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Item 8. Financial Statements and Supplementary Data

2023-03-01 compared with 2022-02-28 · 650 added, 768 removed, 988 unchanged (59% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

ITEM 8 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index of Consolidated Financial Statements

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Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2022, 2021 and 2020

Consolidated Statements of Redeemable Noncontrolling Interest and Shareholders’ Equity for the years ended December 31, 2021, 2020 and 2019

Consolidated Statements of Redeemable Noncontrolling Interests and Shareholders’

Equity for the years ended December 31, 2022, 2021 and 2020

Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Shareholders of

Bruker Corporation

To the Board of Directors and Shareholders of Bruker Corporation

Opinions on the Financial Statements and Internal Control over Financial Reporting

We have audited the accompanying consolidated balance sheets of Bruker Corporation and its subsidiaries (the “Company”) as of December 31, 2021 and 2020, and the related consolidated statements of income and comprehensive income, of redeemable noncontrolling interest and shareholders’ equity and of cash flows for each of the three years in the period ended December 31, 2021, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control—Integrated Framework

(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

We have audited the accompanying consolidated balance sheets of Bruker Corporation and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income and comprehensive income, of redeemable noncontrolling interests and shareholders' equity and of cash flows for each of the three years in the period ended December 31, 2022, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal

(2013) issued by the COSO.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control - Integrated Framework(2013) issued by the COSO.

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal control over financial reporting based on our audits.

The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A.

Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

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We believe that our audits provide a reasonable basis for our opinions.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded SCI Instruments, SVXR, Inc.

and Molecubes NV from its assessment of internal control over financial reporting as of December 31, 2021 because they were acquired by the Company in purchase business combinations during 2021.

We have also excluded SCI Instruments, SVXR, Inc.

and Molecubes NV from our

audit of internal control over financial reporting.

SCI Instruments, SVXR, Inc.

and Molecubes NV are wholly-owned subsidiaries whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting collectively represent 1.9% and 0.4%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2021.

As described in Management’s Report on Internal Control over Financial Reporting, management has excluded Prolab Instruments GmbH, PreOmics GmbH, PepSep Holding ApS, Optimal Industrial Automation and Technologies, IonSense, Inc., Inscopix, Inc., and Neurescence, Inc.

from its assessment of internal control over financial reporting as of December 31, 2022 because they were acquired by the Company in purchase business combinations during 2022.

We have also excluded Prolab Instruments GmbH, PreOmics GmbH, PepSep Holding ApS, Optimal Industrial Automation and Technologies, IonSense, Inc., Inscopix, Inc., and Neurescence, Inc.

from our audit of internal control over financial reporting.

The total assets and total revenues of these acquired entities excluded from management’s assessment and our audit of internal control over financial reporting collectively represent 1.5% and 1.1%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2022.

Definition and Limitations of Internal Control over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Goodwill Impairment Assessment—Reporting Unit in Bruker Scientific Instruments (BSI) Nano Segment

As described in Notes 2 and 9 to the consolidated financial statements, the Company’s consolidated goodwill balance was $339.5 million as of December 31, 2021, $238.9 million of which relates to the BSI Nano segment.

Management evaluates goodwill for impairment on an annual basis, or on an interim basis when events or changes in circumstances indicate that the carrying value may not be recoverable.

Management tests goodwill for impairment at the reporting unit level, which is the operating segment or one level below an operating segment.

Management determines the fair value of reporting units using a weighting of both the market and the income methodologies.

In assessing the recoverability of goodwill, management must make assumptions regarding the estimated future cash flows, including the forecasted revenue growth to determine the fair value.

If the carrying amount of a reporting unit exceeds the fair value of the reporting unit, management recognizes an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value up to the total amount of goodwill allocated to the reporting unit.

The principal consideration for our determination that performing procedures relating to the goodwill impairment assessment is a critical audit matter is the significant judgment by management when developing the fair value measurement of the reporting unit.

This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s significant assumption related to the forecasted revenue growth.

The audit effort also involved the use of professionals with specialized skill and knowledge.

Revenue Recognition –

As described in Note 2 to the consolidated financial statements, the Company recognizes revenue from systems sales upon transfer of control in an amount that reflects the consideration it expects to receive.

Transfer of control generally occurs upon shipment, or for certain systems, based upon customer acceptance for a system once delivered and installed at a customer facility.

For systems that include customer-specific acceptance criteria, management is required to assess when it can demonstrate the acceptance criteria has been met, which generally is upon successful factory acceptance testing or customer acceptance and evidence of installation.

The Company’s product revenue for the year ended December 31, 2022 was $2,109.9 million, of which a significant portion relates to system sales.

The principal consideration for our determination that performing procedures relating to revenue recognition for system sales is a critical audit matter is a high degree of auditor effort in performing procedures related to the Company’s system sales revenue recognition.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the valuation of the Company’s reporting unit.

These procedures also included, among others, testing management’s process for developing the fair value estimates of the reporting unit;

evaluating the appropriateness of using a weighting of both the market and income methodologies;

testing the completeness, accuracy, and relevance of underlying data used in the methodologies;

and evaluating the significant assumption used by management related to the forecasted revenue growth.

Evaluating management’s assumption related to the forecasted revenue growth involved evaluating whether the assumption used by management was reasonable considering (i) the current and past performance of the reporting unit, (ii) the consistency with external market and industry data, and (iii) whether the assumption was consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in the evaluation of the Company’s methodologies.

These procedures included testing the effectiveness of controls relating to system sales revenue recognition.

These procedures also included, among others, evaluating the recognition of revenue for a sample of system sales transactions by obtaining and inspecting source documents, such as invoices, customer purchase orders, shipping or delivery documents, acceptance documents, and cash receipts, where applicable.

/s/ PricewaterhouseCoopers LLP

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February 28, 2023

We have served as the Company’s auditor since 2016.

BRUKER CORPORATION

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Other long-term assets

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND

SHAREHOLDERS’

Current liabilities:

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Commitments and contingencies (Note 17)

Redeemable noncontrolling interest

Shareholders’ equity:

Preferred stock, $ 0.01

par value 5,000,000 shares authorized, none

issued or outstanding at December 31, 2021 and 2020

Common stock, $ 0.01

par value 260,000,000

shares authorized, 174,905,035

and 174,045,610

shares issued and 150,753,687

and 151,987,081

outstanding at December 31, 2021 and 2020, respectively

Treasury stock at cost, 24,151,348

and 22,058,529

shares at December 31, 2021 and 2020, respectively

Additional paid-in

Redeemable noncontrolling interests

Shareholders’

Preferred stock, $ 0.01 par value 5,000,000 shares authorized, none issued or

outstanding at December 31, 2022 and 2021

Common stock, $ 0.01 par value 260,000,000 shares authorized, 175,389,586

and 174,905,035 shares issued and 147,023,144 and 150,753,687 outstanding

at December 31, 2022 and 2021, respectively

Treasury stock at cost, 28,366,442 and 24,151,348 shares at December 31, 2022

and 2021, respectively

Additional paid-in capital

Retained earnings

Accumulated other comprehensive (loss) income

Total shareholders’ equity attributable to Bruker Corporation

Noncontrolling interest s

in consolidated subsidiaries

Total shareholders’ equity

Total liabilities, redeemable noncontrolling interest and shareholders’ equity

The accompanying notes are an

integral part of these consolidated financial statements.

Accumulated other comprehensive income (loss), net of tax

Total shareholders’

equity attributable to Bruker Corporation

Noncontrolling interests in consolidated subsidiaries

Total shareholders’

Total liabilities, redeemable noncontrolling interests and shareholders’

The accompanying notes are an integral part of these consolidated financial statements.

BRUKER CORPORATION

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Interest and other income (expense), net

Income before income taxes and noncontrolling interest s

in consolidated subsidiaries

Income before income taxes, equity in income of unconsolidated investees,

net of tax, and noncontrolling interests in consolidated subsidiaries

Income tax provision

Equity in income of unconsolidated investees, net of tax

Consolidated net income

Net income attributable to noncontrolling interest s

in consolidated subsidiaries

Net income attributable to noncontrolling interests in

consolidated subsidiaries

Net income attributable to Bruker Corporation

Net income per common share attributable to Bruker Corporation shareholders:

Net income per common share attributable to Bruker

Corporation shareholders:

Weighted average common shares outstanding:

Consolidated net income

Foreign currency translation (net of tax of $ 2.1 million, $ 1.2 million and $ 5.1 million, respectively) adjustments

Derivatives designated as hedging instruments (net of tax of $ 12.5 million in 2021)

Foreign currency translation adjustments (net of tax of $ 1.4 , $ 2.1

and $ 1.2 , respectively)

Derivatives designated as hedging instruments (net of tax of ($ 13.8 ),

$ 12.5 , respectively)

Pension liability adjustments (net of tax of ($ 11.8 ), ($ 3.9 )

million, ($ 1.7 ) million and $ 6.3 million, respectively)

Net comprehensive income

and ($ 1.7 ), respectively)

Comprehensive income

Comprehensive income attributable to noncontrolling interests

Comprehensive loss attributable to redeemable noncontrolling interest

Comprehensive loss attributable to redeemable noncontrolling

Comprehensive income attributable to Bruker Corporation

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BRUKER CORPORATION

CONSOLIDATED STATEMENTS OF REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS’ EQUITY

CONSOLIDATED STATEMENTS OF REDEEMABLE NONCONTROLLING INTERESTS AND SHAREHOLDERS’

(in millions, except share data)

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Comprehensive

Income (Loss)

Shareholders’

(Loss) Income

Shareholders’

Attributable to

Noncontrolling

Shareholders’

Balance at December 31, 2019

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Stock-based compensation

Shares issued from 2017 acquisition

Shares repurchased

Treasury stock acquired

Cash dividends paid to common stockholders

($ 0.16 per share)

Distributions to noncontrolling interests

Acquired remaining 20 % interest

in Hain LifeScience GmbH

Cash dividends paid to common

shareholders ($ 0.16 per share)

Consolidated net income

Other comprehensive income (loss)

Other comprehensive (loss) income

Balance at December 31, 2020

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Shares repurchased

Distributions to noncontrolling interests

Acquired remaining 20 % interest in Hain LifeScience GmbH

Cash dividends paid to common stockholders

($ 0.16 per share)

Consolidated net income

Other comprehensive income (loss)

Cash dividends paid to common

shareholders ($ 0.16 per share)

Formation of Acuity Spatial

Genomics, Inc.

Consolidated net (loss) income

Other comprehensive loss

Balance at December 31, 2021

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Stock-based compensation

Cash dividends paid to

common stockholders

Formation of Acuity Spatial Genomics, Inc.

Consolidated net income

Other comprehensive income (loss)

Shares repurchased

Distributions to noncontrolling interests

Cash dividends paid to common

shareholders ($ 0.20 per share)

Consolidated net (loss) income

PreOmics Acquisition - other shareholders

Acquisition of minority interest

Other comprehensive (loss) income

Balance at December 31, 2022

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Consolidated net income

Adjustments to reconcile consolidated net income to cash flows from operating activities:

Adjustments to reconcile consolidated net income to cash flows from

operating activities:

Depreciation and amortization

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Cash flows from investing activities:

Purchase of short-term investments

Purchases of short-term investments

Maturity of short-term investments

Purchase of investments held to maturity

Cash paid for strategic investments

Cash paid for acquisitions, net of cash acquired

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Proceeds from issuance of long-term debt

Repayment of long-term debt

Repayment of 2012 Note Purchase Agreement

Repayment of 2019 Note Purchase Agreement

Repayments of revolving lines of credit

Proceeds from revolving lines of credit

Repayment of other debt, net

Proceeds (repayment) of other debt, net

Payment of deferred financing costs

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Payment of contingent consideration

Payment of dividends to common stockholders

Payment of dividends to common shareholders

Repurchase of common stock

Cash payments to noncontrolling interests

Net cash provided by (used in) financing activities

Purchase of minority interest

Net cash (used in) provided by financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

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Bruker Corporation, together with its consolidated subsidiaries (Bruker or the Company), develops, manufactures and distributes high-performance scientific instruments and analytical and diagnostic solutions that enable its customers to explore life and materials at microscopic, molecular and cellular levels.

Many of the Company’s products are used to detect, measure and visualize structural characteristics of chemical, biological and industrial material samples.

The Company’s products address the rapidly evolving needs of a diverse array of customers in life science research, pharmaceuticals, biotechnology, applied markets, cell biology, clinical research, microbiology, in-vitro

diagnostics, nanotechnology and materials science research.

The Company has

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

and Bruker Energy

& Supercon Technologies (BEST)

The Company has three reportable segments, BSI Life Science Segment, BSI Nano

Segment and BEST

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

Bruker BioSpin

- The Bruker BioSpin Group designs, manufactures and distributes enabling life science tools based on magnetic resonance technology.

Bruker BioSpin Group’s revenues are generated by academic and government research customers, pharmaceutical and biotechnology companies and nonprofit laboratories, as well as chemical, food and beverage, clinical and other industrial companies.

(Chemicals, Applied Markets, Life Science, In-Vitro

Diagnostics, Detection)

The Bruker CALID Group designs, manufactures and distributes life science mass spectrometry and ion mobility spectrometry solutions, analytical and process analysis instruments and solutions based on infrared and Raman molecular spectroscopy technologies and radiological/nuclear detectors for Chemical, Biological, Radiological, Nuclear and Explosive (CBRNE) detection.

Customers of the Bruker CALID Group include academic institutions and medical schools;

Many of the Company’s products are used to detect, measure and visualize structural characteristics of chemical, biological and industrial material samples.

The Company has four reportable segments, Bruker Scientific Instruments (BSI) BioSpin, BSI CALID, BSI Nano and Bruker Energy & Supercon Technologies (BEST).

BSI BioSpin - The BSI BioSpin Segment designs, manufactures and distributes enabling life science tools based on magnetic resonance technology.

BioSpin Segment’s revenues are generated by academic and government research customers, pharmaceutical and biotechnology companies and nonprofit laboratories, as well as chemical, food and beverage, clinical and other industrial companies.

BSI CALID (Chemicals, Applied Markets, Life Science, In-Vitro Diagnostics, Detection) - The BSI CALID Segment designs, manufactures and distributes life science mass spectrometry and ion mobility spectrometry solutions, analytical and process analysis instruments and solutions based on infrared and Raman molecular spectroscopy technologies and radiological/nuclear detectors for Chemical, Biological, Radiological, Nuclear and Explosive (CBRNE) detection.

Customers of the BSI CALID Segment include academic institutions and medical schools;

pharmaceutical, biotechnology and diagnostics companies;

contract research organizations;

nonprofit and for-profit

forensics laboratories;

nonprofit and for-profit forensics laboratories;

agriculture, food and beverage safety laboratories;

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hospitals and government departments and agencies.

The BSI Nano Segment designs, manufactures and distributes advanced X-ray

BSI Nano Segment designs, manufactures and distributes advanced X-ray instruments;

atomic force microscopy instrumentation;

advanced fluorescence optical microscopy instruments;

analytical tools for electron microscopes and X-ray

analytical tools for electron microscopes and X-ray metrology;

defect-detection equipment for semiconductor process control;

handheld, portable and mobile X-ray

fluorescence spectrometry instruments;

handheld, portable and mobile X-ray fluorescence spectrometry instruments;

spark optical emission spectroscopy systems;

chip cytometry products and services for targeted spatial proteomics, multi-omic services, and products and services for spatial genomics research.

Chipcytometry products and services for targeted spatial proteomics, multi-omic services, and products and services for spatial genomics research.

Customers of the 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 research and life science research analysis.

The BEST reportable segment develops and manufactures superconducting and non-superconducting

materials and devices for use in renewable energy, energy infrastructure, healthcare and “big science” research.

BEST reportable segment develops and manufactures superconducting and non-superconducting materials and devices for use in renewable energy, energy infrastructure, healthcare and “big science”

The segment focuses on metallic low temperature superconductors for use in magnetic resonance imaging, nuclear magnetic resonance, fusion energy research and other applications.

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Noncontrolling Interests

Noncontrolling interests represents the minority shareholders’ proportionate share of the Company’s majority-owned

subsidiaries.

The portion of net income or net loss attributable to non-controlling

interests is presented as net income attributable to noncontrolling interests in consolidated subsidiaries in the consolidated statements of income and comprehensive income, and the portion of other comprehensive income of these subsidiaries is presented in the consolidated statements of shareholders’ equity.

Noncontrolling interests represents the minority shareholders’

proportionate share of the Company’s majority-owned subsidiaries.

The portion of net income or net loss attributable to non-controlling interests is presented as net income attributable to noncontrolling interests in consolidated subsidiaries in the consolidated statements of income and comprehensive income, and the portion of other comprehensive income of these subsidiaries is presented in the consolidated statements of shareholders’

Redeemable Noncontrolling Interests

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As the redemptions are contingently redeemable at the option of the noncontrolling interest shareholders, the Company classifies the carrying amount of the redeemable noncontrolling interest in the mezzanine section on the consolidated balance sheet, which is presented above the equity section and below liabilities.

The redeemable noncontrolling interests are measured at the greater of the amount that would be paid if settlement occurred as of the balance sheet date based on the contractually defined redemption value and its carrying amount adjusted for net income (loss) attributable to the noncontrolling interest.

The redeemable noncontrolling interests are measured at the greater of the amount that would be paid if settlement occurred as of the balance sheet date based on the

contractually defined redemption value and its carrying amount adjusted for net income (loss) attributable to the noncontrolling interest.

Adjustments to the carrying value of the redeemable noncontrolling interest are recorded through retained earnings.

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Accordingly, at the date of each acquisition, the Company measures the fair value of all identifiable assets acquired (including intangible assets), liabilities assumed and any remaining noncontrolling interests and allocates the amounts paid to all items measured.

The fair value of identifiable intangible assets acquired is based on valuations that use information and assumptions determined by management and which consider management’s best estimates of inputs and assumptions that a market participant would use.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period.

Significant estimates and judgments made by management in preparing these financial statements include revenue recognition, allowances for doubtful accounts, write-downs for excess and obsolete inventory, estimated fair values used to record impairment charges related to intangible assets, goodwill, and other long-lived assets, amortization periods, expected future cash flows used to evaluate the recoverability of long-lived assets and to record intangible assets in business combinations, stock-based compensation expense, warranty allowances, restructuring and other related charges, contingent liabilities and the recoverability of the Company’s net deferred tax assets.

Changes in estimates are recorded in the period in which they become known.

The Company bases its estimates on historical experience and various other assumptions that it believes to be reasonable under the circumstances.

Actual results may differ from management’s estimates if these results differ from historical experience or other assumptions prove not to be substantially accurate, even if such assumptions were reasonable when

Subsequent Events Considerations

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Short-term Investments

Short-term investments represent time and call deposits maturing within twelve months and

with original maturities of greater than three months at the date of acquisition.

Short-term investments are classified as available-for-sale

and are reported at fair value.

Short-term investments represent time and call deposits maturing within twelve months and with original maturities of greater than three months at the date of acquisition.

Short-term investments are classified as available-for-sale and are reported at fair value.

There were no unrealized gains (losses) recorded as of December 31, 2022, 2021 and 2020, as cost approximates current fair value.

Restricted Cash

Restricted cash is included as a component of cash, cash equivalents, and restricted cash on the Company’s consolidated statement of cash flows.

The Company has certain subsidiaries that are required by local laws and regulations to maintain restricted cash balances to cover future employee benefit payments.

Restricted cash balances are classified as non-current

unless, under the terms of the applicable agreements, the funds will be released from restrictions within one year from the balance sheet date.

The current and non-current

portion of restricted cash is recorded within other current assets and other long-term assets , respectively, in the accompanying consolidated balance sheets.

Restricted cash balances are classified as non-current unless, under the terms of the applicable agreements, the funds will be released from restrictions within one year from the balance sheet date.

current and non-current portion of restricted cash is recorded within other current assets and other long-term assets , respectively, in the accompanying consolidated balance sheets.

Accounts Receivable, net

Accounts receivable have been reduced by an allowance for doubtful accounts.

The allowance for doubtful accounts represents the Company’s best estimate of the amount of probable credit losses in our accounts receivable.

The Company’s allowance is based on a number of factors, including an evaluation of customer credit worthiness, the age of the outstanding receivable, economic trends and historical experience.

The allowance for doubtful accounts represents the Company’s best estimate of the amount of probable credit losses in our accounts receivable.

The Company’s allowance is based on a number of factors, including an evaluation of customer credit worthiness, the age of the outstanding receivable, economic trends and historical experience.

Provisions for doubtful accounts are recorded in selling, general and administrative expenses in the accompanying consolidated statements of income and comprehensive income.

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For those derivative instruments that are designated and qualify as hedging instruments, the Company must designate the hedging instrument, based on the exposure being hedged, as a fair value hedge, cash flow hedge, foreign currency hedge or a hedge of a net investment in a foreign operation.

If a derivative is designated as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative are either

offset against the change in fair value of the hedged item through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings.

If a derivative is designated as a hedge, depending on the nature of the hedge, changes in the fair value of the derivative are either offset against the change in fair value of the hedged item through earnings or recognized in other comprehensive income until the hedged item is recognized in earnings.

Derivatives that are not designated as hedges are recorded at fair value through earnings.

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Fair Value of Financial Instruments

applies the following hierarchy to determine the fair value of financial instruments, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement.

The Company applies the following hierarchy to determine the fair value of financial instruments, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement.

The levels in the hierarchy are defined as follows:

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The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets or liabilities.

The income approach uses valuation techniques to convert future amounts to a single present value based on current market expectations about those future amounts, including present value techniques, option-pricing

models and the excess earnings method.

The cost approach is based on the amount that would be required to replace the service capacity of an asset (replacement cost).

The Company’s financial instruments consist primarily of cash equivalents, short-term investments, restricted cash, derivative instruments consisting of forward foreign exchange contracts, cross-currency interest rate swap agreements, commodity contracts, derivatives embedded in certain purchase and sale contracts, derivatives embedded within noncontrolling interests, accounts receivable, accounts payable, contingent consideration and long-term debt.

The carrying amounts of the Company’s cash equivalents, short-term investments and restricted cash, accounts receivable, borrowings under a revolving credit agreement and accounts payable approximate fair value because of their short-term

Derivative assets and liabilities are measured at fair value on a recurring basis.

The Company has evaluated the estimated fair value of financial instruments using available market information and management’s estimates.

use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts.

The Company has evaluated the estimated fair value of financial instruments using available market information and management’s estimates.

The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts.

Concentration of Credit Risk

Financial instruments that subject the Company to credit risk consist of cash, cash equivalents, short-term investments, derivative instruments, accounts receivables and restricted cash.

The risk with respect to cash, cash equivalents and short-term investments is minimized by the Company’s policy of investing in short-term financial instruments issued by highly rated financial institutions.

The risk with respect to derivative instruments is minimized by the Company’s policy of entering into arrangements with highly rated financial institutions.

The risk with respect to accounts receivables is minimized by the creditworthiness and diversity of the Company’s customers.

The Company performs periodic credit evaluations of its customers’ financial condition and generally

an advanced deposit for a portion of the purchase price.

Credit losses have been within management’s expectations and the allowance for doubtful accounts totaled $ 4.2 million and $ 3.0 million at December 31, 2021 and 2020, respectively.

At December 31, 2021 and 2020, no single customer represented 10 % or more of the Company’s accounts receivable.

For the years ended December 31, 2021, 2020 and 2019, no single customer represented 10 % or more of the Company’s total revenue.

of inventory include raw materials,

work-in-process,

demonstration units and finished goods.

Demonstration units include systems which are located in the Company’s demonstration laboratories or installed at the sites of potential customers and are considered available for sale.

Finished goods include

systems that have been shipped to the Company’s customers, but not yet installed and accepted by the customer.

The risk with respect to derivative instruments is minimized by the Company’s policy of entering into arrangements with highly rated financial institutions.

The risk with respect to accounts receivables is minimized by the creditworthiness and diversity of the Company’s customers.

The Company performs periodic credit evaluations of its customers’

financial condition and generally requires an advanced deposit for a portion of the purchase price.

Credit losses have been within management’s expectations and the allowance for doubtful accounts totaled $ 5.3 million and $ 4.2 million at December 31, 2022 and 2021, respectively.

At December 31, 2022 and 2021, no single customer represented 10 % or more of the Company’s accounts receivable.

For the years ended December 31, 2022, 2021 and 2020, no single customer represented 10 % or more of the Company’s total revenue.

Components of inventory include raw materials, work-in-process, demonstration units and finished goods.

Demonstration units include systems which are located in the Company’s demonstration laboratories or installed at the sites of potential customers and are considered available for sale.

Finished goods include in-transit systems that have been shipped to the Company’s customers, but not yet installed and accepted by the customer.

All inventories are stated at the lower of cost and net realizable value.

Cost is determined principally by the

method for a majority of subsidiaries and by

for certain other subsidiaries.

The Company reduces the carrying value of its inventories for differences between cost and estimated net realizable value, taking into consideration usage in the preceding

twelve months , expected demand, technological obsolescence and other information including the physical condition of demonstration inventories.

Cost is determined principally by the first-in, first-out method for a majority of subsidiaries and by average-cost for certain other subsidiaries.

The Company reduces the carrying value of its inventories for differences between cost and estimated net realizable value, taking into consideration usage in the preceding twelve months , expected demand, technological obsolescence and other information including the physical condition of demonstration inventories.

The Company records a charge to cost of product revenue for the amount required to reduce the carrying value of inventory to net realizable value.

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When assets are retired or otherwise disposed of, the assets and related accumulated depreciation and amortization are eliminated from the accounts and any resulting gain or loss is reflected in the consolidated statements of income and comprehensive income.

Depreciation and amortization are calculated on a straight-line

basis over the estimated useful lives of the assets as follows:

Depreciation and amortization are calculated on a straight-line basis over the estimated useful lives of the assets as follows:

Estimated Useful Life

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3 to 10 years

Computer equipment and software

Computer and fixtures

Furniture and fixtures

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Leasehold improvements

of 15 years or

Lesser of 15 years or the remaining lease term

Goodwill and Intangible Assets

Goodwill and indefinite-lived

intangible assets are not amortized, but are evaluated for impairment on an annual basis, or on an interim basis when events or changes in circumstances indicate that the carrying value may not be recoverable.

In assessing the recoverability of goodwill and indefinite-lived

intangible assets, the Company must make assumptions regarding the estimated future cash flows, including forecasted revenue growth, to determine the fair value of these assets.

Goodwill and indefinite-lived intangible assets are not amortized, but are evaluated for impairment on an annual basis, or on an interim basis when events or changes in circumstances indicate that the carrying value may not be recoverable.

In assessing the recoverability of goodwill and indefinite-lived intangible assets, the Company must make assumptions regarding the estimated future cash flows, including forecasted revenue growth, to determine the fair value of these assets.

If these estimates or their related assumptions change in the future, the Company may be required to record impairment charges against these assets in the reporting period in which the impairment is determined.

In January 2017, the Financial Accounting Standards Board (“FASB”) issued ASU No.

Intangibles-Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment

The new standard simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment

The adoption of this ASU on January 1, 2020 did not have a material impact on the Company’s consolidated financial statements.

The Company tests goodwill for impairment at the reporting unit level, which is the operating segment or one level below an operating segment.

The Company has the option of performing a qualitative assessment to determine whether further impairment testing is necessary before performing the quantitative assessment.

If as a result of the qualitative assessment, it is more-likely-than-not

that the fair value of a reporting unit is less than its carrying amount, a quantitative impairment test will be required.

If as a result of the qualitative assessment, it is more-likely-than-not that the fair value of a reporting unit is less than its carrying amount, a quantitative impairment test will be required.

Otherwise, no further testing will be required.

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Estimating the fair value of the reporting units requires significant judgment by management.

If the carrying amount of a reporting unit exceeds the fair value of the reporting unit, an impairment charge is recognized for the amount by which the carrying value amount exceeds the reporting unit’s fair value up to the total amount of goodwill allocated to the reporting unit.

If the carrying amount of a reporting unit exceeds the fair value of the reporting unit, an

impairment charge is recognized for the amount by which the carrying value amount exceeds the reporting unit’s fair value up to the total amount of goodwill allocated to the reporting unit.

In process research and development, or IPR&D, acquired as part of business combinations under the acquisition method represents ongoing development work associated with enhancements to existing products, as well as the development of next generation products.

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If an IPR&D project is abandoned before completion or is otherwise determined to be impaired, the value of the asset or the amount of the impairment is charged to the consolidated statements of income and comprehensive income in the period the project is abandoned or impaired.

At December 31, 2021 and 2020, the Company did not have any IPR&D.

Intangible assets with a finite useful life are amortized on a straight-line

basis over their estimated useful lives as follows:

Intangible assets with a finite useful life are amortized on a straight-line basis over their estimated useful lives as follows:

Estimated Useful Life

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Impairment of Long-Lived Assets

Impairment losses are recorded on long-lived assets used in operations when indicators of impairment are present and the quoted market price, if available or the estimated fair value of those assets are less than the assets’ carrying value and are not recoverable.

carrying value and are not recoverable.

Determination of recoverability is based on an estimate of undiscounted future cash flows resulting from the use of the asset and its eventual disposition.

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Warranty Costs and Deferred Revenue

typically provides a

parts and labor warranty with the purchase of equipment.

The Company typically provides a one-year parts and labor warranty with the purchase of equipment.

The anticipated cost for this warranty is accrued upon recognition of the sale and is included as a current liability on the accompanying consolidated balance sheets.

The Company’s warranty reserve reflects estimated material and labor costs for potential product issues for which the Company expects to incur an obligation.

The Company’s estimates of anticipated rates of warranty claims and costs are primarily based on historical information.

The Company’s warranty reserve reflects estimated material and labor costs for potential product issues for which the Company expects to incur an obligation.

The Company’s estimates of anticipated rates of warranty claims and costs are primarily based on historical information.

The Company assesses the adequacy of the warranty reserve on a quarterly basis and adjusts the amount as necessary.

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A valuation allowance is applied against any net deferred tax asset if, based on the available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.

The Company records liabilities related to uncertain tax positions in accordance with the guidance that clarifies the accounting for uncertainty in income taxes recognized in a Company’s financial statements.

This guidance prescribes a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

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The Company typically requires an advance deposit under the terms and conditions of contracts with customers.

These deposits are recorded as a current or long-term liability until revenue is recognized on the specific contract in accordance with the Company’s revenue recognition policy.

Revenue Recognition

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers

The Company recognizes revenue in accordance with Accounting Standards Codification (“ASC”) 606, Revenue from Contracts with Customers .

The key elements of ASC 606 are:

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A performance obligation is a promise in a contract to transfer a distinct good or service to the customer.

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

Some of the Company’s contracts have multiple performance obligations, most commonly due to providing additional goods or services along with a system, such as installation, accessories, parts and services.

For contracts with multiple performance obligations, the Company allocates the contract’s transaction price to each performance obligation using the best estimate of the standalone selling price of each distinct good or service being provided to the customer.

The Company’s best evidence of standalone selling price is its normal selling pricing and discounting practices for the specific product or service when sold on a standalone basis.

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

The Company’s best evidence of standalone selling price is its normal selling pricing and discounting practices for the specific product or service when sold on a standalone basis.

Alternatively, when not sold separately, the Company may determine standalone selling price using an expected cost plus a margin approach.

The Company’s performance obligations are typically satisfied at a point in time, most commonly either on shipment or customer acceptance.

The Company’s performance obligations are typically satisfied at a point in time, most commonly either on shipment, or customer acceptance.

Certain performance obligations, such as maintenance contracts and extended warranty, are recognized over time based on the contractual obligation period.

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For performance obligations recognized over time, revenue is measured by progress toward completion of the performance obligation that reflects the transfer of control.

Typically, progress is measured

using a cost-to-cost

method based on cost incurred to date relative to total estimated costs upon completion as this best depicts the transfer of control to the customer.

Application of the cost-to-cost

method requires the Company to make reasonable estimates of the extent of progress toward completion and the total costs the Company expects to incur.

Typically, progress is measured using a cost-to-cost method based on cost incurred to date relative to total estimated costs upon completion as this best depicts the transfer of control to the customer.

Application of the cost-to-cost method requires the Company to make reasonable estimates of the extent of progress toward completion and the total costs the Company expects to incur.

Losses are recorded immediately when the Company estimates that contracts will ultimately result in a loss.

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Amounts billed to customers in connection with these costs are included in total revenues.

When control of the goods transfers prior to the completion of the Company’s obligation to ship the products to its customers, the Company

has elected the practical expedient to account

for the shipping services as a fulfillment cost.

When control of the goods transfers prior to the completion of the Company’s obligation to ship the products to its customers, the Company has elected the practical expedient to account for the shipping services as a fulfillment cost.

The Company expenses incremental costs of obtaining a contract as and when incurred if the expected amortization period is one year or less or the amount is immaterial.

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Revenue from accessories and parts is generally recognized based on shipment.

Service revenue is recognized as the services are performed or ratably over the contractual obligation and includes maintenance contracts, extended warranties, training, application support and on-demand

When products are sold through an independent distributor or a strategic distribution partner, the Company recognizes the system sale upon transfer of control which is typically on shipment.

When the Company is responsible for installation, the standalone selling price of installation is deferred until customer acceptance.

The Company’s distributors do not have price protection rights or rights of return;

however, the Company’s products are typically warranted to be free from defect for a period of one year.

The Company’s distributors do not have price protection rights or rights of return;

however, the Company’s products are typically warranted to be free from defect for a period of one year.

The Company requires an advance deposit based on the terms and conditions of contracts with customers for many of its contracts.

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The Company does not have any material payment terms that extend beyond one year.

There is minimal variable consideration included in the transaction price of the Company’s contracts.

Other revenues are primarily comprised of development arrangements recognized on a cost-plus-fixed-fee

basis and licensing arrangements recognized either when the licenses are provided or ratably over the contract term depending on the nature of the arrangement.

There is minimal variable consideration included in the transaction price of the Company’s contracts.

Other revenues are primarily comprised of development arrangements recognized on a cost-plus-fixed-fee basis and licensing arrangements recognized either when the licenses are provided or ratably over the contract term depending on the nature of the arrangement.

Contract Assets and Liabilities

Contract assets represent unbilled receivables when revenue recognized exceeds the amount billed to the customer, and the right to payment is not just subject to the passage of time.

Contract assets typically result from system revenue recorded where a portion of the transaction price is not billable until a future event, such as customer acceptance, or from contracts recognized on a cost-to-cost

or cost-plus-fixed-fee

basis as revenue exceeds the amount billed to the customer.

Amounts may not exceed their net realizable value.

Contract assets are generally classified as current.

Contract liabilities consist of customer advances, deferred revenue and billings in excess of revenue from contracts recognized on a cost-to-cost

or cost-plus-fixed-fee

Contract liabilities are classified as current or

long-term based on the timing of when the Company expects to recognize revenue.

Contract assets and liabilities are reported in a net position on a contract-by-contract

basis at the end of each reporting period.

accounts for leases in accordance with ASC 842,

Contract liabilities consist of customer advances, deferred revenue and billings in excess of revenue from contracts recognized on a cost-to-cost or cost-plus-fixed-fee basis.

Contract liabilities are classified as current or long-term based on the timing of when the Company expects to recognize revenue.

Contract assets and liabilities are reported in a net position on a contract-by-contract basis at the end of each reporting period.

The Company accounts for leases in accordance with ASC 842, Leases .

At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on the unique facts and circumstances present.

Leases with a term greater than 12 months are recognized on the balance sheet as

(“ROU”) assets with a corresponding lease liability.

Leases with a term greater than 12 months are recognized on the balance sheet as Right-of-use (“ROU”) assets with a corresponding lease liability.

The Company has elected not to recognize on the consolidated balance sheets leases with an initial term of 12 months or less.

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Leases are classified as either operating or finance depending on the specific terms of the arrangement.

The Company’s leases mainly consist of facilities, office equipment, and vehicles.

The majority of leases are classified as operating.

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Future rent increases dependent on an index or rate are initially measured at the index or rate at the commencement date.

The Company’s leases typically do not contain residual value guarantees.

At the commencement date, operating and finance lease liabilities, and their corresponding ROU assets, are recorded based on the present value of lease payments over the expected lease term.

The lease term includes the non-cancellable

period of the lease, plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.

The lease term includes the non-cancelable period of the lease, plus any additional periods covered by either a Company option to extend (or not to terminate) the lease that the Company is reasonably certain to exercise, or an option to extend (or not to terminate) the lease controlled by the lessor.

The interest rate implicit in lease contracts is typically not readily determinable, therefore an incremental borrowing rate is used to calculate the lease liability.

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Purchased software is capitalized at cost and is amortized over the estimated useful life, which is generally three years .

Software developed for use in the Company’s products is expensed as incurred to research and

development expense until technological feasibility is achieved.

Software developed for use in the Company’s products is expensed as incurred to research and development expense until technological feasibility is achieved.

Subsequent to the achievement of technological feasibility, amounts are capitalizable;

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The Company expenses advertising costs as incurred.

Advertising expenses were $ 13.8 million, $ 9.7 million and $ 15.4 million during the years ended December 31, 2021, 2020 and 2019,

respectively.

Advertising expenses were $ 19.3 million, $ 13.8 million and $ 9.7 million during the years ended December 31, 2022, 2021 and 2020, respectively.

Stock-Based Compensation

The Company recognizes stock-based compensation expense in the consolidated statements of income and comprehensive income based on the fair value of the share-based award at the grant date.

The Company’s primary types of share-based compensation are stock options, restricted stock awards and restricted stock units.

Compensation expense is amortized on a straight-line basis over the underlying vesting terms of the share-based award.

Stock options to purchase the Company’s common stock are periodically awarded to executive officers and other employees of the Company subject to a vesting period of three

Stock options to purchase the Company’s common stock are periodically awarded to executive officers and other employees of the Company subject to a vesting period of three to four years .

The fair value of each option award is estimated on the date of grant using the Black-Scholes option-pricing model.

The determination of the fair value of stock-based payment awards using the Black-Scholes model is

affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rates and expected dividends.

Risk-free interest rates are based on the yield on zero-coupon

The determination of the fair value of stock-based payment awards using the Black-Scholes model is affected by our stock price and a number of assumptions, including expected volatility, expected life, risk-free interest rates and expected dividends.

Risk-free interest rates are based on the yield on zero-coupon U.S.

Treasury securities for a period that is commensurate with the expected life assumption.

Expected life is determined through a calculation based on historical experience.

Expected volatility is based the Company’s historical volatility results.

Expected dividend yield is based on the estimated annualized dividend yield on our stock based on our history of paying dividends.

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Weighted-average fair value per share

Stock-based compensation for restricted stock awards and restricted stock units is expensed ratably over the vesting period based on the gran

t date fair value.

Stock-based compensation for restricted stock awards and restricted stock units is expensed ratably over the vesting period based on the grant date fair value.

Earnings Per Share

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Post Retirement Benefit Plans

The Company recognizes the over-funded

or under-funded

status of defined benefit pension and other postretirement defined benefit plans as an asset or liability, respectively, in its consolidated balance sheets and recognizes changes in the funded status in the year in which the changes occur through other comprehensive income.

The Company recognizes the over-funded or under-funded status of defined benefit pension and other post retirement defined benefit plans as an asset or liability, respectively, in its consolidated balance sheets and recognizes changes in the funded status in the year in which the changes occur through other comprehensive income.

Other Comprehensive Income (Loss)

Other comprehensive income (loss) refers to revenues, expenses, gains and losses that are excluded from net income as these amounts are recorded directly as an adjustment to shareholders’ equity, net of tax.

The Company’s other comprehensive income (loss) was composed of foreign currency translation adjustments, derivatives designated as hedging instruments and pension liability adjustments.

Other comprehensive income (loss) refers to revenues, expenses, gains and losses that are excluded from net income as these amounts are recorded directly as an adjustment to shareholders’

equity, net of tax.

The Company’s other comprehensive income (loss) was composed of foreign currency translation adjustments, derivatives designated as hedging instruments and pension liability adjustments.

Foreign Currency Translation

Assets and liabilities of the Company’s foreign subsidiaries, where the functional currency is the local currency, are translated into U.S.

dollars using the current exchange rate as of the consolidated balance sheet date and shareholders’ equity is translated using historical rates.

Assets and liabilities of the Company’s foreign subsidiaries, where the functional currency is the local currency, are translated into U.S.

Dollars using the current exchange rate as of the consolidated balance sheet date and shareholders’

equity is translated using historical rates.

Revenues and expenses of foreign subsidiaries are translated at the average exchange rates in effect during the year.

Adjustments resulting from financial statement translations are included as a separate component of shareholders’ equity.

Adjustments resulting from financial statement translations are included as a separate component of shareholders’

Gains and losses resulting from translation of foreign currency monetary transactions are reported in interest and other income (expense), net in the consolidated statements of income and comprehensive income for all periods presented.

The Company has certain intercompany foreign currency transactions that are deemed to be of a long-term

investment nature.

Exchange adjustments related to those transactions are made directly to a separate component of shareholders’ equity.

The Company has certain intercompany foreign currency transactions that are deemed to be of a long-term investment nature.

Exchange adjustments related to those transactions are made directly to a separate component of shareholders’

Risks and Uncertainties

The Company is subject to risks common to its industry including, but not limited to, global economic conditions, rapid technological change, government and academic funding levels, the impact of the COVID-19

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

The impact of the COVID-19

worldwide pandemic has been and will likely continue to be extensive in certain geographies and aspects of society.

The Company is subject to risks common to its industry including, but not limited to, global economic conditions, (including increasing inflation), rapid technological change, government and academic funding levels, the impact of the COVID-19 coronavirus, geopolitical uncertainties, changes in commodity prices, spending patterns of its customers, protection of its intellectual property, availability of key raw materials and components and other supply chain challenges, compliance with existing and future regulation by government agencies and fluctuations in foreign currency exchange rates and interest rates.

The impact of the COVID-19 worldwide pandemic has been and will likely continue to be extensive in certain geographies and aspects of society.

The pandemic has resulted in and will likely continue to result in significant disruptions to the global economy, global supply chains, as well as businesses and capital markets around the world.

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

In an effort to halt the outbreak of COVID-19,

a number of countries, including the United States, 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 are loosening 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 the Company’s employees in jurisdictions in which it has significant operations continue to work remotely.

In addition, certain Asia Pacific geographies where the Company operates are continuing to experience significant COVID-19

Impacts to the Company’s business since the beginning of the pandemic have included temporary closures of many of the Company’s government and university customers and suppliers, disruptions or restrictions on employees’

and customers’

ability to travel, and delays in product installations or shipments to and from affected countries.

In an effort to halt the outbreak of COVID-19, a number of countries, including the United States, implemented and some continue to implement, significant restrictions on travel, shelter in place or stay at home orders, and business closures.

While many of these restrictions have loosened in certain jurisdictions, including the United States and Europe, some markets have returned and others may return to restrictions in the face of increases in new COVID-19 cases, particularly if additional or more contagious variants or subvariants of the virus emerge or spread.

Many of the Company’s employees in jurisdictions in which it has significant operations continue to work remotely.

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 the Company or its customers to close or partially close operations once again.

These travel restrictions, business closures and operating reductions at Bruker, customers, distributors, and/or suppliers have in the past adversely impacted and may continue to adversely impact the Company’s operations worldwide, including the ability to manufacture, sell or distribute products, as well as cause temporary closures of foreign distributors, or the facilities of suppliers or customers.

Global supply chains, including for semiconductor chips, components and raw materials such as copper, have been disrupted, causing shortages, which has impacted the Company’s ability to manufacture or supply its products.

The Company could also experience increased compensation expenses associated with employee recruiting and employee retention to the extent employment opportunities continue to multiply post-pandemic, causing the search for and retention of talent to become more competitive.

This disruption of the Company’s employees, distributors, suppliers and customers has historically impacted and may continue to impact the Company’s global sales and operating results.

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 the Company is not currently subject to any vaccine mandate, any requirement to mandate COVID-19

vaccination of its workforce or require its unvaccinated employees to be tested weekly could result in employee attrition and difficulty securing future labor needs and may have an adverse effect on future operations.

In addition, any requirement to impose such obligations on the Company’s suppliers who are deemed government contractors and their subcontractors could impact the price and continuity of supply of raw materials and its results of operations and financial condition could be adversely affected.

It continues to be the Company’s policy to encourage each of its employees to be fully vaccinated against COVID-19.

The Company has 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 the Company’s products and increased difficulties in its ability to obtain a consistent supply of materials at stable pricing levels.

Supply shortages and longer lead times for components used in the Company’s products, including limited source components, can result in significant additional costs and inefficiencies in manufacturing.

A shortage of key components may cause a significant disruption to the Company’s production activities, which could have a substantial adverse effect on the Company’s financial condition or results of operations.

If the Company is unsuccessful in resolving any such component shortages in a timely manner, the Company could experience a significant adverse impact on the timing of its revenue, a possible loss of revenue, or an increase in manufacturing costs, any of which could have a material adverse impact on the Company’s operating results.

The Company is continuing to monitor and assess the effects of the COVID-19

pandemic on its commercial operations in 2022.

However, the Company cannot at this time accurately predict what effects these conditions will ultimately have on future operations due to uncertainties relating to the severity of the disease, the duration of the outbreak, including the impact of any resurgence of the virus or the continued emergence of new strains of the virus, the effectiveness and availability of vaccines, (including to protect against any new strains of the virus), the willingness of individuals to receive vaccines, and the length or severity of the travel restrictions, business closures, and other safety and precautionary measures imposed by the governments of impacted countries.

The pandemic has also adversely affected the economies and financial markets of many countries, which has affected and likely will continue to affect demand for the Company’s products and its operating results.

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 variants or subvariants of the virus, particularly any variants or subvariants which are more easily transmitted or which are resistant to existing vaccines, may require the Company or its customers to close or partially close operations once again.

The Company could also experience increased compensation expenses associated with employee recruiting and employee retention to the extent that employment opportunities continue to multiply post-pandemic, causing the search for and retention of talent to become more competitive.

This disruption of the Company’s employees, distributors, suppliers and customers has impacted and is continuing to impact the Company’s global sales and operating results.

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

The Company’s policy continues to encourage its employees to be fully vaccinated against COVID-19.

The Company is continuing to monitor and assess the effects of the COVID-19 pandemic on its commercial operations in 2023.

However, the Company cannot at this time accurately predict what effects these conditions will ultimately have on future operations due to uncertainties relating to the duration of the outbreak, including the impact of any resurgence of the virus or the continued emergence or spread of certain variants or subvariants, the effectiveness and availability of vaccines, (including to protect against any new variants or subvariants), the willingness of individuals to receive vaccines and boosters, and the length or severity of the travel restrictions, business closures, and other safety and precautionary measures imposed by the governments of impacted countries.

The Company may experience supply chain interruptions as a result of the COVID-19 pandemic, general global economic conditions, including inflation and the threat of a potential recession, a tighter labor market and other factors including natural events and disasters.

Various factors, including increased demand for certain components and production delays, are contributing to shortages of certain components used in the Company's products and increased difficulties in the Company's ability to obtain a consistent supply of materials at stable pricing levels.

Supply shortages and longer lead teams for components used in the Company's products, including limited source components, has resulted and may continue to cause disruptions to the Company's production activities, which has had and may continue to have an adverse effect on the Company's financial condition or result of operations.

These factors have impacted and may continue to impact the timing of the Company's revenue, and have also resulted, and may result in a delay of revenue, and an increase in manufacturing costs, all of which have adversely impacted and may continue to adversely impact the Company's operating results.

Additionally, geopolitical tensions, such as Russia's incursion into and ongoing war in Ukraine, ongoing conflicts between the United States and China, tariff and trade policy changes, economic sanctions, and increasing potential of conflict involving countries

in Asia that are critical to the Company's supply chain operations, such as Taiwan and China, have resulted in increasing global instability and create uncertainty for global commerce.

In addition to experiencing adverse economic impacts resulting from economic sanctions on Russia, as well as the prospect of a reduction in natural gas exports from Russia and resulting market disruptions, such as higher prices for and reduced availability of key metals used in our products, the Company has ceased its Russian operations.

Sustained or worsening global economic conditions and increasing inflation and geopolitical tensions have increased the Company's cost of doing business, impacted the Company's supply chain operations, caused certain of the Company's customers to reduce or delay spending and further intensified pricing pressures.

Combined with increased inflation, potential energy shortages in Europe where we have significant operations and overall higher energy and transportation costs, these factors have affected and may continue to affect the Company's financial condition and result of operations.

The preparation of the consolidated financial statements requires the Company to make estimates, judgments and assumptions that may affect the reported amounts of assets, liabilities, equity, revenues and expenses and related disclosure of contingent assets and liabilities.

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The Company bases estimates on historical experience and on various other assumptions that they believe are reasonable, the results of which form the basis for making judgments about the carrying values of assets, liabilities and equity and the amount of revenues and expenses.

The full extent to which the COVID-19

pandemic 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,

new strains of the virus, the effectiveness and availability of COVID-19

vaccines or individuals’ willingness to receive vaccines, and the actions taken to contain or treat the virus, as well as the economic impact on local, regional, national and international customers and markets.

The Company has made estimates of the impact of COVID-19

within the financial statements and there may be changes to those estimates in future periods.

Actual results may differ from management’s estimates if these results differ from historical experience.

The full extent to which the COVID-19 pandemic, global supply chain interruptions, higher energy costs and shortages, the global economy, including inflation and the threat of recession, and geopolitical instability 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 developments concerning the COVID-19 pandemic, global supply chain and various global conflicts.

The Company has made estimates of the impact of COVID-19 within the financial statements and there may be changes to those estimates in future periods.

Actual results may differ from management’s estimates if these results differ from historical experience.

Loss Contingencies

Loss contingency provisions are recorded if the potential loss from any claim, asserted or unasserted, or legal proceeding related to patents, products and other matters, is considered probable and the amount can be reasonably estimated or a range of loss can be determined.

These accruals represent management’s best estimate of probable loss.

Disclosure is provided when a loss is considered probable but the loss is not reasonably estimable and when a material loss is reasonably possible but not probable.

Recent Accounting Pronouncements

In October 2021, the FASB issued Accounting Standards Update (“ASU”) No.

Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers

to improve the accounting for acquired revenue contracts with customers in a business combination.

The amendments require an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606.

Previous guidance required an entity to recognize contract assets and contract liabilities at fair value as of the acquisition date.

The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted, including adoption in an interim period.

The Company elected to early adopt ASU No.

in the fourth quarter of 2021, and in accordance with the early adoption requirements in an interim period, has applied the provisions retrospectively to all acquisitions completed on or after January 1, 2021.

The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In March 2020, the FASB issued ASU No.

2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting

(“ASU 2020-04”),

which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform.

Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides temporary optional guidance to ease the potential burden in accounting for reference rate reform.

The guidance provides optional expedients and exceptions for applying generally accepted accounting principles to transactions affected by reference rate reform if certain criteria are met.

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contract modifications, hedging relationships, and sale or transfer of debt securities classified as held-to-maturity.

In January 2021, the FASB issued ASU 2021-01,

Reference Rate Reform (Topic 848):

In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform (Topic 848):

Scope, to clarify that certain optional expedients and exceptions under the reference rate reform guidance for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition.

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This temporary guidance is effective for all entities as of March 12, 2020 through December 31, 2022.

The Company may elect to apply this guidance for all contract modifications or eligible hedging relationships during that time period

subject to certain criteria.

The Company is still evaluating the impact of reference rate reform and whether this guidance will be adopted.

In January 2020, the FASB issued ASU 2020-01

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

, which clarifies the interaction of the accounting for certain equity securities, equity method investments, and certain forward contracts and purchased options.

The guidance clarifies that an entity should consider observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of applying measurement principles for certain equity securities immediately before applying or discontinuing the equity method.

The Company adopted this guidance using a prospective method.

The adoption of this ASU in 2020 did not have a material impact on the Company’s consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12

The Company elected to apply this guidance for all contract modifications or eligible hedging relationships during that time period subject to certain criteria.

The adoption of this standard has not and is not expected to have a material impact on the Company's consolidated financial statements.

In October 2021, the FASB issued Accounting Standards Update (“ASU”) No.

2021-08, Business Combinations (Topic 805)—Accounting for Contract Assets and Contract Liabilities from Contracts with Customers to improve the accounting for acquired revenue contracts with customers in a business combination.

The amendments require an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC 606.

Previous guidance required an entity to recognize contract assets and contract liabilities at fair value as of the acquisition date.

The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

Early adoption is permitted, including adoption in an interim period.

The Company elected to early adopt ASU No.

2021-08 in the fourth quarter of 2021, and in accordance with the early adoption requirements in an interim period, has applied the provisions retrospectively to all acquisitions completed on or after January 1, 2021.

The adoption of this ASU did not have a material impact on the Company’s consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12—

Income Taxes (Topic 740):

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This guidance is effective for annual and interim periods beginning after December 15, 2020 and early adoption is permitted.

The adoption of this ASU in 2021 did not have a material impact on the Company’s consolidated financial statements.

In August 2018, the FASB issued ASU No.

Fair Value Measurement (Topic 820), Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurement

, which modifies the disclosure requirements of fair value measurements, including the consideration of costs and benefits.

This ASU is effective for the Company in fiscal years beginning after December 15, 2019.

The Company adopted this guidance on January 1, 2020 and the adoption did not have a material impact on its consolidated financial statements.

In January 2017, the FASB issued ASU No.

Intangibles-Goodwill and Other (Topic 350):

Simplifying the Test for Goodwill Impairment

The new standard simplifies the subsequent measurement of goodwill by eliminating the second step of the goodwill impairment test.

This ASU will be applied prospectively and is effective for annual or interim goodwill impairment tests in fiscal years beginning after December 15, 2019.

The Company adopted this ASU on January 1, 2020 and the adoption did not have a material impact on its consolidated financial statements .

In June 2016, the FASB issued ASU 2016-13—

Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments

The guidance modifies the recognition of credit losses related to financial assets, such as debt securities, trade receivables, net investments in leases, off-balance

sheet credit exposures, and other financial assets that have the contractual right to receive cash.

Current guidance requires the recognition of a credit loss when it is considered probable that a loss event has occurred.

The new guidance requires the measurement of expected credit losses to be based upon relevant information, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the asset.

As such, expected credit losses may be recognized sooner under the new guidance due to the broader range of information that will be required to determine credit loss estimates.

The new guidance also amends the current other-than-temporary impairment model used for debt securities classified as available-for-sale.

When the fair value of an available-for-sale

debt security is below its amortized cost, the new guidance requires the total unrealized loss to be bifurcated into its credit and non-credit

Any expected credit losses or subsequent recoveries will be recognized in earnings and any changes not considered credit related will continue to be recognized within other comprehensive income (loss).

This guidance is effective for annual and interim periods beginning after December 15, 2019.

The Company adopted this new standard on January 1, 2020 using a

modified retrospective method for all financial assets measured at amortized cost.

The new standard impacts the Company’s accounts receivables and

sheet credit exposures.

The new standard did not have an impact on the Company’s results of operations and cash flows.

The following table presents the Company’s revenues by Group for the years ended December 31:

(in millions)

Revenue by Group:

Bruker BioSpin

The adoption of this ASU in 2021 did not have a material impact on the Company’s consolidated financial statements.

The following table presents the Company’s revenues by Segment for the years ended December 31 (in millions):

Revenue by Segment:

Total revenue

Revenue for the Company recognized at a point in time versus over time is as follows for the years ended December 31:

(in millions)

Revenue for the Company recognized at a point in time versus over time is as follows for the years ended December 31 (in millions):

Revenue recognized at a point in time

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As of December 31, 2022, remaining performance obligations were approximately $ 2,258.8 million.

The Company expects to recognize revenue on approximately 70 % of the remaining performance obligations over the next twelve months and the remaining performance obligations primarily within one to three years .

Contract Balances

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

Contract assets—

Most of the Company’s long-term contracts are billed as work progresses in accordance with the contract terms and conditions, either at periodic intervals or upon achievement of certain milestones.

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

Contract assets—

Most of the Company’s long-term contracts are billed as work progresses in accordance with the contract terms and conditions, either at periodic intervals or upon achievement of certain milestones.

Billing often occurs subsequent to revenue recognition, resulting in contract assets.

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The balance of contract assets as of December 31, 2022 and December 31, 2021 was $ 61.3 million and $ 46.1 million, respectively.

Contract liabilities—

The Company often receives cash payments from customers in advance of the Company’s performance, resulting in contract liabilities.

Contract liabilities—

The Company often receives cash payments from customers in advance of the Company’s performance, resulting in contract liabilities.

These contract liabilities are classified as either current or long-term in the consolidated balance sheet based on the timing of when revenue recognition is expected.

As of December 31, 2021 and December 31, 2020, the contract liabilities were

$ 430.8 million and $ 399.4 million, respectively.

The increase in the contract liability balance during the year ended

December 31, 202 1

is primarily a result of new performance obligations entered into during the period in

addition to delays in instrument installations due to customer facility closures or reduced operations as a result of COVID-19.

Approximately

$ 270.0 million of the contract liability balance on December 31, 2020 was recognized as revenue during the year ended December 31, 2021.

The balance of contract liabilities as of December 31, 2022 and December 31, 2021 was $ 471.7 million and $ 430.8 million, respectively.

The increase in the contract liability balance during the year ended December 31, 2022 is primarily a result of new performance obligations entered into during the period and delays in certain system installations due to supply chain and logistics challenges.

Approximately $ 289.4 million of the contract liability balance on December 31, 2021 was recognized as revenue during the year ended December 31, 2022.

Pro forma financial information reflecting all acquisitions has not been presented because the impact, individually and collectively, on revenues and net income is not material.

Amounts allocated to goodwill that are attributable to expected synergies are not expected to be deductible for tax purposes.

In the year ended December 31, 2021, the Company completed various acquisitions that collectively complemented its existing product offerings of to the Company’s existing businesses.

In the year ended December 31, 2022, the Company completed various acquisitions that collectively complemented its existing product offerings of to the Company’s existing businesses.

The following table reflects the consideration transferred and the respective reportable segment for each of the 2022 acquisitions (in millions):

SCI Instruments

PreOmics GmbH

Optimal Industrial Automation and Technologies

Inscopix, Inc.

Consideration Transferred:

Cash acquired

Fair value of hybrid financial instruments - founders

Fair value of redeemable noncontrolling interest - other shareholders

Fair value of contingent consideration

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Customer relationships

Deferred taxes

Liabilities assumed

Total consideration allocated

SCI Instruments

On August 24, 2021, the Company acquired SCI Instruments (“SCI”), a privately held company, for a purchase price of $ 28.0 million with the potential for additional consideration of up to $ 4.0 million based on revenue and gross margin achievements in the calendar years 2022 and 2023.

SCI is a manufacturer of advanced metrology systems and analysis software and serves major companies in the semiconductor, optoelectronics, data storage, display, MEMS, and optical coating industries.

SCI will be integrated into the BSI Nano Segment.

The acquisition is being accounted for under the acquisition method.

The preliminary fair value allocation included contingent consideration in the amount

million, which represented the estimated fair value of future payments to the former shareholders of SCI based on achieving revenue and gross margin targets for the calendar years 2022 and 2023.

PreOmics GmbH

On January 18, 2022, the Company acquired a 74.15 % interest in PreOmics GmbH, (“PreOmics”), a privately held company, for a purchase price of EUR 46.1 million (approximately $ 52.1 million).

PreOmics is a provider of sample preparation and automation solutions for proteomic analysis by mass spectrometry systems.

PreOmics is located in Munich, Germany and was integrated into BSI CALID Segment.

Concurrent with the acquisition, the Company entered into an agreement with the noncontrolling interest holders that provides the Company with the right to purchase, and the noncontrolling interest holders with the right to sell, the remaining 25.85 % of PreOmics for cash at a contractually defined redemption value for both the original founders and other shareholders of PreOmics, exercisable beginning in 2026.

The fair value of these rights has been bifurcated into two financial instruments to separately account for the amounts attributable to the founders and the amount attributable to other shareholders.

The rights (embedded derivative) associated with the founders can be accelerated, at a discounted redemption value, upon certain events related to post combination employment services.

As the options are tied to continued employment, the Company classified the hybrid instrument (noncontrolling interest with an embedded derivative) as a long-term liability on the consolidated balance sheet.

The hybrid instrument associated with the founders is initially measured at fair value on the acquisition date.

Subsequent to the acquisition, the carrying value of the hybrid instrument is remeasured to fair value with changes recorded to stock-based compensation expense in proportion to the requisite service period vested.

The rights associated with the other noncontrolling interest shareholders are contingently redeemable at the option.

As redemption of the rights is contingently redeemable at the option of the noncontrolling interest shareholders, the Company classifies the carrying amount of the redeemable noncontrolling interest in the mezzanine section on the consolidated balance sheet, which is presented above the equity section and below liabilities.

The redeemable noncontrolling interest is initially measured at fair value and subsequently at the greater of the amount that would be paid if settlement occurred as of the balance sheet date based on the contractually defined redemption value and its carrying amount adjusted for net income (loss) attributable to the noncontrolling interest.

Adjustments to the carrying value of the redeemable noncontrolling interest are recorded through retained earnings.

The Company completed the fair value allocation during 2022.

The amortization period for the intangible assets acquired is nine years for technology, and twelve years for the trade name and customer relationships.

Optimal Industrial Automation and Technologies

On April 1, 2022, the Company completed a share purchase agreement to acquire 100 % of the outstanding stock of Optimal Industrial Technologies Limited ("OIT") and Optimal Industrial Automation Limited ("OIA"), collectively, "Optimal".

The purchase price for the outstanding shares of Optimal was approximately GBP 30.7 million (approximately $ 40.3 million) with the potential for additional contingent consideration of up to GBP 3.4 million (approximately $ 4.5 million).

OIA and OIT, provide industrial automation solutions and Process Analytical Technology (“PAT”) software and services to Life Sciences, Pharmaceutical, Chemical, Fast-Moving Consumer Goods, Power Generation and Food & Beverage customers around the globe.

The Optimal Industrial Companies are closely related as OIA is a PAT software company, which develops and sells “turn-key industrial solution”, and OIT is a services company, which provides PAT expertise related to the software in addition to 24/7 integration support.

Optimal is located in Bristol, England, and was integrated into the BSI BioSpin Segment.

The Company accounted for the purchase of Optimal under the acquisition method.

The preliminary fair value allocation for Optimal included contingent consideration in the amount of GBP 0.3 million (approximately $ 0.4 million), which represented the estimated fair value of future payments to the former shareholders of Optimal based on achieving revenue targets in 2022.

The Company expects to complete the fair value allocation during the measurement period.

The amortization period for the intangible assets acquired is

ten years for the trade name and technology, and

for the customer relationships.

The backlog intangible asset will be amortized through March 31, 2022.

On November 17, 2021, the Company acquired Molecubes NV (“Molecubes”),

a privately held company, for a purchase price of EUR 18.7 million (approximately $ 21.1 million) with the potential for additional consideration of up to EUR 3.0 million (approximately $ 3.4 million) based on revenue and gross margin achievements.

Molecubes manufactures and sells preclinical imaging CUBES that enable researchers to perform high-performance SPECT/CT and PET/CT studies without the need for complex system handling.

The acquisition is being accounted for under the acquisition method.

The preliminary fair value allocation included contingent consideration in the amount of EUR 0.4 million (approximately $ 0.4 million), which represented the estimated fair value of future payments to the former shareholders of Molecubes based on achieving revenue and gross margin targets in 2021 and 2022.

The amortization period for the intangible assets acquired is ten years for the technology, between twelve years and fourteen years for the customer relationships, and thirteen years for the trade names.

The Company expects to amortize backlog through the second quarter of 2023.

Inscopix, Inc.

On November 7, 2022, the Company completed a share purchase agreement to acquire 100 % of the outstanding stock of Inscopix, Inc.

("Inscopix").

The purchase price for the outstanding shares of Inscopix was $ 101.5 million.

Inscopix is a private company founded in 2011 from Stanford University research that led to the invention of the miniscope.

The innovation at the core of the Inscopix brain-mapping platform is the integration and miniaturization of the benchtop fluorescence microscope into a 2-gram device that can be mounted onto the head of a freely behaving animal to observe its brain activity.

These miniscopes are empowering advances in neuroscience research and preclinical research for the development of transformational therapeutics.

Inscopix is located in Mountain View, California and will be integrated into the BSI Nano Segment.

The Company accounted for the purchase of Inscopix under the acquisition method.

The Company expects to complete the fair value allocation during the measurement period.

The amortization period for the intangible assets acquired is ten years for the trade name, technology, and customer relationships.

The backlog intangible asset was fully amortized as of December 31, 2021.

In addition to the SCI and Molecubes acquisitions, in 2021 the Company completed various other acquisitions accounted for under the acquisition method that complemented the Company’s existing product offerings.

The amortization period for the intangible assets acquired is ten years for the technology and customer relationships, and twelve years for the trade name.

In addition to the PreOmics, Optimal and Inscopix acquisitions in 2022, the Company completed various other acquisitions accounted for under the acquisition method that complemented the Company’s existing product offerings.

The following table reflects the consideration transferred and the respective reportable segment for these acquisitions (in millions):

3 unchanged sentences

Consideration

Creative Instruments

BSI Life Science

September 9, 2021

In addition to the acquisitions noted above, in 2021 the Company completed minority investments that complemented the Company’s existing product offerings.

The following table reflects the consideration transferred and the respective reportable segment for the acquisitions (in millions):

Prolab Instruments GmbH

January 17, 2022

PepSep Holding ApS

February 1, 2022

IonSense, Inc

April 5, 2022

Neurescence, Inc.

November 30, 2022

In addition to the acquisitions noted above, in 2022 the Company completed minority strategic investments that complemented the Company’s existing product offerings.

The following table (in millions) reflects the consideration transferred and the respective reportable segment for the investments.

For those investments accounted for under the alternative measurement these values also represent the carrying value at December 31, 2022.

No impairments have been recognized on these investments.

Acquisition /

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Consideration

Glycopath Inc.

Other long-term

February 18, 2021

BSI Life Science

Other long-term

March 18, 2021

BSI Life Science

Other long-term

September 23, 2021

BSI Life Science

2022—Subsequent Event Acquisitions

On January 1 7

, 2022, the Company completed

a share purchase agreement to acquire 100 % of the outstanding stock of Prolab Instruments GmbH (“Prolab”)

for a purchase price of CHF 5.0 million (approximately $ 5.5 million) with the potential for additional consideration of up to CHF 3.0 million (approximately $ 3.3 million).

Prolab is located in Basel, Switzerland and will be integrated into the Bruker CALID Group.

On January 1 8

, 2022, the Company completed

a share purchase agreement to acquire 74.15 % of the outstanding stock of PreOmics GmbH (“PreOmics”)

for EUR 44.7 million (approximately $ 50.6 million).

PreOmics is located in Munich, Germany and will be integrated into the Bruker CALID Group.

PrognomiQ, Inc

Other long-term assets

February 16, 2022

, the Company

a share purchase agreement to acquire 100 % of the outstanding stock of PepSep Holding

ApS (“PepSep”)

for EUR 2.5 M (approximately $ 2.8 million) with the potential for additional consideration of up to EUR $ 1.5 million (approximately $ 1.7 million).

PepSep is located in Odense, Denmark and will be integrated into the Bruker CALID Group.

On February 15, 2022, the Company completed an additional $ 12.0 million minority interest investment in PrognomIQ, Inc.

(“PrognomIQ”).

PrognomIQ is located in Redwood City, California and is reported within the Bruker CALID Group.

Canopy Biosciences

On September 10, 2020, Bruker acquired Canopy Biosciences, LLC (“Canopy”) for a purchase price of

million with the potential for additional consideration of up to

million based on achieving revenue targets in calendar years 2021 and 2022.

Canopy is a leader in high multiplex biomarker imaging for immunology, immune-oncology and cell therapy.

Canopy was integrated into the BSI Nano Segment.

Other long-term assets

April 28, 2022

Other long-term assets

November 23, 2022

Other Investments

Other long-term assets

Equity-method investments

The Company's investments in Tofwerk, AG and Eliptica Limited amount to an equity investment in common stock of 40 % and 20 %, respectively, and are accounted for using the equity-method of accounting.

The Company accounts for the investments under the equity method if the Company has the ability to exercise significant influence, but not control, over an investee.

Investments in equity-method investees are included within "Other long-term assets" in the consolidated balance sheets.

The Company's proportional share of the earnings or losses as reported by equity-method investees are classified as "Equity in income of unconsolidated investees, net of tax" in the consolidated statements of income and comprehensive income.

The Company regularly evaluates these investments, which are not carried at fair value, for other-than-temporary impairment.

The Company records investments, including incremental investments, of shares in equity-method investees at cost.

In the event the Company no longer has the ability to exercise significant influence over an equity-method investee, the Company would discontinue accounting for the investment under the equity method.

2023—Subsequent Event Acquisitions

On January 3, 2023, the Company acquired 100 % of Biognosys, AG ("Biognosys") for CHF 75 million (approximately $ 80.1 million).

In connection with the acquisition, the Company issued and sold stock in Biognosys to the two founding shareholders representing a 2.8 % ownership interest in Biognosys.

The Company and the founding shareholders each have put/call rights associated with the minority interest.

On January 4, 2023, the Company acquired Acquifer Imaging GmbH and Deltabyte GmbH for EUR 7.2 million (approximately $ 7.7 million).

SCI Instruments

SCI will be integrated into the BSI Nano Segment.

The acquisition was accounted for under the acquisition method.

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

The fair value allocation included contingent consideration in the amount of $ 1.0 million, which represented the estimated fair value of future payments to the former shareholders of SCI based on achieving revenue and gross margin targets for the calendar years 2022 and 2023.

The Company completed the fair value allocation during 2022.

The amortization period for the intangible assets acquired is ten years for the trade name and technology, and nine years for the customer relationships.

The backlog intangible asset was fully amortized.

On November 17, 2021, the Company acquired Molecubes NV (“Molecubes”), a privately held company, for a purchase price of EUR 18.7 million (approximately $ 21.1 million) with the potential for additional consideration of up to EUR 3.0 million (approximately $ 3.4 million) based on revenue and gross margin achievements.

Molecubes manufactures and sells preclinical imaging CUBES that enable researchers to perform high-performance SPECT/CT and PET/CT studies without the need for complex system handling.

The acquisition was accounted for under the acquisition method.

The fair value allocation included contingent consideration in the amount of EUR 0.4 million (approximately $ 0.4 million), which represented the estimated fair value of future payments to the former shareholders of Molecubes based on achieving revenue and gross margin targets in 2021 and 2022.

The Company completed the fair value allocation during 2022.

The amortization period for the intangible assets acquired is ten years for the trade name, technology, and customer relationships.

The backlog intangible asset was fully amortized.

SCI Instruments

Consideration Transferred:

Contingent consideration

Cash acquired

Fair value of contingent consideration

Working capital adjustment

2 unchanged sentences

Accounts receivable

Other current and non-current

Other current assets

Property, plant and equipment

Operating lease assets

Intangible assets:

Customer relationships

Deferred taxes, net

Deferred taxes

Liabilities assumed

Total consideration allocated

The fair value allocation included contingent consideration in the amount of $ 0.5 million, which represented the estimated fair value of future payments to the former shareholders of Canopy based on achieving revenue targets for calendar years 2021 and 2022.

The Company completed the fair value allocation during 2021.

The amortization period for the intangible assets acquired is ten years for the customer relationships and technology, eight years for the trade name and one year for the backlog intangible asset.

During the year ended December 31,

2021, the revenue targets were not achieved and the $ 0.5 million contingent consideration liability was reduced to zero resulting in

a reduction to selling, general and administrative expenses.

On October 15, 2018, Bruker acquired an 80 % interest in Hain LifeScience GmbH (“Hain”) for a purchase price of Euro 66 million (approximately $ 76.4 million) with options to acquire the remaining 20 %.

Hain is an infectious disease specialist with a broad range of molecular diagnostics solutions for the detection of microbial and viral pathogens, as well as for molecular antibiotic resistance testing.

Hain is located in Nehren, Germany and was integrated into the BSI Life Science Segment.

On January 31, 2020, the Company acquired the remaining 20 % interest in Hain for a purchase price of EUR 20 million (approximately $ 22.2 million).

The carrying value of the noncontrolling interest was accreted to the redemption value of EUR 20 million through retained earnings and then reclassified to additional paid in capital.

In addition to the acquisitions noted above, in 2020 the Company completed various other acquisitions that complemented the Company’s existing product offerings.

The following table reflects the consideration transferred and the respective reportable segment for these acquisitions

(in millions):

The following table reflects the consideration transferred and the respective reportable segment for these acquisitions (in millions):

Name of Acquisition

2 unchanged sentences

Consideration

SmartTip B.V.

April 1, 2020

Integrated Proteomics Applications, Inc.

August 7, 2020

BSI Life Science

Creative Instruments

September 9, 2021

In addition to the acquisitions noted above, in 2021 the Company completed minority strategic investments that complemented the Company’s existing product offerings.

The following table reflects the consideration transferred and the respective reportable segment for the acquisitions (in millions):

Acquisition /

Classification

Date Acquired

Consideration

Glycopath Inc.

Other long-term assets

February 18, 2021

Other long-term assets

March 18, 2021

Other long-term assets

September 23, 2021

Allowance for Doubtful Accounts

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Demonstration units

Finished goods include in-transit

systems that have been shipped to the Company’s customers but not yet installed and accepted by the customer.

At December 31, 2021 and 2020, inventory-in-transit

was $ 49.5 million and $ 67.8 million, respectively.

Total Inventories

Finished goods include in-transit systems that have been shipped to the Company’s customers but not yet installed and accepted by the customer.

At December 31, 2022 and 2021, inventory-in-transit was $ 41.1 million and $ 49.5 million, respectively.

Property, Plant and Equipment, Net

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Goodwill and Intangible Assets

The following table sets forth the changes in the carrying amount of goodwill by segment

(in millions):

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

Balance at December 31, 2019

8 unchanged sentences

Balance at December 31, 2022

performed its annual impairment evaluation using both a quantitative and qualitative approach at December 31, 2021, 2020 and 2019, and concluded it was more likely than not that goodwill has not been impaired.

Based on the most recent quantitative analysis the fair values of each of the Company’s reporting units was greater than their carrying amounts and, therefore, no impairment was required.

As a result of the impact of the COVID-19

pandemic, the Company performed an interim impairment assessment of the goodwill balance as of March 31, 2020 using a combination of both quantitative and qualitative approaches.

The Company has historically evaluated its goodwill for impairment annually as of December 31 or more frequently if impairment indicators arose in accordance with Accounting Standards Codification (“ASC”) Topic 350, “Intangibles - Goodwill and Other.”

In the fourth quarter of 2022, the Company changed the date of its annual assessment of goodwill to October 1st for all reporting units.

The change in testing date for goodwill is a change in accounting principle, which management believes is preferable as the new date of the assessment better aligns with the Company’s budgeting process and will create a more efficient and timely process surrounding the impairment tests.

The change in the assessment date does not delay, accelerate or avoid a potential impairment charge.

The Company has determined that it is impracticable to objectively determine projected cash flows and related valuation estimates that would have been used as of each October 1st of prior reporting periods without the use of hindsight.

As such, the Company prospectively applied the change in annual goodwill impairment testing date from October 1, 2022.

No impairment was recognized during the years ended December 31, 2022, 2021 or 2020.

As a result of the impact of the COVID-19 pandemic, the Company performed an interim impairment assessment of the goodwill balance as of March 31, 2020 using a combination of both quantitative and qualitative approaches.

Based on this interim assessment, the Company concluded the fair values of each of the reporting units were significantly greater than their carrying amounts, and therefore, no impairment is required.

The goodwill assessment was based on management’s estimates and assumptions, certain of which are dependent on external factors.

No further triggering events were identified subsequent to March 31, 2020.

has recorded $ 3.1

million of accumulated impairment losses of goodwill as of December 31, 2021.

The Company has recorded $ 3.1 million of accumulated impairment losses of goodwill as of December 31, 2022.

Intangible Assets

32 unchanged sentences

Balance at December 31, 2022

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

EUR notes (in dollars) under the 2021 Note Purchase Agreement

CHF notes (in dollars) under the 2021 Note Purchase Agreement

CHF notes (in dollars) under the 2019 Note Purchase Agreement

Dollar notes under the 2019 Term Loan

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

EUR notes (in U.S.

Dollars) under the 2021 Note Purchase Agreement

CHF notes (in U.S.

Dollars) under the 2021 Note Purchase Agreement

CHF notes (in U.S.

Dollars) under the 2019 Note Purchase Agreement

Dollar notes under the 2019 Term Loan Agreement

Dollar notes under the 2012 Note Purchase Agreement

2 unchanged sentences

Finance lease obligations

Current portion of long-term debt

Current portion of long-term debt and finance lease obligations

Total long-term debt, less current portion

1 unchanged sentence

On December 7, 2021, the Company entered into a note purchase agreement, referred to as the 2021 Note Purchase Agreement, with a group of institutional accredited investors.

Pursuant to the 2021 Note Purchase Agreement, the Company issued and sold CHF 300 million aggregate principal amount of 0.88 % series

A senior notes and EUR 150 million aggregate principal amount of 1.03 % series B senior notes due December 8, 2031 , referred to as the 2021 Senior Notes.

The obligations under the Note Purchase Agreement are unsecured and are fully and unconditionally guaranteed by certain of the Company’s subsidiaries .

Pursuant to the 2021 Note Purchase Agreement, the Company issued and sold CHF 300 million aggregate principal amount of 0.88 % series A senior notes and EUR 150 million aggregate principal amount of 1.03 %

series B senior notes due December 8, 2031 , referred to as the 2021 Senior Notes.

The obligations under the Note Purchase Agreement are unsecured and are fully and unconditionally guaranteed by certain of the Company’s subsidiaries.

Interest on the 2021 Senior Notes is payable semi-annually on June 7 and December 7 of each year , commencing June 7, 2022 .

The Company may prepay some or all of the 2021 Senior Notes at any time in an

amount not less than 10 % of the aggregate principal amount of the

then outstanding at a price equal to the sum of (a) the principal amount to be prepaid, plus accrued and unpaid interest, (b) any applicable “make-whole” amount, and (c) certain other fees and expenses.

In the event of a change in control (as defined in the 2021 Note Purchase Agreement) of the Company, the Company may be required to prepay the 2021 Senior

Notes at a price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest and certain other fees and expenses.

The 2021 Note Purchase Agreement contains customary affirmative and negative covenants, including, among others, restrictions on the Company’s ability to incur liens, transfer or sell equity or assets, engage in certain mergers and consolidations, enter into transactions with affiliates, and engage or permit any subsidiary to engage in certain lines of business.

The Company may prepay some or all of the 2021 Senior Notes at any time in an amount not less than 10 % of the aggregate principal amount of the 2021 Senior Notes then outstanding at a price equal to the sum of (a) the principal amount to be prepaid, plus accrued and unpaid interest, (b) any applicable “make-whole”

amount, and (c) certain other fees and expenses.

In the event of a change in control (as defined in the 2021 Note Purchase Agreement) of the Company, the Company may be required to prepay the 2021 Senior Notes at a price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest and certain other fees and expenses.

The 2021 Note Purchase Agreement also includes customary representations and warranties and events of default.

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2019 Transactions

On December 11, 2019, the Company entered into (1) a new revolving credit agreement to establish a new revolving credit facility in the aggregate principal amount of $ 600 million;

On December 11, 2019, the Company entered into (1) a revolving credit agreement to establish a new revolving credit facility in the aggregate principal amount of $ 600 million;

(2) a term loan agreement to establish a new term loan facility in the aggregate principal amount of $ 300 million;

and (3) a note purchase agreement to issue and sell CHF 297 million aggregate principal amount of 1.01 % senior notes due December 11, 2029.

The existing $ 105 million 4.31 % Series 2012A Senior Notes, Tranche C, due January 18, 2022, and the existing $ 100 million 4.46 % Series 2012A Senior Notes, Tranche D, due January 18, 2024, which the Company issued pursuant to a note purchase agreement dated January 18, 2012, remain in full force and effect.

The existing $ 105 million 4.31 % Series 2012A Senior Notes, Tranche C, was paid in January 2022, and the existing $ 100 million 4.46 % Series 2012A Senior Notes, Tranche D, due January 18, 2024, which the Company issued pursuant to a note purchase agreement dated January 18, 2012, remain in full force and effect.

Each of the revolving credit agreements, term loan agreement and note purchase agreements are described below.

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The 2019 Revolving Credit Agreement provides for a five-year revolving credit facility in the U.S.

Dollar equivalent amount of $ 600 million, comprised of sub-facilities

for revolving loans, swing-line loans, letters of credit and foreign borrowings.

Dollar equivalent amount of $ 600 million, comprised of sub-facilities for revolving loans, swing-line loans, letters of credit and foreign borrowings.

The 2019 Revolving Credit Agreement also provides for an uncommitted incremental facility whereby, under certain circumstances, the Company may, at its option, increase the amount of the revolving facility or incur term loans in an aggregate amount not to exceed $ 250 million.

Loans under the 2019 Revolving Credit Agreement will be repayable in full at maturity and may also be prepaid at the Company’s option in whole or in part without premium or penalty.

Amounts borrowed under the 2019 Revolving Credit Agreement may be repaid and reborrowed from time to time prior to the maturity date.

The obligations under the 2019 Revolving Credit Agreement are unsecured and are fully and unconditionally guaranteed by the Company and certain of its subsidiaries.

from 1.000% to 1.500%

based on the Company’s leverage ratio, or (b) the highest of (i) the federal

funds effective rate plus 1⁄2 of 1%, (ii) the

prime rate announced by Bank of America, N.A., and (iii) LIBOR, as

adjusted , plus

each case, a margin rate ranging from

0.500 %, based on the Company’s leverage ratio.

The Company has also agreed to pay a quarterly facility fee based on the aggregate unused amount available under the 2019 Revolving Credit Agreement ranging from

0.200 %, based on the Company’s leverage ratio.

The 2019 Revolving Credit Agreement includes affirmative, negative and financial covenants and events of

default customary for financings of this type.

Borrowings under the 2019 Revolving Credit Agreement bear interest at a rate equal to, at the Company’s option, (a) the London Interbank Offered Rate ( LIBOR ) applicable to the relevant currency, plus a margin ranging from 1.000% to 1.500%, based on the Company’s leverage ratio, or (b) the highest of (i) the federal funds effective rate plus 1 ⁄

2 of 1%, (ii) the prime rate announced by Bank of America, N.A., and (iii) LIBOR, as adjusted , plus 1 %, plus, in each case, a margin rate ranging from 0.100 % to 0.500 %, based on the Company’s leverage ratio.

The Company has also agreed to pay a quarterly facility fee based on the aggregate unused amount available under the 2019 Revolving Credit Agreement ranging from 0.100 % to 0.200 %, based on the Company’s leverage ratio.

The 2019 Revolving Credit Agreement includes affirmative, negative and financial covenants and events of default customary for financings of this type.

The negative covenants include, among others, restrictions on liens, indebtedness of the Company and its subsidiaries, asset and equity sales, dividends, and transactions with affiliates.

The financial covenants include maximum leverage ratio and minimum interest coverage ratios of the Company, specifically, the Company’s leverage ratio cannot exceed 3.5 and the interest coverage ratio cannot be less than 2.5

The events of default include, among others, payment defaults, defaults in the performance of affirmative and negative covenants, the inaccuracy of representations and warranties, bankruptcy and insolvency related events, certain ERISA events, material judgments, and the occurrence of a change of control.

The following is a summary of the maximum commitments and the net amounts available to the Company under the 2019 Revolving Credit Agreement and other lines of credit with various financial institutions located primarily in Germany and Switzerland that are unsecured and typically due upon demand with interest payable monthly (dollars i n

Interest Rate

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The Term Loan Agreement provides for a $ 300 million seven-year term loan facility subject to terms and conditions substantially consistent with those provisions contained in the 2019 Revolving Credit Agreement.

Loans under the Term Loan Agreement will be repayable in full at maturity, subject to scheduled amortization beginning in 2022, and may also be prepaid at the Company’s option in whole or in part without premium or penalty.

The obligations under the Term Loan Agreement are unsecured and are fully and unconditionally guaranteed by certain of the Company’s subsidiaries.

Amounts outstanding under the Term Loan Agreement bear interest at a rate equal to, at the Company’s option, (a) the U .

Dollar London Interbank Offered Rate ( USD LIBOR ), plus a margin ranging from 1.000 % to 1.500 %, based on the Company’s leverage ratio, or (b) the highest of (i) the federal funds effective rate plus 1

of 1 %, (ii) the prime rate announced by Bank of America, N.A., and (iii) USD LIBOR , as adjusted, plus 1 %, plus a margin ranging from 0.100 % to 0.500 %, based on the Company’s leverage ratio.

The obligations under the Term Loan Agreement are unsecured and are fully and unconditionally guaranteed by certain of the Company’s subsidiaries.

Amounts outstanding under the Term Loan Agreement bear interest at a rate equal to, at the Company’s option, (a) the U.S.

2 of 1 %, (ii) the prime rate announced by Bank of America, N.A., and (iii) USD LIBOR , as adjusted, plus 1 %, plus a margin ranging from 0.100 % to 0.500 %, based on the Company’s leverage ratio.

The other terms of the Term Loan Agreement are substantially similar to the terms of the 2019 Revolving Credit Agreement, including representations and warranties, affirmative, negative and financial covenants, and events of default.

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On December 11, 2019, the Company entered into a note purchase agreement, referred to as the 2019 Note Purchase Agreement, with a group of institutional accredited investors.

Pursuant to the 2019 Note

Agreement, the

Company issued and sold CHF 297 million aggregate principal amount of 1.01 % senior notes due December 11, 2029, referred to as the 2019 Senior Notes.

The obligations under the Note Purchase Agreement are unsecured and are fully and unconditionally guaranteed by certain of the Company’s subsidiaries.

Interest on the 2019 Senior Notes is payable semi-annually on June 11 and December 11 of

each year, commencing June 11, 2020.

The 2019 Senior Notes are unsecured obligations of the Company and are fully and unconditionally guaranteed by certain of the Company’s subsidiaries.

The Company may prepay some or all of the 2019 Senior Notes at any time in an amount not less than 10 % of the aggregate principal amount of the 2019 Senior Notes then outstanding at a price equal to the sum of (a) the principal amount to be prepaid, plus accrued and unpaid interest, (b) any applicable “make-whole” amount, and (c) certain other fees and expenses.

Pursuant to the 2019 Note Purchase Agreement, the Company issued and sold CHF 297 million aggregate principal amount of 1.01 % senior notes due December 11, 2029, referred to as the 2019 Senior Notes.

The obligations under the Note Purchase Agreement are unsecured and are fully and unconditionally guaranteed by certain of the Company’s subsidiaries.

Interest on the 2019 Senior Notes is payable semi-annually on June 11 and December 11 of each year, commencing June 11, 2020.

The 2019 Senior Notes are unsecured obligations of the Company and are fully and unconditionally guaranteed by certain of the Company’s subsidiaries.

amount, and (c) certain other fees and expenses.

In the event of a change in control (as defined in the 2019 Note Purchase Agreement) of the Company, the Company may be required to prepay the 2019 Senior Notes at a price equal to 100 % of the principal amount thereof, plus accrued and unpaid interest and certain other fees and expenses.

The 2019 Note Purchase Agreement contains customary affirmative and negative covenants, including, among others, restrictions on the Company’s ability to incur liens, transfer or sell equity or assets, engage in certain mergers and consolidations, enter into transactions with affiliates, and engage or permit any subsidiary to engage in certain lines of business.

The 2019 Note Purchase Agreement also includes customary representations and warranties and events of default.

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$ 100 million 4.46 % Series 2012A Senior Notes, Tranche D, due January 18, 2024.

Principal amounts of Tranches A, B and C together with any accrued interest theron were paid on their respective due dates in accordance with the 2012 Note Purchase Agreement.

Principal amounts of Tranches A, B and C together with any accrued interest thereon were paid on their respective due dates in accordance with the 2012 Note Purchase Agreement.

Under the terms of the 2012 Note Purchase Agreement, interest is payable semi-annually on January 18 and July 18 of each year.

The 2012 Senior Notes are unsecured obligations of the Company and are fully and unconditionally guaranteed by certain of the Company’s direct and indirect subsidiaries.

The 2012 Senior Notes rank pari passu in right of repayment with the Company’s other senior unsecured indebtedness.

some or all of the 2012 Senior Notes at any time in an amount not less than 10 % of the original aggregate principal amount of the 2012 Senior Notes to be prepaid, at a price equal to the sum of (a) 100 % of the principal amount thereof, plus accrued and unpaid interest, and (b) the applicable make-whole

amount, upon not less than 30 and no more than 60 days ’ written notice to the holders of the 2012 Senior Notes.

In the event of a change in control of the Company, as defined in the Note Purchase Agreement, the Company may be required to prepay the Notes at a price equal to 100 % of the principal amount thereof, plus accrued and unpaid

The 2012 Senior Notes are unsecured obligations of the Company and are fully and unconditionally guaranteed by certain of the Company’s direct and indirect subsidiaries.

The 2012 Senior Notes rank pari passu in right of repayment with the Company’s other senior unsecured indebtedness.

The Company may prepay some or all of the 2012 Senior Notes at any time in an amount not less than 10 % of the original aggregate principal amount of the 2012 Senior Notes to be prepaid, at a price equal to the sum of (a) 100 % of the principal amount thereof, plus accrued and unpaid interest, and (b) the applicable make-whole amount, upon not less than 30 and no more than 60 days’

written notice to the holders of the 2012 Senior Notes.

The 2012 Note Purchase Agreement contains affirmative covenants, including, without limitation, maintenance of corporate existence, compliance with laws, maintenance of insurance and properties, payment of taxes, addition of subsidiary guarantors and furnishing notices and other information.

The 2012 Note Purchase Agreement also contains certain restrictive covenants that restrict the Company’s ability to, among other things, incur liens, transfer or sell assets, engage in certain mergers and consolidations and enter into transactions with affiliates.

The 2012 Note Purchase Agreement also includes customary representations and warranties and events of default.

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In the case of any other event of default, a majority of the holders of the 2012 Senior Notes may declare all the 2012 Senior Notes to be due and payable immediately.

3.50 to 1.00, (ii) its interest coverage ratio as determined pursuant to the 2012 Note Purchase Agreement as of the end of any fiscal quarter for any period of four consecutive fiscal quarters to be less than 2.50 to 1 or (iii) priority debt at any time to exceed 25 % of consolidated net worth, as determined pursuant to the 2012 Note Purchase Agreement.

Pursuant to the 2012 Note Purchase Agreement, so long as any 2012 Senior Notes are outstanding, the Company will not permit (i) its leverage ratio, as determined pursuant to the 2012 Note Purchase Agreement, as of the end of any fiscal quarter to exceed 3.50 to 1.00, (ii) its interest coverage ratio as determined pursuant to the 2012 Note Purchase Agreement as of the end of any fiscal quarter for any period of four consecutive fiscal quarters to be less than 2.50 to 1 or (iii) priority debt at any time to exceed 25 % of consolidated net worth, as determined pursuant to the 2012 Note Purchase Agreement.

As of December 31, 2022, the Company was in compliance with the covenants of all debt agreements.

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to Euro to hedge the variability in the movement of foreign currency exchange rates on portions of our Euro and Swiss Franc denominated net asset investments.

These agreements qualify for hedge accounting and accordingly the change in fair value of the derivative is

recorded in other comprehensive income as part of foreign currency translation adjustments and remains

in accumulated comprehensive income (loss) attributable to Bruker Corporation in shareholders’ equity until the sale or substantial liquidation of the foreign operation.

The difference between the interest rate received and paid under the interest rate and cross-currency swap agreements is recorded in interest and other income (expenses) in the consolidated statements of income and comprehensive income.

As a result of entering into these agreements, the Company has lowered net interest expense by $ 5.5 million and $ 7.2 million during 2021 and 2020, respectively.

The gains related to hedges of net asset investments in international operations that were recorded within the cumulative

adjustment section of other comprehensive income were $ 36.4 million for the year ended December 31, 202 1

The losses related to hedges of net asset investments in international operations that were recorded within the cumulative

section of other comprehensive income were $ 47.1

million and $ 6.8 million for the years ended December 31, 2020 and 2019, respectively.

Interest expense for the years ended December 31

was $ 14.3 million, $ 14.4 million and $ 16.0 million, respectively.

These agreements qualify for hedge accounting and accordingly the changes in fair value of the derivative are recorded in other comprehensive income and remain in accumulated comprehensive income (loss) attributable to Bruker Corporation in shareholders’

equity until the sale or substantial liquidation of the foreign operation.

The difference between the interest rate received and paid under the interest rate and cross-currency swap agreements is recorded in interest and other income (expense) in the consolidated statements of income and comprehensive income.

As a result of entering into these agreements, the Company lowered net interest expense by $ 8.6 million and $ 5.5 million during 2022 and 2021, respectively.

The gains related to hedges of net asset investments in international operations that

were recorded within the cumulative translation adjustment section of other comprehensive income were $ 58.0 million and $ 36.4 million for the years ended December 31, 2022 and 2021, respectively.

The losses related to hedges of net asset investments in international operations that were recorded within the cumulative translation adjustment section of other comprehensive income were $ 47.1 million for the year ended December 31, 2020.

The Company presents the cross-currency swap periodic settlements in investing activities and the interest rate swap periodic settlements in operating activities in the statement of cash flow.

In June 2022, the Company entered into the First Amendment to the 2019 Credit Agreement to modify certain contract definitions within the agreement.

Primarily, the current London Interbank Offered Rate ("LIBOR") rates were changed to new alternative base rates for the respective currencies.

As part of the change any related items, such as fall back rates and day conventions were also changed.

No other material terms were modified with this agreement.

In September 2022, the Company entered into the Second Amendment to the 2019 Term Loan Agreement and the Second Amendment to the 2019 Credit Agreement (collectively, the "Amendments"), to modify certain aspects of the 2019 Term Loan Agreement and 2019 Credit Agreement, respectively.

The Amendments modify the reference rate thereunder from LIBOR to Secured Overnight Financing Rate ("SOFR").

There were no other changes to the 2019 Term Loan Agreement or 2019 Credit Agreement as a result of the Amendments.

During 2022, the Company adopted the practical expedient for Reference Rate Reform related to its debt arrangements and as such, these amendments are treated as a continuation of the existing debt agreement and no gain or loss on the modification was recorded.

The Company did not record any gains or losses on the conversion of the reference rate for Borrowings under the Term Loan Agreement from LIBOR to SOFR.

Interest expense for the years ended December 31, 2022, 2021 and 2020 was $ 16.1 million, $ 14.3 million and $ 14.4 million, respectively.

Fair Value of Financial Instruments

The Company measures the following financial assets and liabilities at fair value on a recurring basis.

The following tables set forth the Company’s financial instruments and presents them within the fair value hierarchy using the lowest level of input that is significant to the fair value measurement (in millions):

December 31, 2022

1 unchanged sentence

Time deposits and money market funds

Short-term investments

Interest rate and cross-currency swap agreements

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Contingent consideration

Hybrid instrument liability

Forward currency contracts

Hybrid instruments liability

Liability awards

Interest rate and cross-currency swap agreements

Forward currency contracts

Long-term fixed interest rate debt

5 unchanged sentences

Interest rate and cross-currency swap agreements

Foreign currency contracts

Forward currency contracts

Embedded derivatives in purchase and delivery contracts

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Contingent consideration

Hybrid instrument liability

Hybrid instruments liability

Interest rate and cross-currency swap agreements

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Debt securities are classified as available for sale and are carried at fair value.

Contingent consideration recorded within other liabilities represents the estimated fair value of future payments to the former shareholders as part of certain acquisitions.

These contingent consideration amounts are primarily based on the applicable acquired company achieving annual revenue and gross margin targets in certain years as specified in the relevant purchase and sale agreement.

Contingent consideration recorded within other current and other long-term liabilities represents the estimated fair value of future payments to the former shareholders as part of certain acquisitions.

The contingent consideration is primarily based on the applicable acquired company achieving annual revenue and gross margin targets in certain years as specified in the relevant purchase and sale agreement.

The Company initially values the contingent consideration on acquisition date by using a Monte Carlo simulation or an income approach method.

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Balance at December 31, 2022

As part of the Mestrelab acquisition, the Company entered into an agreement with the noncontrolling interest holders that provides the Company with the right to purchase, and the noncontrolling interest holders with the right to sell, the remaining 49 % of Mestrelab for cash at a contractually defined redemption value.

rights (an embedded derivative) are exercisable beginning in 2022 and can be accelerated, at a discounted redemption value, upon certain events related to post combination services.

As the option is tied to continued employment, the Company classified the hybrid instrument (noncontrolling interest with an embedded derivative) within short-term and long-term liabilities on the consolidated balance sheet.

The hybrid instrument is classified as Level 3 in the fair value hierarchy.

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

As part of the 2018 Mestrelab and 2022 PreOmics GmbH acquisitions, the Company entered into agreements with the noncontrolling interest holders that provide the Company with the right to purchase, and the noncontrolling interest holders with the right to sell, the remaining ownerships for cash at contractually defined redemption values.

These rights (embedded derivatives) can be accelerated, at discounted redemption values, upon certain events related to post combination employment services.

As the options are tied to continued employment, the Company classified the hybrid instruments (noncontrolling interests with an embedded derivatives) as liabilities on the consolidated balance sheet.

Subsequent to the acquisitions, the carrying value of the hybrid instruments are remeasured to fair value with changes recorded to stock-based compensation expense in proportion to the respective requisite service period vested.

During the year ended December 31, 2022, the Company acquired an additional 30 % interest in Mestrelab for a purchase price of Euro 11.0 million (approximately $ 11.6 million).

The Company classified the hybrid instruments as Level 3 in the fair value hierarchy.

The following table sets forth the changes in hybrid instruments liability (in millions):

Balance at December 31, 2020

3 unchanged sentences

Current period additions

Current period adjustments

Current period settlements

Foreign currency effect

2 unchanged sentences

Interest Rate Risk

The Company’s exposure to interest rate risk relates primarily to outstanding variable rate debt and adverse movements in the related market rates.

Typically, the most significant component of the Company’s interest rate risk relates to amounts outstanding under the 2019 Credit Agreement and the 2019 Term Loan.

The Company’s exposure to interest rate risk relates primarily to outstanding variable rate debt and adverse movements in the related market rates.

Typically, the most significant component of the Company’s interest rate risk relates to amounts outstanding under the 2019 Revolving Credit Agreement, the 2019 Term Loan and the 2021 Senior Notes.

Commodity Price Risk Management

The Company has arrangements with certain customers under which it has a firm commitment to deliver copper-based superconductors at a fixed price.

In order to minimize the volatility that fluctuations in the price of copper have on the Company’s sales of these commodities, the Company enters into commodity hedge contracts.

As commodity contracts settle, gains (losses) as a result of changes in fair values are adjusted to the contracts with the customers through revenues.

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The Company periodically enters into foreign currency contracts in order to minimize the volatility that fluctuations in currency translation have on its monetary transactions.

Under these arrangements, the Company typically agrees to purchase a fixed amount of a foreign currency in exchange for a fixed amount of U.S.

Under these arrangements, the Company typically agrees to purchase a fixed amount of a foreign currency in exchange

for a fixed amount of U.S.

Dollars or other currencies on specified dates with maturities of less than twelve months, with some agreements extending to longer periods.

These transactions do not qualify for hedge accounting and, accordingly, the instrument is recorded at fair value with the corresponding gains and losses recorded in the consolidated statements of income and comprehensive income.

In addition, the Company periodically

enters into purchase and sales contracts denominated in currencies other than the functional currency of the parties to the transaction.

The Company accounts for these transactions separately valuing the “embedded derivative” component of these contracts.

The contracts, denominated in currencies other than the functional currency of the transacting parties, amounted to $ 8.5 million and

for the purchase of products at December 31, 2021 and 2020, respectively.

The contracts, denominated in currencies other than the functional currency of the transacting parties, amounted to $ 0.0 million and $ 7.5 million for the delivery of products at December 31, 2021 and 2020, respectively.

In addition, the Company periodically enters into purchase and sales contracts denominated in currencies other than the functional currency of the parties to the transaction.

The Company accounts for these transactions separately valuing the “embedded derivative”

component of these contracts.

The contracts, denominated in currencies other than the functional currency of the transacting parties, amounted to $ 15.3 million and $ 8.5 million for the purchase of products as of December 31, 2022 and 2021, respectively.

There were no contracts denominated in currencies other than the functional currency of the transacting parties for the delivery of products as of December 31, 2022 and 2021, respectively.

The changes in the fair value of these embedded derivatives are recorded in interest and other income (expense), net in the consolidated statements of income and comprehensive income.

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

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

December 31, 2022

December 31, 2021

Derivatives designated as hedging instruments

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Total derivatives

The following is a summary of the gain (loss) included in th e

consolidated statements of income and comprehensive income related to the

derivative instruments described above (in millions):

Years Ended December 31,

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

Year Ended December 31,

Financial Statement Classification

Derivatives not designated as hedging instruments

Derivatives not designated as

hedging instruments

Forward currency contracts

Interest and other income (expense), net

Embedded derivatives in purchase and delivery contracts

Interest and other income

(expense), net

Derivatives designated as cash flow hedging

Embedded derivatives in purchase and

delivery contracts

Interest and other income (expense), net

Derivatives designated as cash flow

hedging instruments

Interest rate cross-currency swap agreements

Interest and other income

(expense), net

Derivatives designated as net investment hedging instruments

Interest and other income (expense), net

Derivatives designated as net

investment hedging instruments

Interest rate cross-currency swap agreements

Interest and other income (expense), net

Years Ended December 31,

Year Ended December 31,

Financial Statement Classification

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Interest rate cross-currency swap agreements

Accumulated other

comprehensive income,

Derivatives designated as net investment hedging

Accumulated other comprehensive income, net of tax

Derivatives designated as net investment hedging instruments

Interest rate cross-currency swap agreements

Accumulated other

comprehensive income,

Accumulated other comprehensive income, net of tax

Long-term debt

Accumulated other

comprehensive income,

The domestic and foreign components of income before income taxes are as follows (in millions):

Accumulated other comprehensive income, net of tax

The domestic and foreign components of income before income taxes for the years ended December 31 (in millions):

Total income before provision for income taxes

The components of the income tax provision are as follows (in millions):

The components of the income tax provision for the years ended December 31 (in millions):

Current income tax expense (benefit):

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Accrued expenses

Deferred revenue

Disallowed interest carryforward

Section 174 capitalization

Disallowed interest carryforwards

Net operating loss carryforwards

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Deferred tax liabilities:

Accounts receivable

Accounts payable

Hedge unrealized FX gain/loss

Deferred revenue

Foreign patent reserves

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Accrued withholding tax

Right-of-use asset

Total deferred tax liabilities

Net deferred tax asset s

Net deferred tax assets

The Company uses the liability method to account for income taxes.

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A valuation allowance is established when necessary to reduce deferred tax assets to the expected realizable amounts.

The Company can only recognize a deferred tax asset to the extent this it is “more likely than not” that these assets will be realized.

The Company can only recognize a deferred tax asset to the extent this it is “more likely than not”

that these assets will be realized.

Judgments around realizability depend on the availability and weight of both positive and negative evidence.

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Balance at December 31, 2019

Decreases recorded as a benefit to income tax provision

Balance at December 31, 2019

Increases recorded as part of acquisition purchase accounting

Balance at December 31, 2020

Increases recorded as

an expense to income tax provision

Increases recorded as an expense to income tax provision

Balance at December 31, 2021

Decrease recorded for state valuation allowance release

Balance at December 31, 2022

As of December 31, 2022, the Company had approximately $ 65.8 million net operating loss carryforwards available to reduce state taxable income that are expected to expire at various times beginning in 2023.

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Utilization of these credits and state net operating losses may be subject to annual limitations due to the ownership percentage change limitations provided by the Code Section 382 and similar state provisions.

In the event of a deemed change in control under Code Section 382, an annual limitation on the utilization of net operating losses and credits may result in the expiration of all or a portion of the net operating loss and credit carryforwards.

In the event of a deemed change in control under Code Section 382, an annual limitation on the utilization of net operating losses and

credits may result in the expiration of all or a portion of the net operating loss and credit carryforwards.

Additionally, the Company has $ 39.8 million of gross interest expense carryforward as provided by Code Section 163(j) that can be carried forward indefinitely.

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If this E&P is ultimately distributed to the United States in the form of dividends the Company would likely be subject to additional withholding tax.

The Company estimates the amount of unrecognized deferred withholding taxes on the undistributed E&P to be approximately $

69 million at December 31, 2021.

The Company had gross unrecognized tax benefits, excluding interest, of approximately $ 51.4 million as of December 31, 2021, that if recognized, would reduce the Company’s effective tax rate.

The Company estimates the amount of unrecognized deferred withholding taxes on the undistributed E&P to be approximately $ 82.2 million at December 31, 2022.

The Company had gross unrecognized tax benefits, excluding interest, of approximately $ 54.9 million as of December 31, 2022, that if recognized, would reduce the Company’s effective tax rate.

In the next twelve months it is reasonably possible that the Company will reduce its unrecognized tax benefits by an immaterial amount due to the expiration of statutes of limitations.

A tabular reconciliation of the Company’s gross unrecognized tax benefits is as follows (in millions):

Gross unrecognized tax benefits at December 31, 2019

Gross increases—tax positions in prior periods

Gross increases—current period tax positions

Lapse of statutes

Gross increases—tax positions in prior periods

Gross increases—current period tax positions

Gross unrecognized tax benefits at December 31, 2020

Gross increases—tax positions in prior periods

Gross increases—current period tax positions

Gross increases—tax positions in prior periods

Gross increases—current period tax positions

Gross unrecognized tax benefits at December 31, 2021

Gross increases—tax positions in prior periods

Gross increases—current period tax positions

Gross decreases—tax positions in prior periods

Gross increases—current period tax positions

Gross unrecognized tax benefits at December 31, 2022

The Company’s policy is to include accrued interest and penalties related to unrecognized tax benefits and income tax liabilities, when applicable, in income tax expense.

At December 31, 2022 and 2021, the Company had approximately $ 4.2 million and $ 3.1 million, respectively, of accrued interest and penalties related to uncertain tax positions included in other long-term liabilities in the consolidated balance sheets.

The Company recorded expense of $

1.5 million for penalties and interest related to unrecognized tax benefits in the provision for income taxes during the year ended

December 31, 2021.

There was no benefit recognized during the year ended December 31, 2020.

The Company has been subject to a tax examination in Germany for the years 2009 through 2012 whereby the German tax authorities had imposed additional tax assessments for those years.

Due to the nature of the

additional tax assessments, the Company filed for competent authority relief from those assessments under the Mutual Agreement Procedures (“MAP”) of the United States-Germany income tax treaty.

The Company expects the competent authorities to present a resolution for the 2009 through 2012 tax years during 2022.

The Company does not expect a material impact to the results of operations for the year ending December 31, 2022 as a result of the resolution of this matter.

The Company recorded expense of $ 1.1 million and $ 1.5 million for penalties and interest related to unrecognized tax benefits in the provision for income taxes during the years ended December 31, 2022 and 2021, respectively.

The Company files tax returns in the United States, which includes federal, state and local jurisdictions, and many foreign jurisdictions with varying statutes of limitations.

The Company considers Germany, the United States and Switzerland to be its significant tax jurisdictions.

The majority of the Company’s earnings are derived in Germany and Switzerland.

Accounting for the various federal and local taxing authorities, the statutory rates for 2021 were approximately

30.0 % and 20.0 % for Germany and Switzerland, respectively.

The majority of the Company’s earnings are derived in Germany and Switzerland.

Accounting for the various federal and local taxing authorities, the statutory rates for 2022 were approximately 30.0 % and 20.0 % for Germany and Switzerland, respectively.

The mix of earnings in those two jurisdictions resulted in an increase of 5.7 % from the U.S.

statutory rate of 21 % in 2022.

The Company has been subject to tax examinations in Germany for the years 2009 through 2012 whereby the German tax authorities had imposed additional tax assessments for those years.

Due to the nature of the additional tax assessments, the Company filed for competent authority relief from those assessments and reached a final resolution during the first quarter of 2022.

In addition, the Company has been subject to tax examinations for the years 2013-2017 with Germany taxing authorities and 2013-2022 in various taxing authorities.

In 2020, the Company was granted an income tax holiday for our manufacturing facility in Malaysia.

The tax holiday allows for tax-free

operations through February 28, 2023, with the option to apply for a 5 year extension if certain conditions are met.

The tax holiday allows for tax-free operations through February 28, 2023, with the option to apply for a 5 year extension if certain conditions are met.

This tax holiday had an immaterial impact to earnings per share for the year ended December 31, 2022.

In connection with the Tax Cuts and Jobs Act (“TCJA”) of 2017, the Company recorded a toll charge liability of $ 35.4 million.

Of that amount, approximately $ 14.2 million has already been paid as of December 31, 2022.

In 2020, the U.S.

Treasury Department issued final regulations regarding Foreign Derived Intangible Income (“FDII”) and Global Intangible Low-Taxed

Income (“GILTI”).

We have determined we will elect the GILTI high tax exception as allowed by the final regulations for the period ended December 31, 2021.

In July and August 2022, the CHIPS and Science Act, of CHIPS, and the Inflation Reduction Act, or IRA were signed into law.

The IRA introduced tax provisions primarily focused on implementing a 15 % corporate alternative minimum tax on global adjusted financial statement income of certain large corporations and 1 % excise tax on share repurchases, which are both effective January 1, 2023.

While we are still evaluating the impact of the provisions in the Inflation Reduction Act, we do not believe this legislation will have a material impact on our consolidated financial statements.

Under the Tax Cuts and Jobs Act of 2017, research and development costs are no longer fully deductible and are required to be capitalized and amortized for U.S.

tax purposes effective January 1, 2022.

The mandatory capitalization did not result in a material impact in the overall effective tax rate for the year ended December 31, 2022.

Operating lease cost is recognized over the lease term on a straight-line basis, while finance lease cost is amortized over the expected term on a straight-line basis.

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The components of lease expense were as follows (in millions):

Amortization of right-of-use

Amortization of right-of-use assets

Interest on lease liabilities

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Other current liabilities

Operating lease liability—long term

Weighted average remaining lease term

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Financing cash flows from finance leases

assets obtained in exchange for lease liabilities

Right-of-use assets obtained in exchange for lease liabilities

Operating leases

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Defined Benefit Plans

Substantially all of the Company’s employees in Switzerland, France and Japan, as well as certain employees in Germany, are covered by Company-sponsored

defined benefit pension plans.

Substantially all of the Company’s employees in Switzerland, France, Japan and Thailand, as well as certain employees in Germany, are covered by Company-sponsored defined benefit pension plans.

Retirement benefits are generally earned based on years of service and compensation during active employment.

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however, the level of benefits and terms of vesting varies among plans.

The Company records pension service cost within cost of sales, selling, general and administrative, and research and development expenses while non-service

related pension costs are recorded within interest and other income (expense), net in the consolidated statements of income and comprehensive income.

The Company records pension service cost within cost of sales, selling, general and administrative, and research and development expenses while non-service related pension costs are recorded within interest and other income (expense), net in the consolidated statements of income and comprehensive income.

The components of net periodic benefit costs included in the accompanying consolidated statements of income were as follows (in millions):

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Expected return on plan assets

Settlement loss recognized

Settlement (gain) loss recognized

Amortization of prior service (credit) cost

Amortization of actuarial (gains) losses

Amortization of actuarial losses

Net periodic benefit costs

The Company measures its benefit obligation and the fair value of plan assets as

of December 31st each year.

The Company measures its benefit obligation and the fair value of plan assets as of December 31st each year.

The changes in benefit obligations and plan assets under the defined benefit pension plans, projected benefit obligation and funded status of the plans were as follows (in millions):

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Benefits paid

Actuarial loss (gain)

Actuarial gain

Premiums paid

Plan combinations / acquisitions

Impact of foreign currency exchange rates

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Premiums paid

Plan combinations / acquisitions

Impact of foreign currency exchange rates

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Net under-funded status

Plan amendments

relate to further reductions in the mandatory and the supplementary conversion rates for the pension plan in Switzerland that will be effective in 2022 and in 2023, respectively

Plan amendments relate to further reductions in the mandatory and the supplementary conversion rates for the pension plan in Switzerland that will be effective in 2023 and in 2024, respectively.

The accumulated benefit obligation for the defined benefit pension plans is $ 168.6 million and $ 225.8 million at December 31, 2022 and 2021, respectively.

All defined benefit pension plans have an accumulated benefit obligation and projected benefit obligation in excess of plan assets at December 31, 2022 and 2021.

The following amounts were recognized in the accompanying consolidated balance sheets for the Company’s defined benefit plans (in millions):

Current liabilities

Non-current liabilities

Net benefit obligation

The following pre-tax

amounts were recognized in accumulated other comprehensive income for the Company’s defined benefit plans (in millions):

The following pre-tax amounts were recognized in accumulated other comprehensive income for the Company’s defined benefit plans (in millions):

Reconciliation of amounts recognized in the consolidated balance sheets:

Prior service cost (credi t)

Net actuarial loss

Accumulated other comprehensive loss

Prior service cost (credit)

Net actuarial gain (loss)

Accumulated other comprehensive gain (loss)

Accumulated contributions in excess of net periodic benefit cost

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Under this approach, net actuarial gains or losses in excess of ten percent of the larger of the projected benefit obligation or the fair value of plan assets are amortized over the average remaining service of active participants who are expected to receive benefits under the plans.

The following assumptions were used for defined benefit pension plans reflects the

different economic environments within the various countries.

The following assumptions were used for defined benefit pension plans reflects the different economic environments within the various countries.

The assumptions used to determine the net periodic benefit costs and the projected benefit obligations are as follows:

Annual discount rate—defined benefit obligation