$	0.4
Inventories		0.6
Other current assets		0.7
Property, plant and equipment		1.3
Other assets		0.4
Intangible assets:
Technology		12.5
Customer relationships		6.9
Trade name		1.9
Goodwill		47.0
Liabilities assumed		(7.9	)
Total consideration allocated	$	63.8

~~2021~~

In addition to the PreOmics acquisition, during the three months ended March 31, ~~2021,~~2022, the Company ~~made investments in businesses complementary to its own portfolio~~

. completed various other acquisitions accounted for under the acquisition method that complemented the Company’s existing product offerings. The following table reflects the consideration transferred and the respective reporting segment for ~~these investments~~the acquisitions (in millions):


Name of Acquisition	Date Acquired	Segment	Total Consideration		Cash Consideration
Prolab Instruments GmbH	January 17, 2022	BSI Life Science	$	5.7	$	5.5
PepSep Holding ApS	February 1, 2022	BSI Life Science		4.1		2.8
			$	9.8	$	8.3

In the three months ended March 31, 2022, the Company completed a minority investment that complemented the Company's existing product offerings. The following table reflects the consideration transferred and the respective reporting segment for this investment (in millions):


Name	Acquisition / Investment	Date Acquired	Segment	Total Consideration		Cash Consideration
PrognomiQ, Inc	Investment	February 16, 2022	BSI Life Science	$	12.0	$	12.0
				$	12.0	$	12.0

Subsequent Event Acquisitions

On April 1, 2022, the Company completed a share purchase agreement to acquire 100% of the outstanding stock of Optimal Industrial Technologies Limited (“OIT”) and Optimal Industrial Automation Limited (“OIA”), collectively “Optimal”. The purchase price for the outstanding shares of OIT and OIA, collectively, was approximately GBP 30.7 million (approximately $40.3 million) with the potential for additional consideration of up to GBP 3.4 million (approximately $4.5 million). Optimal is located in Bristol, England, and will be integrated into the Bruker BioSpin Group within the BSI Life Science Segment.

On April 5, 2022, the Company entered into a merger agreement with IonSense, Inc. for a purchase price of $8.0 million with the potential for additional consideration of up to $12.5 million. IonSense, Inc. is located in Saugus, Massachusetts and, following closing, will be integrated into the Bruker CALID Group within the BSI Life Science Segment.

On April 28, 2022, the Company completed a minority investment in Tofwerk, AG, for CHF 18.0 million (approximately $18.6 million). Tofwerk, AG is located in Gwatt (Thun), Switzerland and will be integrated into the Bruker CALID Group within the BSI Life Science Segment.

Inventories

Name

Acquisition /
Investment

Date Acquired

Segment

Consideration

Cash Consideration

Glycopath Inc.
   Investment    February 18, 2021    BSI Life Science    $ 2.0    $ 2.0
IonPath Inc
   Investment    March 18, 2021    BSI Life Science    2.0    2.0
Acuity Spatial Genomics, Inc.
   Investment    February 24, 2021    BSI Nano    4.5    4.5

            $ 8.5    $ 8.5

5.	~~Inventories~~

Inventories consisted of the following ~~(dollars in~~(in millions):


	March 31, 2022		December 31, 2021
Raw materials	$	238.8	$	218.7
Work-in-process		266.3		254.9
Finished goods		145.3		144.9
Demonstration units		89.5		91.6
Inventories	$	739.9	$	710.1

March 31,
2021

December 31,
2020

Raw materials
   $ 197.1    $ 198.8
Work-in-process
   253.2    245.7
Finished goods
   157.0    152.1
Demonstration units
   93.4    95.7

Inventories
   $ 700.7    $ 692.3

Finished goods include

in-transit

systems that have been shipped to the ~~Company’s~~Company��s customers for which control has not passed to the ~~customers as the systems were not installed and accepted by the customer.~~customers. As of March 31, ~~2021,~~2022, and December 31, ~~2020,~~2021, the value of

inventory-in-transit

was ~~$59.6~~$54.4 million and ~~$67.8~~$49.5 million, respectively.

Goodwill and Intangible Assets

6.	~~Goodwill and Intangible Assets~~

Goodwill

~~Goodwill~~

The following table sets forth the changes in the carrying amount of goodwill ~~(dollars in~~(in millions):


	Total
Balance at December 31, 2021	$	339.5
Current period additions/adjustments		50.1
Foreign currency effect		(5.3	)
Balance at March 31, 2022	$	384.3

Total

Balance at December 31, 2020
   $ 320.4
Current period additions/adjustments
   (0.3 )
Foreign currency impact
   (6.8 )

Balance at March 31, 2021
   $ 313.3

~~Table of Contents~~

Intangible Assets

The following is a summary of intangible assets, excluding goodwill ~~(dollars in~~(in millions):


	March 31, 2022							December 31, 2021
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Existing technology and related patents	$	325.2	$	(209.7	)	$	115.5	$	310.4	$	(206.8	)	$	103.6
Customer relationships		161.9		(61.1	)		100.8		156.1		(58.2	)		97.9
Trade names		17.3		(6.1	)		11.2		15.5		(5.8	)		9.7
Other		1.8		(1.8	)		0		1.8		(1.2	)		0.6
Intangible assets	$	506.2	$	(278.7	)	$	227.5	$	483.8	$	(272.0	)	$	211.8

March 31, 2021

December 31, 2020


Gross
Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

Gross
Carrying
Amount

Accumulated
Amortization

Net Carrying
Amount

Existing technology and related patents
   $ 299.0    $ (192.3 ) $ 106.7    $ 309.8    $ (194.6 ) $ 115.2
Customer relationships
   144.4    (48.0 ) 96.4    148.3    (45.4 ) 102.9
Trade names
   14.8    (4.7 ) 10.1    15.2    (4.4 ) 10.8
Other
   0.3    (0.1 ) 0.2    0.3    (0.1 ) 0.2

Intangible assets
   $ 458.5    $ (245.1 ) $ 213.4    $ 473.6    $ (244.5 ) $ 229.1

For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, the Company recorded amortization expense of ~~$8.9~~$9.2 million and ~~$8.7~~$8.9 million, respectively, related to intangible assets subject to amortization.

On a quarterly basis, the Company reviews its intangible assets to determine if there have been any events that could create an impairment. NaN were noted for the three months ended March 31, 2022 or 2021.

Debt

~~Debt~~

The Company’s debt obligations ~~consisted~~consist of the following ~~(dollars in~~(in millions):


	March 31, 2022			December 31, 2021
EUR notes (in U.S. dollars) under the 2021 Note Purchase Agreement	$	166.3		$	170.7
CHF notes (in U.S. dollars) under the 2021 Note Purchase Agreement		325.4			329.2
CHF notes (in U.S. dollars) under the 2019 Note Purchase Agreement		322.2			325.9
U.S. Dollar notes under the 2019 Term Loan		298.5			299.2
U.S. Dollar notes under the 2012 Note Purchase Agreement		100.0			205.0
Unamortized debt issuance costs		(1.9	)		(2.0	)
Other loans		1.8			1.9
Total notes and loans outstanding		1,212.3			1,329.9
Finance lease obligations		4.1			4.3
Total debt		1,216.4			1,334.2
Current portion of long-term debt		(11.0	)		(112.4	)
Total long-term debt, less current portion	$	1,205.4		$	1,221.8

March 31,
2021

December 31,
2020

US Dollar notes under the 2012 Note Purchase Agreement
   $ 205.0    $ 205.0
CHF notes (in dollars) under the 2019 Note Purchase Agreement
   314.8    335.5
US Dollar notes under the 2019 Term Loan
   300.0    300.0
Unamortized debt issuance costs
   (2.3 )    (2.4 )
Capital lease obligations and other loans
   6.7    6.4

Total debt
   824.2    844.5
Current portion of long-term debt
   (108.4 )    (2.2 )

Total long-term debt, less current portion
   $ 715.8    $ 842.3

The following is a summary of the maximum commitments and the net amounts available to the Company under ~~its credit agreements~~the 2019 Revolving Credit Agreement and other lines of credit with various financial institutions located primarily in Germany and Switzerland that are unsecured and typically due upon demand with interest payable monthly, at March 31, ~~2021~~2022 (in millions):


	Weighted Average Interest Rate			Total Amount Committed by Lenders		Outstanding Borrowings		Outstanding Letters of Credit		Total Amount Available
2019 Credit Agreement		1.3	%	$	600.0	$	—	$	0.1	$	599.9
Bank guarantees and working capital line	varies				110.3		—		110.3		—
Total revolving lines of credit				$	710.3	$	—	$	110.4	$	599.9

Weighted

Average

Interest Rate

Total Amount

Committed by

Lenders

Outstanding

Borrowings

Outstanding

Letters of

Credit

Total
Committed

Amounts
Available

2019 Credit Agreement
   1.3 % $ 600.0    $ —      $ 0.2    $ 599.8
Bank guarantees and working capital line
   0.0 % 120.2    —      120.2    —

Total revolving lines of credit
   $ 720.2    $ —      $ 120.4    $ 599.8

As of March 31, ~~2021,~~2022, the Company was in compliance with the financial covenants of all debt agreements.

As of March 31, ~~2021,~~2022, the Company ha

had several cross-currency and interest rate swap agreements with a notional value of ~~$150.0~~$149.3 million of U.S. to Swiss Franc and a notional value of ~~$355.0~~$249.3 million of U.S. to Euro to hedge the variability in the movement of foreign currency exchange rates on portions of our Euro and Swiss Franc denominated net asset investments. These agreements qualify for hedge accounting and accordingly the ~~change~~

changes in fair value of the derivative are recorded in other comprehensive income as part of foreign currency translation adjustments and remain in accumulated comprehensive income (loss) attributable to Bruker Corporation in shareholders’ equity until the sale or substantial liquidation of the foreign operation. The difference between the interest rate received and paid under the interest rate and cross-currency swap agreements is recorded in interest and other income (expenses) in the ~~unaudited~~ consolidated statements of income and comprehensive income. As a result of entering into these agreements, the Company ~~has~~ lowered net interest expense by ~~$1.4~~$1.1 million and ~~$2.6~~$1.4 million during the three months ended March 31, ~~2021~~2022 and 2020, respectively. The gains (losses) related to hedges of net asset investments in international operations that were recorded within the cumulative translation adjustment section of other comprehensive income were

~~gains of~~

~~$27.7 million and $10.9 million for the three months ended March 31,~~ 2021, ~~and 2020,~~ respectively. The Company presents the cross-currency swap periodic settlements in investing activities and the interest rate swap periodic settlements in operating activities in the statement of cash flows.

Fair Value of Financial Instruments

~~Table of Contents~~

8.	~~Fair Value of Financial Instruments~~

The Company measures the following financial assets and liabilities at fair value on a recurring basis. The following tables set forth the Company’s financial instruments measured at fair value on a recurring basis and present them within the fair value hierarchy using the lowest level of input that is significant to the fair value measurement ~~(dollars in~~(in millions):


March 31, 2022	Total		Quoted Prices in Active Markets Available (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Time deposits and money market funds	$	301.1	$	—	$	301.1	$	—
Short-term investments		100.0		—		100.0		—
Interest rate and cross currency swap agreements		17.3		—		17.3		—
Forward currency contracts		0.3		—		0.3		—
Embedded derivatives in purchase and delivery contracts		0.1		—		0.1		—
Fixed price commodity contracts		0.7		—		0.7		—
Debt securities available for sale		1.2		—		—		1.2
Total assets recorded at fair value	$	420.7	$	—	$	419.5	$	1.2
Liabilities:
Contingent consideration	$	6.8	$	—	$	—	$	6.8
Hybrid instruments liability		40.0		—		—		40.0
Interest rate and cross currency swap agreements		15.7		—		15.7		—
Forward currency contracts		0.2		—		0.2		—
Long-term fixed interest rate debt		854.8		—		854.8		—
Total liabilities recorded at fair value	$	917.5	$	—	$	870.7	$	46.8

December 31, 2021	Total		Quoted Prices in Active Markets Available (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Time deposits and money market funds	$	367.7	$	—	$	367.7	$	—
Short-term investments		100.0		—		100.0		—
Interest rate and cross currency swap agreements		6.4		—		6.4		—
Forward currency contracts		0.7		—		0.7		—
Embedded derivatives in purchase and delivery contracts		0.2		—		0.2		—
Fixed price commodity contracts		0.4		—		0.4		—
Debt securities available for sale		1.2		—		—		1.2
Total assets recorded at fair value	$	476.6	$	—	$	475.4	$	1.2
Liabilities:
Contingent consideration	$	6.6	$	—	$	—	$	6.6
Hybrid instrument liability		15.6		—		—		15.6
Interest rate and cross currency swap agreements		23.9		—		23.9		—
Forward currency contracts		0.3		—		0.3		—
Long-term fixed interest rate debt		1,043.3		—		1,043.3		—
Total liabilities recorded at fair value	$	1,089.7	$	—	$	1,067.5	$	22.2

March 31, 2021

Total

Quoted Prices
in Active
Markets
Available
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Assets:

Time deposits and money market funds
   $ 151.1    $ —      $ 151.1    $ —
Short-term investments
   50.0    —      50.0    —
Interest rate and cross currency swap agreements
   7.1    —      7.1    —
Forward currency contracts
   0.1    —      0.1    —
Fixed price commodity contracts
   3.8    —      3.8    —
Debt securities available for sale
   1.2    —      —      1.2

Total assets recorded at fair value
   $ 213.3    $ —      $ 212.1    $ 1.2

Liabilities:

Contingent consideration
   $ 3.3    $ —      $ —      $ 3.3
Hybrid instrument liability
   13.8    —      —      13.8
Interest rate and cross currency swap agreements
   33.3    —      33.3    —
Embedded derivatives in purchase and delivery contracts
   0.3    —      0.3    —
Forward currency contracts
   1.3    —      1.3    —

Total liabilities recorded at fair value
   $ 52.0    $ —      $ 34.9    $ 17.1

December 31, 2020

Total

Quoted Prices
in Active
Markets
Available
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

Assets:

Time deposits and money market funds
   $ 183.2    $ —      $ 183.2    $ —
Short-term investments
   50.0    —      50.0    —
Interest rate and cross currency swap agreements
   7.6    —      7.6    —
Forward currency contracts
   2.1    —      2.1    —
Embedded derivatives in purchase and delivery contracts
   0.1    —      0.1    —
Fixed price commodity contracts
   3.1    —      3.1    —
Debt securities available for sale
   1.2    —      —      1.2

Total assets recorded at fair value
   $ 247.3    $ —      $ 246.1    $ 1.2

Liabilities:

Contingent consideration
   $ 4.3    $ —      $ —      $ 4.3
Hybrid instrument liability
   13.9    —      —      13.9
Interest rate and cross currency swap agreements
   61.5    —      61.5    —
Forward currency contracts
   0.4    —      0.4    —

Total liabilities recorded at fair value
   $ 80.1    $ —      $ 61.9    $ 18.2

~~The Company’s~~

Derivative financial instruments ~~consist primarily of cash equivalents, short-term investments, restricted cash,~~are classified within level 2 because there is not an active market for each derivative instruments consisting of forward currency contracts, cross-currency interest rate swap agreements, commodity contracts, derivatives embedded in certain purchase and sale contracts, derivatives embedded within noncontrolling interests, accounts receivable, accounts payable, contingent consideration and long-term debt. The carrying amountscontract. However, the inputs used to calculate the value of the Company’s cash equivalents, short-term investments and restricted cash, accounts receivable, borrowings under a revolving credit agreement and accounts payable approximate fair value because of their short-term nature. Derivative assets and liabilitiesinstruments are measured at fair value on a recurring basis. The Company’s long-term debt consists principally of a note purchase agreement entered into in 2012 and a revolving credit agreement, long term loan agreement and note purchase agreement entered into in 2019.

~~Table of Contents~~

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.

obtained from active markets.

The Company measures certain 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 or liabilities which originated during the three months ended March 31, ~~2021~~2022 or ~~2020.~~

2021.

The fair value of the long-term fixed interest rate debt, which has been classified as Level 2 was ~~$527.7 million and $549.8 million at March 31, 2021 and December 31, 2020, respectively,~~ based on market and observable sources with similar maturity

dates. The carrying value of our variable rate debt approximates its fair value at March 31, ~~2021~~2022 and December 31, ~~2020.~~

2021.

On a quarterly basis, the Company reviews its short-term investments to determine if there have been any events that could create an impairment. None were noted for the three months ended March 31, ~~2021~~2022 or ~~2020.~~

2021.

Debt securities consist of investments in redeemable preferred stock. Debt securities are classified as either current or long-term investments based on their contractual maturities unless the Company intends to sell an investment within the next twelve months, in which case it is classified as current on the consolidated balance sheets. Debt securities are classified as available for sale and are carried at fair value.

Contingent consideration recorded within other current and other long-term liabilities represents the estimated fair value of future payments to the former shareholders as part of certain acquisitions. The contingent consideration is primarily based on the applicable acquired company achieving annual revenue and gross margin targets in certain years as specified in the relevant purchase and sale agreement. The Company initially values the contingent consideration on the acquisition date by using a Monte Carlo simulation or an income approach method. The Monte Carlo method models future revenue and costs of goods sold projections and discounts the average results to present value. The income approach method involves calculating the earnout payment based on the forecasted cash flows, adjusting the future earnout payment for the risk of reaching the projected financials, and then discounting the future payments to present value by the counterparty risk. The counterparty risk considers the risk of the buyer having the cash to make the earnout payments and is commensurate with a cost of debt over an appropriate term.

The following table sets forth the changes in contingent consideration liabilities ~~(dollars in~~(in millions):


	Total
Balance at December 31, 2021	$	6.6
Current period additions		1.2
Current period adjustments		0.3
Current period settlements		(1.2	)
Foreign currency effect		(0.1	)
Balance at March 31, 2022	$	6.8

Balance at December 31, 2020
   $ 4.3
Current period adjustments
   (0.5 )
Current period settlements
   (0.4 )
Foreign currency effect
   (0.1 )

Balance at March 31, 2021
   $ 3.3

As part of the 2018 Mestrelab ~~acquisition,~~Research, S.L. and 2022 PreOmics GmbH, acquisitions, the Company entered into ~~an agreement~~agreements with the noncontrolling interest holders that provides the Company with the right to purchase, and the noncontrolling interest holders with the right to sell, the remaining ~~49% of Mestrelab~~ownerships for cash at a contractually defined redemption ~~value.~~values. These rights ~~(an embedded derivative) are exercisable beginning in 2022 and~~(embedded derivatives) can be accelerated, at a discounted redemption ~~value,~~values, upon certain events related to post combination services. As the ~~option is~~options are tied to continued employment, the Company classified the hybrid ~~instrument~~instruments (noncontrolling ~~interest~~interests with an embedded ~~derivative)~~derivatives) as a long-term ~~liability~~liabilities on the consolidated balance sheet. Subsequent to the ~~acquisition,~~acquisitions, the carrying value of the hybrid ~~instrument is~~instruments are remeasured to fair value with changes recorded to stock-based compensation expense in proportion to the respective requisite service period vested. The hybrid ~~instrument is~~instruments are classified as Level 3 in the fair value hierarchy.

The following table sets forth the changes in hybrid instrument liability ~~(dollars in~~(in millions):


	Total
Balance at December 31, 2021	$	15.6
Current period additions		20.9
Current period adjustments		4.2
Foreign currency effect		(0.7	)
Balance at March 31, 2022	$	40.0

Derivative Instruments and Hedging Activities

Balance at December 31, 2020
   $ 13.9
Current period adjustments
   0.4
Foreign currency effect
   (0.5 )

Balance at March 31, 2021
   $ 13.8

~~Table of Contents~~

9.	~~Derivative Instruments and Hedging Activities~~

Commodity Price Risk Management

~~At March 31, 2021 and December 31, 2020,~~

The Company has arrangements with certain customers 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 ~~had fixed price~~enters into commodity ~~contracts with notional amounts aggregating $5.8 million and $8.8 million, respectively.~~hedge contracts. As commodity contracts settle, gains (losses) as a result of changes in fair values are adjusted to the contracts with the customers through revenues.

Foreign Exchange Rate Risk Management

The Company had the following notional amounts outstanding under foreign exchange contracts, ~~and~~ cross-currency interest rate swap agreements and long-term debt designated as net investment hedges (in millions) and the respective fair value of the instruments recorded in the consolidated balance sheets as follows (in millions):


	March 31, 2022					December 31, 2021
	Notional (in USD)		Fair Value			Notional (in USD)		Fair Value
Derivatives designated as hedging instruments
Interest rate cross-currency swap agreements
Other current assets			$	7.1				$	6.4
Other assets				10.2					0
Other current liabilities				0					(5.8	)
Other long-term liabilities				(15.7	)				(18.1	)
	$	398.5	$	1.6		$	504.3	$	(17.5	)
Long-term debt
Long-term debt		813.9		(23.3	)		825.8		(35.1	)
Total derivatives designated as hedging instruments	$	1,212.4	$	(21.7	)	$	1,330.1	$	(52.6	)
Derivatives not designated as hedging instruments
Forward currency contracts
Other current assets	$	55.3	$	0.3		$	157.7	$	0.7
Other current liabilities		60.9		(0.2	)		23.0		(0.3	)
Embedded derivatives in purchase and delivery contracts
Other current assets		7.6		0.1			8.5		0.2
Fixed price commodity contracts
Other current assets		7.2		0.7			5.5		0.4
Total derivatives not designated as hedging instruments	$	131.0	$	0.9		$	194.7	$	1.0
Total derivatives	$	1,343.4	$	(20.8	)	$	1,524.8	$	(51.6	)

March 31, 2021

December 31, 2020


Notional
Amount in U.S.
Dollars

Fair Value

Notional
Amount in U.S.
Dollars

Fair Value

Forward Currency Contracts (1):

Assets
   $ 10.0    $ 0.1    $ 175.8    $ 2.1
Liabilities
   121.3    (1.3 )    102.5    (0.4 )
Cross-Currency and Interest Rate Swap Agreements (2):

Liabilities
   505.0    (26.2 )    505.0    (53.9 )

   $ 636.3    $ (27.4 )    $ 783.3    $ (52.2 )

~~(1)~~

~~Derivatives not designated as accounting hedges.~~

~~(2)~~

~~Derivatives designated as accounting hedges.~~

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 ~~$6.1~~$7.6 million ~~for the delivery of products~~ and ~~$4.3~~$8.5 million for the purchase of products at March 31, ~~2021~~2022 and ~~$7.5 million for the delivery of products and $4.8 million for the purchase of products at~~ December 31, ~~2020.~~2021, respectively. The changes in the fair value of these embedded derivatives are recorded in interest and other income (expense), net in the ~~unaudited condensed~~consolidated statements of income and comprehensive income.

The following is a summary of the gain (loss) included in the consolidated statements of income and comprehensive income ~~(loss).~~

~~Table of Contents~~

~~The derivative instruments described above are recorded in the unaudited condensed consolidated balance sheets as follows (dollars in millions):~~

March 31, 2021

December 31, 2020

Derivatives designated as hedging instruments

Interest rate cross-currency swap agreements

Other current assets
   $ 7.1    $ 7.6
Other current liabilities
   (9.3 )    (4.3 )
Other long-term liabilities
   (24.0 )    (57.2 )

Total derivatives designated as hedging instruments
   (26.2 )    (53.9 )

Derivatives not designated as hedging instruments

Forward currency contracts

Other current assets
   $ 0.1    $ 2.1
Other current liabilities
   (1.3 )    (0.4 )
Embedded derivatives in purchase and delivery contracts

Other current assets
   —      0.1
Other current liabilities
   (0.3 )    —
Fixed price commodity contracts

Other current assets
   3.8    3.1

Total derivatives not designated as hedging instruments
   2.3    4.9

Total derivatives
   $ (23.9 )    $ (49.0 )

~~The following is a summary of the activity included in the unaudited condensed consolidated statements of income and comprehensive income loss~~ related to the derivative instruments described above (in millions):


		Three Months Ended March 31,
	Financial Statement Classification	2022			2021
Derivatives not designated as hedging instruments
Forward currency contracts	Interest and other income (expense), net	$	(1.5	)	$	(5.0	)
Embedded derivatives in purchase and delivery contracts	Interest and other income (expense), net		(0.1	)		(0.4	)
			(1.6	)		(5.4	)
Derivatives designated as cash flow hedging instruments
Interest rate cross-currency swap agreements	Interest and other income (expense), net	$	(1.0	)	$	(1.1	)
Derivatives designated as net investment hedging instruments
Interest rate cross-currency swap agreements	Interest and other income (expense), net		2.1			2.5
			1.1			1.4
Total		$	(0.5	)	$	(4.0	)


		Three Months Ended March 31,
	Financial Statement Classification	2022		2021
Derivatives designated as cash flow hedging instruments
Interest rate cross-currency swap agreements	Accumulated other comprehensive income, net of tax	$	11.4	$	9.9
			11.4		9.9
Derivatives designated as net investment hedging instruments
Interest rate cross-currency swap agreements	Accumulated other comprehensive income, net of tax	$	0.7	$	17.8
Long-term debt	Accumulated other comprehensive income, net of tax		9.0		20.8
			9.7		38.6
Total		$	21.1	$	48.5

10.

Provision for Income Taxes

Three Months Ended March 31,


Financial Statement Classification

2021

2020

Derivatives not designated as hedging instruments

Forward currency contracts

Interest and other income (expense), net
   $ (5.0 )    $ (0.5 )
Embedded derivatives in purchase and delivery contracts

Interest and other income (expense), net
   (0.4 )    0.6

      $ (5.4 )    $ 0.1

Derivatives designated as Cash Flow hedging instruments

Interest rate cross-currency swap agreements

Interest
incurred

Interest and other income (expense), net
   $ (1.1 )    $ —
Unrealized gains (losses) on contracts

Accumulated other comprehensive income
   9.9    (19.0 )

      $ 8.8    $ (19.0 )

Derivatives designated as Net Investment hedging instruments

Interest rate cross-currency swap agreements

Interest earned

Interest and other income (expense), net
   $ 2.5    $ 2.6
Unrealized gains on contracts
Accumulated other comprehensive income
   17.8    29.9

      $ 20.3    $ 32.5

~~10.~~

~~Provision for Income Taxes~~

The Company accounts for income taxes using the asset and liability approach by recognizing deferred tax assets and liabilities for the expected future tax consequences of differences between the financial statement basis and the tax basis of assets and liabilities, calculated using enacted tax rates in effect for the year in which the differences are expected to be reflected in the tax return. The Company records a valuation allowance to reduce deferred tax assets to the amount that is more likely than not to be realized. In addition, the Company accounts for uncertain tax positions that have reached a minimum recognition threshold.

~~Table of Contents~~

The income tax provision for the three months ended March 31, 2022 and 2021 ~~and 2020~~ was ~~$27.5~~$31.9 million and ~~$2.9~~$27.5 million, respectively, representing effective tax rates of ~~32.2%~~33.9% and ~~21.5%~~32.2%, respectively. The increase in our effective tax rate was primarily due to the impact of U.S. legislation that became effective during the quarter limiting the deductibility of R&D and the benefit relating to foreign tax credits, and impact of Mutual Agreement Procedures ("MAP") resolution. The Company’s effective tax rate may change over time as the amount or mix of income and ~~taxes~~tax changes among the jurisdictions in which the Company is subject to

tax. ~~The increase in our effective tax rate was primarily due to the jurisdictional mix and the impact of unfavorable discrete items in the period.~~

As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company had gross unrecognized tax benefits, excluding penalties and interest, of approximately ~~$24.3~~$50.9 million and ~~$22.7~~$51.4 million, respectively, which, if recognized, would result in a reduction of the Company’s effective tax rate. The Company recognizes penalties and interest related to unrecognized tax benefits in the provision for income taxes. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, approximately ~~$1.9~~$3.5 million and ~~$1.8~~$3.1 million, respectively, of accrued interest and penalties related to uncertain tax positions was included in other long-term liabilities on the Company’s unaudited condensed consolidated balance sheets. Penalties and interest of $0.4 million and $0.1 million were recorded in the provision for income taxes for unrecognized tax benefits during both the three months ended March 31, 2022 and 2021.

The Company has been subject to a tax examination in Germany for the years 2009 through 2012 whereby the German tax authorities had imposed additional tax assessments for those years. Due to the nature of the additional tax assessments, the Company filed for competent authority relief from those assessments under MAP of the United States-Germany income tax treaty. A final resolution has been reached with the respective tax authorities in Germany and the United States during the first quarter of 2022.

The Company files tax returns in the United States, which includes federal, state and local jurisdictions, and many foreign jurisdictions with varying statutes of limitations. The Company considers Germany, the United States and Switzerland to be its significant tax jurisdictions. The majority of the Company’s earnings are derived in Germany and Switzerland. Accounting for the various federal and local taxing authorities, the statutory rates for ~~2021~~2022 are approximately ~~30.0%~~30.0% and ~~20.0%~~20.0% for Germany and Switzerland, respectively. The mix of earnings in those two jurisdictions resulted in an increase of ~~5.1%~~5.2% from the U.S. statutory rate of ~~21.0%~~21.0% in the three months ended March 31, ~~2021.~~2022.

11.

Earnings Per Share

~~On March 27, 2020 the House passed the Coronavirus Aid, Relief, and Economic Security Act (The~~

~~CARES Act~~

~~), also known as the Third~~

~~COVID-19~~

Supplemental Relief bill, and the president of the United States signed the legislation into law. The Company does not expect the provisions of the legislation to have a significant impact on the effective tax rate or the income tax payable and deferred income tax positions of the Company.

~~11.~~

~~Earnings Per Share~~

The following table sets forth the computation of basic and diluted weighted average shares outstanding and net income per common share attributable to Bruker shareholders ~~(dollars in~~(in millions, except per share amounts):


	For The Three Months Ended March 31,
	2022		2021
Net income attributable to Bruker Corporation	$	61.6	$	56.7
Weighted average shares outstanding:
Weighted average shares outstanding-basic		150.4		151.8
Effect of dilutive securities:
Stock options and restricted stock units		1.0		1.4
		151.4		153.2
Net income per common share attributable to Bruker Corporation shareholders:
Basic	$	0.41	$	0.37
Diluted	$	0.41	$	0.37

Three Months Ended March 31,


2021

2020

Net income attributable to Bruker Corporation, as reported
   $ 56.7    $ 10.5
Weighted average shares outstanding:

Weighted average shares outstanding-basic
   151.8    154.2
Effect of dilutive securities:

Stock options and restricted stock awards and units
   1.4    1.2

   153.2    155.4

Net income per common share attributable to Bruker Corporation shareholders:

Basic
   $ 0.37    $ 0.07

Diluted
   $ 0.37    $ 0.07

The following common share equivalents have been excluded from the computation of diluted weighted-average shares outstanding, as their effect would have been anti-dilutive (amounts in millions of shares):


	Three Months Ended March 31,
	2022		2021
Stock options		0.1		—
Unvested restricted stock units		0.2		—

12.

Shareholders’ Equity

Three Months Ended
March 31,


2021

2020

Stock options
   —      0.1
Unvested restricted stock units
   —      —

~~Table of Contents~~

~~12.~~

~~Shareholders’ Equity~~

Share Repurchase Program

In May 2019, the Company’s Board of Directors approved a ~~stock~~share repurchase plan (the “2019 Repurchase Program”) authorizing the purchase of common stock in the amount of up to ~~$300.0~~$300.0 million from time to time, in amounts, at prices, and at such times as management deems appropriate, subject to market conditions, legal requirements and other considerations. During the ~~quarter~~three months ended March 31, 2021, the Company ~~purchased~~repurchased a total of 530,729 shares at an aggregate cost of ~~$32.8~~$32.8 million under the ~~share repurchase plan. There were no purchases under the plan in the three months ended March 31, 2020. At March 31, 2021, $1.7~~

~~million remained available for future purchases under the plan.~~2019 Repurchase Program. We completed the ~~share purchase program~~2019 Repurchase Program in April 2021, after reaching the maximum cumulative spend. ~~This~~

In May 2021, the Company’s Board of Directors approved a share repurchase plan ~~was set~~(the “2021 Repurchase Program”) authorizing the purchase of common stock in the amount of up to ~~expire on May 13, 2021.~~

$500.0 million from time to time over a two-year period, in amounts, at prices, and at such times as management deems appropriate, subject to market conditions, legal requirements and other considerations. The Company purchased a total of 1,603,055 shares at an aggregate cost of $105.6 million under the share repurchase plan during the three months ended March 31, 2022. At March 31, 2022, $275.5 million remained available for future purchases under the 2021 Repurchase Program.

Accumulated Other Comprehensive Income, ~~(Loss)~~

net of tax

The following is a summary of comprehensive income ~~(dollars in~~(in millions):


	Three Months Ended March 31,
	2022			2021
Consolidated net income	$	62.1		$	57.8
Foreign currency translation adjustments		(30.5	)		(68.0	)
Derivatives designated as hedging instruments, net of tax		21.1			48.5
Pension liability adjustments, net of tax		0.5			3.3
Net comprehensive income		53.2			41.6
Less: Comprehensive income attributable to noncontrolling interests		0.2			0.9
Less: Comprehensive loss attributable to redeemable noncontrolling interests		(0.2	)		0
Comprehensive income attributable to Bruker Corporation	$	53.2		$	40.7

Three Months Ended March 31,

2021

2020

Consolidated net income
$ 57.8    $ 10.6
Foreign currency translation adjustments
(19.5 )    (13.0 )
Pension liability adjustments, net of tax
3.3    14.5

Net comprehensive income
41.6    12.1
Less: Comprehensive
income (loss)
attributable to noncontrolling interests
0.9    (0.1 )
Less: Comprehensive
income (loss)
attributable to redeemable noncontrolling interest
—      (0.5 )

Comprehensive income attributable to Bruker Corporation
$ 40.7    $ 12.7

The following is a summary of the components of accumulated other comprehensive income, ~~(loss),~~ net of tax ~~(dollars in~~(in millions):


	Foreign Currency Translation			Derivatives Designated as Hedging Instruments			Pension Liability Adjustment			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2021	$	63.1		$	(40.1	)	$	(31.2	)	$	(8.2	)
Other comprehensive (loss) income before reclassifications, net of tax		(30.5	)		21.1			0.2			(9.2	)
Realized gain on amounts reclassified from other comprehensive income, net of tax		0			0			0.3			0.3
Net current period other comprehensive (loss) income		(30.5	)		21.1			0.5			(8.9	)
Balance at March 31, 2022	$	32.6		$	(19.0	)	$	(30.7	)	$	(17.1	)

Foreign
Currency
Translation

Pension
Liability
Adjustment

Accumulated
Other
Comprehensive
Income
(Loss)

Balance at December 31, 2020
   $ 49.4    $ (45.7 )    $ 3.7
Other comprehensive income (loss) before reclassifications
   (19.1 )    2.6    (16.5 )
Realized loss on amounts reclassified from other comprehensive income (loss), net of tax
   —      0.7    0.7

Net current period other comprehensive income (loss)
   (19.1 )    3.3    (15.8 )

Balance at March 31, 2021
   $ 30.3    $ (42.4 )    $ (12.1 )

Stock-Based Compensation

The Company recorded stock-based compensation expense as follows in the unaudited condensed consolidated statements of income and comprehensive income ~~(dollars in~~(in millions):


	Three Months Ended March 31,
	2022		2021
Costs of product revenue	$	0.6	$	0.5
Selling, general and administrative		2.6		2.4
Research and development		0.6		0.5
Total stock-based compensation expense	$	3.8	$	3.4

Three Months Ended March 31,


2021

2020

Costs of product revenue
   $ 0.5    $ 0.5
Selling, general and administrative
   2.4    2.0
Research and development
   0.5    0.5

Total stock-based compensation
   $ 3.4    $ 3.0

In addition to the awards above, the Company recorded stock-based compensation expense within other charges, net of ~~$0.4~~$4.2 million and ~~$0.3~~$0.4 million in the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively, related to the ~~2018 acquisition of~~ Mestrelab ~~Research, S.L. (Mestrelab).~~

acquisition.

At March 31, ~~2021,~~2022, the Company ~~had $23.4 million of unrecognized~~expected to recognize pre-tax stock-based compensation expense ~~related~~of $2.7 million associated with outstanding stock option awards granted under the Company's stock plans over the weighted average remaining service period of 2.2 years. The Company also expects to ~~employees and directors’ unvested~~recognize additional pre-tax stock-based compensation expense of $25.5 million associated with outstanding restricted stock units ~~and stock options that are expected to be recognized~~granted under the Company's 2016 Incentive Compensation Plan over athe weighted average remaining service period of ~~2.3~~ 2.2 years.

~~Table of Contents~~

~~13.~~

~~Other Charges, Net~~

13.

Other Charges, Net

The components of other charges, net were as follows ~~(dollars in~~(in millions):


	Three Months Ended March 31,
	2022		2021
Information technology transformation costs	$	1.0	$	0.7
Professional fees incurred in connection with investigation matters		0.4		0.1
Restructuring charges		0.3		1.3
Acquisition-related expenses, net		5.1		0.9
Long-lived asset impairments		0.4		0
Other		0.3		0
Other charges, net	$	7.5	$	3.0

Three Months Ended March 31,


2021

2020

Information technology transformation costs
   $ 0.7    $ 0.9
Professional fees incurred in connection with investigation matters
   0.1    3.4
Restructuring charges
   1.3    1.5
Acquisition-related charges
   0.9    (1.1 )
Long-lived asset impairments
   —      1.2
Other
   —      0.3

Other charges, net
   $ 3.0    $ 6.2

Restructuring Initiatives

Restructuring charges include charges for various programs that were recorded in the accompanying unaudited condensed consolidated statements of income and comprehensive income. The following table sets forth the restructuring charges ~~(dollars in~~(in millions):


	Three Months Ended March 31,
	2022		2021
Cost of revenues	$	0.1	$	1.1
Other charges, net		0.3		1.3
Total	$	0.4	$	2.4

Three Months Ended March 31,


2021

2020

Cost of revenues
   $ 1.1    $ 0.8
Other charges, net
   1.3    1.5

   $ 2.4    $ 2.3

The following table sets forth the changes in restructuring reserves ~~(dollars in~~(in millions):


	Total			Severance			Exit Costs			Provisions for Excess Inventory
Balance at December 31, 2021	$	6.4		$	3.5		$	0.3		$	2.6
Restructuring charges		0.4			0.1			0.3			0
Cash payments		(2.8	)		(2.6	)		(0.2	)		0.0
Other, non-cash adjustments and foreign currency effect		(1.4	)		0			0			(1.4	)
Balance at March 31, 2022	$	2.6		$	1.0		$	0.4		$	1.2

14.

Commitments and Contingencies

Total

Severance

Exit Costs

Provisions
for Excess
Inventory

Balance at December 31, 2020
   $ 9.8    $ 7.6    $ 0.8    $ 1.4
Restructuring charges
   2.4    2.2    0.2    —
Cash payments
   (5.2 )    (4.7 )    (0.5 )    —
Other,
non-cash
adjustments and foreign currency effect
   (0.1 )    —      —      (0.1 )

Balance at March 31, 2021
   $ 6.9    $ 5.1    $ 0.5    $ 1.3

~~14.~~

~~Commitments and Contingencies~~

In accordance with ASC Topic 450, Contingencies, the Company accrues anticipated costs of settlement, damages or other costs to the extent specific losses are probable and estimable.

Litigation and Related Contingencies

Lawsuits, claims and proceedings of a nature considered normal to its businesses may be pending from time to time against the Company. Third parties might allege that the Company or its collaborators are infringing their patent rights or that the Company is otherwise violating their intellectual property rights. Loss contingency provisions are recorded if the potential loss from any claim, asserted or unasserted, or legal proceeding is considered probable and the amount can be reasonably estimated or a range of loss can be determined. These accruals represent management’s best estimate of probable loss. Disclosure is also provided when it is reasonably possible that a loss will be incurred or when it is reasonably possible that the amount of a loss will exceed the recorded provision. The Company believes the outcome of pending proceedings, individually and in the aggregate, will not have a material impact on the Company’s financial statements.

On September 25, 2019, in a complaint filed in the Düsseldorf, Germany, District Court, Carl Zeiss Microscopy GmbH, a subsidiary of Carl Zeiss AG (Zeiss), sued Luxendo GmbH (Luxendo), a subsidiary of Bruker Corporation, for infringement of a recently registered German utility model patent licensed to Zeiss pertaining to one specific Luxendo product category. Zeiss is seeking injunctive relief, an accounting, indemnification for damages resulting from infringement, and other related remedies. The Company is vigorously defending against this ~~claim~~

~~Table of Contents~~

~~On September 23, 2019, in a complaint filed~~claim.

In addition, the Company is subject to regulation by national, state and local government agencies in the ~~Düsseldorf, Germany, District Court, Micromass UK Limited (Micromass), a subsidiary~~United States and other countries in which the Company operates. From time to time, the Company is the subject of Waters Corporation, sued Bruker Corporation, as well as its affiliate, Bruker Daltonik GmbH, for infringement of a European patent pertaining to our timsTOF product line. Bruker was later notified that Micromass had expanded its complaint in Düsseldorf to assert another recently granted European patent in Germany. On March 5, 2021, the parties entered into a Patent License Agreement pursuant to which Bruker licensed certain patents from Micromassgovernmental investigations often involving regulatory, marketing and ~~agreed to pay a one-time, upfront~~

~~4.0~~

~~million payment~~other business practices. These governmental investigations may result in the ~~second quarter~~commencement of ~~2021~~civil and ~~agreed~~

~~to pay royalties, subject to~~criminal proceedings, fines, penalties and administrative remedies which could have a ~~quarterly minimum,~~material adverse effect on ~~certain Tims TOF systems commencing March 1, 2022. In addition, pursuant to~~ the Patent License Agreement, all claims between the parties in connection with this and other pending infringement matters were settled and dismissed with prejudice. The settlement of this matter did not and is not expected to materially impact the Company’sCompany's financial position, results of operations

. and/or liquidity.

As of March 31, ~~2021~~2022 and December 31, ~~2020, no~~2021, 0 material accruals have been recorded for potential contingencies.

15. Related Parties

On March 15, 2022, Bruker's Board of Directors appointed Dr. Philip Ma to serve on the Board effective as of April 1, 2022. Dr. Ma is the Chief Executive Officer of PrognomiQ, Inc in which the Company has invested $17.0 million. The Company currently recognizes the strategic investment in PrognomiQ as a long-term asset in the unaudited condensed consolidated balance sheets.

16. Business Segment Information

~~15.~~

~~Business Segment Information~~

The Company has 3 reportable segments, BSI Life Science, BSI ~~NANO~~Nano and BEST, as discussed in Note 1 to the unaudited condensed consolidated financial statements.

Revenue and operating income by reportable segment are presented below ~~(dollars in~~(in millions):


	Three Months Ended March 31,
	2022			2021
Revenue:
BSI Life Science	$	361.0		$	351.8
BSI Nano		178.5			154.4
BEST		59.7			52.4
Eliminations (a)		(4.2	)		(3.9	)
Total revenue	$	595.0		$	554.7
Operating income (loss):
BSI Life Science	$	85.9		$	88.9
BSI Nano		22.3			12.3
BEST		6.6			4.1
Corporate, eliminations and other (b)		(18.3	)		(16.2	)
Total operating income	$	96.5		$	89.1

(a)

Represents product and service revenue between reportable segments.

(b)

Represents corporate costs and eliminations not allocated to the reportable segments.

Three Months Ended March 31,


2021

2020

Revenue:

BSI Life Science
   $ 351.8    $ 261.4
BSI NANO
   154.4    120.1
BEST
   52.4    46.2
Eliminations (a)
   (3.9 )    (3.7 )

Total revenue
   $ 554.7    $ 424.0

Operating Income (loss)

BSI Life Science
   $ 88.9    $ 39.5
BSI NANO
   12.3    (8.0 )
BEST
   4.1    1.7
Corporate, eliminations and other (b)
   (16.2 )    (16.8 )

Total operating income
   $ 89.1    $ 16.4

~~(a)~~

~~Represents product and service revenue between reportable segments.~~

~~(b)~~

~~Represents corporate costs and eliminations not allocated to the reportable segments.~~

Total assets by reportable segment are as follows ~~(dollars in~~(in millions):


	March 31, 2022			December 31, 2021
Assets:
BSI Life Science, BSI Nano & Corporate	$	3,463.0		$	3,560.5
BEST		94.9			97.9
Eliminations and other (a)		(7.2	)		(8.4	)
Total assets	$	3,550.7		$	3,650.0

(a)

Assets not allocated to the reportable segments and eliminations of intercompany transactions.

March 31,
2021

December 31,
2020

Assets:

BSI Life Science, BSI NANO & Corporate
   $ 2,947.8    $ 2,964.5
BEST
   92.3    88.7
Eliminations and other (a)
   (5.2 )    (4.2 )

Total assets
   $ 3,034.9    $ 3,049.0

~~(a)~~

~~Assets not allocated to the reportable segments and eliminations of intercompany transactions.~~

The Company is unable, without unreasonable effort or expense to disclose the amount of total assets by BSI Life Science and BSI ~~NANO Segments~~Nano segments as well as the Corporate function and further, the Company’s chief operating decision maker does not receive any asset information by operating segment.

~~Table of Contents~~

~~ITEM 2.~~

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion of our financial condition and results of operations should be read in conjunction with our interim unaudited condensed consolidated financial statements and the notes to those statements included in Part 1, Item 1 of this Quarterly Report on

Form 10-Q,

and in conjunction with the consolidated financial statements contained in our Annual Report on

Form 10-K

for the year ended December 31, ~~2020.~~

2021.

Statements contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this Quarterly Report on Form

10-Q,

which express that we “believe,” “anticipate,” “plan,” “expect,” “seek,” “may,” “will,” “intend,” “estimate,” “should” and similar expressions are intended to identify forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any forward-looking statements contained herein are based on current expectations but are subject to a number of risks and uncertainties. ~~Forward looking~~Forward-looking statements include, but are not limited to, statements regarding the impact of

COVID-19

on our business operations, ~~and~~the impact of supply chain ~~including our implementation of certain cost cutting measures and their impact,~~challenges, expectations regarding the global economy and geopolitical tensions, our intentions regarding our intellectual property, the impact of government contracts and government regulation, our working capital requirements and sufficiency of cash, our competition, the seasonality of our business, the sufficiency of our facilities, our employee relations, the impact of legal or intellectual property proceedings, the impact of changes to tax and accounting rules and changes in law, our anticipated tax rate, our expectations regarding cash dividends, share repurchases, interest expense, interest rate swap agreements, expenses and capital expenditures, the impact of foreign currency exchange rates and changes in commodity prices, the impact of our restructuring initiatives, our expectations regarding backlog and revenue and other risk factors discussed herein and from time to time in our other filings with the Securities and Exchange Commission, or SEC. These and other factors are identified and described in more detail in our filings with the SEC, including, without limitation, our annual report on Form

10-K

for the year ended December 31, ~~2020~~2021 and subsequent filings. We expressly disclaim any intent or obligation to update these forward-looking statements other than as required by law.

Non-GAAP

Measures

Although our consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (GAAP), we believe describing revenue and expenses, excluding the effects of foreign currency, acquisitions and divestitures, as well as certain other charges, net, provides meaningful supplemental information regarding our performance. We rely internally on certain measures that are not calculated according to GAAP. These measures are organic revenue, free cash flow,

non-GAAP

gross profit margin and

non-GAAP

operating margin. Our management believes that these financial measures provide relevant and useful information that is widely used by equity analysts, investors and competitors in our industry, as well as by our management, in assessing both consolidated and business unit performance. We define the term organic revenue as GAAP revenue excluding the effect of foreign currency translation changes and the effect of acquisitions and divestitures. We define the term

non-GAAP

gross profit margin as GAAP gross profit margin with certain

non-GAAP

measures excluded and

non-GAAP

operating margin as GAAP operating margin with certain

non-GAAP

measures excluded. These

non-GAAP

measures exclude costs related to restructuring actions, acquisition and related integration expenses, amortization of acquired intangible assets, costs associated with our global information technology transition ~~initiative,~~initiatives, and other

non-operational

costs and we believe these are useful measures to evaluate our continuing business.

We define free cash flow as net cash provided by operating activities less additions to property, plant, and equipment. We believe free cash flow is a useful measure to evaluate our business as it indicates the amount of cash generated after additions to property, plant, and equipment which is available for, among other things, investments in our business, acquisitions, share repurchases, dividends and repayment of debt. We regularly use these

non-GAAP

financial measures internally to understand, manage, and evaluate our business results and make operating decisions. We also measure our employees and compensate them, in part, based on such

non-GAAP

measures and use this information for our planning and forecasting activities. These measures may also be useful to investors in evaluating the underlying operating performance of our business. The presentation of these

non-GAAP

financial measures is not intended to be a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP and may be different from

non-GAAP

financial measures used by other companies, and therefore, may not be comparable among companies.

OVERVIEW

We are a developer, manufacturer and distributor of high-performance scientific instruments and analytical and diagnostic solutions that enable our customers to explore life and materials at microscopic, molecular and cellular levels. Our corporate headquarters are located in Billerica, Massachusetts. We maintain major technical and manufacturing centers in Europe, Asia and North America and we have sales offices located throughout the world. Bruker is organized into three reportable segments: the BSI Life Science ~~Segment~~segment (comprised of the Bruker BioSpin Group and the Bruker CALID Group), the BSI ~~NANO Segment~~Nano segment and the Bruker Energy & Supercon Technologies (BEST) ~~Segment.~~

~~Table of Contents~~

segment.

Revenue for the three months ended March 31, ~~2021~~2022 increased by ~~$130.7~~$40.3 million, or ~~30.8%~~7.3%, to ~~$554.7~~$595.0 million, compared to ~~$424.0~~$554.7 million for the comparable period in ~~2020.~~2021. Included in revenue was a decrease of approximately $23.7 million from unfavorable foreign exchange rate movements, offset by an increase of ~~approximately $26.8 million from foreign currency translation and an increase of $3.2~~$5.8 million from acquisitions. Excluding the unfavorable effects of foreign ~~currency translation~~exchange rate movements and our recent acquisitions, our organic revenue, a

non-GAAP

measure, increased ~~$100.7~~$58.2 million. Revenue increases were driven by strong demand for our ~~high performance life science tools, scientific instruments~~products and ~~diagnostic solutions.~~

solutions compared to the same period in 2021.

Our gross profit margin increased to ~~50.2%~~51.5% during the three months ended March 31, ~~2021~~2022, as compared to ~~45.4% for~~50.2% in the ~~three months ended March 31, 2020. Our operating margin increased to 16.1% for~~same period in 2021, the ~~three months ended March 31, 2021 compared to 3.9% during the three months ended March 31, 2020. The increase in gross and operating margin was a~~ result of higher revenue and volume ~~operating leverage and contributions from higher margin products.~~

leverage.

Our income tax provision in the three months ended March 31, 2022 and 2021 ~~and 2020~~ was ~~$27.5~~$31.9 million and ~~$2.9~~$27.5 million, respectively, representing effective tax rates of ~~32.2%~~33.9% and ~~21.5%~~32.2%, respectively. The increase in our effective tax rate was primarily due to ~~the jurisdictional mix and~~i) the impact of ~~unfavorable discrete items in~~legislation that became effective during the ~~period.~~

quarter limiting the deductibility of R&D and the benefit relating to foreign tax credits and ii) the settlement of a tax audit.

Diluted earnings per share for the three months ended March 31, ~~2021 were $0.37,~~2022 was $0.41, an increase of ~~$0.30~~$0.04 compared to ~~$0.07~~$0.37 per share in the ~~three months ended March 31, 2020.~~same period in 2021. The increase in net income and earnings per diluted share ~~was primarily driven by higher revenue, gross profit and operating profit~~ in the three months ended March 31, 2022 was primarily driven by favorable revenue mix and operating leverage compared to the same period in 2021.

The following table presents a reconciliation from net cash provided by operating activities, which is the most directly comparable GAAP operating financial measure, to free cash flow as used by management (in millions):

Three Months Ended March 31,


2021

2020

Net cash provided by operating activities
   $ 98.0    $ 35.0
Less: purchases of property, plant and equipment
   (24.7 )    (30.5 )

Free Cash Flow
   $ 73.3    $ 4.5


	Three Months Ended March 31,
	2022			2021
Net cash provided by operating activities	$	77.8		$	98.0
Less: purchases of property, plant and equipment		(19.0	)		(24.7	)
Free cash flow	$	58.8		$	73.3

The following table presents ~~a reconciliation~~reconciliations from gross profit and gross profit margin, which isare the most directly comparable GAAP operating performance ~~measure,~~measures, to

non-GAAP

gross profit and non-GAAP gross profit margin as used by management (in millions):

Three Months Ended
March 31,


2021

2020

Gross profit
   $ 278.7    $ 192.3
Restructuring costs
   1.1 �� 0.8
Purchased intangible amortization
   4.5    4.9
Other costs
   —      0.1

Non-GAAP
gross profit
   $ 284.3    $ 198.1


	Three Months Ended March 31,
	2022				2021
Gross profit	$	306.3	51.5	%	$	278.7	50.2	%
Non-GAAP adjustments:
Restructuring costs		0.1	—			1.1	0.2	%
Acquisition-related costs		0.2	—			—	—
Purchased intangible amortization		4.5	0.8	%		4.5	0.9	%
Other costs		2.2	0.4	%		—	—
Non-GAAP gross profit	$	313.3	52.7	%	$	284.3	51.3	%

Our

non-GAAP

gross profit margin was ~~51.3%~~52.7% and ~~46.7%~~51.3% in the three months ended March 31, 2022 and 2021, ~~and 2020,~~ respectively. ~~Our~~

The increase in our non-GAAP

gross profit ~~margin increased due to volume~~margins in the three months ended March 31, 2022 was driven by favorable revenue mix and operating leverage, ~~and contributions from higher margin products in 2021, as~~partially offset by supply chain challenges compared to ~~2020 which was negatively impacted by the~~

~~COVID-19~~

~~pandemic.~~

2021.

~~Table of Content~~

The following table presents ~~a reconciliation~~reconciliations from operating income and operating margin, which isare the most directly comparable GAAP operating performance ~~measure,~~measures, to

non-GAAP

operating income and non-GAAP operating margin as used by management (in millions):

Three Months Ended
March 31,


2021

2020

Operating income
   $ 89.1    $ 16.4
Restructuring costs
   2.4    2.3
Acquisition-related costs
   0.9    (1.1 )
Purchased intangible amortization
   9.0    8.7
Other costs
   0.8    5.9




Non-GAAP
operating income
   $ 102.2    $ 32.2


	Three Months Ended March 31,
	2022				2021
Operating income	$	96.5	16.2	%	$	89.1	16.1	%
Non-GAAP adjustments:
Restructuring costs		0.4	0.1	%		2.4	0.4	%
Acquisition-related costs		5.3	0.9	%		0.9	0.2	%
Purchased intangible amortization		9.3	1.6	%		9.0	1.6	%
Other costs		4.3	0.7	%		0.8	0.1	%
Non-GAAP operating income	$	115.8	19.5	%	$	102.2	18.4	%

Our

non-GAAP

operating margin was ~~18.4%~~19.5% and ~~7.6%~~18.4% in the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, respectively. Our

non-GAAP

operating margin increased in ~~2021,~~2022 due to higher gross margin resulting from differentiated products and operating leverage, partially offset by planned commercial investments, as compared to ~~2020 due to higher revenue, gross margins and operating leverage in 2021, as compared to 2020 which was negatively impacted by the~~

~~COVID-19~~

~~pandemic.~~

2021.

We can experience

quarter-to-quarter

fluctuations in our operating results as a result of various factors, some of which are outside our control, such as:

•

the impact of the

COVID-19

global pandemic, inflation, and geopolitical tensions on our customers, supply chain or manufacturing capabilities;

•

the impact of certain weather-related disruptions, such as the recent flooding in Germany and other parts of Europe;

•

the timing of governmental stimulus programs and academic research budgets;

•

the time it takes between the date customer orders and deposits are received, systems are shipped and accepted by our customers and full payment is received;

•

foreign currency exchange rates;

•

the time it takes for us to receive critical materials to manufacture our products;

•

general economic conditions, including the impact of

COVID-19

or other factors on the global economy;

•

the time it takes to satisfy local customs requirements and other export/import requirements;

•

the time it takes for customers to construct or prepare their facilities for our products; and

•

the time required to obtain governmental licenses.

Several of these factors have in the past affected the amount and timing of revenue recognized on sales of our products and receipt of related payments and will likely continue to do so in the future. Accordingly, our operating results in any particular quarter may not necessarily be an indication of any future quarter’s operating performance. The

COVID-19

pandemic continues to present a challenging operating ~~environment and~~environment. Throughout the COVID-19 pandemic, we ~~remain~~have been focused on ~~four~~and continue to focus on three key priorities: the health and safety of our employees, customers and partners; maintaining business continuity and service levels for our customers; ~~executing prudent temporary cost reductions;~~ and delivering enabling research and diagnostic products to help fight the pandemic, and to support other essential priorities of our society.

Health and safety of our valued employees, customers and partners

~~We have~~

In response to the COVID-19 pandemic, we implemented strict social distancing, enhanced cleaning protocols and other preventative measures, ~~such as temperature scanners and company-issued face coverings,~~ in our major ~~facilities.~~facilities to ensure the health and safety of our valued employees, customers and partners. While many of our office colleagues ~~are working~~worked remotely at the height of the pandemic and through subsequent surges, we ~~are placing~~placed enhanced focus on our service organization and factory employees for whom work from home iswas not feasible. Where customer sites ~~are~~were accessible and open, our field service organizations ~~operate~~operated under social distancing protocols with proper face coverings to ensure the safety of customer sites, when our employees ~~need~~needed to be on site. ~~Many~~Consistent with local government and health organization guidelines, many of our facilities have ~~begun~~started a gradual return to ~~plan~~the office for employees who have been working ~~remotely during the pandemic~~remotely. As we continue to ~~gradually return to the office. Employee~~monitor developments and make appropriate adjustments, as needed, employee and visitor health and safety will remain our paramount concern.

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Maintaining business continuity and service levels to our customers

Ensuring our ability to supply our enabling technologies and solutions and maintaining high service levels for our customers is another top priority for Bruker. In late March and during parts of April 2020, several of our manufacturing sites underwent temporary controlled shutdowns or were operating at reduced capacity to implement new safety protocols, comply with local rules, and manage cost and inventory levels. These sites thereafter ramped back up with expanding capacity and productivity levels. However, with any resurgence of the virus or the emergence of additional strains of the virus, particularly any new strains of the virus that are more resistant to existing vaccines, we may again need to consider ~~further~~ temporary controlled shutdowns or reduced capacity measures. In addition, we are continuing capital investments in production facilities for efficiencies and expansion. We continue to manage supply chain risks, more recently associated with the economic recovery from the pandemic ~~like~~and geopolitical tensions and, the worldwide shortage of semiconductor chips, components and ~~components.~~

~~Executing prudent temporary cost reductions~~

~~In an effort to mitigate the negative impacts on our business of~~

~~COVID-19~~

and the related slowdown in the global economy, we implemented temporary cost control and cost reduction measures in 2020. These temporary measures included short-time work for many of our European operations, temporary tiered salary reductions for our board of directors, global leadership team and workforce,

~~one-to~~

~~two-week~~

~~closures of select manufacturing locations, selective product manufacturing reductions, a hiring freeze, and curtailment of~~

~~non-strategic~~

discretionary spending. At the same time, we looked to minimize the disruption for our employees and preserve our ability to ramp up again with our highly trained and loyal work force. While pursuing cost savings throughout the business, we have maintained our important investments in key strategic initiatives. Many of these cost reduction measures have now been relaxed and our revenue is experiencing a recovery.

raw materials, such as copper.

Delivering enabling research and diagnostic products to help fight the pandemic and to support other essential priorities of our society

Bruker is providing critical technologies and solutions to help combat the

COVID-19

~~crisis,~~ pandemic, most notably our Microbiology and infectious disease diagnostics portfolio ~~to which we have added~~

~~SARS-COV-2~~

~~PCR tests,~~ and our nuclear magnetic resonance and mass spectrometry systems which are used in critical disease, therapeutic and vaccine research.

The

COVID-19

global pandemic has driven volatility and uncertainty in global markets and has in the past affected our operations significantly. We continue to work to manage the impact of

COVID-19

on our operations; however, the full extent to which any resurgence of the virus, the emergence of any new strains of the virus, or the availability and effectiveness of

COVID-19

vaccines will impact our business, directly or indirectly, cannot accurately be predicted at this time. ~~In 2020, the~~

~~COVID-19~~

~~pandemic affected productivity at our manufacturing facilities and caused disruptions and delays in certain of our shipments to customers who closed facilities during the pandemic.~~ We continue to monitor the impact of

COVID-19

on our business and our supply chain and respond accordingly. For additional information on the various risks posed by the

COVID-19

pandemic, refer to Item 1A. Risk Factors included in this report.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

This discussion and analysis of our financial condition and results of operations is based upon our unaudited condensed consolidated financial statements, which have been prepared in accordance with GAAP. 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; stock-based compensation expense; restructuring and other related charges; income taxes, including the recoverability of deferred tax assets; allowances for doubtful accounts; inventory reductions for excess and obsolete inventories; estimated fair values of long-lived assets used to measure the recoverability of long-lived assets; intangible assets and goodwill; expected future cash flows used to measure the recoverability of intangible assets and long-lived assets; warranty costs; derivative financial instruments; and contingent liabilities. We base our estimates and judgments on our 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 and estimates to be both those most important to the portrayal of our financial position and results of operations and those that require the most estimation and subjective ~~judgment.~~

judgment:

•

Revenue recognition;

•

Income taxes;

•

Inventories;

•

Goodwill, other intangible assets and other long-lived assets; and

•

Business combinations.

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For a further discussion of our critical accounting policies, please refer to our Annual Report on Form

10-K

for the year ended December 31, ~~2020.~~

2021.

RESULTS OF OPERATIONS

Three Months Ended March 31, ~~2021~~2022 compared to the Three Months Ended March 31, ~~2020~~

2021

Consolidated Results

The following table presents our results ~~(dollars in millions, except per share data)~~(in millions):

Three Months Ended March 31,


2021

2020

Dollar
Change

Percentage

Change

Product revenue
   $ 458.6    $ 345.0    $ 113.6    32.9 %
Service revenue
   94.1    78.2    15.9    20.3 %
Other revenue
   2.0    0.8    1.2    150.0 %







Total revenue
   554.7    424.0    130.7    30.8 %
Cost of product revenue
   220.9    180.5    40.4    22.4 %
Cost of service revenue
   54.8    51.1    3.7    7.2 %
Cost of other revenue
   0.3    0.1    0.2    200.0 %







Total cost of revenue
   276.0    231.7    44.3    19.1 %







Gross profit
   278.7    192.3    86.4    44.9 %
Operating expenses:

Selling, general and administrative
   131.8    121.2    10.6    8.7 %
Research and development
   54.8    48.5    6.3    13.0 %
Other charges, net
   3.0    6.2    (3.2 )    (51.6 )%







Total operating expenses
   189.6    175.9    13.7    7.8 %







Operating income
   89.1    16.4    72.7    443.3 %
Interest and other income (expense), net
   (3.8 )    (2.9 )    (0.9 )    31.0 %







Income before income taxes and noncontrolling interest in consolidated subsidiaries
   85.3    13.5    71.8    531.9 %
Income tax provision
   27.5    2.9    24.6    848.3 %







Consolidated net income
   57.8    10.6    47.2    445.3 %
Net income (loss) attributable to noncontrolling interests in consolidated subsidiaries
   1.1    0.1    1.0    1,000.0 %







Net income attributable to Bruker Corporation
   $ 56.7    $ 10.5    $ 46.2    440.0 %







Net income per common share attributable to Bruker Corporation shareholders:

Basic
   $ 0.37    $ 0.07    $ 0.30    428.6 %







Diluted
   $ 0.37    $ 0.07    $ 0.30    428.6 %







Weighted average common shares outstanding:

Basic
   151.8    154.2
Diluted
   153.2    155.4


	Three Months Ended March 31,
	2022			2021			Dollar Change			Percentage Change
Product revenue	$	490.4		$	458.6		$	31.8			6.9	%
Service revenue		103.2			94.1			9.1			9.7	%
Other revenue		1.4			2.0			(0.6	)		(30.0	)%
Total revenue		595.0			554.7			40.3			7.3	%
Cost of product revenue		229.0			220.9			8.1			3.7	%
Cost of service revenue		59.6			54.8			4.8			8.8	%
Cost of other revenue		0.1			0.3			(0.2	)		(66.7	)%
Total cost of revenue		288.7			276.0			12.7			4.6	%
Gross profit		306.3			278.7			27.6			9.9	%
Operating expenses:
Selling, general and administrative		145.7			131.8			13.9			10.5	%
Research and development		56.6			54.8			1.8			3.3	%
Other charges, net		7.5			3.0			4.5			150.0	%
Total operating expenses		209.8			189.6			20.2			10.7	%
Operating income		96.5			89.1			7.4			8.3	%
Interest and other income (expense), net		(2.5	)		(3.8	)		1.3			(34.2	)%
Income before income taxes and noncontrolling interest in consolidated subsidiaries		94.0			85.3			8.7			10.2	%
Income tax provision		31.9			27.5			4.4			16.0	%
Consolidated net income		62.1			57.8			4.3			7.4	%
Net income attributable to noncontrolling interests in consolidated subsidiaries		0.5			1.1			(0.6	)		(54.5	)%
Net income attributable to Bruker Corporation	$	61.6		$	56.7		$	4.9			8.6	%

Revenue

Revenue increases were driven by strong demand for our ~~high performance life science tools, scientific~~differentiated instruments and ~~diagnostic solutions.~~

solutions as compared to the same period in 2021.

Gross Profit

The increase in gross profit in the three months ended March 31, ~~2021,~~2022, as compared to the same period in ~~2020,~~2021, was a result of higher revenue and volume ~~operating~~ leverage and ~~contributions~~ from ~~higher~~differentiated instruments and solutions, partially offset by inflationary margin ~~products.~~

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challenges in 2022.

Selling, General and Administrative

Our selling, general and administrative expenses for the three months ended March 31, ~~2021 decreased~~2022 increased to ~~23.8%~~24.5% of total revenue, from ~~28.6%~~23.8% of total revenue for the comparable period in ~~2020.~~2021. The increase as a percentage of revenue was a result of the timing of certain sales and marketing investments, driven by higher freight, logistics and commission costs.

Research and Development

Our research and development expenses for the three months ended March 31, 2022 decreased to 9.5% of total revenue from 9.9% of total revenue for the comparable period in 2021. The decrease as a percentage of revenue was a result of the increase in revenue period over period.

~~Research and Development~~

~~Our research and development expenses~~

Other Charges, Net

Other charges, net recorded for the three months ended March 31, ~~2021 decreased to 9.9%~~2022 consisted of ~~total revenue from 11.4%~~$5.1 million of ~~total revenue for the comparable period in 2020. The decrease as a percentage of revenue was a result of the increase in revenue period over period.~~

~~Other Charges, Net~~

~~Other charges, net was $3.0 million for the three months ended March 31, 2021. The charges consisted primarily of $1.3 million in restructuring costs, $0.9 million in~~ acquisition-related charges related to acquisitions completed in 2022 and 2021, ~~and 2020, $0.7~~$1.0 million of costs associated with our global information technology (IT) transformation ~~initiative and $0.1~~activities, $0.7 million related to suspension of operations in Russia, $0.4 million of professional fees incurred in connection with investigation ~~matters.~~matters, and $0.3 million of restructuring costs. The IT transformation initiative is a multi-year project aimed at updating and integrating our global enterprise resource planning and human resource information systems.

Other charges, net ~~was $6.2 million~~ for the three months ended March 31, ~~2020. The charges~~2021 consisted primarily of ~~$3.4~~$1.3 million of restructuring costs, $0.9 million of acquisition-related charges related to acquisitions completed in 2021 and 2020, $0.7 million of costs associated with our global IT transformation initiative and $0.1 million of professional fees incurred in connection with investigation matters, $1.5 million of restructuring costs related to closing facilities and implementing outsourcing and other restructuring initiatives, $1.2 million related to long-lived asset impairments, $0.9 million of costs associated with our global information technology transformation initiative and a benefit of $1.1 million of acquisition-related charges related to acquisitions completed in 2020 and 2019.

matters.

Operating Income

The increase in operating income was due to higher ~~revenue~~gross margin resulting from differentiated products and ~~gross profit~~operating leverage, partially offset by inflationary margin challenges in 2022, as compared to 2021.

Interest and Other Income (Expense), Net

The decline in net interest and other income (expense) in the three months ended March 31, ~~2021 as our business and end markets began to rebound,~~2022, as compared to the same period in ~~2020 which~~2021 was ~~negatively impacted by the~~

~~COVID-19~~

~~pandemic and related economic slowdown.~~

~~Interest and Other Income (Expense), Net~~

~~The increase in net interest expense in the three months ended March 31, 2021, as compared~~mainly due to ~~the same period in 2020, was primarily attributable to an increase in realized losses on foreign currency denominated transactions of $2.0 million.~~

other strategic investment activity.

Income Tax Provision

~~In the three months ended March 31,~~

The 2022 and 2021 ~~and 2020~~ effective tax rates were estimated using projected annual

pre-tax

income on a jurisdictional basis. Expected tax benefits, including tax credits and incentives, the impact of changes to valuation allowances and the effect of jurisdictional differences in statutory tax rates were also considered in the calculation.

The ~~income~~effective tax ~~provision~~rates for the three months ended March 31, 2022 and 2021 were 33.9% and ~~2020 was $27.5 million and $2.9 million, respectively, representing effective tax rates of~~ 32.2% ~~and 21.5%~~, respectively. The increase in our effective tax rate was primarily due to ~~the jurisdictional mix and~~i) the impact of ~~unfavorable discrete items in~~legislation that became effective during the ~~period.~~

quarter limiting the deductibility of R&D and the benefit relating to foreign tax credits and ii) the settlement of a tax audit.

Net Income (Loss) Attributable to Noncontrolling Interests

The net income (loss) attributable to noncontrolling interests represented the minority shareholders’ proportionate share of the net income recorded by our majority-owned subsidiaries.

~~Net Income Attributable to Bruker Corporation~~

The increase in net income and earnings per diluted share in the three months ended March 31, 2021, as compared to the same period in 2020, was primarily driven by the increase in revenue, gross profit and operating profit as a result of the rebounding in our business and end markets.

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Reportable Segment ~~Results~~

Revenue

The following table presents revenue, change in revenue and revenue growth by reportable segment ~~(dollars in~~(in millions):


	Three Months Ended March 31,
	2022			2021			Dollar Change			Percentage Change
BSI Life Science	$	361.0		$	351.8		$	9.2			2.6	%
BSI Nano		178.5			154.4			24.1			15.6	%
BEST		59.7			52.4			7.3			13.9	%
Eliminations (a)		(4.2	)		(3.9	)		(0.3	)
Total revenue	$	595.0		$	554.7		$	40.3			7.3	%

(a)

Represents product and service revenue between reportable segments.

Three Months Ended
March 31,

Percentage


2021

2020

Dollar Change

Change

BSI Life Science
   $ 351.8    $ 261.4    $ 90.4    34.6 %
BSI NANO
   154.4    120.1    34.3    28.6 %
BEST
   52.4    46.2    6.2    13.4 %
Eliminations (a)
   (3.9 )    (3.7 )    (0.2 )







   $ 554.7    $ 424.0    $ 130.7    30.8 %

~~(a)~~

~~Represents product and service revenue between reportable segments.~~

For financial reporting purposes, we aggregate the Bruker BioSpin Group and Bruker CALID Group as the BSI Life Science ~~Segment.~~segment. This aggregation reflects the similar economic characteristics, production processes, customer services provided, types and classes of customers, methods of distribution and regulatory environments.

The increase in revenue for the BSI Life Science ~~Segment~~segment in the three months ended March 31, ~~2021~~2022 was due to strong demand, ~~for mass spectrometry, infrared~~business and ~~Raman products, a~~end market recovery, and was led by growth in ~~customer demand~~Preclinical Imaging (PCI) and ~~deliveries for Nuclear Magnetic Resonance (NMR) systems~~Microbiology and ~~included customer acceptance of two GHz-class NMR systems.~~Diagnostic solutions. The increase in revenue for the BSI ~~NANO~~Nano segment was driven by ~~a recovery in~~ industrial research ~~and academic market~~ demand and continued strong demand from semiconductor and microelectronics customers. The increase in revenue for the BEST segment ~~revenue was higher resulting~~resulted from ~~certain project completions~~demand from superconductors for healthcare MRI in the three months ended March 31, ~~2021.~~

2022.

Operating Income

The following table presents operating income and operating margins on revenue by reportable segment ~~(dollars in~~(in millions):


	Three Months Ended March 31,
	2022						2021
	Operating Income (Loss)			Percentage of Segment Revenue			Operating Income (Loss)			Percentage of Segment Revenue
BSI Life Science	$	85.9			23.8	%	$	88.9			25.3	%
BSI Nano		22.3			12.5	%		12.3			8.0	%
BEST		6.6			11.1	%		4.1			7.8	%
Corporate, eliminations and other (a)		(18.3	)					(16.2	)
Total operating income	$	96.5			16.2	%	$	89.1			16.1	%

(a)

Represents corporate costs and eliminations not allocated to the reportable segments.

Three Months Ended March 31,


2021

2020


Percentage of

Percentage of


Operating

Segment

Operating

Segment


Income

Revenue

Income

Revenue

BSI Life Science
   $ 88.9    25.3 % $ 39.5    15.1 %
BSI NANO
   12.3    8.0 % (8.0 )    (6.7 %)
BEST
   4.1    7.8 % 1.7    3.7 %
Corporate, eliminations and other (a)
   (16.2 )    (16.8 )





Total operating income
   $ 89.1    16.1 % $ 16.4    3.9 %

~~(a)~~

~~Represents corporate costs and eliminations not allocated to the reportable segments.~~

The operating margin increases in the BSI Life Science and BSI ~~NANO Segments resulted~~Nano segments was primarily due to higher gross margin resulting from ~~higher revenue, volume~~differentiated products and operating leverage, ~~and contributions from higher margin products.~~partially offset by planned commercial investments. The operating margin increase in the BEST segment resulted from higher revenue and favorable mix.

LIQUIDITY AND CAPITAL RESOURCES

We anticipate that our existing cash and credit facilities will be sufficient to support our operating and investing needs for at least the next twelve months. Our future cash requirements could be affected by acquisitions that we may complete, ~~repurchases~~purchases of our common stock or the payment of dividends in the future. Historically, we have financed our growth and liquidity needs through cash flow generation from operations and a combination of debt financings and issuances of common stock. In the future, there are no assurances that we will continue to generate cash flow from operations or that additional financing alternatives will be available to us, if required, or if available, will be obtained on terms favorable to us.

Cash, cash equivalents and short-term investments at March 31, ~~2021~~2022 and December 31, ~~2020~~2021 totaled ~~$746.8~~$916.1 million and ~~$731.8~~$1,168.2 million, respectively, of which ~~$570.0~~$607.5 million and ~~$514.9~~$646.9 million, respectively, related to cash, cash equivalents and short-term investments held outside of the U.S. in our foreign subsidiaries, most significantly in the Netherlands, Switzerland and Hong Kong.

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The following table presents our cash flows from operating activities, investing activities and financing activities for the periods presented (in millions):

Three Months Ended
March 31,


2021

2020

Net cash provided by operating activities
   $ 98.0    $ 35.0
Net cash used in investing activities
   (24.0 )    (100.6 )
Net cash (used in) provided by financing activities
   (38.1 )    191.3
Effect of exchange rates on cash and cash equivalents
   (21.0 )    (8.7 )




Total increase (decrease) in cash and cash equivalents
   $ 14.9    $ 117.0


	Three Months Ended March 31,
	2022			2021
Net cash provided by operating activities	$	77.8		$	98.0
Net cash used in investing activities		(101.8	)		(24.0	)
Net cash used in financing activities		(217.4	)		(38.1	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(10.7	)		(21.0	)
Net change in cash, cash equivalents and restricted cash	$	(252.1	)	$	14.9

Cash provided by operating activities during the ~~first quarter of 2021~~three months ended March 31, 2022 resulted primarily from consolidated net income adjusted for

non-cash

items of $81.6 million, partially offset by a change in operating assets and liabilities, net of acquisitions and divestitures of $3.8 million. The decrease was primarily due to strategic inventory management to handle supply chain challenges, timing of tax payment payables partially offset by customer advances received during the period for related to new orders. Cash provided by operating activities during the three months ended March 31, 2021 resulted primarily from consolidated net income adjusted for non-cashitems of $93.7 million, in addition to a change in operating assets and liabilities, net of acquisitions and divestitures of $4.3 million. The increase in operating assets and liabilities, net of acquisitions and divestitures for the three months ended March 31, 2021 was primarily due to higher payables and accrued liabilities as well as timing of income tax payables offset by improved inventory turnover within the same period of the prior year.

~~During~~

Cash used in investing activities during the three months ended March 31, ~~2020, net cash provided by operating activities~~2022 resulted primarily from ~~consolidated net income adjusted for~~

~~non-cash~~

~~items~~acquisitions of ~~$45.7~~$83.8 million, ~~partially~~purchases of property, plant and equipment of $19.0 million, and strategic investments of $12.0 million, offset by ~~a change~~$12.7 million of net proceeds from sales of property, plant and equipment. Cash used in ~~operating assets and liabilities, net of acquisitions and divestitures of $10.7 million.~~

~~During~~investing activities during the three months ended March 31, 2021 ~~cash used in investing activities~~ was primarily attributed to cash paid for net purchases of property, plant and equipment of $24.7 million, cash paid for acquisitions, net of cash acquired of $4.0 million, offset by $3.5 million from proceeds of ~~cross currency~~cross-currency swap agreements.

~~Cash~~

Net cash used in ~~investing~~financing activities during the three months ended March 31, ~~2020~~2022 was primarily ~~attributed to~~from cash paid for purchases of ~~short-term investments~~common stock under our repurchase program of ~~$50.0~~$105.6 million, ~~purchases~~repayment of ~~property, plant and equipment~~our 2012 Note Purchase Agreement of ~~$30.5~~$105.0 million and ~~acquisitions~~$7.5 million for the payment of ~~$22.0 million.~~

~~Cash~~dividends. Net cash used in financing activities during the ~~first quarter of~~three months ended March 31, 2021 was primarily ~~due to the $32.6 million in purchases~~from cash paid for repurchases of common stock ~~associated with~~under our ~~ongoing~~ Repurchase Program ~~(as defined below),~~of $32.6 million and $6.1 million for the payment of dividends, partially offset by proceeds of $1.1 million from the exercise of stock options. Net cash provided by financing activities during the three months ended March 31, 2020 was primarily attributable to $197.5 million in proceeds from borrowings under the 2019 Revolving Credit Agreement offset in part by $6.2 million for the payment of dividends.

Share Repurchase Program

In May 2019, our Board of Directors approved our share repurchase program (the ~~“Repurchase~~“2019 Repurchase Program”) under which repurchases of common stock in the amount of up to $300.0 million were authorized to occur from time to time, in amounts, at prices, and at such times as we deem appropriate, subject to market conditions, legal requirements and other considerations. During the three months ended March 31, 2021, we purchased 530,729 shares of common stock with an aggregate cost of approximately $32.8 million under the 2019 Repurchase Program. ~~There were no purchases under the Repurchase Program in the three months ended March 31, 2020. At March 31, 2021, $1.7 million remained for future purchase under the share repurchase plan.~~ We completed the 2019 Repurchase Program in April 2021, after reaching the maximum cumulative spend. ~~The~~

In May 2021, our Board of Directors approved a share repurchase program (the “2021 Repurchase ~~Program would have expired~~Program”) authorizing the purchase of up to $500.0 million of our common stock over a two-year period from time to time, in amounts, at prices, and at such times as we deem appropriate, subject to market conditions, legal requirements and other considerations. During the three months ended March 31, 2022, we purchased 1,603,055 shares of common stock with an aggregate cost of approximately $105.6 million under the 2021 Repurchase Program. At March 31, 2022, $275.5 million remained for future purchase under the 2021 Repurchase Program. We intend to fund any additional repurchases from cash on ~~May 13, 2021.~~hand, future cash flows from operations and available borrowings under our revolving credit facility. The purchased shares are reflected within Treasury stock in the accompanying unaudited condensed consolidated balance ~~sheet at March~~ sheets.

31 ~~2021.~~

~~Income Taxes~~

Credit Facilities

On December ~~31, 2020~~7, 2021, we entered into a note purchase agreement to issue and sell CHF 300 million aggregate principal amount of 0.88% series A senior notes and EUR 150 million aggregate principal amount of 1.03% series B senior notes due December 8, 2031. We designated our CHF 300 million series A senior notes as a hedge in ~~accordance with the tax reform legislation signed by the president~~our net investment in our Swiss Franc denominated net assets. We designated our EUR 150 million series B senior notes as a hedge in our net investment in our EUR denominated net assets. Proceeds of the United States on December 22, 2017, or the 2017 Tax Act, we recorded state and foreign withholding taxes, as well as subsequent foreign currency translations on these withholding taxes as they are an obligation of the parent company, on the cash and liquid assets portion of the unremitted earnings and profits (E&P) of foreign subsidiaries expected tonotes will be ~~repatriated from our foreign subsidiaries to the United States. We continue to be indefinitely reinvested in the amount of $435.6 million of~~

~~non-cash~~

E&P that is subject to the 2017 Tax Act deemed repatriation. If this E&P is ultimately distributed to the United States in the form of dividends or otherwise we would likely be subject to additional withholding tax. We will continue to evaluate our assertions on the cumulative historical outside basis differences in our foreign subsidiaries as of December 31, 2020. The amount of unrecognized deferred withholding taxes on the undistributed E&P was $62.9 million at December 31, 2020.

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As of March 31, 2021, we had approximately $65.2 million of net operating loss carryforwards available to reduce state taxable income that are expected to expire at various times beginning in 2021; approximately $104.0 million of net operating losses available to reduce German federal income and trade taxes that are carried forward indefinitely and $13.1 million of other foreign net operating losses that are expected to expire at various times beginning in 2021. We also had U.S. state research and development tax credits of $7.1 million. Utilization of these credits and state net operating losses may be subject to annual limitations due to the ownership percentage change limitations provided by the Internal Revenue Code Section 382 of 1986, as amended (the “Code”), and similar state provisions. In the event of a deemed change in control under Code Section 382, an annual limitation on the utilization of net operating losses and credits may result in the expiration of all or a portion of the net operating loss and credit carryforwards.

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. 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.

~~Credit Facilities~~

used for general corporate purposes.

On December 11, 2019, we entered into (1) a new revolving credit agreement to establish a new revolving credit facility in the aggregate principal amount of $600 million; (2) a term loan agreement to establish a new term loan facility in the aggregate principal amount of $300 million; and (3) a note purchase agreement to issue and sell CHF 297 million aggregate principal amount of 1.01% senior notes due December 11, 2029. Floating interest rates under the term loan were simultaneously fixed through cross-currency and interest rate swap agreements into Euro ($150 million) and Swiss Franc ($150 million) rates carrying average effective interest rates of 0.94% and hedge our net investment in our Euro and Swiss Franc denominated net assets. The new revolving credit agreement replaced our $500 million five-year revolving credit agreement established on October 27, 2015, that was terminated on December 11, 2019.

In addition, we designated our CHF 297 million senior notes as a hedge in our net investment in our Swiss Franc denominated net assets. Proceeds from this financing were used to repay the outstanding borrowings under our prior 2015 revolving credit facility and we intend to use the remaining proceeds for general corporate purposes and to support corporate strategic objectives. During December 2019, we entered into U.S. Dollar to Euro cross-currency swaps on our existing 2012 private placement notes of $105 million of 4.31% Series 2012A Senior Notes, Tranche C, ~~due~~repaid in January ~~18,~~ 2022, and the existing $100 million of 4.46% Series 2012A Senior Notes, Tranche D, due January 18, 2024, resulting in an average effective interest rate of 2.25% on these instruments. The cross-currency swaps hedge our net investment in our Euro denominated net assets.

As of March 31, 2022, we have several cross-currency and interest rate swap agreements with a notional value of $149.3 million of U.S. to Swiss Franc and a notional value of $249.3 million of U.S. to Euro to hedge the variability in the movement of foreign currency exchange rates on portions of our Euro and Swiss Franc denominated net asset investments. As a result of entering into these ~~interest rate and cross currency swap~~ agreements, ~~we reduced our~~the Company lowered net interest expense by $1.1 million and $1.4 million during the three months ended March 31, ~~2021.~~2022 and 2021, respectively. We anticipate these swap agreements will lower net interest expense in future years.

We had the following debt outstanding ~~(dollars in~~(in millions):


	March 31, 2022			December 31, 2021
EUR notes (in U.S. dollars) under the 2021 Note Purchase Agreement	$	166.3		$	170.7
CHF notes (in U.S. dollars) under the 2021 Note Purchase Agreement		325.4			329.2
CHF notes (in U.S. dollars) under the 2019 Note Purchase Agreement		322.2			325.9
U.S. Dollar notes under the 2019 Term Loan		298.5			299.2
U.S. Dollar notes under the 2012 Note Purchase Agreement		100.0			205.0
Unamortized debt issuance costs		(1.9	)		(2.0	)
Other loans		1.8			1.9
Total notes and loans outstanding		1,212.3			1,329.9
Finance lease obligations		4.1			4.3
Total debt		1,216.4			1,334.2
Current portion of long-term debt		(11.0	)		(112.4	)
Total long-term debt, less current portion	$	1,205.4		$	1,221.8

As of March 31, ~~2021, there are no material changes to our contractual obligations from those disclosed in our Annual Report on Form~~

~~10-K~~

~~for the fiscal year ended December 31, 2020.~~

~~As of March 31, 2021,~~2022, we had no

off-balance

sheet arrangements.

~~Table of Contents~~

The following is a summary of the maximum commitments and the net amounts available to us under the 2019 Credit Agreement and other ~~banking working capital~~ lines ~~and guarantees~~ of credit with various financial institutions located primarily in Germany and Switzerland that are unsecured and typically due upon demand with interest payable monthly, at March 31, ~~2021 (dollars in~~2022 (in millions):


	Weighted Average Interest Rate			Total Amount Committed by Lenders		Outstanding Borrowings		Outstanding Letters of Credit		Total Amount Available
2019 Credit Agreement		1.3	%	$	600.0	$	—	$	0.1	$	599.9
Bank guarantees and working capital line	varies				110.3		—		110.3		—
Total revolving lines of credit				$	710.3	$	—	$	110.4	$	599.9

As of March 31, ~~2021,~~2022, wewere in compliance with the financial covenants of these debt agreements.

RECENT ACCOUNTING PRONOUNCEMENTS

Information regarding recent accounting standard changes and developments is incorporated by reference from Part I, Item 1, Unaudited Condensed Consolidated Financial Statements, of this document and should be considered an integral part of this Item 2. See Note 2 in the Notes to the Unaudited Condensed Consolidated Financial Statements in this Quarterly Report on Form

10-Q

for recently adopted and issued accounting standards.

~~ITEM 3.~~

~~QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK~~

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are potentially exposed to market risks associated with changes in foreign currency translation rates, interest rates and commodity prices. We selectively use financial instruments to reduce these risks. All transactions related to risk management techniques are authorized and executed pursuant to our policies and procedures. Analytical techniques used to manage and monitor foreign currency translation and interest rate risk include market valuations and sensitivity ~~analyses.~~

analysis.

Foreign Currency Risk

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, reducing our transaction risk exposure. However, for foreign currency denominated sales in certain regions, such as Japan, where we do not incur significant costs denominated in Japanese Yen, we are more exposed to the impact of foreign currency fluctuations.

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 would have received 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. For example, if the U.S. dollar strengthened against the Japanese Yen, our Japanese-based competitors would have a greater pricing advantage over us.

Changes in foreign currency translation rates ~~increased our revenue by 6.2% and~~ decreased our revenue by ~~1.2%~~4.2% and increased our revenue 6.2% for the three months ended March 31, 2022 and 2021, ~~and 2020,~~ respectively.

Assets and liabilities of our foreign subsidiaries, where the functional currency is the local currency, are translated into U.S. dollars using

period-end

exchange rates. Revenues and expenses of foreign subsidiaries are translated at the average exchange rates in effect during the year. Adjustments resulting from financial statement translations are included as a separate component of shareholders’ equity. For the three months ended March 31, ~~2021~~2022 and ~~2020,~~2021, we recorded net ~~losses~~gains (losses) from currency translation adjustments of ~~$19.5~~$(9.4) million and ~~$13.0~~$(19.5) million, respectively. Gains and losses resulting from foreign currency transactions are reported in interest and other income (expense), net in the unaudited condensed consolidated statements of income and comprehensive income.

~~The impact of currency exchange rate movement can be positive or negative in any period.~~

We periodically enter into ~~foreign~~forward currency contracts in order to minimize the volatility that fluctuations in currency translation have on our monetary transactions. Under these arrangements, we typically 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 with maturities of less than twelve months, with some agreements extending to longer periods. 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 unaudited condensed consolidated statements of income and comprehensive income.

~~Table of Contents~~

As of March 31, ~~2021,~~2022, we have several cross-currency and interest rate swap agreements with a notional value of ~~$150.0~~$149.3 million of U.S. ~~Dollar~~dollar to Swiss Franc and a notional value of ~~$355.0~~$249.3 million of U.S. dollar to Euro to hedge the variability in the movement of foreign currency exchange rates on portions of our Euro and Swiss Franc denominated net asset investments. Under the GAAP hedge accounting guidance, changes in fair value of the derivative that relates to changes in the foreign currency spot rate are recorded in the currency translation adjustment in comprehensive income (loss) and remain in accumulated comprehensive income (loss) in shareholders’ equity until the sale or substantial liquidation of the foreign operation. ~~The difference between~~For the ~~interest rate received~~three months ended March 31, 2022 and ~~paid under~~2021, we recorded net gains from the ~~interest rate cross-currency swap derivative~~changes in fair value of the derivatives of $12.1 million and net losses of $27.7 million, respectively.

On December 7, 2021, we entered into a note purchase agreement, referred to as the 2021 Note Purchase Agreement, with a group of institutional accredited investors. Pursuant to the 2021 Note Purchase Agreement, we issued and sold CHF 300 million aggregate principal amount of 0.88% series A senior notes and EUR 150 million aggregate principal amount of 1.03% series B senior notes due December 8, 2031. We designated our CHF 300 million series A senior notes as a hedge in our net investment in our Swiss Franc denominated net assets. We designated our EUR 150 million series B senior notes as a hedge in our net investment in our Euro denominated net assets. Accordingly, the change in fair value of the 2021 Note Purchase Agreement is recorded in ~~interest~~other comprehensive income within derivatives designated as hedging instruments, net of tax.

On December 11, 2019, we entered into a note purchase agreement, referred to as the 2019 Note Purchase Agreement, with a group of institutional accredited investors. Pursuant to the 2019 Note Purchase Agreement, we issued and sold CHF 297 million aggregate principal amount of 1.01% senior notes due December 11, 2029. We designated our CHF 297 million senior notes as a hedge in our net investment in our Swiss Franc denominated net assets. Accordingly, the ~~unaudited condensed consolidated statements~~change in fair value of the 2019 Note Purchase Agreement is recorded in other comprehensive income within derivatives designated as hedging instruments, net of tax.

For the three months ended March 31, 2022 and ~~comprehensive income.~~

2021, we recorded net gains (losses) from the changes in fair value, net of tax, of the 2021 Note Purchase Agreement and the 2019 Note Purchase Agreement of $9.0 million and $20.8 million, respectively.

From time to time, we have entered into forward ~~currency~~exchange contracts designed to minimize the volatility that fluctuations in foreign currency 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 with some agreements extending to longer periods. These transactions are recorded at fair value with the corresponding gains and losses recorded in interest and other income (expense), net in the unaudited condensed consolidated statements of income and comprehensive income. At March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had ~~forward currency~~foreign exchange contracts with notional amounts aggregating ~~$131.3~~$116.2 million and ~~$278.3~~$180.7 million, respectively. We will continue to evaluate our currency risks and in the future may utilize foreign currency contracts more frequently.

Interest Rate Risk

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. We currently have a higher level of fixed rate debt than variable rate debt, which limits the exposure to adverse movements in interest rates.

Commodity Price Risk

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-tin,

used to manufacture superconductors, have increased significantly over the last decade. Copper and

niobium-tin

are the main 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 March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, we had fixed price commodity contracts with notional amounts aggregating ~~$5.8~~$7.2 million and ~~$8.8~~$5.5 million, respectively. The fair value of the fixed price commodity contracts at March 31, ~~2021~~2022 and December 31, ~~2020~~2021 was ~~$3.8~~$0.7 million and ~~$3.1~~$0.4 million, respectively. As commodity contracts settle, gains (losses) as a result of changes in fair values are adjusted to the contracts with the customers through revenues. We will continue to evaluate our commodity risks and may utilize commodity forward purchase contracts more frequently in the future.

Inflation Risk

~~We do~~

Inflation did not ~~believe inflation had~~have a material impact on our business or operating results ~~during any~~for several years. In 2021, supply chain volatility increased the prices in our materials, which have increased our cost of ~~the periods presented.~~

~~ITEM 4.~~

~~CONTROLS AND PROCEDURES~~

operations. Further, inflation has increased our general and administrative expenses. We continue to evaluate these cost increases in relation to our new orders and may continue to see a negative impact on our financial results for a period of time.

ITEM 4. CONTROLS AND PROCEDURES

We have established disclosure controls and procedures (as defined in Rules

13a-15(e)

and

15d-15(e)

under the Securities Exchange Act of 1934, as amended (Exchange Act)) 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 and principal accounting 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 March 31, ~~2021.~~2022. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures were effective as of March 31, ~~2021.~~

~~Table of Contents~~

2022.

Management concluded that the unaudited condensed consolidated financial statements contained in this Quarterly Report on Form

10-Q

fairly ~~present,~~state, in all material respects, our financial condition, results of operations and cash flows for the periods presented in conformity with accounting principles generally accepted in the United States of America.

Changes in Internal Controls over Financial Reporting

There have been no changes in our internal control over financial reporting during the three months ended March 31, ~~2021~~2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II OTHER INFORMATION

~~ITEM 1.~~

~~LEGAL PROCEEDINGS~~

ITEM 1. LEGAL PROCEEDINGS

We are involved in lawsuits, claims, and proceedings, including, but not limited to, patent and commercial matters, which arise in the ordinary course of business. There are no such matters pending that we currently believe are reasonably likely to have a material impact on our business or to our condensed consolidated financial statements.

On September 25, 2019, in a complaint filed in the Düsseldorf, Germany, District Court, Carl Zeiss Microscopy GmbH, a subsidiary of Carl Zeiss AG (Zeiss), sued Luxendo GmbH (Luxendo), a subsidiary of Bruker Corporation, for infringement of a recently registered German utility model patent licensed to Zeiss pertaining to one specific Luxendo product category. Zeiss is seeking injunctive relief, an accounting, indemnification for damages resulting from infringement, and other, related remedies. We are vigorously defending against this claim.

On September 23, 2019, in a complaint filed in the Düsseldorf, Germany, District Court, Micromass UK Limited (Micromass), a subsidiary of Waters Corporation, sued Bruker Corporation, as well as its affiliate, Bruker Daltonik GmbH, for infringement of a European patent pertaining to our timsTOF product line. Bruker was later notified that Micromass had expanded its complaint in Düsseldorf to assert another recently granted European patent in Germany. On March 5, 2021, the parties entered into a Patent License Agreement pursuant to which Bruker licensed certain patents from Micromass and agreed to pay a one-time, upfront $4.0 million payment in the second quarter of 2021 and agreed to pay royalties, subject to a quarterly minimum, on certain TimsTOF systems commencing March 1, 2022. In addition, pursuant to the Patent License Agreement, all claims between the parties in connection with this and other pending infringement matters were settled and dismissed with prejudice. The settlement of this matter did not and is not expected to materially impact the Company’s results of operations.

In addition, we are subject to regulation by national, state and local government agencies in the United States and other countries in which we operate. From time to time, we are the subject of governmental investigations often involving regulatory, marketing and other business practices. These governmental investigations may result in the commencement of civil and criminal proceedings, fines, penalties and administrative remedies which could have a material adverse effect on our financial position, results of operations and/or liquidity.

~~ITEM IA.~~

~~RISK FACTORS~~

ITEM IA. RISK FACTORS

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form

10-K

for the year ended December 31, ~~2020,~~2021, which could materially affect our business, financial condition or future results. The risks described in this report and in our Annual Report on Form

10-K

are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

~~Our financial condition and results of operations for fiscal 2021 may be adversely affected by the~~

~~COVID-19~~

~~pandemic.~~

~~The impact of the worldwide~~

~~COVID-19~~

pandemic has been and will likely continue to be extensive in many geographies and aspects of society. The pandemic has resulted in and will likely continue to result in disruptions to the global economy, as well as businesses, supply chains and capital markets around the world.

Impacts to our business included temporary closures in 2020 of many of our government and university customers and our suppliers, disruptions or restrictions on our employees’ and customers’ ability to travel, and delays in product installations or shipments to and from affected countries. In an effort to halt the outbreak of

~~COVID-19,~~

a number of countries, including the United States, have implemented and continue to implement significant restrictions on travel, shelter in place or stay at home orders, and business closures. While some of these restrictions are loosening in certain jurisdictions, some markets have returned to restrictions in the face of increases in new

~~COVID-19~~

~~cases or new strains of the virus. A number of states, including California, Massachusetts and New Jersey where we have significant operations, have implemented phased~~

~~re-opening~~

~~policies as vaccines to protect against the virus continue to be administered. However, many of our employees in these areas continue to work remotely, and any~~

~~re-openings~~

may be delayed or pulled back if the virus continues to spread or as new strains of the virus emerge, in particular if existing vaccines are determined to be less effective against these new strains than against earlier strains. In addition, a number of our production facilities had to either temporarily close or operate on a reduced capacity in 2020. Much of the commercial activity in sales and marketing, and customer demonstrations and applications training, is still either being conducted remotely or postponed. Many customer purchasing departments are still operating at reduced capacity, and many customers could delay or cut capital expenditures and operating budgets due to ongoing pandemic-related concerns. Even where customers have

~~re-opened~~

~~their sites, many still operate at productivity levels that are below~~

~~pre-pandemic~~

~~levels in an effort to accommodate safety~~

~~Table of Contents~~

protocols. Any resurgence of the virus or the emergence of new strains of the virus, particularly any new strains which are resistant to existing vaccines, may require us or our customers to close or partially close operations once again. These travel restrictions, business closures and operating reductions at Bruker, our customers, our distributors, and/or our suppliers have and may continue to adversely impact our operations worldwide, including our ability to manufacture, sell or distribute our products, as well as cause temporary closures of our foreign distributors, or the facilities of suppliers or customers. Global supply chains, including for semiconductor chips and other component products, have been disrupted causing shortages, which could impact our ability to manufacture or supply our products. This disruption of our employees, distributors, suppliers or customers has and may continue to impact our global sales and future operating results. We anticipate that the

~~COVID-19~~

~~pandemic and challenges to our customers’ and our own operations may continue to have a negative impact on our second quarter 2021 financial results.~~

~~We are continuing to monitor and assess the effects of the~~

~~COVID-19~~

pandemic on our commercial operations, including its continued impact on our revenue in 2021. However, we cannot at this time accurately predict what effects these conditions will ultimately have on our operations due to uncertainties relating to the severity of the disease, including the impact of any resurgence of the virus, the continued emergence of new strains of the virus, the effectiveness and availability of vaccines, the willingness of individuals to receive vaccines, (including to protect against any new strains of the virus), and the length or severity of the travel restrictions, business closures, and other safety and precautionary measures imposed by the governments of impacted countries. The pandemic has also adversely affected the economies and financial markets of many countries, which has affected and likely may continue to affect demand for the Company’s products and its operating results.

~~There have been no other material changes to the risk factors previously disclosed in our Annual Report on Form~~

~~10-K~~

~~for the fiscal year ended December 31, 2020.~~

~~ITEM 2.~~

~~UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS~~

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information about purchases made by or on behalf of the Company or any ~~“affiliated~~"affiliated purchaser,”" as defined in Rule

10b-18(a)(3)

under the Exchange Act, during the quarter ended March ~~1, 2021~~31, 2022 of shares of our common stock.


Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Program (2)
January 1 - January 31, 2022		—	$	—		—	$	365,595,079
February 1 - February 28, 2022		224,450	$	69.20		224,450	$	365,595,079
March 1 - March 31, 2022		1,378,605	$	65.32		1,378,605	$	275,538,707
		1,603,055	$	65.87		1,603,055	$	275,538,707

(1)

Period

Total Number

of Shares
Purchased (1)

Average Price Paid
per Share

Total Number of
Shares Purchased as
Part of Publicly
Announced Plans or
Programs

Maximum Number (or
Approximate Dollar
Value) of Shares that
May Yet Be
Purchased Under the
Plans or Programs (2)

January 1 - January 31, 2021
   85,773    $ 58.29    85,773    $ 29,453,135
February 1 - February 28, 2021
   390,783    $ 62.55    390,783    $ 5,009,816
March 1 - March 31, 2021
   54,173    $ 59.76    54,173    $ 1,691,717

   530,729    $ 61.73    530,729    $ 1,691,717

The Company purchased shares of common stock in accordance with the 2021 Repurchase Program. The shares were purchased on the open market at prevailing prices.

(2)

The 2021 Repurchase Program authorizes the purchases of the Company's common stock of up to $500.0 million from time to time over a two-year period, in amounts, at prices, and at such times as management deems appropriate, subject to market conditions, legal requirements and other considerations.

ITEM 6. EXHIBITS

~~(1)~~

The Company purchased shares of common stock in accordance with its share repurchase program approved by the Board of Directors and announced on May 10, 2019. The shares were purchased on the open market at prevailing prices.

~~(2)~~

~~The Repurchase Program authorized the Company to purchase up to $300.0 million of its common stock over a~~

~~two-year~~

~~period. We completed the share purchase program in April 2021, after reaching the maximum cumulative spend. The Repurchase Program was set to expire May 13, 2021.~~

~~Table of Contents~~

~~ITEM 6.~~

~~EXHIBITS~~


~~Exhibit No.~~		~~Description~~

31.1* Exhibit No.	Description

31.1*	Certification by Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification by Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification by Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS*		Inline XBRL Instance Document

101.SCH*		Inline XBRL Taxonomy Extension Schema Document

101.CAL*		Inline XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF*		Inline XBRL Taxonomy Extension Definition Linkbase Document

101.LAB*		Inline XBRL Taxonomy Extension Label Linkbase Document

101.PRE*		Inline XBRL Taxonomy Extension Presentation Linkbase Document

104*		The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, ~~2021~~2022 has been formatted in Inline XBRL (included in Exhibit 101)

*	~~Filed or furnished herewith.~~

* Filed or furnished herewith.

~~Table of Contents~~

SIGNATURES

Pursuant to the requirements 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.


Date: May 6, 2022			BRUKER CORPORATION

~~Date: May 7, 2021~~	By:	~~By:~~		/s/ FRANK H. LAUKIEN, PH.D.
				Frank H. Laukien, Ph.D.
				President, Chief Executive Officer and Chairman
				(Principal Executive Officer)

Date: May ~~7, 2021~~6, 2022	By:	~~By:~~		/s/ GERALD N. HERMAN
				Gerald N. Herman
				Executive Vice President and Chief Financial Officer ~~and Executive Vice President~~
				(Principal Financial Officer and Principal Accounting Officer)


Delaware		04-3110160
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)



Large accelerated filer	☒	☒	Accelerated filer	☐

Non-accelerated filer	☐	☐	Smaller reporting company	☐

		Emerging growth company	☐


~~Class~~
Class	Outstanding at May 3, ~~2021~~ 2022
Common Stock, $0.01 par value per share		~~151,521,114~~ 149,255,424 shares


			Page
Part I		FINANCIAL INFORMATION		1	3
Item 1:		Unaudited Condensed Consolidated Financial Statements		1	3
		Unaudited Condensed Consolidated Balance Sheets as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021		1	3
		Unaudited Condensed Consolidated Statements of Income and Comprehensive Income ~~(Loss)~~ for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021		2	4
		Unaudited Condensed Consolidated Statements of Redeemable Noncontrolling Interest and Shareholders’ Equity for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021		3	5
		Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, ~~2021~~2022 and ~~2020~~2021		4	7
		Notes to Unaudited Condensed Consolidated Financial Statements		5	8
Item 2:		Management’s Discussion and Analysis of Financial Condition and Results of Operations		19	24
Item 3:		Quantitative and Qualitative Disclosures About Market Risk		28	34
Item 4:		Controls and Procedures		29	36
Part II		OTHER INFORMATION		30	37
Item 1:		Legal Proceedings		30	37
Item 1A:		Risk Factors		30	37
Item 2:		Unregistered Sales of Equity Securities and Use of Proceeds		31	37
Item 6:	Exhibits	~~Exhibits~~		32	38
	Signatures	~~Signatures~~		33	39


	March 31, 2021			December 31, 2020
ASSETS
Current assets:
Cash and cash equivalents	$	696.8		$	681.8
Short-term investments		50.0			50.0
Accounts receivable, net		326.0			335.3
Inventories		700.7			692.3
Other current assets		172.7			165.6

Total current assets		1,946.2			1,925.0
Property, plant and equipment, net		384.1			395.5
Goodwill		313.3			320.4
Intangible assets, net		213.4			229.1
Other long-term assets		177.9			179.0

Total assets	$	3,034.9		$	3,049.0

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Current portion of long-term debt	$	108.4		$	2.2
Accounts payable		152.3			134.6
Customer advances		182.2			189.2
Other current liabilities		500.6			465.9

Total current liabilities		943.5			791.9
Long-term debt		715.8			842.3
Other long-term liabilities		393.9			440.5
Commitments and contingencies (Note 14)		0			0
Shareholders’ equity:
Preferred stock, $0.01 par value 5,000,000 shares authorized, 0ne issued or outstanding		0			0
Common stock, $0.01 par value 260,000,000 shares authorized, 174,132,743 and 174,045,610 shares issued and 151,543,485 and 151,987,081 shares outstanding at March 31, 2021 and December 31, 2020, respectively		1.7			1.7
Treasury stock, at cost, 22,589,258 and 22,058,529 shares at March 31, 2021 and December 31, 2020		(699.8	)		(667.0	)
Accumulated other comprehensive (loss) income		(12.1	)		3.7
Other shareholders’ equity		1,677.9			1,622.8

Total shareholders’ equity attributable to Bruker Corporation		967.7			961.2
Noncontrolling interest in consolidated subsidiaries		14.0			13.1

Total shareholders’ equity		981.7			974.3

Total liabilities and shareholders’ equity	$	3,034.9		$	3,049.0


	Three Months Ended March 31,
	2021			2020
Product revenue	$	458.6		$	345.0
Service revenue		94.1			78.2
Other revenue		2.0			0.8

Total revenue		554.7			424.0
Cost of product revenue		220.9			180.5
Cost of service revenue		54.8			51.1
Cost of other revenue		0.3			0.1

Total cost of revenue		276.0			231.7

Gross profit		278.7			192.3
Operating expenses:
Selling, general and administrative		131.8			121.2
Research and development		54.8			48.5
Other charges, net		3.0			6.2

Total operating expenses		189.6			175.9

Operating income		89.1			16.4
Interest and other income (expense), net		(3.8	)		(2.9	)

Income before income taxes and noncontrolling interest in consolidated subsidiaries		85.3			13.5
Income tax provision		27.5			2.9

Consolidated net income		57.8			10.6
Net income (loss) attributable to noncontrolling interests in consolidated subsidiaries		1.1			0.1

Net income attributable to Bruker Corporation	$	56.7		$	10.5

Net income per common share attributable to Bruker Corporation shareholders:
Basic	$	0.37		$	0.07

Diluted	$	0.37		$	0.07

Weighted average common shares outstanding:
Basic		151.8			154.2
Diluted		153.2			155.4
Comprehensive income	$	41.6		$	12.1
Less: Comprehensive income (loss) attributable to noncontrolling interests		0.9			(0.1	)
Less: Comprehensive income (loss) attributable to redeemable noncontrolling interest		—			(0.5	)

Comprehensive income attributable to Bruker Corporation	$	40.7		$	12.7


	Redeemable Noncontrolling Interest			Common Shares			Common Stock Amount		Treasury Shares		Treasury Stock Amount			Additional Paid-In Capital			Retained Earnings			Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity Attributable to Bruker Corporation			Noncontrolling Interests in Consolidated Subsidiaries			Total Shareholders’ Equity

Balance at December 31, 2019	$	21.1			154,155,798		$	1.7		19,346,577	$	(543.8	)	$	199.7		$	1,274.7		$	(25.5	)	$	906.8		$	10.3		$	917.1
Stock options exercised					30,182			—							0.7									0.7						0.7
Restricted stock units vested					40,516			—							(0.1	)								(0.1	)					(0.1	)
Stock-based compensation															3.0									3.0						3.0
Dividends declared to common stockholders ($0.04 per share)		—																(6.2	)					(6.2	)		(1.2	)		(7.4	)
Acquired remaining 20% interest in Hain LifeScience GmbH		(20.6	)															(1.3	)					(1.3	)					(1.3	)
Consolidated net income																		10.5						10.5			0.1			10.6
Other comprehensive income (loss)		(0.5	)																		2.2			2.2			(0.2	)		2.0

Balance at March 31, 2020	$	—			154,226,496		$	1.7		19,346,577	$	(543.8	)	$	203.3		$	1,277.7		$	(23.3	)	$	915.6		$	9.0		$	924.6

Balance at December 31, 2020					151,987,081		$	1.7		22,058,529	$	(667.0	)	$	216.3		$	1,406.5		$	3.7		$	961.2		$	13.1		$	974.3
Stock options exercised					65,312			—							1.2									1.2						1.2
Restricted stock units vested					21,821			—							(0.1	)								(0.1	)					(0.1	)
Stock based compensation															3.4									3.4						3.4
Shares purchased					(530,729	)				530,729		(32.8	)											(32.8	)					(32.8	)
Dividends declared to common stockholders ($0.04 per share)																		(6.1	)					(6.1	)					(6.1	)
Consolidated net income																		56.7						56.7			1.1			57.8
Other comprehensive income (loss)																					(15.8	)		(15.8	)		(0.2	)		(16.0	)

Balance at March 31, 2021					151,543,485		$	1.7		22,589,258	$	(699.8	)	$	220.8		$	1,457.1		$	(12.1	)	$	967.7		$	14.0		$	981.7


	Total
Balance at December 31, 2020	$	320.4
Current period additions/adjustments		(0.3	)
Foreign currency impact		(6.8	)

Balance at March 31, 2021	$	313.3


	March 31, 2021							December 31, 2020
	Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization			Net Carrying Amount
Existing technology and related patents	$	299.0	$	(192.3	)	$	106.7	$	309.8	$	(194.6	)	$	115.2
Customer relationships		144.4		(48.0	)		96.4		148.3		(45.4	)		102.9
Trade names		14.8		(4.7	)		10.1		15.2		(4.4	)		10.8
Other		0.3		(0.1	)		0.2		0.3		(0.1	)		0.2

Intangible assets	$	458.5	$	(245.1	)	$	213.4	$	473.6	$	(244.5	)	$	229.1


	March 31, 2021			December 31, 2020
US Dollar notes under the 2012 Note Purchase Agreement	$	205.0		$	205.0
CHF notes (in dollars) under the 2019 Note Purchase Agreement		314.8			335.5
US Dollar notes under the 2019 Term Loan		300.0			300.0
Unamortized debt issuance costs		(2.3	)		(2.4	)
Capital lease obligations and other loans		6.7			6.4

Total debt		824.2			844.5
Current portion of long-term debt		(108.4	)		(2.2	)

Total long-term debt, less current portion	$	715.8		$	842.3


	Weighted Average Interest Rate			Total Amount Committed by Lenders		Outstanding Borrowings		Outstanding Letters of Credit		Total Committed Amounts Available
2019 Credit Agreement		1.3	%	$	600.0	$	—	$	0.2	$	599.8
Bank guarantees and working capital line		0.0	%		120.2		—		120.2		—

Total revolving lines of credit				$	720.2	$	—	$	120.4	$	599.8


	March 31, 2021					December 31, 2020
	Notional Amount in U.S. Dollars		Fair Value			Notional Amount in U.S. Dollars		Fair Value
Forward Currency Contracts (1):
Assets	$	10.0	$	0.1		$	175.8	$	2.1
Liabilities		121.3		(1.3	)		102.5		(0.4	)
Cross-Currency and Interest Rate Swap Agreements (2):
Liabilities		505.0		(26.2	)		505.0		(53.9	)

	$	636.3	$	(27.4	)	$	783.3	$	(52.2	)


	Foreign Currency Translation			Pension Liability Adjustment			Accumulated Other Comprehensive Income (Loss)
Balance at December 31, 2020	$	49.4		$	(45.7	)	$	3.7
Other comprehensive income (loss) before reclassifications		(19.1	)		2.6			(16.5	)
Realized loss on amounts reclassified from other comprehensive income (loss), net of tax		—			0.7			0.7

Net current period other comprehensive income (loss)		(19.1	)		3.3			(15.8	)

Balance at March 31, 2021	$	30.3		$	(42.4	)	$	(12.1	)


	Three Months Ended March 31,									Percentage
	2021			2020			Dollar Change			Change
BSI Life Science	$	351.8		$	261.4		$	90.4			34.6	%
BSI NANO		154.4			120.1			34.3			28.6	%
BEST		52.4			46.2			6.2			13.4	%
Eliminations (a)		(3.9	)		(3.7	)		(0.2	)

	$	554.7		$	424.0		$	130.7			30.8	%


Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number (or Approximate Dollar Value) of Shares that May Yet Be Purchased Under the Plans or Programs (2)
January 1 - January 31, 2021		85,773	$	58.29		85,773	$	29,453,135
February 1 - February 28, 2021		390,783	$	62.55		390,783	$	5,009,816
March 1 - March 31, 2021		54,173	$	59.76		54,173	$	1,691,717

		530,729	$	61.73		530,729	$	1,691,717