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Table of Contents
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
Form
10-K
 
 
 
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT of 1934
For the fiscal year ended December 31, 2021
 
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 000-30833
 
 
BRUKER CORPORATION
(Exact name of registrant as specified in its charter)
 
 
 
Delaware
 
04-3110160
(State or other jurisdiction of
Incorporation or organization)
 
(I.R.S. Employer
Identification No.)
40 Manning Road, Billerica, MA
 
01821
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code:
(978663-3660
Securities registered pursuant to Section 12(b) of the Act:
 
Title of each class
 
Trading Symbols(s)
 
Name of each exchange on which registered
Common Stock
 
BRKR
 
Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act:
None
 
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☒    No  ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ☐    No  ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T
(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule
12b-2
of the Exchange Act.
 
Large Accelerated Filer      Accelerated filer  
Non-accelerated filer
     Smaller reporting company  
     Emerging growth company  
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2
of the Exchange Act).    Yes  ☐    No  
The aggregate market value of the voting and
non-voting
stock held by
non-affiliates
of the registrant as of June 30, 2021 (the last business day of the registrant’s most recently completed second fiscal quarter) was $4,039,944,813 based on the reported last sale price on the Nasdaq Global Select Market. The number of shares of the registrant’s common stock outstanding as of February 23, 2022 was 150,773,407.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the information required by Part III of this report (Items 10, 11, 12, 13 and 14) are incorporated by reference from the registrant’s Definitive Proxy Statement on Schedule 14A for its 2022 Annual Meeting of Stockholders to be filed within 120 days of the close of the registrant’s fiscal year.
 
 
 

Table of Contents
BRUKER CORPORATION
ANNUAL REPORT ON
FORM 10-K
TABLE OF CONTENTS
 
        
Page
 
Part I
  
Item 1        3  
Item 1A        19  
Item 1B        37  
Item 2        37  
Item 3        39  
Item 4        39  
Part II
  
Item 5        40  
Item 6        41  
Item 7        42  
Item 7A        56  
Item 8        59  
Item 9        115  
Item 9A        115  
Item 9B        116  
Item 9C        116  
Part III
  
Item 10        117  
Item 11        117  
Item 12        117  
Item 13        117  
Item 14        117  
Part IV
  
Item 15        118  
Item 16        121  
       122  
 
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Table of Contents
Any statements contained in this Annual Report on Form
10-K
that are not statements of historical fact may be deemed to be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Without limiting the foregoing, the words “believe,” “anticipate,” “plan,” “expect,” “seek,” “may,” “will,” “intend,” “estimate,” “should,” and similar expressions are intended to identify forward-looking statements. Any forward-looking statements contained herein are based on current expectations but are subject to a number of risks and uncertainties. Forward-looking statements include, but are not limited to, statements regarding the impact of
COVID-19
on our business operations, the impact of supply chain 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 and our expectations regarding backlog and revenue. The factors that could cause actual future results to differ materially from current expectations include, but are not limited to, risks and uncertainties related to the length and severity of the
COVID-19
pandemic, the impact of the pandemic on global economic conditions, the length and severity of any resulting recession, the impact of supply chain challenges including inflationary pressures, the impact of geopolitical tensions and any resulting sanctions, continued volatility in the capital markets, the integration and assumption of liabilities of businesses we have acquired or may acquire in the future, our restructuring and cost-control initiatives, changing technologies, product development and market acceptance of our products, the cost and pricing of our products, manufacturing and outsourcing, competition, dependence on collaborative partners, key suppliers and third party distributors, capital spending and government funding policies, changes in governmental regulations, intellectual property rights, litigation, exposure to foreign currency fluctuations, our ability to service our debt obligations and fund our anticipated cash needs, the effect of a concentrated ownership of our common stock, loss of key personnel, payment of future dividends and other factors. Many of these factors are described in more detail in this Annual Report on Form
10-K
under Item 1A. “Risk Factors” and from time to time in other filings we may make with the Securities and Exchange Commission (the “SEC”). While we may elect to update forward-looking statements in the future, we specifically disclaim any obligation to do so, even if our estimates change, and readers should not rely on those forward-looking statements as representing our views as of any date subsequent to the date of the filing of this report.
References to “we,” “us,” “our,” “management” or the “Company” refer to Bruker Corporation and, in some cases, its subsidiaries, as well as all predecessor entities.
Our principal executive offices are located at 40 Manning Road, Billerica, MA 01821, and our telephone number is
(978) 663-3660.
Information about Bruker Corporation is available at
www.bruker.com
. The information on our website is not incorporated by reference into and does not form a part of this report. All trademarks, trade names or copyrights referred to in this report are the property of their respective owners.
 
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PART I
 
ITEM 1
BUSINESS
Our Business
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. Many of our products are used to detect, measure and visualize structural characteristics of chemical, biological and industrial material samples. Our products and solutions 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
diagnostics, nanotechnology and materials science research. Our technology platforms include magnetic resonance technologies, mass spectrometry technologies, gas and liquid chromatography, triple quadrupole mass spectrometry technologies,
X-ray
technologies,
spark-optical
emission spectroscopy, atomic force microscopy, stylus and optical metrology technology, fluorescence optical microscopy, and infrared and Raman molecular spectroscopy technologies. Our product portfolio also includes testing solutions used in microbiology and infectious disease diagnostics, including our MALDI Biotyper rapid pathogen identification platform and related test kits, DNA test strips and fluorescence-based polymerase chain reaction (PCR) technology for selected infectious disease applications. We develop, manufacture and distribute a range of field analytical systems for chemical, biological, radiological, nuclear and explosives, or CBRNE, detection. We also develop, manufacture and market low temperature superconducting materials and devices based primarily on metallic low temperature superconductors. Our corporate headquarters are located in Billerica, Massachusetts. We maintain major technical and manufacturing centers in Europe, North America and Southeast Asia, and have sales offices located throughout the world.
We originally were incorporated in Massachusetts in February 1991, as Bruker Federal Systems Corporation. In February 2000, we reincorporated in Delaware as Bruker Daltonics Inc. In July 2003, we merged with Bruker AXS Inc., and we were the surviving corporation in that merger. In connection with that merger, we changed our name to Bruker BioSciences Corporation and formed two operating subsidiaries, Bruker Daltonics and Bruker AXS. In July 2006, we acquired Bruker Optics Inc. In February 2008, we acquired the Bruker BioSpin group of companies and changed our name to Bruker Corporation.
Business Segments
We have four operating segments,
Bruker BioSpin Group, Bruker CALID Group, Bruker Scientific Instruments (BSI) Nano Segment
and
Bruker Energy
 & Supercon Technologies (BEST)
. We have three reportable segments
, BSI Life Science
,
BSI Nano
, and
BEST
. For financial reporting purposes, the Bruker BioSpin and Bruker CALID Groups are aggregated into the BSI Life Science reportable segment because they have similar economic characteristics, production processes, service offerings, types and classes of customers, methods of distribution and regulatory environments.
BSI Life Science Segment
Bruker BioSpin Group
The Bruker BioSpin Group comprises the Bruker Magnetic Resonance, Applied Industrial and Clinical, Preclinical Imaging and Service and Lifecycle Support Divisions and designs, manufactures and distributes enabling life science tools based on magnetic resonance technology. Magnetic resonance is a natural phenomenon occurring when a molecule placed in a magnetic field gives off a signature radio frequency. The signature radio frequency is characteristic of the particular molecule and provides a multitude of precise chemical and structural information. Depending on the intended application, we market and sell to our customers an NMR system or an EPR system (each as defined below).
Bruker BioSpin also manufactures and sells single and multiple modality systems using MRI, PET, SPECT, CT and MPI technologies (each as defined below). Bruker BioSpin’s products, which have particular application
 
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in structural proteomics, drug discovery, pharmaceutical and biotechnology research and production, and the food and materials science fields, provide customers with the ability to determine the structure, dynamics, and function of specific molecules, such as proteins, and to characterize and determine the composition of mixtures.
The majority of Bruker BioSpin’s customers are academic and government research facilities. Other customers include pharmaceutical and biotechnology companies; chemical, food and beverage, clinical and polymer companies; and nonprofit laboratories.
During 2021, we further expanded our business with additional GHz class systems, which represent the top end of our product portfolio. We obtained customer acceptance on four such systems (two 1.2 GHz and two 1.0 GHz). We also achieved major technical milestones in the automatic diagnosis and calibration capabilities of our systems, enabling new services like predictive maintenance. During 2021, we also successfully scaled up our benchtop Fourier NMR platform. With these Fourier NMR systems and solutions we address multiple end markets including teaching, academic research, pharmaceuticals, food and various industrial applications.
Bruker BioSpin Group’s instruments are based on the following technology platforms:
 
   
NMR
—Nuclear magnetic resonance;
 
   
EPR
—Electron paramagnetic resonance;
 
   
MRI
—Magnetic resonance imaging;
 
   
MPI
—Magnetic particle imaging;
 
   
PET
—Positron emission tomography;
 
   
SPECT
—Single photon emission tomography; and
 
   
CT
—Computed tomography.
NMR
is a qualitative and quantitative analytical technique that is used to determine the molecular structure and purity of a sample. Molecules are placed in a magnetic field and give off a radio frequency signature that is recorded by a sensitive detector. Analysis software helps to determine the molecular structure of the sample. The NMR technique is used in academia, by pharmaceutical, biotechnology, food and beverage and clinical companies, and by other industrial users in life science and material science research.
EPR
is a process of absorption of microwave radiation by paramagnetic ions or molecules with at least one unpaired electron that spins in the presence of a static magnetic field. EPR detects unpaired electrons unambiguously, whereas other techniques can only provide indirect evidence of their presence. In addition, EPR can identify the paramagnetic species that are detected, which present information on the molecular structure near the unpaired electron and give insight into dynamic processes such as molecular motions or fluidity. Our EPR instruments are used for a wide range of applications, including advanced materials research, materials analysis and quality control.
MRI
is a process of creating an image from the manipulation of hydrogen atoms in a magnetic field. In the presence of an external magnetic field, atoms will align with or against the external magnetic field. Application of a radio frequency causes the atoms to jump between high and low energy states. MRI and magnetic resonance spectroscopy, or MRS, include many methods including
diffusion-weighted,
perfusion-weighted,
molecular imaging and
contrast-enhance.
MRI offers high resolution morphologic information, as well as functional, metabolic or molecular information. Customers use our MRI systems in pharmaceutical research, including metabolomics, to study a number of diseases, including diabetes, neurology, oncology and cardiovascular disorders.
MPI
is a process of creating an image from magnetic particles administered to the body of an animal. The magnetic particles are manipulated in a combination of oscillating magnetic fields exhibiting a field free zone.
 
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The response of the particles allows a real time 3D data set acquisition of the whole body of an animal, showing the contrast agent distributing in and flowing through the body. This imaging modality is used to detect cardiovascular disorders.
PET
is a process of creating an image from positrons after administration of a positron emitting radionuclide to the body of an animal. Annihilation of the positron produces two photons which show an angle of 180° between them, distinguishing these photons from photons originating from other sources. The PET tracer enriches in certain regions of interest within the body and gains molecular information from the animal
in vivo
. This has widespread applications, most importantly for oncology, inflammation, neurology and cardiovascular disorders, as well as metabolic disease, drug discovery and bone disease.
SPECT
uses a contrast agent containing radionuclides which directly emit single photons. The contrast agent enriches in certain parts of the body of an animal and generates images of the radionuclide distribution in the body. SPECT has widespread application in animal investigations
in vivo
, most importantly in oncology, neurology and cardiovascular disorders.
CT
is a technology based on
X-rays
which are used to generate a complete 3D data set. The most important applications are tissue sample analysis or
non-invasive
in vivo
animal imaging. CT offers the highest spatial resolution of all preclinical imaging modalities and is especially useful to generate morphological information about the object or animal under investigation. CT is being used in a wide range of preclinical investigations in the fields of bone-orthopedics, cardiology, pulmonology, oncology and metabolism among others.
The Bruker BioSpin Group also offers a range of services, product lifecycle support, scientific software and workflow solutions to customers who use Bruker BioSpin products.
Bruker CALID Group
The Bruker CALID Group comprises the Bruker Daltonics and Bruker Optics Divisions. The Bruker Daltonics Division primarily designs, manufactures and distributes life science mass spectrometry, or MS, instruments that can be integrated and used along with sample preparation or chromatography instruments to design an analytical workflow and mass spectrometry-based and molecular diagnostic solutions for microbiology and infectious disease diagnostics. Bruker CALID’s life science mass spectrometry products are used in research, pharmaceutical and biotechnology development. Bruker CALID’s microbiology and infectious disease solutions are used primarily in the human and veterinary clinical diagnostic and food microbiology settings.
Mass spectrometers are sophisticated devices that measure the mass or weight of a molecule and can provide accurate information on the identity, quantity and primary structure of the molecule. Mass spectrometry-based solutions often combine advanced mass spectrometry instrumentation, automated sampling and sample preparation robots, reagent kits and other disposable products used in conducting tests, or assays, and bioinformatics software. We offer mass spectrometry systems and integrated solutions for applications in multiple existing and emerging life science markets and chemical and applied markets, including expression proteomics, clinical proteomics research, metabolic and peptide biomarker profiling, drug discovery and development, molecular diagnostics research and molecular and systems biology, as well as basic molecular medicine research. Our timsTOF Pro mass spectrometer offers workflow solutions for proteomics research. Our MALDI Biotyper mass spectrometry solution and test kits, DNA test strips and fluorescence-based PCR technologies are designed for
in-vitro
diagnostic (IVD) use in clinical microbiology markets in certain configurations and certain countries, where regulatory approvals have been achieved. In addition to culture-based microbial identification with the MALDI Biotyper platform, the Genotype and Fluorotype molecular diagnostics (MDx) kits enable a culture-free detection and analysis of microbes and viruses directly from patient samples with a special focus on tuberculosis, transplant diagnostics and sexually-transmitted diseases.
Molecular Diagnostics utilize Polymerase Chain Reaction (PCR) assays and systems to provide diagnostic solutions for a number of different disease states, including Respiratory, Mycobacteria (including Tuberculosis),
 
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Table of Contents
Virology, Safety of Immunocompromised patients, Sexually Transmitted Infections, Gastroenteric Diseases as well as other Microbiology tests. Depending on the assay being used, the technology enables users to ascertain basic identification of a certain infection, distinguish infections which can cause similar symptoms and detect specific microbial resistance, all from a single sample. The GenoType portfolio has been established for over 30 years and has been successful in mycobacteria and tuberculosis detection, differentiation, and identification of antibiotic resistance markers. The portfolio now includes FluoroType
®
, using fluorescence-based real-time PCR technology, and more recently we have also developed LiquidArray
®
assays based on melt curve analysis for optimized asymmetrical PCR technology. LiquidArray
®
uses
light-on-off
probes, providing a powerful technology to identify a broad number of indicators for different infections or resistance markers from a single sample, providing greater depth of information. We are applying this approach to a new portfolio of syndromic panels in development. As a producer of extraction chemistry and instrumentation alongside integrated thermocyclers, software and a range of assays, Bruker brings complete diagnostic solutions to the Molecular Diagnostics market.
The Bruker Optics Division manufactures and distributes research, analytical and process analysis instruments and solutions based on infrared and Raman molecular spectroscopy technologies. These products are utilized in industry, government and academia for a wide range of applications and solutions for life science, pharmaceutical, food and agricultural analysis, quality control and process analysis applications. Infrared and Raman spectroscopy are widely used in both research and industry as simple, rapid, nondestructive and reliable techniques for applications ranging from basic sample identification and quality control to advanced research. The Bruker Optics Division also utilizes Fourier transform and dispersive Raman measurement techniques on an extensive range of laboratory and process spectrometers. The Bruker Optics Division’s products are complemented by a wide range of sampling accessories and techniques, which include, among others, microanalysis and
high-throughput
screening to help users find suitable solutions to analyze their samples effectively.
Customers of our Bruker CALID Group include pharmaceutical, biotechnology and diagnostics companies, contract research organizations, academic institutions, medical schools, nonprofit or
for-profit
forensic laboratories, agriculture, food and beverage safety, environmental and clinical microbiology laboratories, hospitals and government departments and agencies.
During 2021, we launched a number of new mass spectrometry-based solutions and additional workflows, including the timsTOF SCP (Single Cell Proteomics) mass spectrometer enabling researchers to analyze proteins within a single cell. In our microbiology and molecular diagnostics markets, we introduced the MALDI Biotyper Sirius broadly into the market. In our molecular diagnostics portfolio we launched two assays in the field of respiratory disease testing, primarily covering
SARS-CoV
2 testing for the diagnosis of
COVID-19
infection. The
Fluorotyper-SARS-CoV
2 plus kit allows for a real-time PCR detection of the
SARS-CoV
2 virus. It detects two viral genes in parallel as a mechanism for high sensitivity. The additional FluoroType
®
SARS-CoV-2/Flu/RSV
assay is a multiplex real-time PCR kit that detects four viruses of clinical significance causing respiratory disease during the winter season:
SARS-CoV
2, influenza A, influenza B and respiratory syncytial virus (RSV). During 2020, the Bruker Optics division launched LUMOS II, a fully automated stand-alone FTIR imaging microscope. LUMOS II provides ultrafast FTIR imaging capabilities based on modern focal plane array (FPA) detector technology. The novel LUMOS II is designed to identify particles, to determine coatings and contaminations, and to reveal the polymeric composition of plastics.
The Bruker CALID Group’s instruments are based on the following technology platforms:
 
   
MALDI
-TOF
—Matrix-assisted
laser desorption ionization
time-of-flight
mass spectrometry, including tandem
time-of-flight
systems
(MALDI-TOF);
 
   
ESI
-TOF
—Electrospray ionization
time-of-flight
spectrometry, including trapped ion mobility (TIMS) based on
ESI-quadrupole-TOF
mass spectrometry (timsTOF);
 
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MRMS
—Magnetic resonance mass spectrometry, including hybrid systems with a quadrupole front end
(Q-q-MRMS);
 
   
ITMS
—Ion trap mass spectrometry;
 
   
GC
-MS
—Gas
chromatography-mass
spectrometry systems utilizing
triple-quadrupole
time-of-flight
mass spectrometry;
 
   
LC
-MS
—Liquid
chromatography-mass
spectrometry systems utilizing
triple-quadrupole
time-of
flight mass spectrometry;
 
   
FT
-IR
—Fourier
transform-infrared
spectroscopy;
 
   
NIR
—Near-infrared
spectroscopy; and
 
   
Raman
—Raman spectroscopy.
MALDI
-TOF
mass spectrometers utilize an ionization process to analyze solid samples using a laser that combines high sample throughput with high mass range and sensitivity. Our
MALDI-TOF
mass spectrometers are particularly useful for applications in clinical diagnostics, environmental and taxonomical research and food processing and quality control. Specific applications include: oligonucleotide and synthetic polymer analysis; protein identification and quantification; peptide de novo sequencing; determination of
post-translational
modifications of proteins; interaction proteomics and protein function analysis; drug discovery and development; and fast body fluid and tissue peptide or protein biomarker detection. MALDI mass spectrometry allows users to classify and identify microorganisms quickly and reliably with minimal sample preparation efforts and life cycle costs. Our MALDI Biotyper solution, which serves the clinical microbiology market, enables identification, taxonomical classification or dereplication of microorganisms like bacteria, yeasts and fungi.
ESI
-TOF
mass spectrometers utilize an electrospray ionization process to analyze liquid samples. This ionization process, which does not dissociate the molecules, allows for rapid data acquisition and analysis of large biological molecules.
ESI-TOF
mass spectrometers are particularly useful for: identification, protein analysis and functional complex analysis in proteomics and protein function; molecular identification in metabolomics, natural product and drug metabolite analysis; combinatorial chemistry high throughput screening; and fast liquid chromatography mass spectrometry, or liquid chromatography mass spectrometry
(LC-MS),
in drug discovery and development.
MRMS
systems utilize
high-field
superconducting magnets to offer the highest resolution, selectivity, and mass accuracy currently achievable in mass spectrometry. Our systems based on this technology often eliminate the need for
time-consuming
separation techniques in complex mixture analyses. In addition, our systems can fragment molecular ions to perform exact mass analysis on all fragments to determine molecular structure. MRMS systems are particularly useful for: the study of the structure and function of biomolecules, including proteins, DNA and natural products; complex mixture analysis including body fluids or combinatorial libraries;
high-throughput
proteomics and metabolomics; and
top-down
proteomics of intact proteins without the need for enzymatic digestion of the proteins prior to analysis. We offer
next-generation
hybrid MRMS systems that combine a traditional external quadrupole mass selector and hexapole collision cell with a
high-performance
MRMS for further ion dissociation,
top-down
proteomics tools and
ultra-high
resolution detection.
ITMS
systems collect all ions simultaneously, which improves sensitivity relative to previous quadrupole mass spectrometers. Ion trap mass spectrometers are particularly useful for sequencing and identification based on peptide structural analysis, quantitative liquid chromatography mass spectrometry, identification of combinatorial libraries and generally enhancing the speed and efficiency of the drug discovery and development process.
GC
-MS
systems combine the features of gas chromatography and mass spectrometry to identify different substances within a test sample. The two components, used together, allow for a finer degree of substance
 
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identification than either system when used separately. The result is a quantitative analysis of the components and the mass spectrum of each component. Our
GC-MS
systems are available in triple quadrupole configurations and can be configured with a variety of options to suit a range of applications. Our
GC-MS
systems have applications in food and product safety, forensics, clinical and toxicology testing and environmental, pharmaceutical and chemical analysis.
LC
-MS
systems combine the separation features of liquid chromatography with the molecular identification features of mass spectrometry to separate, identify and quantify different substances within a test sample. As a complementary technique to
GC-MS,
which analyzes volatile compounds,
LC-MS
can be used to analyze a wide range of
non-volatile
compounds in complex samples. Our
LC-MS
systems are available in a wide range of configurations to suit a user’s specific needs. Although primarily used for life science applications, our
LC-MS
systems also have applications in food and product safety, forensics and clinical and toxicology testing, as well as environmental, pharmaceutical and chemical analysis.
FT
-IR
spectrometers utilize the
mid-
and
far-infrared
regions of the electromagnetic spectrum. Our
FT-IR
systems are commonly used for various quality control and materials research applications.
NIR
spectrometers utilize the
near-infrared
region of the electromagnetic spectrum. Our NIR instruments are primarily used for quality and process control applications in the pharmaceutical, food and agriculture and chemical industries. The pharmaceutical industry is the leading user of NIR instruments, and applications include quality control, research and development and process analytical technology. The food and agricultural industry is the second largest user of NIR instrumentation, with an increasing demand for food, feed and beverage quality control.
Raman
spectroscopy provides information on molecular structure. The mechanism of Raman scattering is different from that of infrared absorption, in that Raman and IR spectra provide complementary information. Raman is useful for the identification of both organic and inorganic compounds and functional groups. It is a nondestructive technique and can be used for the analysis of both liquids and solids. Raman is well suited for use in the polymer and pharmaceutical industries, and has applications in the metals, electronics and semiconductors industries. The technique also has applications in life sciences, forensics and artwork authentication.
Additionally, the Bruker Detection product line offers a wide range of portable analytical and bioanalytical detection systems and related products for CBRNE detection. Our customers use these devices for nuclear, biological agent and chemical agent defense applications,
anti-terrorism,
law enforcement and process and facilities monitoring. Our CBRNE detection products use many of the same technology platforms as our life science products, as well as additional technologies, including infrared
stand-off
detection and ion mobility spectrometry, for handheld chemical detectors. We also provide integrated, comprehensive detection suites that include our multiple detection systems, consumables, training and simulators.
BSI Nano Segment
The BSI Nano Segment comprises the Bruker AXS, Bruker Nano Analytics, Bruker Nano Surfaces and Metrology, Fluorescence Microscopy and Canopy Divisions. The Bruker AXS Division designs, manufactures and distributes advanced
X-ray
instruments that use electromagnetic radiation with extremely short wavelengths to determine the characteristics of matter and the three-dimensional structure of molecules. This includes a product portfolio of instruments based on
X-ray
fluorescence spectroscopy (XRF),
X-ray
diffraction (XRD) and
X-ray
micro computed tomography (µCT), or
X-ray
microscopy, as well as spark optical emission spectroscopy systems
(S-OES)
used to analyze the concentration of elements in metallic samples.
The Bruker Nano Analytics Division manufactures and markets analytical tools for electron microscopes, including
energy-dispersive
X-ray
spectrometers (EDS), electron backscatter diffraction systems (EBSD) and µCT accessories, as well as mobile and bench top micro
X-ray
fluorescence (µXRF), total reflection
X-ray
 
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fluorescence spectrometers (TXRF) and handheld, portable and mobile
X-ray
fluorescence
(HMP-XRF)
spectrometry instruments.
The Bruker Nano Surfaces and Metrology Division’s products include atomic force microscopy instrumentation (AFM). Such instruments provide atomic or near atomic resolution of surface topography and nanoscale, mechanical, electrical and chemical information using nano scale probes. The Bruker Nano Surfaces and Metrology Division also provides
non-contact
nanometer resolution solution topography through white light interferometry and stylus profilometry. In addition, the division manufacturers and markets automated
X-ray
metrology, automated AFM defect-detection and photomask repair and cleaning equipment for semiconductor process control.
The Fluorescence Microscopy Division provides advanced optical fluorescence microscopy instruments with multi-photon, multipoint scanning confocal 3D super-resolution, light-sheet modalities for studies in life science applications.
The Canopy Division provides products and services to support the multi-omics needs of researchers in translational research, drug and biomarker discovery.
Customers of our BSI 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 analysis.
During 2021, we launched several new products including
IconIR, nanoIR, NanoWizard V BioAFM, InSight
CAP-HP
automated AFM, Sirius XRD
-X-Ray
CD metrology, Sirius RF,
WC-2200
Wafer Clean, Q4 POLO elemental analysis and multiphoton 3P
.
We acquired Scientific Computing International (SCI), which was a leading innovator and provider of advanced metrology systems and analysis software to major companies in the semiconductor, optoelectronics, data storage, display, MEMS, and optical coating industries. And we also acquired SVXR, Inc. which engages in researching, developing, designing, engineering, and manufacturing automated
x-ray
inspection technology and providing analysis toolkits, bringing high speed inspection and metrology technology to the semiconductor packaging industry with its revolutionary
HR-AXI
technology.
The BSI Nano Segment systems are based on the following technology platforms:
 
   
XRD
—Polycrystalline
X-ray
diffraction, often referred to as
X-ray
diffraction;
 
   
XRF
—X-ray
fluorescence, also called
X-ray
spectrometry, including handheld XRF systems;
 
   
SC
-XRD—
Single crystal
X-ray
diffraction, often referred to as
X-ray
crystallography;
 
   
µ
CT—
X-ray
micro computed tomography,
X-ray
microscopy;
 
   
EDS—
Energy dispersive
X-ray
spectroscopy on electron microscopes;
 
   
EBSD—
Electron backscatter diffraction on electron microscopes;
 
   
S
-OES—
Spark optical emission spectroscopy;
 
   
CS/ONH—
Combustion analysis for carbon, sulfur, oxygen, nitrogen, and hydrogen in solids;
 
   
AFM
—Atomic force microscopy;
 
   
FM
—Fluorescence microscopy;
 
   
SOM
—Stylus and optical metrology;
 
   
TMT
—Tribology and mechanical test systems for analysis of friction and wear;
 
   
NanoIR
—Nanoscale infrared spectroscopy;
 
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Alicona
—Focus variation optical technology for
non-contact
dimensional metrology; and
 
   
Canopy
—Multiplexed fluorescence-based single cell imaging for suspended cells and tissues as well as multi-omics sample characterization.
XRD
systems investigate polycrystalline samples or thin films with single wavelength
X-rays.
The atoms in the polycrystalline sample scatter the
X-rays
to create a unique diffraction pattern recorded by a detector. Computer software processes the pattern and produces a variety of information, including stress, texture, qualitative and quantitative phase composition, crystallite size, percent crystallinity and layer thickness, composition, defects and density of thin films and semiconductor material. Our XRD systems contribute to a reduction in the development cycles for new products in the catalyst, polymer, electronic, optical material and semiconductor industries. Customers also use our XRD systems in academic and government research, as well as in a variety of other fields, including forensics, art and archaeology.
XRF
systems determine the elemental composition of a material and provide a full qualitative and quantitative analysis. Our XRF systems direct
X-rays
at a sample, and the atoms in the sample absorb the
X-ray
energy. The elements in the sample then emit
X-rays
that are characteristic for each element. The system collects the
X-rays,
and the software analyzes the resulting data to determine the elements that are present. Our XRF products provide automated solutions on a
turn-key
basis for industrial users that require automated, controlled production processes that reduce product and process cost, increase output and improve product quality. Our XRF products cover substantially all of the periodic table and can analyze solid, powder or liquid samples.
SC
-XRD
systems determine the
three-dimensional
structures of molecules in a chemical, mineral, or biological substance being analyzed.
SC-XRD
systems have the capability to determine structure in both small chemical molecules and larger biomolecules.
SC-XRD
systems direct an
X-ray
beam at a solid, single crystal sample. The atoms in the crystal sample scatter the
X-rays
to create a precise diffraction pattern recorded by an electronic detector. Software then reconstructs a model of the structure and provides the unique arrangement of the atoms in the sample. This information on the exact arrangement of atoms in the sample is a critical part of molecular analysis and can provide insight into a variety of areas, including how a protein functions or interacts with a second molecule. Our
SC-XRD
systems are designed for use in the life sciences industry, academic research and a variety of other applications.
µ
CT
is
X-ray
imaging in 3D, by the same method used in hospital CT scans, but on a small scale with massively increased resolution. 3D microscopy allows users to image the internal structure of objects
non-destructively
on a very fine scale. Bruker µCT is available in a range of
easy-to-use
desktop instruments, which generate 3D images of the sample’s morphology and internal microstructure with resolution down to the
sub-micron
level. Our µCT systems are used for numerous applications in materials research and in the life sciences industry.
EDS
systems analyze the chemical composition of materials under investigation in electron microscopes by utilizing the fact that atoms of different chemical elements, when exposed to the high energy electron beam generated by the microscope, irradiate
X-rays
of different characteristic energy. The evaluation of the energy spectrum collected by our spectrometer allows the determination of the qualitative and quantitative chemical sample composition at the current beam position. EDS systems allow for simultaneous analysis of all elements in the periodic table, beginning with atomic number 4 (beryllium). Our EDS systems are used for a range of applications, including nanotechnology and advanced materials research, as well as materials analysis and quality control. Customers for EDS systems include industrial customers, academia and government research facilities.
EBSD
systems are used to perform quantitative microstructure analysis of crystalline samples in electron microscopes. The microscope’s electron beam strikes the tilted sample and diffracted electrons form a pattern on a fluorescent screen. This pattern is characteristic of the crystal structure and orientation of the sample region from which it was generated. It provides the absolute crystal orientation with
sub-micron
resolution. EBSD can
 
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be used to characterize materials with regard to crystal orientation, texture, stress, strain and grain size. EBSD also allows the identification of crystalline phases and their distribution and is applied to many industries such as metals processing, aerospace, automotive, microelectronics and earth sciences.
S
-OES
instruments are used for analyzing metals.
S-OES
covers a broad range of applications for metals analysis from pure metals trace analysis to high alloyed grades and allows for analysis of a complete range of relevant elements simultaneously.
S-OES
instruments pass an electric spark onto a sample, which burns the surface of the sample and causes atoms to jump to a higher orbit. Our detectors quantify the light emitted by these atoms and help our customers to determine the elemental composition of the material. This technique is widely used in production control laboratories of foundries and steel mills.
CS/ONH
carrier gas systems incorporate a furnace and infrared or thermal conductivity detection to analyze inorganic materials for the determination of carbon, sulfur, nitrogen, oxygen and hydrogen. Combustion and inert gas fusion analyzers are used for applications in metal production and processing, chemicals, ceramics and cement, coal processing, oil refining and semiconductors.
AFM
systems provide atomic or
near-atomic
resolution of material surface topography using a
nano-scale
probe that is brought into light contact with the sample being investigated. In addition to presenting a surface image, AFM can also provide quantitative
nano-scale
measurements of feature sizes, material properties, electrical information, chemical properties and other sample characteristics. Our AFM systems are used for applications in academic and governmental materials and biological research and semiconductor, data storage hard drive, LED, battery, solar cells, polymers, and pharmaceutical product development and manufacturing.
FM
products use fluorescence microscopy to determine the structure and composition of life science samples. Our products include
two-photon
microscopes, multipoint scanning confocal microscopes, super-resolution microscopes, light-sheet microscopes, laser illumination sources, photoactivation, photostimulation and photoablation accessories and synchronization and analysis software.
Two-photon
microscopes allow imaging deep into tissues and cells and are used widely in neuroscience. Multipoint scanning confocal systems allow live cell imaging with rapid acquisition of images for structural and composition analysis. Super-resolution and single-molecule localization microscopy products allow imaging below the optical diffraction limit by an order of magnitude. Light-sheet based products allow fast 3D volume imaging with very low phototoxicity and photo-damage effects enabling live cell and large volume imaging.
SOM
systems provide atomic or
near-atomic
two dimensional and three-dimensional surface resolution using white light interferometry, confocal optical and stylus profilometry methods. SOM profilers range from
low-cost
manual tools for single measurements to advanced, highly automated systems for production line quality assurance and quality control applications where the combination of throughput, repeatability and reproducibility is essential. SOM profilers support a range of applications in research, product development, tribology, quality control and failure analysis related to materials and machining in the automotive, orthopedic, ophthalmic, high brightness LED, semiconductor, data storage, optics and other markets.
TMT
systems provide a platform for all types of common mechanical, friction, durability, scratch and indentation tests for a wide spectrum of materials. Tribology systems are utilized for both academic research of the fundamental material properties and industrial applications in the semiconductor, aerospace, petroleum, automotive and other industries.
NanoIR
systems perform infrared (IR) spectroscopy at the nanoscale. Our systems use nanoprobe technology similar to what is used in our atomic force microscopes to deliver quantitative chemical information from the nanoscale to the
sub-micron
and macro scales. The NanoIR measurement gives the user varying physical and chemical properties with nanoscale spatial resolution in a diverse range of fields, including polymers, 2D materials, materials science, life science and the micro-electronics industry. Our systems allow nanoscale IR absorption spectroscopy with interpretable IR spectra that directly correlates to FTIR as well as the
 
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complementary technique of nanoscale
s-SNOM.
With our broadband sources, these systems allow broadband scientific spectroscopy.
Alicona
systems combine the functionalities of a micro coordinate measurement machine (CMM) with those of a surface measurement system. These dimensional metrology systems are based on the pioneering development of optical Focus-Variation measurement algorithms and provide the noncontact measurement of form and roughness of complex, miniaturized geometries. These systems serve many quality assurance application areas requiring precision measurement and dimensional metrology, including aerospace, automotive, precision medical products, additive manufacturing, and micro precision manufacturing.
Canopy
provides digital spatial profiling services and instruments which include both our ChipCytometry profiling instrument and ChipCytometry (single cell and spatial targeted proteomics) and other services. These technologies, along with Canopy’s more basic IHC and FISH services, allow researchers to elucidate gene and protein expression in a spatial context, which is useful for deep biological insight into gene expression and for the development of biomarkers. Canopy also provides transcriptional profiling services covering a variety of assays, including RNASeq and qPCR. Our multi-omic services provide data elucidating gene expression, signaling pathways, and differential expression trends on customer provided biological samples. These services generally incorporate a data analysis service as well and can be utilized with multiple types of samples from very early discovery research through clinical trials.
BEST Segment
The BEST Segment designs, manufactures and distributes superconducting materials, primarily metallic low temperature superconductors, for use in magnetic resonance imaging, nuclear magnetic resonance, fusion energy research and other applications. Additionally, BEST develops, manufactures and markets sophisticated devices and complex tools based primarily on metallic low temperature superconductors that have applications in “big science” research, including radio frequency accelerator cavities and modules, power couplers and linear accelerators. BEST also manufactures and sells
non-superconducting
high technology tools, such as synchrotron and beamline instrumentation, principally to customers engaged in materials research and “big science” research projects.
Sales and Marketing
We maintain direct sales forces throughout North America, Europe, Russia, China, Japan, and elsewhere in the Asia Pacific region. We also utilize indirect sales channels to reach customers. We have various international distributors, independent sales representatives and various other representatives in parts of Asia, Latin America, Africa, the Middle East and Eastern Europe. These entities augment our direct sales force and provide coverage in areas where we do not have direct sales personnel. In addition, we have adopted a distribution business model in which we engage in strategic distribution alliances with other companies to address certain market segments. The sales cycle for our products is dependent on the size and complexity of the system and budgeting cycles of our customers. Our sales cycle is typically three to
twenty-four months
for academic and
high-end
research products and two weeks to six months for industrial products. The sales cycle of our low temperature superconducting materials is typically four to twelve months, with cycles of certain
high-end
materials exceeding one year. Sales of our
high-end
NMR and superconducting devices typically take more than one year and certain large, complex contracts can take more than two years to complete.
We have
well-equipped
applications and demonstration facilities and qualified application personnel who assist customers and provide product demonstrations in specific application areas. We maintain our primary demonstration facilities at our production facilities, as well as in other key market locations.
Seasonal Nature of Business
Historically, we have higher levels of revenue in the fourth quarter and lower levels of revenues in the first quarter of the year, which we believe is influenced by our customers’ budgeting cycles.
 
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Major Customers
We have a broad and diversified customer base and we do not depend on any single customer. No single customer accounted for more than 10% of revenue in any of the last three fiscal years or more than 10% of accounts receivable as of December 31, 2021 or 2020.
Competition
Our existing products and solutions and any products and solutions that we develop in the future may compete in multiple, highly competitive markets. In addition, there has been a trend towards consolidation in our industries and many of our competitors have substantially greater financial, technical and marketing resources than we do. Our competitors may succeed in developing and offering products that could render our products or those of our strategic partners obsolete or noncompetitive. Our competitors may also have cost and price advantages based upon the value of their currencies compared with the U.S. Dollar or Euro. In addition, many of these competitors have significantly more experience in the life sciences, chemical and materials markets. Our ability to compete successfully will depend on our ability to develop proprietary products that reach our target markets in a timely manner and are technologically superior to and/or less expensive, or more cost effective, than products marketed by our competitors. Current competitors or other companies may possess or develop technologies and products that are more effective than ours. Our technologies and products may be rendered obsolete or uneconomical by technological advances or by entirely different approaches developed by one or more of our competitors.
We also compete with companies that provide analytical or automation tools based on technologies other than those we offer. These technologies may prove to be more successful in meeting demands in the markets that our products and solutions are intended to serve. In addition, other companies may choose to enter our fields in the future. We believe that the principal competitive factors in our markets are
technology-based
applications expertise, product specifications, functionality, reliability, marketing expertise, distribution capability, proprietary patent portfolios and cost effectiveness.
BSI Life Science Segment Competition
The Bruker BioSpin Group competes with companies that offer magnetic resonance spectrometers, mainly JEOL and Oxford Instruments. In the field of preclinical imaging, Bruker BioSpin competes with PerkinElmer Inc., Mediso, Trifoil, MR Solutions and others. The Bruker CALID Group competes with a variety of companies that offer mass spectrometry-based systems. Bruker CALID’s competitors in the life science markets and chemical and applied markets include Danaher, Agilent,
GE-Healthcare,
Waters, Thermo Fisher Scientific, Shimadzu, Hitachi and JEOL. In the microbiology market, Bruker CALID competes with Biomerieux. In molecular diagnostics, Bruker CALID competes with a number of companies offering products for infectious disease diagnostics. Bruker CALID also competes with a variety of companies that offer molecular spectrometry-based systems, including Thermo Fisher Scientific, PerkinElmer, Agilent, Foss, ABB Bomem, Buchi, Shimadzu and Jasco. Bruker CALID’s CBRNE detection customers are highly fragmented, and it competes with a number of companies in this area, of which the most significant competitor is Smiths Detection.
BSI Nano Segment Competition
The BSI Nano Segment competes with companies that offer analytical
X-ray
solutions, OES systems, AFM and SOM systems and optical fluorescence systems, primarily Rigaku, Oxford Instruments, Agilent, Thermo Fisher Scientific, Ametek’s Spectro and Edax divisions, PANalytical, Park Systems, Olympus, Nikon, Zeiss and Danaher’s Leica business.
BEST Segment Competition
BEST competes with Luvata, Western Superconducting Technologies Co., Ltd. (WST), and Jastec Co., Ltd. in low temperature superconducting materials. BEST further competes with Zanon, Mitsubishi Electric and AES
 
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in the development and supply of accelerator cavities, with Thales, Toshiba and CPI International in the development and supply of radio frequency couplers, with Mitsubishi Heavy Industries in the development and supply of superconducting accelerator modules and with AES and Thales for electron linear accelerators.
Manufacturing and Supplies
Several of our manufacturing facilities are certified under ISO 9001:2008 and ISO 13485, international quality standards. We manufacture and test our magnetic resonance products at our facilities in Faellanden, Switzerland; Wissembourg, France; and Karlsruhe, Germany. We manufacture and test our preclinical imaging products at our facilities in Ettlingen, Germany; Wissembourg, France; Kontich, Belgium; and Faellanden, Switzerland. We manufacture and test our mass spectrometry products at our facilities in Bremen, Germany. We principally manufacture and test our molecular spectroscopy products, including CBRNE detection products, at our facilities in Ettlingen, Germany. We manufacture and test our
X-ray,
OES and AFM products at our facilities in Penang, Malaysia; Karlsruhe, Germany; Berlin, Germany; Santa Barbara, California, U.S.A.; and Migdal Ha’Emek, Israel. We manufacture and test the majority of our energy and superconducting products at our facilities in Hanau, Germany; Bergisch Gladbach, Germany; Perth, Scotland; and Carteret, New Jersey, U.S.A. Manufacturing processes at our facilities in Europe, Israel and California, U.S.A. include all phases of manufacturing, such as machining, fabrication, subassembly, system assembly, and final testing. Our other facilities primarily perform high-level assembly, system integration and final testing. We typically manufacture critical components
in-house
to ensure key competence and outsource to third party manufacturers
non-critical
components.
We purchase materials and components from various suppliers that are either standard products or built to our specifications. We obtain some of the components included in our products from a limited group of suppliers or from a single-source supplier for items such as charge coupled device area detectors,
X-ray
tubes, robotics, infrared optics and others. BEST has an ongoing collaboration and a joint technology development agreement with Allegheny Technologies Incorporated to advance
state-of-the-art
niobium-based superconductors, including those used in MRI magnets for the medical industry, and preclinical MRI magnets used in the life-science tools industry.
Research and Development
We commit substantial capital and resources to internal and collaborative research and development projects in order to provide innovative products and solutions to our customers. We conduct research primarily to enhance system performance and improve the reliability of existing products, and to develop revolutionary new products and solutions. Our research and development efforts are conducted for the relevant products within each of the operating segments, as well as in collaboration with others on areas such as microfluidics, automation and workflow management software. We have been the recipient of government grants from Germany and the United States for various projects related to
early-stage
research and development. We have generally retained, at a minimum,
non-exclusive
rights to any items or enhancements we develop under these grants. The German government requires that we use and market technology developed under grants in order to retain our rights to the technology. We have also accepted some sponsored research contracts from private sources.
BSI Life Science Segment Research and Development
The research and development performed in the Bruker BioSpin Group and in the CALID Group is primarily conducted at our facilities in Bremen and Ettlingen, Germany; Faellanden, Switzerland and Wissembourg, France. The Bruker BioSpin Group maintains technical competencies in core magnetic resonance technologies and single- and multimodal imaging technologies and capabilities, including NMR, EPR, MRI, MPI, PET and CT. The most recent technological innovations included Bruker’s ultra-high-field class in the NMR and MRI product line and the benchtop Fourier NMR platform. In 2021, we achieved major technical milestones in automatic diagnosis and calibration capabilities of our systems, enabling new services like predictive maintenance.
 
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The Bruker CALID Group maintains technical competencies in core mass spectrometry technologies and capabilities, including: MALDI, ESI and EI/CI ion source, TOF, TOF/TOF, ion traps, MRMS, quadrupole and IMS analyzers and bioinformatics. Recent projects include the innovative timsTOF mass spectrometer for separation and analysis of unresolved compounds and conformations. The Bruker CALID Group also maintains technical competencies in core vibrational spectroscopy technologies and capabilities, including
FT-IR,
NIR and Raman.
BSI Nano Segment Research and Development
The research and development performed in the BSI Nano Segment is primarily conducted at our facilities in Karlsruhe, Berlin and Leipzig, Germany; Penang, Malaysia; Madison, Wisconsin, Eden Prairie, Minnesota, San Jose and Santa Barbara, California, and St. Louis, Missouri, U.S.A. The BSI Nano Segment maintains technical competencies in core
X-ray
technologies and capabilities, including detectors used to sense
X-ray
and
X-ray
diffraction patterns,
X-ray
sources and optics that generate and focus the
X-rays,
robotics and sample handling equipment that holds and manipulates the experimental material, and software that generates the structural data. Recent projects include fluorescence microscopy with simultaneous,
all-optical
stimulation and imaging platforms for optogenetics neuroscience research and light sheet cell microscopy systems, which enable brain research and high-resolution live cell research. The BSI Nano Segment also has competencies in AFM technology, which involve
sub-angstrom
level position and motion control, as well as
sub-pico
newton force control. The BSI Nano Segment technologies also include 3D optical inference-based microscopy, stylus profilometry, tribology testing, nano-indentation, optical fluorescence
two-photon
microscopy, multipoint scanning microscopy, high-speed, 3D super-resolution florescence microscopy and spatial biology and single-cell targeted proteomics technologies. Recent innovations include elemental analyzer systems for advanced applications and research and simultaneous,
all-optical
stimulation and imaging platforms for neuroscience applications.
BEST Segment Research and Development
The research and development performed in the BEST Segment is primarily conducted at our facilities in Hanau and Bergisch Gladbach, Germany; and Carteret, New Jersey, U.S.A. BEST maintains technical competencies in the production and development of low and high temperature superconducting materials and devices.
Intellectual Property
Our intellectual property consists of patents, copyrights, trade secrets,
know-how,
and trademarks. Protection of our intellectual property is a strategic priority for our businesses because of the length of time and expense associated with bringing new products through the development process and to the marketplace. We have a substantial patent portfolio, and we intend to file additional patent applications as appropriate. We believe our owned and licensed patent portfolio provides us with a competitive advantage. This portfolio permits us to maintain access to a number of key technologies. We license our owned patent rights where appropriate. We intend to enforce our patent rights against infringers, if necessary. The patent positions of life sciences tools companies involve complex legal and factual questions. As a result, we cannot predict the enforceability of our patents with certainty. In addition, we are aware of the existence from time to time of patents in certain countries, which, if valid, could impair our ability to manufacture and sell products in these countries.
We also rely upon trade secrets,
know-how,
trademarks, copyright protection and licensing to develop and maintain our competitive position. We generally require the execution of confidentiality agreements by our employees, consultants, and other scientific advisors. These agreements provide that all confidential information made known during the course of a relationship with us will be held in confidence and used only for our benefit. In addition, these agreements provide that we own all inventions generated during the course of the relationship.
 
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Government Contracts
We are a party to various government contracts. Under some of these government contracts, the government may receive license or similar rights to intellectual property developed under the contract. However, under government contracts we enter we generally receive at least
non-exclusive
rights to any items or technologies we develop. Although we transact business with various government agencies, we believe that no government contract is of such magnitude that a renegotiation of profits or termination of the contract or subcontracts at the election of the government would have a material adverse effect on our financial results.
Government Regulation
We are required to comply with federal, state, and local environmental protection regulations. We do not expect this compliance to have a significant impact on our capital spending, earnings or competitive position.
Our products are subject to the U.S. Food and Drug Administration’s, or the FDA’s, requirements for electronic radiation emitting products, which include requirements related to record-keeping and reporting; labeling; notification; product repairs, replacements and refunds; importations; and performance standards. For example, prior to introducing a product in the United States, our Bruker AXS subsidiary provides notice to the FDA in the form of a Radiation Safety Initial Product Abbreviated Report, which provides identification information and operating characteristics of the product. If the FDA finds that the report is complete, it provides approval in the form of what is known as an accession number. Bruker AXS may not market a product until it has received an accession number. In addition, Bruker AXS submits an annual report to the FDA that includes the radiation safety history of all products it sells in the United States. Bruker AXS is required to report to the FDA incidents of accidental exposure to radiation arising from the manufacture, testing, or use of any of its products. Bruker AXS also reports installations of its products to state government regulatory agencies responsible for the regulation of radiation emitting devices. For sales in Germany, Bruker AXS registers each system with the local authorities. In some countries where Bruker AXS sells systems, Bruker AXS uses the license we obtained from the federal authorities in Germany to assist it in obtaining a license from the country in which the sale occurs.
Our Bruker AXS subsidiary possesses
low-level
radiation materials licenses from the local radiation safety authority, Gewerbeaufsichtsamt Karlsruhe, for its facility in Karlsruhe, Germany; and from the local radiation safety authority, Kanagawa Prefecture, for its facility in Yokohama, Japan, as well as from various other countries in which it sells its products. Our Bruker Daltonics subsidiary possesses
low-level
radiation licenses for facilities in Billerica, Massachusetts and Leipzig, Germany. The U.S. Nuclear Regulatory Commission also has regulations concerning the exposure of our employees to radiation.
Certain of our clinical products are subject to regulation as medical devices in the United States by the FDA and by similar regulatory bodies in other countries where such products are sold. The regulatory requirements imposed by the FDA and other regulatory bodies govern a wide variety of product-related activities, from quality management, design and development to labeling, manufacturing, promotion, sales, and distribution. As such, we continually invest in our manufacturing infrastructure to gain and maintain certifications and registrations necessary for the relevant level of regulatory clearance. We also are required to maintain processes and systems for medical device product submissions. For example, our MALDI Biotyper CA system is subject to regulation by the FDA as a medical device and requires FDA premarket review and clearance via the 510(k) premarket notification process and our
IVD-CE
Certified MALDI BioTyper system is subject to regulation in the European Union under the provisions of Directive 98/79/EC. In addition, certain product changes, including changes to the product indications or label claims, could trigger the requirement for a new 510(k) or other FDA or foreign regulatory premarket submission. The process of obtaining marketing approval, authorization, or clearance from the FDA and comparable foreign regulatory authorities for new products, or for enhancements or modifications to existing products, could take a significant amount of time, require the expenditure of substantial financial and other resources, and require rigorous and expensive
pre-clinical
and clinical testing. Additionally, the FDA or
 
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comparable foreign regulatory authorities could impose limitations on the indications for use of our products. Should we pursue an FDA or comparable foreign regulatory authority clearance, authorization, or approval for a new device or device modification, we cannot be certain that we will receive required clearance, authorization, or approval on a timely basis or at all. The failure to receive clearance, authorization, or approval for significant new products or modifications to existing products on a timely basis or at all could have a material, adverse effect on our financial condition and results of operations.
Both before and after a medical device product is commercially released, we have ongoing responsibilities under FDA and foreign regulations. For example, we are required to comply with the FDA’s Quality System Regulation, which sets forth the good manufacturing requirements for medical devices. These include requirements related to design controls, production and process controls, process validation, purchasing controls, supplier oversight, complaint handling and investigation, corrective and preventative actions, and record-keeping. In addition, the FDA’s medical device reporting regulation requires us to provide information to the FDA whenever we become aware that there is evidence that reasonably suggests that a device may have caused or contributed to a death or serious injury or, that a malfunction occurred which would be likely to cause or contribute to a death or serious injury upon recurrence. The FDA and comparable foreign regulatory authorities also regulate the promotion and marketing of medical devices and require that manufacturers only make promotional claims or statements that are consistent with the indications and labeling cleared, authorized, or approved by the FDA or other regulatory authorities. The FDA and comparable foreign regulatory authorities may take enforcement action against us, should the FDA determine we have engaged in
“off-label”
promotion or other violative marketing activities.
The European Union Directive will be replaced in May 2022 by the IVD Regulation (EU) 2017/746. The regime changes significantly with the new Regulation, which requires clinical evidence to demonstrate the claimed benefits and safety of the device in relation to its stated purpose, stricter classification and
CE-marking
requirements and ongoing post-market
follow-up
to ensure conformity. The Regulation requires new databases to be set up to track which devices are CE marked and to register clinical studies and post-market monitoring. In addition, tracing is enhanced by a Unique Device Identification (UDI) System and through requirements on other economic operators in the supply chain. Our products currently approved under the Directive, and not already placed on the market or put into service, must be recertified under the Regulation by May 2024.
Backlog
Our backlog consists of firm orders under
non-cancellable
purchase orders received from customers. Total system backlog as of December 31, 2021 and 2020 was approximately $2,077.2 million and $2,006.7 million, respectively. The increase in our backlog in 2021 when compared to 2020 is due to strengthening demand in our BSI order bookings as of December 31, 2021. We anticipate that approximately 70% of the backlog as of December 31, 2021 will be recognized in revenue in 2022. We generally experience variable and fluctuating revenues in the first three quarters of the year, while our fourth quarter revenues have historically been stronger than the rest of the year. As a result, backlog on any particular date can be indicative of our short-term revenue performance but is not necessarily a reliable indicator of long-term revenue performance.
Human Capital
We are committed to enabling scientists to make breakthrough discoveries and develop new applications that improve the quality of human life. Our employees are a critical component of that mission. We endeavor to attract, develop and retain top talent by offering our employees a challenging but rewarding work experience, as well as competitive compensation and benefits. Further, we strive to create a work environment that promotes integrity, respect and trust among our employees.
As of December 31, 2021 and 2020, we had approximately 7,765 and 7,400 full-time employees worldwide, respectively. Of these employees, approximately 1,230 and 1,180 were located in the United States at December 31, 2021 and 2020, respectively. Our senior leadership team is 75% male and 25% female.
 
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The table below provides our employees by functional area.
 
    
Number of
Employees
 
    
2021
    
2020
 
Production and distribution
     3,690        3,570  
Selling and marketing
     1,900        1,770  
General and administrative
     885        825  
Research and development
     1,290        1,235  
  
 
 
    
 
 
 
Total
     7,765        7,400  
  
 
 
    
 
 
 
Diversity, Talent Retention and Development
Bruker has initiatives and programs to attract, develop and retain our talent tailored to specific employee populations and geographies, including leadership development programs, technical training, and other skill-based training.
We have an established global performance management process in which managers provide regular feedback and coaching to develop employees. Throughout the year, managers and employees engage in annual objective setting,
mid-year
reviews of performance as well as a
year-end
performance evaluation. We also have certain employee populations piloting the use of our Talent Management system to capture career development goals as well as certifications achieved, projects completed, languages spoken and mobility preferences in order to promote internal career opportunities.
Additionally, we are focused on promoting diversity across our organization. Our people come from diverse backgrounds all over the world. We are united by a shared purpose—innovation with integrity. We hope that the work we do every day inspires and impacts global scientific research—and our diverse and dynamic team of people inspire each other to achieve their full potential. We build cross-functional teams to support collaboration and enable the creation of new ideas by actively identifying and recruiting talent with diverse professional experiences, skills and backgrounds including from diverse gender, racial and ethnic backgrounds.
Employee Health and Safety
Ensuring the safety and well-being of our employees is a top priority for Bruker. In response to the
COVID-19
pandemic, we implemented additional health and safety protocols at our sites including enhanced cleaning procedures and social distancing requirements. We implemented a remote work policy for all employees whose job allowed them to do so. Additional personal protective equipment (PPE) was provided to employees, and work procedures were modified to reduce risk. Also, we engaged with a vendor to offer at home
COVID-19
testing kits for those employees who needed to travel to customer sites as well as implemented an enhanced Employee Assistance Program to promote mental and physical wellness. We continue to refine these measures as new information about the virus becomes available.
Available Information
We maintain a website at
www.bruker.com
. We make available on our website documents describing our corporate governance and our Code of Conduct. We are not including the information contained on our website as a part of, or incorporating it by reference into, this Annual Report on Form
10-K.
We make available free of charge through our website our annual reports on Form
10-K,
our proxy statements, quarterly reports on Form
10-Q,
current reports on Form
8-K,
and amendments to these reports filed with or furnished to the SEC pursuant to Sections 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. The SEC also maintains an internet site that contains reports, proxy and information statements and other information regarding our filings at
www.sec.gov
.
 
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ITEM 1A
RISK FACTORS
The following risk factors should be considered in conjunction with the other information included in this Annual Report on
Form 10-K.
This report may include
forward-looking
statements that involve risks and uncertainties. In addition to those risk factors discussed elsewhere in this report, we identify the following risk factors, which could affect our actual results and cause actual results to differ materially from those in the
forward-looking
statements.
Risk Factor Summary
Our business is subject to numerous risks and uncertainties, including those described in Item 1A
Risk Factors
.”
These risks include, but are not limited to, the following:
 
   
Our financial condition and results of operations for fiscal 2022 may continue to be adversely affected by the
COVID-19
pandemic;
 
   
Supply chain issues, including increasing demand for certain components used in our products and production delays, has and could continue to result in significant additional costs and manufacturing inefficiencies, which could adversely impact our revenue, increase our manufacturing costs and have a material adverse effect on our operating results.
 
   
Unfavorable economic or political conditions in the countries in which we operate may have an adverse impact on our business results or financial condition;
 
   
We derive a significant portion of our revenue from international sales and are subject to the operational risks of doing business in foreign countries;
 
   
Adverse global economic conditions, geopolitical tensions and other conditions that impact our increasingly global operations could have a negative effect on our business, results of operations and financial condition and liquidity.
 
   
If our products fail to achieve and sustain sufficient market acceptance across their broad intended range of applications, we will not generate expected revenue;
 
   
Our products compete in markets that are subject to rapid technological change, and one or more of the technologies underlying our products could be made obsolete by new technology;
 
   
If investment in life and material science research spending declines, our ability to generate revenue may suffer;
 
   
Any reduction in the capital resources or government funding of our customers could reduce our sales and impede our ability to generate revenue;
 
   
Disruptions at any of our manufacturing facilities could adversely affect our business;
 
   
In addition to the risks applicable to our life science and materials analysis products, our CBRNE detection products are subject to a number of additional risks, including lengthy product development and contract negotiation periods and certain risks inherent in long-term government contracts;
 
   
Our debt may adversely affect our cash flow and may restrict our investment opportunities or limit our activities;
 
   
The transition away from LIBOR may adversely affect our cost to obtain financing;
 
   
If we lose our strategic partners, our marketing and sales efforts could be impaired;
 
   
We face risks related to sales through distributors and other third parties that we do not control, which could harm our business;
 
   
Our operations are dependent upon a limited number of suppliers and contract manufacturers;
 
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Supply shortages and increasing prices of raw materials could adversely affect the gross profit of the Bruker BioSpin Group and the BEST Segment;
 
   
If we are unable to effectively protect our intellectual property, third parties may use our technology, which would impair our ability to compete in our markets;
 
   
We may be involved in lawsuits to protect or enforce our patents that are brought by us which could be expensive and time consuming and, if determined adversely, could adversely affect our patent position;
 
   
Our manufacture and sale of products could lead to product liability claims for which we could have substantial liability;
 
   
We are subject to environmental laws and regulations, which may impose significant compliance or other costs on us; and
 
   
We operate as an entrepreneurial, decentralized company, which presents both benefits and certain risks. In particular, significant growth in a decentralized operating model may put strain on certain business group resources and our corporate functions, which could materially and adversely affect our business, financial condition and results of operations.
Risks Related to Our Business and Industry
Our financial condition and results of operations for fiscal 2022 may continue to 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 have included temporary closures 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, implemented and some continue to implement significant restrictions on travel, shelter in place or stay at home orders, and business closures. While some of these restrictions were loosened in certain jurisdictions, some markets have returned to restrictions in the face of increases in new
COVID-19
cases, particularly as more contagious strains of the virus emerge. Many of our employees in jurisdictions in which we have significant operations continue to work remotely. In addition, certain Asia Pacific geographies where we operate are continuing to experience significant disruptions relating to
COVID-19.
Much of the commercial activity in sales and marketing, and customer demonstrations and applications training, is still either being conducted remotely or postponed. Even where customers have
re-opened
their sites, some still operate at productivity levels that are below
pre-pandemic
levels in an effort to accommodate safety 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 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 in the past adversely impacted 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. Further, global supply chains, including for semiconductor chips, components and raw materials such as copper, continue to be disrupted, causing shortages, which has impacted our ability to manufacture and supply our products. We 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 our employees, distributors, suppliers and customers has historically impacted and may continue to impact our global sales and future operating results.
 
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In September 2021, President Biden issued an Executive Order requiring certain
COVID-19
precautions for government contractors and their subcontractors, including mandatory employee vaccination (subject to medical and religious exemptions). In November 2021, the Department of Labor’s Occupational Safety and Health Administration, or OSHA, issued an Emergency Temporary Standard, or ETS, requiring that all employers with at least 100 employees ensure that their employees are fully vaccinated for
COVID-19
or obtain a negative
COVID-19
test at least once a week. The Executive Order was preliminarily enjoined by several U.S. federal district courts, the U.S. Supreme Court preliminarily stayed the OSHA ETS in January 2022, and OSHA subsequently withdrew the ETS. While we are not currently subject to any vaccine mandate, any requirement to mandate
COVID-19
vaccination of our workforce or require our 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 profit margins. In addition, any requirement to impose such obligations on our suppliers who are deemed government contractors and their subcontractors could impact the price and continuity of supply of raw materials and our results of operations and financial condition could be adversely affected. It continues to be our policy to encourage each of our employees to be fully vaccinated against
COVID-19.
We are continuing to monitor and assess the ongoing effects of
the COVID-19
pandemic on our commercial operations in 2022. 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 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 may continue to affect demand for our products and our operating results.
The preparation of the consolidated financial statements requires us 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. We evaluate estimates, judgments and methodologies on an ongoing basis. Changes in estimates are recorded in the period in which they become known. We base estimates on historical experience and on various other assumptions that we 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 will directly or indirectly impact future business, results of operations and financial condition, including sales, expenses, reserves and allowances, manufacturing, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning
COVID-19,
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 actions taken to contain or treat the virus, as well as the economic impact on local, regional, national and international customers and markets. We have made estimates of the impact of
COVID-19
within the consolidated 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.
Supply chain issues, including increasing demand for certain components used in our products and production delays, has and could continue result in significant additional costs and manufacturing inefficiencies, which could adversely impact our revenue, increase our manufacturing costs and have a material adverse effect on our operating results.
We have experienced supply chain interruptions as a result of the COVID-19 pandemic, general global economic conditions, a tight 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 our products and increased difficulties in our ability to obtain a consistent supply of materials at stable pricing levels. Supply shortages and longer lead times for components used in our products,
 
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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 our production activities, which could have a substantial adverse effect on our financial condition or results of operations. If we are unsuccessful in resolving any such component shortages in a timely manner, we could experience a significant adverse impact on the timing of our revenue, a possible loss of revenue, or an increase in manufacturing costs, any of which could have a material adverse impact on our operating results.
Unfavorable economic or political conditions in the countries in which we operate may have an adverse impact on our business results or financial condition.
Our businesses and results of operations are affected by international, national and regional economic and political conditions. Our businesses or financial results may be adversely impacted by unfavorable changes in economic or political conditions in the countries and markets in which we operate, including, among others, adverse changes in interest rates or tax rates, volatility in financial and commodity markets, contraction in the availability of credit in the marketplace, geopolitical tensions and changes in capital spending patterns.
Our revenue from U.S. operations represented approximately 25% and 23% of total consolidated revenue for fiscal 2021 and 2020, respectively. Our revenue from operations in Europe represented approximately 38% of total consolidated revenue for both fiscal years 2021 and 2020. Our revenue from operations in the Asia Pacific region represented approximately 30% and 32% of total consolidated revenue in each of the corresponding periods. Economic factors that could adversely influence demand for our products include the impact of geopolitical tensions and any related sanctions implemented, continued uncertainty about global economic conditions, including as a result of the pandemic, leading to ongoing reductions in investment, changes in government spending levels and/or priorities, the size and availability of government budgets, customers’ and suppliers’ access to credit and other macroeconomic factors affecting government, academic or industrial spending behavior. Slower economic growth or a deterioration in economic conditions could result in a decrease in government funding for scientific research, a delay in orders from current or potential customers or a reduction in purchases of our products.
We cannot predict how changes in economic conditions or political instability will affect our customers and suppliers or how any negative impact on our customers and suppliers might adversely impact our business results or financial condition.
Adverse global economic conditions, geopolitical tensions and other conditions that impact our increasingly global operations could have a negative effect on our business, results of operations and financial condition and liquidity.
As a global company, our performance is affected by global economic conditions as well as geopolitical tensions and other conditions with global reach. In recent years, concerns about the global economic outlook have adversely affected market and business conditions in general. Macroeconomic weakness and uncertainty make it more difficult for us to manage our operations and accurately forecast revenue, gross margin and expenses. Geopolitical tensions, such as Russia’s recent incursion into Ukraine, ongoing conflicts between the United States and China, tariff and trade policy changes, economic sanctions, increasing potential of conflict involving countries in Asia that are critical to our supply chain operations, such as Taiwan and China, have resulted in increasing global tensions and create uncertainty for global commerce. As a result of economic sanctions on Russia we may face disruptions to our operations within Russia, among other challenges. Sustained or worsening of global economic conditions and increasing geopolitical tensions may increase our cost of doing business, materially disrupt our supply chain operations, cause our customers to reduce or delay spending and intensify pricing pressures. Any or all of these factors could negatively affect demand for our products and our business, financial condition and result of operations.
 
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We derive a significant portion of our revenue from international sales and are subject to the operational risks of doing business in foreign countries.
International sales account, and are expected to continue to account, for a significant portion of our total revenues. Our revenue from
non-U.S.
operations represented approximately 75% and 77% of our total consolidated revenue for fiscal 2021 and 2020, respectively. Our international operations are, and will continue to be, subject to a variety of risks associated with conducting business internationally, many of which are beyond our control. These risks, which may adversely affect our ability to achieve and maintain profitability and our ability to sell our products internationally, include:
 
   
changes in foreign currency translation rates;
 
   
changes in regulatory requirements;
 
   
legislation and regulation, including tariffs, relating to the import or export of high technology products, which legislation and regulation may conflict with U.S. law and may have an adverse impact on our business results;
 
   
the imposition of government controls;
 
   
political and economic instability, including the impact of
COVID-19,
the possibility of an economic recession in certain key markets such as Germany, international hostilities and resulting sanctions, acts of terrorism and governmental restrictions, inflation, trade relationships and military and political alliances;
 
   
costs and risks of deploying systems in foreign countries;
 
   
compliance with export laws and controls and trade embargoes in multiple jurisdictions, which may conflict with U.S. law and may have an adverse impact on our business results;
 
   
limited intellectual property rights;
 
   
the burden of complying with a wide variety of complex foreign laws and treaties, including unfavorable labor regulations, specifically those applicable to our European operations; and
 
   
compliance with U.S. and local laws affecting the activities of U.S. companies abroad, including the United States Foreign Corrupt Practices Act, or FCPA, and local
anti-bribery
laws.
The United States has implemented tariffs on certain imported goods. These additional tariffs could include items imported by us from China or other countries. In addition, China has imposed tariffs on a wide range of American products in retaliation for these new American tariffs. As a result, there is a concern that the imposition of additional tariffs by the United States could result in the adoption of additional tariffs by China and other countries as well. Any resulting trade war could negatively impact the global market for scientific instruments and could have a significant adverse effect on our business. The imposition of tariffs on items imported by us from China or other countries could increase our costs and could result in lowering our gross margin on products sold. Conversely, China imposing tariffs on items that we export to China could adversely impact our customers’ ability to purchase our products and our competitive position in China or increase our costs, which could have a material adverse effect on our business and results of operations.
We must also comply with the European Union General Data Protection Regulation (GDPR) and other similar regulations in other countries. The goal of the regulation is to increase individual rights and protections for personal data located in or originating from the European Union. GDPR is extraterritorial in that it applies to all business within the European Union and any business located outside of the European Union that processes personal data of individuals located within the European Union. There are significant fines associated with
non-compliance.
In 2020, the Court of Justice of the European Union invalidated the
EU-US
Privacy Shield Framework, removed a key mechanism for transfers of personal data from the European Union to the United States and altered the international data transfer under GDPR. The decision has caused uncertainty for multinational companies about how they can properly transfer personal data from the EU to the US and the cost and effort to comply with such decision could cause disruption of data transfers and have a material adverse effect on our business.
 
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While the impact of these factors is difficult to predict, any one or more of these factors could adversely affect our operations in the future.
Our competitive position and reported financial results may be adversely affected when we exchange foreign currency received from international sales into U.S. Dollars and by fluctuations in currency exchange rates.
A significant portion of our business is conducted in currencies other than the U.S. Dollar, which is our reporting currency. As a result, currency fluctuations among the U.S. Dollar and the currencies in which we do business could cause the price of our products to be more or less competitive than our principal competitors’ products. Currency fluctuations will increase or decrease our cost structure relative to those of our competitors, which could lessen the demand for our products and affect our competitive position. From time to time we enter into certain hedging transactions and/or option and foreign currency exchange contracts which are intended to offset some of the market risk associated with our sales denominated in foreign currencies. We cannot predict the effectiveness of these transactions or their impact upon our future operating results, and from time to time they may negatively affect our quarterly earnings.
In addition to the foreign currency exposure associated with differences between where our products are manufactured and sold by us and our competitors, our exposure to currency exchange rate fluctuations results from the currency translation exposure associated with the preparation of our consolidated financial statements, as well as from the exposure associated with transactions of our subsidiaries that are denominated in a currency other than the respective subsidiary’s functional currency. While our financial results are reported in U.S. Dollars, the financial statements of many of our subsidiaries outside the U.S. are prepared using the local currency as the functional currency. During consolidation, these results are translated into U.S. Dollars by applying appropriate exchange rates. As a result, fluctuations in the exchange rate of the U.S. Dollar relative to the local currencies in which our foreign subsidiaries report could cause significant fluctuations in our reported results. Moreover, as exchange rates vary, revenue and other operating results may differ materially from our expectations. The effects of changes in currency exchange rates increased our 2021 revenue by approximately $43.3 million, or 2.2%, increased our 2020 revenue by approximately $29.4 million, or 1.4%, and decreased our 2019 revenue by approximately $50.3 million, or 2.7%. Adjustments resulting from financial statement translations are included as a separate component of shareholders’ equity. In the years ended December 31, 2021 and 2020, we recorded net losses from currency translation adjustments of ($26.4) million and net gains of $22.0 million, respectively.
Additionally, to the extent monetary assets and liabilities, including cash and debt, are held in a different currency than the reporting subsidiary’s functional currency, fluctuations in currency exchange rates may have a significant impact on our reported financial results, and may lead to increased earnings volatility. We may record significant gains or losses related to both the translation of assets and liabilities held by our subsidiaries into local currencies and the remeasurement of inter-company receivables and loan balances.
Goodwill, intangible assets and other
long-lived
assets are subject to impairment which could negatively impact our operating results.
We have recorded goodwill, intangible assets and other long-lived assets that must be periodically evaluated for potential impairment. We assess the realizability of the reported goodwill, intangible assets and other long-lived assets annually, as well as whenever events or changes in circumstances indicate that the assets may be impaired. These events or circumstances generally include operating losses or a significant decline in the earnings associated with the reporting unit these assets are reported within. A decline in our stock price and market capitalization may also cause us to consider whether goodwill, intangible assets and other long-lived assets may require an impairment assessment. Our ability to realize the value of these assets will depend on the future cash flows of the reporting unit in addition to how well we integrate the businesses we acquire. We did not record any impairment losses for the years ended December 31, 2021 and December 31, 2020. We recorded impairment losses of $1.7 million for the year ended December 31, 2019.
 
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If our products fail to achieve and sustain sufficient market acceptance across their broad intended range of applications, we will not generate expected revenue.
Our business strategy depends on our ability to successfully commercialize a broad range of products based on our technology platforms, including magnetic resonance technology,
pre-clinical
imaging technology, mass spectrometry technology,
X-ray
technology, atomic force microscopy technology, ChipCytometry technology, stylus and optical metrology technology, fluorescence microscopy technology, infrared technology and superconducting magnet technologies for use in a variety of life science, chemistry and materials analysis applications. Some of our products have only recently been commercially launched and have achieved only limited sales to date. The commercial success of our products depends on obtaining and expanding market acceptance by a diverse array of industrial, academic, clinical, pharmaceutical, biotechnology, applied, medical research and governmental customers around the world. We may fail to achieve or sustain substantial market acceptance for our products across the full range of our intended applications or in one or more of our principal intended applications. Any such failure could decrease our sales and revenue. To succeed, we must convince substantial numbers of potential customers to invest in new systems or replace their existing techniques with techniques employing our systems. Limited funding available for capital acquisitions by our customers, as well as our customers’ own internal purchasing approval policies, could hinder market acceptance of our products. Our intended customers may be reluctant to make the substantial capital investment generally needed to acquire our products or to incur the training and other costs involved with replacing their existing systems with our products. We also may not be able to convince our intended customers that our systems are an attractive and
cost-effective
alternative to other technologies and systems for the acquisition, analysis and management of molecular, cellular and microscopic information. Because of these and other factors, our products may fail to gain or sustain market acceptance.
Our products compete in markets that are subject to rapid technological change, and one or more of the technologies underlying our products could be made obsolete by new technology.
The market for discovery and analysis tools is characterized by rapid technological change and frequent new product introductions. Rapidly changing technology could make some or all of our product lines obsolete unless we are able to continually improve our existing products and develop new products. Because substantially all of our products are based on our technology platforms, including magnetic resonance technology, mass spectrometry technology,
X-ray
technology, atomic force microscopy technology, fluorescence microscopy technology, ChipCytometry technology, stylus and optical metrology technology and infrared technology, we are particularly vulnerable to any technological advances that would make these techniques obsolete as the basis for analytical systems in any of our markets. To meet the evolving needs of our customers, we must rapidly and continually enhance our current and planned products and services and develop and introduce new products and services. In addition, our product lines are based on complex technologies that are subject to rapid change as new technologies are developed and introduced in the marketplace. We may have difficulty in keeping abreast of the rapid changes affecting each of the different markets we serve or intend to serve. If we fail to develop and introduce products in a timely manner in response to changing technology, market demands or the requirements of our customers, our product sales may decline, and we could experience significant losses.
We face substantial competition. If we fail to compete effectively, it could harm our business results and materially impact the value of our company.
We face substantial competition in our industries and we expect that competition in all of our markets will increase further. Currently, our principal competition comes from established companies providing products using existing technologies that perform many of the same functions for which we market our products. A number of our competitors have expanded their market share in recent years through business combinations. Other companies also may choose to enter our fields in the future. Our competitors may develop or market products that are more effective or commercially attractive than our current or future products or that may render our products obsolete. Competition has in the past subjected, and is likely in the future to subject, our products to pricing pressure. Many of our competitors have more experience in the market and substantially greater financial,
 
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operational, marketing and technical resources than we do, which could give them a competitive advantage in areas such as research and development, production, marketing and distribution. Our ability to compete successfully will depend, in part, on our ability to develop proprietary products that reach the market in a timely manner and are technologically superior to, less expensive than, or more
cost-effective
than, other currently marketed products.
If investment in life and material science research spending declines, our ability to generate revenue may suffer.
We are dependent, both directly and indirectly, upon general investment in life science research, particularly in the research and development budgets of the pharmaceutical and biotechnology industries, and in material science research as well as upon the financial condition and funding priorities of various governments and government agencies. Since our inception, both we and our academic collaborators and customers have benefited from various governmental contracts and research grants. Whether we or our academic collaborators will continue to be able to attract these grants depends not only on the quality of our products, but also on general spending patterns of public institutions.
Any reduction in the capital resources or government funding of our customers could reduce our sales and impede our ability to generate revenue.
A significant portion of our sales are capital purchases by our customers. The spending policies of our customers could have a significant effect on the demand for our products. These policies are based on a wide variety of factors, including the resources available to make purchases, the spending priorities among various types of equipment, policies regarding spending during recessionary periods and changes in the political climate.
Any changes in capital spending or changes in the capital budgets of our customers could significantly reduce demand for our products. The capital resources of our life science and other corporate customers may be limited by the availability of equity or debt financing. Any significant decline in research and development expenditures by our life science and material science customers could significantly decrease our sales. In addition, a substantial portion of our sales are to
non-profit
and government entities, which are dependent on government support for scientific research. Any decline in this support could decrease the ability of these customers to purchase our products.
Disruptions at any of our manufacturing facilities could adversely affect our business.
We have manufacturing facilities located in the United States, Europe, Israel and Malaysia. Many of our products are developed and manufactured at single locations, with limited alternate facilities. If we experience any significant disruption of those facilities for any reason, such as strikes or other labor unrest, power interruptions, fire, earthquakes, or other events beyond our control, we may be unable to manufacture the relevant products at previous levels or at all. A reduction or interruption in manufacturing could harm our customer relationships, impede our ability to generate revenues from our backlog or obtain new orders and could have a material adverse effect on our business, results of operations, financial condition and cash flows.
If employees were to engage in a strike or other work stoppage or interruption, our business, results of operations, financial condition and liquidity could be materially adversely affected.
Many of our employees are represented by workers’ councils and labor unions in certain jurisdictions, primarily in Germany and France. If disputes with these employees arise, or if our workers engage in a strike or other work stoppage or interruption, we could experience a significant disruption of, or inefficiencies in, our operations or incur higher labor costs, which could have a material adverse effect on our business, results of operations, financial condition and liquidity.
 
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In addition to the risks applicable to our life science and materials analysis products, our CBRNE detection products are subject to a number of additional risks, including lengthy product development and contract negotiation periods and certain risks inherent in long-term government contracts.
Our CBRNE detection products are subject to many of the same risks associated with our life science products, including vulnerability to rapid technological change, dependence on mass spectrometry and other technologies and substantial competition. In addition, our CBRNE detection products and certain
FT-IR
products are generally sold to government agencies under long-term contracts. These contracts generally involve lengthy
pre-contract
negotiations and product development. We may be required to devote substantial working capital and other resources prior to obtaining product orders. As a result, we may incur substantial costs before we recognize revenue from these products. Moreover, in return for larger, longer-term contracts, our customers for these products often demand more stringent acceptance criteria. These criteria may also cause delays in our ability to recognize revenue from sales of these products. Furthermore, we may not be able to accurately predict in advance our costs to fulfill our obligations under these long-term contracts. If we fail to accurately predict our costs, due to inflation or other factors, we could incur significant losses. Also, the presence or absence of such contracts may cause substantial variation in our results of operations between fiscal periods and, as a result, our results of operations for any given fiscal period may not be predictive of our results for subsequent fiscal periods. The resulting uncertainty may have an adverse impact on our stock price.
We rely on information technology to support our operations and reporting environments. A security failure of that technology, including with respect to cybersecurity, could impact our ability to operate our businesses effectively, adversely affect our financial results, damage our reputation and expose us to potential liability or litigation.
We use information systems to carry out our operations and maintain our business records. Some systems are internally managed and some are maintained by third-party service providers. Our ability to conduct business could be materially and adversely affected if these systems or resources are compromised, damaged or fail. This could be a result of a cyber-incident, social engineering scam, hacking, phishing attempts, malware, natural disaster, hardware or software corruption, failure or error, telecommunications system failure, service provider error or failure, intentional or unintentional personnel actions or other disruption.
In the ordinary course of business, we collect and store sensitive data, including intellectual property, other proprietary information and personally identifiable information. Despite our security measures, our information technology and infrastructure may be vulnerable to cyber-attacks by hackers, including intrusions designed to access and exfiltrate information and to disrupt and
lock-up
access to systems for the purpose of demanding ransom payments, or breached due to employee error, malfeasance, or other disruptions. If this data is compromised, destroyed or inappropriately disclosed, it could have a material adverse effect, including damage to our reputation, loss of customers, significant expenses to address and resolve the issues, fines or litigation or other proceedings by affected individuals, business partners or regulatory authorities.
Our debt may adversely affect our cash flow and may restrict our investment opportunities or limit our activities.
As of December 31, 2021, we had outstanding an aggregate principal amount of debt totaling approximately $1,336.2 million. We also had the ability to borrow an additional $599.8 million available under our existing credit facility. Most of our outstanding debt is in the United States and there are substantial cash requirements in the United States to service debt interest obligations, fund operations, capital expenditures and our declared dividends and finance potential acquisitions or share repurchases. Our ability to satisfy our debt obligations and meet our other liquidity needs depends on our future operating performance and on economic, financial, competitive and other factors beyond our control. Our business may not generate sufficient cash flow to meet our debt obligations or provide sufficient funds for our other objectives. If we are unable to service our debt or obtain additional financing, we may be forced to delay strategic acquisitions, capital expenditures or research and development expenditures or suspend our dividend payments and share repurchases. We may not be able to obtain additional financing on terms acceptable to us or at all. Furthermore, a majority of our cash, cash
 
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equivalents and short-term investments is generated from foreign operations, with $646.9 million, or 55.4% held by foreign subsidiaries as of December 31, 2021. We may incur significant tax consequences relocating cash from our foreign operations to the United States. Our financial condition and results of operations could be adversely impacted if we are unable to maintain a sufficient level of cash flow in the United States to address our funding requirements through cash from operations and timely repatriation of cash from overseas or other sources obtained at an acceptable cost.
Additionally, the agreements governing our debt require that we maintain certain financial ratios related to maximum leverage and minimum interest coverage and contain affirmative and negative covenants, including among others, timely provision of audited consolidated financial statements, restrictions on liens, indebtedness of the Company and its subsidiaries, asset sales, dividends and transactions with affiliates. Our ability to comply with these financial restrictions and covenants is dependent on our operations and performance, which is subject to prevailing economic conditions and other factors, including factors that are beyond our control such as foreign currency translation rates and interest rates. Our failure to comply with any of these restrictions or covenants may result in an event of default under the applicable debt instrument, which could permit acceleration of the debt under the facility and require us to prepay the debt before its scheduled due date.
The transition away from LIBOR may adversely affect our cost to obtain financing.
On July 27, 2017, the U.K. Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit London Interbank Offered Rate, or LIBOR, rates. As a result of this change, certain LIBOR tenors and currencies were eliminated by the end of December 2021 with all other tenors and currencies of LIBOR to be eliminated by the end of June 2023. The Alternative Reference Rates Committee, a steering committee comprised of U.S. financial market participants, selected and the Federal Reserve Bank of New York started in May 2018 to publish the Secured Overnight Finance Rate, or SOFR, as an alternative to LIBOR. SOFR is a broad measure of the cost of borrowing cash in the overnight U.S. treasury repo market. At this time, it is impossible to predict whether the SOFR or another reference rate will become an accepted alternative to LIBOR. The manner and impact of this transition may materially adversely affect the trading market for LIBOR-based securities, which may result in an increase in borrowing costs under our credit agreements and term loan agreement. Any replacement for LIBOR may result in an effective increase in the applicable interest rate on our current or future debt obligations, including our credit agreements and term loan agreement.
Changes in our effective income tax rate could adversely affect our results of operations.
We are subject to income taxes in both the United States and various foreign jurisdictions and our domestic and international tax liabilities are largely dependent upon the distribution of income among these different jurisdictions. Various factors may have favorable or unfavorable effects on our effective income tax rate. These factors include interpretations of existing tax laws, the accounting for stock options and other share-based compensation, changes in tax laws and rates, future levels of research and development spending, changes in accounting standards, changes in the mix of earnings in the various tax jurisdictions in which we operate, the outcome of examinations by the U.S. Internal Revenue Service and other tax authorities, the accuracy of our estimates for unrecognized tax benefits and realization of deferred tax assets and changes in overall levels of
pre-tax
earnings. A change in tax laws, treaties or regulations, or their interpretation, of any country in which we operate could result in a higher tax rate on our earnings, which could result in a significant negative impact on our earnings and cash flow from operations. For example, the Biden administration has proposed significant changes to the tax laws of the United States, including proposals that would have the combined effect of increasing the U.S. taxation on profits earned outside the U.S. In addition to proposed tax law reforms in the United States, there are currently multiple initiatives for comprehensive tax reform underway in other key jurisdictions where we have operations. We assess the impact of various international tax reform proposals and modifications to existing tax treaties in all jurisdictions where we have operations that could result in a material impact on our income taxes. Beginning in 2022, the Tax Cuts and Jobs Act of 2017 (“TCJA”) eliminates the option to deduct research and development expenditures currently and requires taxpayers to amortize them over five years pursuant to the Internal Revenue Code. We cannot predict whether any other specific legislation that
 
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would have an adverse impact on our income taxes will be enacted or the terms of any such legislation. However, if such proposals were enacted, or if modifications were to be made to certain existing treaties, the consequences could have a materially adverse impact on us, including increasing our tax burden, increasing costs of our tax compliance or otherwise adversely affecting our financial condition, results of operations and cash flows.
Various international tax risks could adversely affect our earnings and cash flows.
We are subject to international tax risks. We could be subject to double taxation on income related to operations in certain countries that do not have tax treaties with the country of the trading partner. In addition, we may have a higher effective income tax rate than that of other companies in our industry if losses incurred by one operating company are not available to offset the income of an operating company located in another country. Also, distributions of earnings and other payments received from our subsidiaries may be subject to withholding taxes imposed by the countries where they are operating or are incorporated. If these foreign countries do not have income tax treaties with the United States or the countries where our subsidiaries are incorporated, we could be subject to high rates of withholding taxes on these distributions and payments. Additionally, the amount of the credit that we may claim against our U.S. federal income tax for foreign income taxes paid or accrued is subject to many limitations which may significantly restrict our ability to claim a credit for all of the foreign taxes we pay.
We currently have reserves established for potential tax liabilities. If these reserves are challenged, and we are unable to successfully defend our tax positions, a negative impact to our cash flows could result.
The unpredictability and fluctuation of our quarterly results may adversely affect the trading price of our common stock.
Our revenues and results of operations have in the past and will in the future vary from quarter to quarter due to a number of factors, many of which are outside our control and any of which may cause our stock price to fluctuate. The primary factors that may affect us include the following:
 
   
the timing of sales of our products and services;
 
   
the timing of recognizing revenue and deferred revenue under U.S. GAAP;
 
   
changes in our pricing policies or the pricing policies of our competitors;
 
   
increases in sales and marketing, product development or administration expenses;
 
   
the mix of services provided by us and third-party contractors;
 
   
our ability to attain and maintain quality levels for our products; and
 
   
costs related to acquisitions of technology or businesses.
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 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;
 
   
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.
 
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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.
Historically we have higher levels of revenue in the fourth quarter of the year compared to the first, second and third quarters, which we believe is primarily the result of our customers’ budgeting cycles.
Quarter-to-quarter
comparisons of our results of operations should not be relied upon as an indication of our future performance. It is likely that in some future quarters, our results of operations may be below the expectations of public market analysts and investors. In this event, the price of our common stock may fall.
The ownership of our shares is highly concentrated, which could cause or exacerbate volatility in our share price as well as have significant influence over us.
As of February 15, 2022, Laukien family members, including our Chairman, President and Chief Executive Officer (“CEO”) Frank Laukien and his brother, Joerg Laukien, owned, in the aggregate, approximately 32% of our outstanding common stock. We may also repurchase shares in the future, which could further increase the concentration of our share ownership. Because of this reduced liquidity, the trading of relatively small quantities of shares by our shareholders could disproportionately influence the price of those shares in either direction. The price for our shares could, for example, decline precipitously if a large number of our shares were sold on the market without commensurate demand, as compared to a company with greater trading liquidity that could better absorb those sales without adverse impact on its share price. These stockholders may also exercise substantial influence over all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This could have the effect of delaying or preventing a change in control of our company and will make some transactions difficult to accomplish without the support of these stockholders.
The loss of key personnel or an inability to attract and retain additional personnel could affect our ability to successfully grow our business.
We are highly dependent upon the continued service and performance of our CEO and other members of senior management and key finance, technical, scientific and production personnel, any of whom may cease their employment with us at any time with minimal advance notice. Because the expertise of these individuals is highly specific and takes years to develop, we face intense competition for these individuals from many other companies. The loss of one or more of our key employees may significantly delay or prevent the achievement of our business objectives, and our failure to attract and retain suitably qualified individuals or to adequately plan for succession could have an adverse effect on our ability to implement our business plan.
Dividends on our common stock could be reduced or eliminated in the future.
In recent years, we have paid dividends on our common stock. In February 2022, we announced that our Board of Directors (“Board”) had declared a quarterly dividend of $0.05 per share that, will be payable in March 2022. There is no guarantee that such dividends will continue indefinitely. In the future, our Board may determine to reduce or eliminate our common stock dividend in order to fund investments for growth, repurchase shares or conserve capital resources.
Risks Related to Our Dependence on Third Parties
If we lose our strategic partners, our marketing and sales efforts could be impaired.
A substantial portion of our sales of selected products consists of sales to third parties who incorporate our products into their systems. These third parties are responsible for the marketing and sales of their systems. We have little or no control over their marketing and sales activities or how they use their resources. Our present or future strategic partners may or may not purchase sufficient quantities of products from us or perform appropriate marketing and sales activities. In addition, if we are unable to maintain our relationships with strategic partners, our businesses may suffer. Failures by our present or future strategic partners, or our inability to maintain
 
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existing or enter into new arrangements with strategic partners for product distribution, could materially impede the growth of our businesses and our ability to generate sufficient revenue and profits.
We face risks related to sales through distributors and other third parties that we do not control, which could harm our business.
We sell some products through third party agents, including distributors and
value-added
resellers. This exposes us to various risks, including competitive pressure, concentration of sales volumes, credit risks, and compliance risks. We may rely on one or a few key distributors for a product or market, and the loss of these distributors could reduce our revenue and net earnings. Distributors may also face financial difficulties, including bankruptcy, which could harm our collection of accounts receivable. Risks related to our use of distributors may reduce sales, increase expenses, and weaken our competitive position. Moreover, violations of the FCPA or similar
anti-bribery
laws by distributors or other third-party agents could materially and adversely impact our business, reputation and results of operations.
Dependence on contract manufacturing may adversely affect our ability to bring products to market and damage our reputation.
As part of our efforts to streamline our operations and reduce our operating costs, we outsource certain aspects of our manufacturing processes and continue to evaluate additional outsourcing. If our contract manufacturers fail to perform their obligations in a timely manner or at satisfactory quality levels, our ability to bring products to market and our reputation could suffer. For example, during a market upturn, our contract manufacturers may be unable to meet our demand requirements, which may preclude us from fulfilling our customers’ orders on a timely basis. The ability of these manufacturers to perform is largely outside our control. Additionally, changing or replacing our contract manufacturers could cause disruptions or delays. Problems with outsourced manufacturing could result in lower revenues and unexecuted efficiencies, and adversely affect our financial condition and results of operations.
Our operations are dependent upon a limited number of suppliers and contract manufacturers.
We currently purchase components used in our products from a limited number of outside suppliers. Our reliance on a limited number of suppliers could result in time delays associated with redesigning a product due to an inability to obtain an adequate supply of required components and reduced control over pricing, quality and timely delivery. Any of these factors could adversely affect our revenues and profitability. In particular, our
X-ray
microanalysis business, which manufactures and sells accessories for electron microscopes, is partially dependent on cooperation from larger manufacturers of electron microscopes. Additionally, our elemental analysis business purchases certain optical detectors from a single supplier, PerkinElmer, Inc., the sole supplier of these detector components. Bruker CALID purchases detectors and power supplies from sole or limited source suppliers and its focal plane array detectors from a single supplier, Lockheed Martin Corporation. Similarly, Bruker BioSpin obtains various components from sole or limited source suppliers and BEST obtains various raw materials and uses key production equipment from sole or limited source suppliers or contract manufacturers. There are limited, if any, available alternatives to these suppliers. The existence of shortages of these components or the failure of delivery with regard to these components could have a material adverse effect upon our revenues and margins. In addition, price increases from these suppliers or contract manufacturers could have a material adverse effect upon our gross margins.
Because of the scarcity of some components, we may be unable to obtain an adequate supply of components, or we may be required to pay higher prices or to purchase components of lesser quality. Any delay or interruption in the supply of these or other components could impair our ability to manufacture and deliver our products, harm our reputation and cause a reduction in our revenues. In addition, any increase in the cost of the components that we use in our products could make our products less competitive and decrease our gross profits. We may not be able to obtain sufficient quantities of required components on the same or substantially the same terms. Additionally, consolidation among our suppliers could result in other sole source suppliers for us in the
 
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future. Other events that could affect our ability to source materials, manufacture or distribute our products include fire, natural disaster or extreme weather or a pandemic and the impact of those events on our and our suppliers’ and contract manufacturers’ operations.
Supply shortages and increasing prices of raw materials could adversely affect our gross profit.
The last few years have seen periodic supply shortages and sharp increases in the prices for various raw materials, in part due to high demand from developing countries, which have been exacerbated by the
COVID-19
pandemic. We rely on some of these materials for the production of our products. For example, in our superconducting magnet production, both for the horizontal and vertical magnet series, we rely on the availability of copper, steel and the metallic raw materials for traditional
low-temperature
superconducting wires. Similarly, our BEST Segment relies on the availability of niobium titanium for its production of
low-temperature
superconducting materials and devices. Higher prices for these commodities will increase the production cost of superconducting wires and superconducting magnets and may adversely affect gross profits.
The prices of copper and certain other raw materials used for superconductors have increased significantly over the last decade. Since copper is a main constituent of low temperature superconductors, this may affect the price of superconducting wire. This type of increase would have an immediate effect on the production costs of superconducting magnets and may negatively affect the profit margins for those products.
In order to operate superconducting magnets, we and our customers rely on liquid helium. Helium is controlled by the Federal Helium Reserve and is subject to price changes. Shortages of liquid helium associated with federal price controls or depleted natural reserves could drive increases in helium pricing and have an adverse impact on producing and operating our superconducting magnets, which may negatively impact the profit margins of those products.
Risks Related to Our Intellectual Property Rights
Our success depends on our ability to operate without infringing or misappropriating the proprietary rights of others.
Our commercial success depends on avoiding the infringement of other parties’ patents and proprietary rights as well as avoiding the breach of any licenses relating to our technologies and products. Given that there may be patents of which we are unaware, particularly in the United States where patent applications are confidential, avoidance of patent infringement may be difficult. Various third parties hold patents which may relate to our technology, and we may be found in the future to infringe these or other patents or proprietary rights of third parties, either with products we are currently marketing or developing or with new products which we may develop in the future. If a third-party holding rights under a patent successfully asserts an infringement claim with respect to any of our current or future products, we may be prevented from manufacturing or marketing our infringing product in the country or countries covered by the patent we infringe, unless we can obtain a license from the patent holder. We may not be able to obtain such a license on commercially reasonable terms, if at all, especially if the patent holder is a competitor. In addition, even if we can obtain a license, it may be
non-exclusive,
which will permit others to practice the same technology licensed to us. We also may be required to pay substantial damages to the patent holder in the event of infringement. Under some circumstances in the United States these damages could include damages equal to triple the actual damages the patent holder incurs. If we have supplied infringing products to third parties for marketing by them or licensed third parties to manufacture, use or market infringing products, we may be obligated to indemnify these third parties for any damages they may be required to pay to the patent holder and for any losses the third parties may sustain themselves as the result of lost sales or license payments they are required to make to the patent holder. Any successful infringement action brought against us may also adversely affect marketing of the infringing product
 
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in other markets not covered by the infringement action, as well as our marketing of other products based on similar technology. Furthermore, we will suffer adverse consequences from a successful infringement action against us even if the action is subsequently reversed on appeal, nullified through another action or resolved by settlement with the patent holder. The damages or other remedies awarded, if any, may be significant. As a result, any successful infringement action against us may harm our business.
If we are unable to effectively protect our intellectual property, third parties may use our technology, which would impair our ability to compete in our markets.
Our continued success will depend in significant part on our ability to obtain and maintain meaningful patent protection for our products throughout the world. We rely on patents to protect a significant part of our intellectual property and to enhance our competitive position. However, our presently pending or future patent applications may not issue as patents, and any patent previously issued to us may be challenged, invalidated, held unenforceable or circumvented. Furthermore, the claims in patents which have been issued, or which may be issued to us in the future, may not be sufficiently broad to prevent third parties from producing competing products similar to our products. In addition, the laws of various foreign countries in which we compete may not protect our intellectual property to the same extent as do the laws of the United States. Failure to obtain adequate patent protection for our proprietary technology could materially impair our ability to be commercially competitive.
In addition to patent protection, we also rely on the protection of trade secrets,
know-how
and confidential and proprietary information. To maintain the confidentiality of trade secrets and proprietary information, we generally seek to enter into confidentiality agreements with our employees, consultants and strategic partners upon the commencement of a relationship with us. However, we may not obtain these agreements in all circumstances. In the event of unauthorized use or disclosure of this information, these agreements, even if obtained, may not provide meaningful protection for our trade secrets or other confidential information. In addition, adequate remedies may not exist in the event of unauthorized use or disclosure of this information. The loss or exposure of our trade secrets and other proprietary information would impair our competitive advantages and could have a material adverse effect on our operating results, financial condition and future growth prospects. Furthermore, others may have, or may in the future independently develop, substantially similar or superior
know-how
and technology.
We may be involved in lawsuits to protect or enforce our patents that are brought by us which could be expensive and time consuming and, if determined adversely, could adversely affect our patent position.
In order to protect or enforce our patent rights, we may initiate patent litigation against third parties, and we may be similarly sued by others. We may also become subject to interference proceedings conducted in the patent and trademark offices of various countries to determine the priority of inventions. The defense and prosecution, if necessary, of intellectual property suits, interference proceedings and related legal and administrative proceedings is costly and diverts our technical and management personnel from their normal responsibilities. We may not prevail in any of these suits. An adverse determination of any litigation or defense proceedings could put our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, during the course of this kind of litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments in the litigation. If securities analysts or investors perceive these results to be negative, it could have a substantial negative effect on the trading price of our common stock.
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. We are vigorously defending against these claims.
 
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Risks Related to Legal, Regulatory and Compliance
Our manufacture and sale of products could lead to product liability claims for which we could have substantial liability.
The manufacture and sale of our products expose us to product liability claims if any of our products cause injury or are found otherwise unsuitable during manufacturing, marketing, sale or customer use. In particular, if one of our CBRNE detection products malfunctions, this could lead to civilian or military casualties in a time of unrest, exposing us to increased potential for high-profile liability. If our CBRNE detection products malfunction by generating a false-positive to a potential threat, we could be exposed to liabilities associated with actions taken that otherwise would not have been required. Additionally, the nuclear magnetic resonance, research magnetic resonance imaging, Fourier transform mass spectrometry and certain electron paramagnetic resonance magnets of Bruker BioSpin utilize high magnet fields and cryogenics to operate at approximately 4 Kelvin, the temperature of liquid helium. There is an inherent risk of potential product liability due to the existence of these high magnetic fields, associated stray fields outside the magnet, and the handling of the cryogens associated with superconducting magnets. In addition, our MALDI Biotyper product has an
IVD-CE
mark and U.S. FDA approval and is used for the identification of microorganisms. Misidentification or a false-negative of certain viruses, bacteria, yeasts or fungi could lead to inappropriate treatment for patients and could expose us to product liability claims.
A successful product liability claim brought against us in excess of, or outside the coverage of, our insurance coverage could have a material adverse effect on our business, financial condition and results of operations. We may not be able to maintain product liability insurance on acceptable terms, if at all, and insurance may not provide adequate coverage against potential liabilities.
We are subject to environmental laws and regulations, which may impose significant compliance or other costs on us.
Our manufacturing, product development and research and development operations and processes involve the controlled use of certain hazardous materials. In addition, we own and/or lease a number of facilities, some of which have been in operation for many decades, where we or others may have used substances or generated and disposed of wastes which are considered hazardous or may be considered hazardous in the future. We also have acquired various companies which historically may have used certain hazardous materials and which may have owned and/or leased facilities at which hazardous materials have been used. For all of these reasons, we are subject to federal, state, foreign, and local laws and regulations governing the use, manufacture, storage, transportation, handling, treatment, remediation, and disposal of hazardous materials and certain waste products. We have potential liability under these laws and regulations with respect to the remediation of past contamination in certain of the facilities we now own or lease. Additionally, in the future our facilities and the disposal sites owned by others to which we send or sent waste, may be identified as contaminated and require remediation. Accordingly, we may become subject to additional compliance costs or environmental liabilities which may be significant and could materially harm our results of operations or financial condition.
Specifically, we use controlled hazardous and radioactive materials in our business and generate wastes that are regulated as hazardous wastes under U.S. federal, and Massachusetts, California, New Jersey, Washington and Wisconsin state environmental and atomic energy regulatory laws and under equivalent provisions of law in those and other jurisdictions in which our research and manufacturing facilities are located. Our use of these substances and materials is subject to stringent, and periodically changing, regulation that can impose costly compliance obligations on us and has the potential to adversely affect our manufacturing activities. The risk of accidental contamination or injury from these materials cannot be completely eliminated. If an accident with these substances occurs, we could be held liable for any damages that result, in addition to incurring
clean-up
costs and liabilities, which can be substantial. Additionally, an accident could damage our research and manufacturing facilities resulting in delays and increased costs.
 
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We are subject to existing and potential additional regulation and government inquiry, which can impose burdens on our operations and narrow the markets for our products.
We are subject, both directly and indirectly, to the adverse impact of existing and potential future government regulation of our operations and markets. For example, the exportation of our products is subject to U.S. and
non-U.S.
export control, sanctions, customs, import and anti-boycott laws and regulations, including, as applicable, the International Traffic in Arms Regulations, the Export Administration Regulations and the sanctions laws, regulations and executive orders administered and enforced by the U.S. Department of the Treasury’s Office of Foreign Assets Control, and other laws and regulations adopted by the governments or agencies of other countries relating to the same subject matter as the U.S. laws and regulations described above.
The failure to satisfy export control criteria or obtain necessary clearances could delay or prevent shipment of products, which could adversely affect our revenues and profitability. Failure by us, our employees or others working on our behalf to comply with these laws and regulations could result in administrative, civil or criminal liabilities, including suspension, debarment from bidding for or performing government contracts, or suspension of our export privileges, which could have a material adverse effect on us. We frequently team with international subcontractors and suppliers who are also exposed to similar risks. In some cases, compliance with the laws and regulations of one country could violate the laws and regulations of another country. Violations of these laws and regulations could materially adversely affect our brand, international growth efforts and business.
In addition, as a result of our international operations, we are subject to compliance with various laws and regulations, including the FCPA and local anti-bribery laws in the jurisdictions in which we do business (including some higher risk countries according to the Transparency International Corruption Index), which generally prohibit companies and their intermediaries or agents from engaging in bribery or making improper payments to foreign officials or their agents. The FCPA also requires proper record keeping and characterization of such payments in our reports filed with the SEC. Despite maintaining policies and procedures that require our employees to comply with these laws and our standards of ethical conduct, we cannot ensure that these policies and procedures will always protect us from intentional, reckless or negligent acts committed by our employees or third-party agents.
Moreover, the life sciences industry, which is the market for our principal products, has historically been heavily regulated. Given the evolving nature of this industry, legislative bodies or regulatory authorities may adopt additional regulation that adversely affects our market opportunities. Our business is also directly affected by a wide variety of government regulations applicable to business enterprises generally and to companies operating in the life sciences industry in particular.
Our products are subject to the FDA’s requirements for electronic radiation emitting products, which include requirements related to record-keeping and reporting; labeling; notification; product repairs, replacements, and refunds; importation; and performance standards. In addition, our clinical products are subject to regulation as medical devices by the FDA in the United States and by similar regulatory bodies in other countries where such products are sold. These regulations govern a wide variety of product related activities, from quality management, design, development, and testing to labeling, manufacturing, complaint handling, reporting, promotion, sales and distribution. Compliance with applicable regulatory requirements is subject to continual review and is monitored rigorously through periodic inspections by the FDA and other regulatory authorities, which may result in written inspectional observations. The FDA and comparable foreign regulatory authorities also monitor product promotion and marketing materials and activities. If we or any of our suppliers or distributors fail to comply with FDA or other applicable regulatory requirements, or are perceived to potentially have failed to comply, we may face, among other things, warning letters; adverse publicity affecting both us and our customers; investigations or notices of
non-compliance,
fines, injunctions, and civil penalties; import or export restrictions; partial suspensions or total shutdown of production facilities or the imposition of operating restrictions; increased difficulty in obtaining required FDA clearances or approvals or foreign equivalents; seizures or recalls of our products or those of our customers; or the inability to sell such products. Any such FDA or comparable foreign regulatory actions could disrupt our business and operations, lead to significant remedial costs and have a material adverse impact on our financial position and results of operations.
 
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In addition, negative publicity and product liability claims resulting from any adverse regulatory action could have a material, adverse effect on our financial condition and results of operations. Further, the adoption of the European Union Directive by the IVD Regulation (EU) 2017/746, which will take effect in May 2022, imposes a stricter regime on manufacturers of IVDs and our products currently approved under the Directive must be recertified under the Regulation by May 2024.
We have been, are, and expect to be in the future, subject to inquiries from the government agencies that enforce these regulations, including the U.S. Department of State, the U.S. Department of Commerce, the U.S. FDA, the U.S. Internal Revenue Service, the U.S. Department of Labor, the U.S. Department of Homeland Security, the U.S. Department of Justice, the SEC, the Federal Trade Commission, U.S. Customs and Border Protection and the U.S. Department of Defense, among others, as well as from state or foreign governments and their departments and agencies. As a result, from time to time, the attention of our management and other resources may be diverted to attend to these inquiries. In addition, failure to comply with these regulations or obtain or maintain necessary permits and licenses could result in a variety of fines or other censures or an interruption in our business operations which may have a negative impact on our ability to generate revenues and could adversely affect our financial condition and results of operations.
Failure to maintain effective internal controls may cause a loss of investor confidence in the reliability of our financial statements or cause us to delay filing our periodic reports with the SEC and adversely affect our stock price.
The SEC, as directed by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring public
companies to include a report of management on internal control over financial reporting in their annual reports on Form
10-K
that contain an assessment by management of the effectiveness of our internal control over financial reporting. In addition, our independent registered public accounting firm must attest to and report on the
effectiveness of our internal control over financial reporting. Although we test our internal control over financial
reporting in order to ensure compliance with the Section 404 requirements, our failure to maintain adequate internal controls over financial reporting could result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our financial statements or a delay in our ability to timely file our periodic reports with the SEC, which ultimately could negatively impact our stock price.
We operate as an entrepreneurial, decentralized company, which presents both benefits and certain risks. In particular, significant growth in a decentralized operating model may put strain on certain business group resources and our corporate functions, which could materially and adversely affect our business, financial condition and results of operations.
Decentralization necessarily places significant control and decision-making powers in the hands of local management, which presents certain risks, including the risk that we may be slower to detect or react to compliance-related matters and that “company-wide” business initiatives may be more challenging or costly to implement, and the risk of noncompliance or failures higher than they may be in a more centralized operating environment. In addition, key business group resources and our corporate functions, which are leanly staffed but responsible for supporting our decentralized operations, may also not be able to detect or resolve financial, operational, and compliance matters on a timely basis. Our failure to adapt our financial, operational and compliance controls and systems to effectively manage our decentralized business and comply with our obligations as a public company could materially and adversely affect our business, financial condition or results of operations.
General Risks Factors
If we are not able to successfully integrate the businesses we acquire through mergers, acquisitions or strategic alliances, we may not be able to realize all of the cost savings and other benefits that we expect to result from the transactions and our financial results may be different than expected.
Our strategy includes expanding our technology base and product offerings through selected mergers, acquisitions and strategic alliances. For example, from January 1, 2019 to December 31, 2021, we have acquired 13 businesses to expand our technologies and product offerings.
 
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Successful integration of the businesses we acquire involves a number of risks, including, among others, risks related to:
 
   
coordinating or consolidating geographically separate organizations and integrating personnel with different business backgrounds and corporate cultures;
 
   
integrating previously autonomous departments in sales and marketing, distribution, accounting and administrative functions;
 
   
integrating financial information and management systems;
 
   
the pace of our acquisition activity and the related diversion of already limited resources and management time;
 
   
disruption of our ongoing business;
 
   
potential impairment of relationships with customers as a result of changes in management or otherwise arising out of such transactions; and
 
   
retention of key employees of the acquired businesses within the first one to two years after the acquisition, including the risk that they may compete with us subsequently.
We may have difficulty developing, manufacturing and marketing the products of a newly acquired company or business in a way that enhances the performance of our combined businesses or product lines. As a result, we may not realize the value from expected synergies. Acquisitions have resulted, and may in the future result, in unexpected significant costs and expenses, including disputes over contingent consideration and complicated accounting for complex transaction structures. In the future, we may be required to record charges to earnings during the period if we determine there is an impairment of goodwill or intangible assets, up to the full amount of the value of the assets.
We generally assume the liabilities of businesses we acquire, which could include liability for an acquired business’ violation of law that occurred before we acquired it. In addition, we have historically acquired smaller, privately held companies that may not have strong cultures of legal compliance or the robust financial controls of a larger, publicly traded company, and if we fail to implement adequate training, controls, and monitoring of the acquired companies, we could also be liable for post-acquisition legal or accounting violations.
Other companies may have difficulty acquiring us, even if doing so would benefit our stockholders, due to provisions under our corporate charter and bylaws, as well as Delaware law.
Provisions in our restated certificate of incorporation, and our amended and restated bylaws, as well as Delaware law could make it more difficult for other companies to acquire us, even if doing so would benefit our stockholders. Our restated certificate of incorporation, and amended and restated bylaws contain the following provisions, among others, which may inhibit an acquisition of our company by a third party:
 
   
a staggered Board of Directors, where stockholders elect only a minority of the board each year;
 
   
advance notification procedures for matters to be brought before stockholder meetings;
 
   
a limitation on who may call stockholder meetings; and
 
   
the ability of our Board of Directors to issue up to 5,000,000 shares of preferred stock without a stockholder vote.
 
ITEM 1B
UNRESOLVED STAFF COMMENTS
Not applicable.
 
ITEM 2
PROPERTIES
We believe that our existing principal facilities are well maintained and in good operating condition and that they are adequate for our foreseeable business needs.
 
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In addition to the principal facilities noted below, we lease additional facilities for sales, applications and service support in various countries throughout the world including Australia, Austria, Belgium, Brazil, China, Czech Republic, France, Germany, Hong Kong, India, Israel, Italy, Japan, Kenya, Malaysia, Mexico, Netherlands, Norway, Poland, Portugal, Russia, Singapore, South Africa, South Korea, Spain, Sweden, Switzerland, Taiwan, Thailand, Turkey, the United Kingdom and the United States. If we should require additional or alternative facilities, we believe that such facilities can be obtained on short notice at competitive rates.
The location and general character of our principal properties are as follows:
 
Location
  
Principal Use
 
Approximate

Square Feet
   
Relationship
 
Principal Facilities Used in Current Operations for Bruker BioSpin:
      
Ettlingen, Germany
   Manufacturing, Research and Development, Application and Demonstration, Marketing, Sales and Administrative     360,000       Owned  
Faellanden, Switzerland
   Manufacturing, Research and Development, Application and Demonstration, Marketing, Sales and Administrative    
422,000
61,000
 
 
   
Owned
Leased

 
Wissembourg, France
   Manufacturing, Research and Development, Application and Demonstration, Marketing, Sales and Administrative     189,000       Owned  
Principal Facilities Used in Current Operations for Bruker CALID:
      
Bremen, Germany
   Manufacturing, Research and Development, Application and Demonstration, Marketing, Sales and Administrative     298,000       Owned  
Ettlingen, Germany
   Manufacturing, Research and Development, Application and Demonstration, Marketing, Sales and Administrative     182,000       Owned  
Nehren, Germany
   Manufacturing, Research and Development, Application and Demonstration, Marketing, Sales and Administrative     89,000      
Owned/

Leased
 
 
Principal Facilities Used in Current Operations for BSI Nano:
      
Karlsruhe, Germany
   Manufacturing, Research and Development, Application and Demonstration, Marketing, Sales and Administrative     145,000       Owned  
Berlin, Germany
   Manufacturing, Research and Development, Application and Demonstration, Marketing, Sales and Administrative     243,000       Owned  
Santa Barbara, CA, U.S.A.
   Manufacturing, Research and Development, Application and Demonstration, Marketing, Sales and Administrative     100,000       Owned  
Graz, Austria
   Manufacturing, Research and Development, Application and Demonstration, Marketing, Sales and Administrative     30,000       Leased  
 
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Location
  
Principal Use
 
Approximate

Square Feet
   
Relationship
Penang, Malaysia
   Manufacturing, Research and Development, Application and Demonstration, Marketing, Sales and Administrative     100,000     Leased
Migdal Ha’Emek, Israel
   Manufacturing, Research and Development, Application and Demonstration, Marketing, Sales and Administrative     22,000     Leased
Principal Facilities Used in Current Operations for BEST:
      
Perth, Scotland
   Manufacturing, Research and Development, Application and Demonstration, Marketing, Sales and Administrative     47,000     Owned
Hanau, Germany
   Manufacturing, Research and Development, Application and Demonstration, Marketing, Sales and Administrative     138,000     Leased
Bergisch Gladbach, Germany
   Manufacturing, Research and Development, Application and Demonstration, Marketing, Sales and Administrative     134,000     Leased
Carteret, NJ, U.S.A.
   Manufacturing, Research and Development, Application and Demonstration, Marketing, Sales and Administrative     115,000     Leased
Shared Principal Facilities:
      
Billerica, MA, U.S.A.
   Research and Development, Application and Demonstration, Marketing, Sales and Administrative     200,000     Owned
 
ITEM 3
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 consolidated financial statements.
Details on recent legal matters can be found in Note 17 to our consolidated financial statements included in this Annual Report on Form
10-K
under Item 8.
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 4
MINE SAFETY DISCLOSURES
Not applicable.
 
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PART II
 
ITEM 5
MARKET FOR REGISTRANT
S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Market Prices
Our common stock is traded on the Nasdaq Global Select Market under the symbol “BRKR.”
As of February 15, 2022, there were approximately 87 holders of record of our common stock. This number does not include individual beneficial owners of shares held in nominee name or within clearinghouse positions of brokerage firms and banks.
Dividends
In February 2016, we announced the establishment of a dividend policy and the declaration by our Board of Directors of an initial quarterly cash dividend in the amount of $0.04 per share of our issued and outstanding common stock. Beginning in 2022, we are targeting a quarterly cash dividend to our shareholders in the amount of $0.05 per share of our issued and outstanding common stock and in February 2022 announced that our Board had approved a quarterly dividend for the first quarter of 2022 of $0.05 per share, payable in March. Future dividend payments, if any, are subject to approval of our Board of Directors.
Stock Price Performance Graph
The graph below compares Bruker Corporation’s annual percentage change in cumulative total return on common shares over the past five years with the cumulative total return of companies comprising the Nasdaq US Benchmark TR Index and the SIC Code 3826 Laboratory Analytical Instruments Index. This presentation assumes that $100 was invested in shares of the relevant issuers on December 31, 2016, and that dividends received were immediately invested in additional shares. The graph plots the value of the initial $100 investment at
one-year
intervals for the fiscal years shown. The Nasdaq US Benchmark TR Index replaces the CRSP Nasdaq Stock Market (US Companies) Index in this analysis and going forward, as the CRSP Index data is no longer accessible. The CRSP index has been included with data through 2020.
 
 
 
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Cumulative Total Return Index for:
  
2016
    
2017
    
2018
    
2019
    
2020
    
2021
 
Bruker Corporation
   $ 100.0      $ 162.96      $ 142.07      $ 244.14      $ 260.20      $ 404.24  
Nasdaq US Benchmark TR Index
     100.0        121.38        114.77        150.55        182.57        229.84  
Nasdaq Stock Market (US companies)
     100.0        129.30        127.19        173.11        249.17        —    
SIC Code 3826 Laboratory Analytical Instruments
     100.0        151.99        158.88        202.04        269.90        336.07  
The data for this performance graph was compiled by Zack’s Investment Research, Inc. and is used with its permission.
Issuer Purchases of Securities
The following table provides information about purchases made by or on behalf of the Company or any “affiliated purchaser,” as defined in Rule
10b-18(a)(3)
under the Exchange Act, during the quarter ended December 31, 2021 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 Programs (2)
 
October 1—October 31, 2021
    —       $ —         —       $ 463,380,168  
November 1—November 30, 2021
    634,855     $ 82.32       634,855     $ 411,119,634  
December 1—December 31, 2021
    371,659     $ 80.70       371,659     $ 381,127,281  
 
 
 
     
 
 
   
    1,006,514     $ 81.72       1,006,514     $ 381,127,281  
 
 
 
     
 
 
   
 
(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 12, 2021 (the “2021 Repurchase Program”). The shares were purchased on the open market at prevailing prices.
(2)
The 2021 Repurchase Program authorizes the purchase 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. At February 23, 2022, $374.9 million remains for future purchase under the 2021 Repurchase Program.
In May 2019, the Company’s Board of Directors approved a share repurchase plan (the “2019 Repurchase Program”) authorizing the purchase of the Company’s common stock of up to $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. We purchased a total of 555,602 shares at an aggregate cost of $34.5 million under the 2019 Repurchase Program during the year ended December 31, 2021. We completed the 2019 Repurchase Program in April 2021, after reaching the maximum cumulative spend.
We purchased a total of 1,537,217 shares of common stock with an aggregate cost of approximately $118.9 million under the 2021 Repurchase Program during the year ended December 31, 2021. Any future purchases will be funded from cash on hand, future cash flows from operations and available borrowings under our revolving credit facility.
 
ITEM 6
RESERVED
 
 
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ITEM 7
MANAGEMENT
S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations in conjunction with our consolidated financial statements and notes to those statements, appearing elsewhere in this report. This report contains forward-looking statements reflecting our current expectations that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions. The cautionary statements made in this report should be read as applying to all related forward-looking statements wherever they appear in this report. Our actual results may differ materially from those indicated in the forward-looking statements due to a number of factors, including those discussed in Item 1A, Risk Factors and elsewhere in this report.
The following Management’s Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, describes the principal factors affecting the results of our operations, financial condition and changes in financial condition, as well as our critical accounting policies and estimates. Our MD&A is organized as follows:
 
   
Non
-GAAP
Measures.
This section provides appropriate disclosures regarding forward looking statements and our use of
Non-GAAP
financial measures.
 
   
Overview
. This section provides a brief discussion of our reportable segments’ results of operations, significant recent developments in our businesses, and challenges and risks that may impact our businesses in the future.
 
   
Results of Operations.
This section provides our analysis of the significant line items on our consolidated statements of income and comprehensive income for the year ended December 31, 2021 compared to the year ended December 31, 2020.
 
   
Liquidity and Capital Resources.
This section provides an analysis of our liquidity and cash flow and a discussion of our outstanding debt and commitments.
 
   
Critical Accounting Policies and Estimates.
This section discusses the accounting estimates that are considered important to our financial condition and results of operations and require us to exercise subjective or complex judgments in their application. All of our significant accounting policies are summarized in Note 2 to our consolidated financial statements in Item 8 of this Annual Report on
Form 10-K.
 
   
Recent Accounting Pronouncements.
This section provides a summary of recent accounting pronouncements and discusses their potential impact on our consolidated financial statements.
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 initiatives, and other
non-operational
costs and we believe these are useful measures to evaluate our continuing business.
 
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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 (comprised of the Bruker BioSpin Group and the Bruker CALID Group), the BSI Nano Segment and the Bruker Energy & Supercon Technologies (BEST) Segment.
Revenue for the year ended December 31, 2021 increased by $430.4 million, or 21.7%, to $2,417.9 million, compared to $1,987.5 million for the comparable period in 2020. Included in revenue was an increase of approximately $43.3 million from foreign currency translation and an increase of $8.1 million from acquisitions. Excluding the effects of foreign currency translation and our recent acquisitions, our organic revenue,
a non-GAAP
measure, increased $379.0 million. Revenue increases were driven by strong demand for our products and solutions, as well as a robust recovery compared to the same period in 2020.
Our gross profit margin increased to 50.0% for the year ended December 31, 2021 as compared to 47.3% in the same period in 2020, the result of volume leverage.
The income tax provision for the years ended December 31, 2021 and December 31, 2020 was $113.0 million and $64.4 million, respectively, representing effective tax rates of 28.7% and 28.5%, respectively. The increase in our effective tax rate was primarily due to additional tax reserves for uncertain tax positions in 2021 and the impact of U.S. tax on foreign earnings, partially offset by the impact of discrete items in the period.
Diluted earnings per share for the year ended December 31, 2021 was $1.81, an increase of $0.79, compared to $1.02 per share in the same period in 2020. The increase in earnings per diluted share was primarily driven by higher revenue, favorable volume and operating leverage compared to the same period in 2020.
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):
 
    
Year Ended

December 31,
 
    
2021
    
2020
 
Net cash provided by operating activities
   $ 282.4      $ 332.2  
Less: purchases of property, plant and equipment
     (92.0      (97.2
  
 
 
    
 
 
 
Free cash flow
   $ 190.4      $ 235.0  
  
 
 
    
 
 
 
 
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For the year ended December 31, 2021, our free cash flow was 19% lower than the same period in 2020, primarily from an increase in working capital due to increased accounts receivable from higher revenues and timing of receivables and strategic inventory build for 2021 orders and supply chain management.
The following table presents a reconciliation from gross profit and gross profit margin, which are the most directly comparable GAAP operating performance measures, to
non-GAAP
gross profit and
non-GAAP
gross profit margin as used by management (dollars in millions):
 
    
Year Ended December 31,
 
    
2021
   
2020
 
Gross profit
   $ 1,209.6        50.0   $ 939.8        47.3
Non-GAAP
adjustments:
          
Restructuring costs
     3.4        0.1     3.8        0.2
Acquisition-related costs
     0.7        —         0.8        —    
Purchased intangible amortization
     20.2        0.9     19.9        1.0
Other costs
     1.1        0.1     3.7        0.2
  
 
 
    
 
 
   
 
 
    
 
 
 
Non-GAAP
gross profit
   $ 1,235.0        51.1   $ 968.0        48.7
  
 
 
    
 
 
   
 
 
    
 
 
 
Our
non-GAAP
gross profit margin was 51.1% and 48.7% in the years ended December 31, 2021 and 2020, respectively. The increases in our
non-GAAP
gross profit margins were driven by higher revenue and volume leverage, compared to 2020 which was negatively impacted by the
COVID-19
pandemic. Contributions from higher margin products also favorably impacted our gross profit margin in the year ended December 31, 2021.
The following table presents a reconciliation from operating income and operating margin, which are the most directly comparable GAAP operating performance measures, to
non-GAAP
operating income and
non-GAAP
operating margin as used by management (in millions):
 
    
Year Ended December 31,
 
    
2021
   
2020
 
Operating income
   $ 413.3        17.1   $ 248.3        12.5
Non-GAAP
adjustments:
          
Restructuring costs
     8.2        0.3     15.8        0.8
Acquisition-related costs
     6.9        0.3     3.2        0.2
Purchased intangible amortization
     37.4        1.5     35.7        1.8
Other costs
     4.4        0.2     14.2        0.7
  
 
 
    
 
 
   
 
 
    
 
 
 
Non-GAAP
operating income
   $ 470.2        19.4   $ 317.2        16.0
  
 
 
    
 
 
   
 
 
    
 
 
 
Our
non-GAAP
operating margin was 19.4% and 16.0% for the years ended December 31, 2021 and 2020, respectively. The increase in our
non-GAAP
operating margins was driven by higher revenue and volume and operating leverage, compared to 2020 which was negatively impacted by the
COVID-19
pandemic. Contributions from higher margin products also favorably impacted our operating margin in the year ended December 31, 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 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;
 
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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. During the
COVID-19
pandemic, we have been focused on and continue to focus on four 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 based on demand; 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 implemented strict social distancing, enhanced cleaning protocols and other preventative measures, such as company-issued face coverings and mandatory mask protocols for unvaccinated employees, in our major facilities. While many of our office colleagues are working remotely, we are placing enhanced focus on our service organization and factory employees for whom work from home is not feasible. Where customer sites are accessible and open, our field service organizations operate under social distancing protocols with proper face coverings to ensure the safety of customer sites, when our employees need to be on site. Many of our facilities have begun to plan for employees who have been working remotely during the pandemic to gradually return to the office. Employee and visitor health and safety will remain our paramount concern.
Maintaining business continuity and service levels for 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 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 the worldwide shortage of semiconductor chips, components and raw materials, such as copper.
Executing prudent temporary cost reductions
During a period of reduced demand due
to COVID-19 in
2020, we implemented temporary cost reduction measures in an effort to mitigate the negative impacts on our business
of COVID-19 and
the related slowdown in
 
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the global economy. 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. These cost reduction measures have since been relaxed, as our revenue has recovered. We could in fact experience increased compensation expenses associated with employee recruiting and employee retention to the extent employment opportunities continue multiplying post-pandemic, causing the search for and retention of talent to remain and become more competitive.
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, most notably our Microbiology and infectious disease diagnostics portfolio 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. 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.
RESULTS OF OPERATIONS
A discussion regarding our results of operations for the fiscal year ended December 31, 2020 compared to 2019 can be found under Item 7 of our Annual Report on Form
10-K
for the fiscal year ended December 31, 2020, filed with the SEC on March 1, 2021, which is available on the SEC’s website at www.sec.gov and our Investor Relations website at https://.ir.bruker.com under the “Financial Info” section.
Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020
Consolidated Results
The following table presents our results for the years ended December 31, 2021 and 2020 (dollars in millions):
 
    
Year Ended December 31,
               
    
     2021     
    
     2020     
    
Dollar
Change
    
Percentage
Change
 
Product revenue
   $ 2,017.3      $ 1,638.1      $ 379.2        23.1
Service revenue
     393.2        343.4        49.8        14.5
Other revenue
     7.4        6.0        1.4        23.3
    
 
 
    
 
 
    
 
 
          
Total revenue
     2,417.9        1,987.5        430.4        21.7
Cost of product revenue
     979.3        840.2        139.1        16.6
Cost of service revenue
     228.2        206.5        21.7        10.5
Cost of other revenue
     0.8        1.0        (0.2      (20.0 )% 
    
 
 
    
 
 
    
 
 
          
Total cost of revenue
     1,208.3        1,047.7        160.6        15.3
    
 
 
    
 
 
    
 
 
          
Gross profit
     1,209.6        939.8        269.8        28.7
 
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Year Ended December 31,
               
    
     2021     
    
     2020     
    
Dollar
Change
    
Percentage
Change
 
Operating expenses:
                                   
Selling, general and administrative
     561.2        468.6        92.6        19.8
Research and development
     220.8        198.0        22.8        11.5
Other charges, net
     14.3        24.9        (10.6      (42.6 )% 
    
 
 
    
 
 
    
 
 
          
Total operating expenses
     796.3        691.5        104.8        15.2
    
 
 
    
 
 
    
 
 
          
Operating income
     413.3        248.3        165.0        66.5
Interest and other income (expense), net
     (19.7      (22.5      2.8        (12.4 )% 
    
 
 
    
 
 
    
 
 
          
Income before income taxes and noncontrolling interest in consolidated subsidiaries
     393.6        225.8        167.8        74.3
Income tax provision
     113.0        64.4        48.6        75.5
    
 
 
    
 
 
    
 
 
          
Consolidated net income
     280.6        161.4        119.2        73.9
Net income attributable to noncontrolling interests in consolidated subsidiaries
     3.5        3.6        (0.1      (2.8 )% 
    
 
 
    
 
 
    
 
 
          
Net income attributable to Bruker Corporation
   $ 277.1      $ 157.8      $ 119.3        75.6
    
 
 
    
 
 
    
 
 
          
Revenue
Revenue increases were driven by strong broad demand for our products and solutions, and the business and end market recovery as compared to the same period in 2020.
Gross Profit
The increase in gross profit was a result of higher revenue, volume leverage and favorable product mix.
Selling, General and Administrative
Our selling, general and administrative expenses for the year ended December 31, 2021 decreased to 23.2% of total revenue from 23.6% of total revenue for the comparable period in 2020. The increase in dollars was a result of the cost control and cost reduction measures implemented during the
COVID-19
pandemic in 2020 that did not occur in 2021. The decrease as a percentage of revenue was a result of the increase in revenue period over period and the delayed timing of certain investments.
Research and Development
Our research and development expenses for the year ended December 31, 2021 decreased to 9.1% of total revenue from 10.0% of total revenue for the comparable period in 2020. The increase in dollars was a result of the cost control and cost reduction measures implemented during the
COVID-19
pandemic in 2020 that did not occur in 2021.The decrease as a percentage of revenue was a result of the increase in revenue period over period and the delayed timing of certain investments.
Other Charges, Net
Other charges, net for the year ended December 31, 2021 consisted primarily of $6.1 million of acquisition-related charges related to acquisitions completed in 2021 and 2020, $4.8 million of restructuring costs related to closing facilities and implementing outsourcing and other restructuring initiatives, $2.8 million of costs associated with our global IT transformation activities, $1.1 million related to professional fees and ($0.5) million related to long-lived asset impairments.
 
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Other charges, net for the year ended December 31, 2020 consisted primarily of $12.0 million of restructuring costs related to closing facilities and implementing outsourcing and other restructuring initiatives, $5.9 million related to professional fees, $2.5 million of costs associated with our global IT transformation activities, $2.4 million of acquisition-related charges related to acquisitions completed in 2020 and 2019 and $2.1 million related to long-lived asset impairments.
Operating Income
The increase in operating income was due to higher revenue, gross profit and favorable operating leverage in the year ended December 31, 2021 as our business and end markets rebounded, as compared to the same period in 2020 which was negatively impacted by
the COVID-19 pandemic
and related economic slowdown.
Interest and Other Income (Expense), Net
The decline in net interest and other expense in the year ended December 31, 2021, as compared to the same period in 2020 was primarily due to the impact of foreign currency exchange rates.
Income Tax Provision
The effective tax rates for years ended 2021 and 2020 were 28.7% and 28.5%, respectively. The increase in our effective tax rate for the year ended December 31, 2021, compared to 2020, was primarily due to additional tax reserves for uncertain tax positions in 2021 and the impact of U.S. tax on foreign earnings, partially offset by the impact of discrete items in the period.
Net Income Attributable to Noncontrolling Interests and Redeemable Noncontrolling Interest
The net income attributable to noncontrolling interests represented the minority shareholders’ proportionate share of the net income recorded by our majority-owned subsidiaries. In January 2020, we acquired the remaining 20%
non-controlling
interests from Hain LifeScience GmbH shareholders.
Net Income Attributable to Bruker Corporation
The increase in net income and earnings per diluted share was primarily driven by the increase in revenue, gross profit and operating profit as a result of strengthened demand and recovery in our business and end markets.
Segment Results
Revenue
The following table presents revenue, change in revenue, and revenue growth by reportable segment for the years ended December 31, 2021 and 2020 (dollars in millions):
 
    
2021
    
2020
    
Dollar Change
    
Percentage
Change
 
BSI Life Science
   $ 1,510.6      $ 1,253.9      $ 256.7        20.5
BSI Nano
     697.5        556.1        141.4        25.4
BEST
     223.8        189.5        34.3        18.1
Eliminations (a)
     (14.0      (12.0      (2.0         
    
 
 
    
 
 
    
 
 
          
     $ 2,417.9      $ 1,987.5      $ 430.4        21.7
    
 
 
    
 
 
    
 
 
          
 
(a)
Represents product and service revenue between reportable segments.
 
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The increase in revenue for the BSI Life Science segment for the year ended December 31, 2021 was due to strong demand and end market recovery across the segment’s major product lines, including mass spectrometry, infrared, Raman, microbiology, Nuclear Magnetic Resonance (NMR) and Preclinical Imaging (PCI) solutions. In addition, system installation activities recovered compared to the same period in 2020. The increase in revenue for the BSI Nano Segment was driven by a rebound in industrial research and academic market demand and continued strong demand from semiconductor and microelectronics customers and our
X-ray
products. The increase in revenue for the BEST Segment resulted from higher “big science” project revenue and a recovery in superconductors for healthcare MRI for the year ended December 31, 2021.
Operating Income
The following table presents operating income and operating margins on revenue by reportable segment for the years ended December 31, 2021 and 2020 (dollars in millions):
 
    
2021
   
2020
 
    
Operating
Income (Loss)
    
Percentage of
Segment
Revenue
   
Operating
Income (Loss)
    
Percentage of
Segment
Revenue
 
BSI Life Science
   $ 385.4        25.5   $ 273.8        21.8
BSI Nano
     73.4        10.5     23.6        4.2
BEST
     22.2        9.9     6.2        3.3
Corporate, eliminations and other (a)
     (67.7              (55.3         
    
 
 
            
 
 
          
Total operating income
   $ 413.3        17.1   $ 248.3        12.5
    
 
 
            
 
 
          
 
(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 from higher revenue, volume and operating leverage. 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, cash equivalents, short-term investments 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, 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 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 December 31, 2021 and 2020 totaled $1,168.2 million and $731.8 million, respectively, of which $646.9 million and $514.9 million, respectively, related to cash, cash equivalents and short-term investments is 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):
 
    
Year Ended December 31,
 
    
    2021    
    
    2020    
 
Net cash provided by operating activities
   $ 282.4      $ 332.2  
Net cash used in investing activities
     (192.4      (192.7
Net cash provided by (used in) financing activities
     318.7        (161.6
Effect of exchange rates on cash and cash equivalents and restricted cash
     (22.5      25.7  
    
 
 
    
 
 
 
Total increase in cash and cash equivalents and restricted cash
   $ 386.2      $ 3.6  
    
 
 
    
 
 
 
Cash provided by operating activities during the year ended December 31, 2021 resulted from consolidated net income adjusted
for non-cash
items of $408.0 million, partially offset by a change in operating assets and liabilities, net of acquisitions and divestitures of $125.6 million. The primary increase is a result of increased net income driven by the increase in revenue, gross profit and operating profit as a result of the rebounding in our business and end markets. The decrease in cash flows due to change in operating assets and liabilities, net of acquisitions for the year ended December 31, 2021 was primarily due to increases in inventory in response to supply chain challenges, timing of tax payments and increased accounts receivable at the end of 2021 due to higher revenues. These decreases were partially offset by a decrease in timing of payments as compared to the same period in the prior year. During the year ended December 31, 2020, net cash provided by operating activities resulted from consolidated net income adjusted
for non-cash items
of $262.6 million, offset by a change in operating assets and liabilities, net of acquisitions and divestitures of $69.6 million. The increase in cash flows due to changes in operating assets and liabilities, net of acquisitions for the year ended December 31, 2020 was primarily caused by a decrease in accounts receivable due to increased cash collections, increased customer advances related to
COVID-19
order increases late in 2020 offset by a strategic inventory build for 2021 orders and supply chain management.
Cash used in investing activities during the year ended December 31, 2021 resulted primarily from purchases of property, plant and equipment of $92.0 million, acquisitions of $65.0 million and purchases of short-term investments, net of maturities of $49.8 million, offset by $10.0 million of net proceeds from our cross-currency swap agreements and proceeds from sales of property, plant and equipment of $4.9 million. Cash used in investing activities during the year ended December 31, 2020 was primarily attributed to net capital expenditures of $97.2 million, net cash paid for acquisitions of $59.2 million and purchases of short-term investments, net of maturities of $43.9 million.
We currently expect capital expenditures in 2022 to be approximately $115.0 million.
Net cash provided by financing activities during the year ended December 31, 2021 was primarily from proceeds from the 2021 Note Purchase Agreement of $492.8 million, offset by cash paid for purchases of common stock under our repurchase program of $153.3 million and $24.2 million for the payment of dividends. Net cash used in financing activities during the year ended December 31, 2020 was primarily attributable to $123.2 million used for the purchase of common stock under our repurchase program, $24.6 million used for the payment of dividends, $7.6 million in net payments of borrowings under the 2019 Revolving Credit Agreement and a $7.5 million payment of contingent consideration.
Share Repurchase Program
In May 2019, our Board of Directors approved a share repurchase program (the “2019 Repurchase Program”) authorizing the purchase of our common stock of up to $300.0 million from time to time, in amounts,
 
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