BRUKER CORP 10-Q

ITEM 1. LEGAL PROCEEDINGS We are involved in lawsuits, claims, and proceedings, including, but not limited to, patent and commercial matters, which arise in the ordinary course of business. There are no such matters pending that we currently believe are reasonably likely to have a material impact on our business or to our consolidated financial statements. On September 25, 2019, in a complaint filed in the Düsseldorf, Germany, District Court, Carl Zeiss Microscopy GmbH, a subsidiary of Carl Zeiss AG (Zeiss), sued Luxendo GmbH (Luxendo), a subsidiary of Bruker Corporation, for infringement of a recently registered German utility model patent licensed to Zeiss pertaining to one specific Luxendo product category. We are vigorously defending against this claim. On September 23, 2019, in a complaint filed in the Düsseldorf, Germany, District Court, Micromass UK Limited (Micromass), a subsidiary of Waters Corporation, sued Bruker Corporation, as well as its affiliate, Bruker Daltonik GmbH, for infringement of a European patent pertaining to our timsTOF product line. Bruker was later notified that Micromass had expanded its complaint in Düsseldorf to assert another recently granted European patent in Germany. On March 5, 2021, the parties entered into a Patent License Agreement pursuant to which Bruker licensed certain patents from Micromass and agreed to pay a one-time, upfront $4.0 million payment in the second quarter of 2021 and agreed to pay royalties, subject to a quarterly minimum, on certain TimsTOF systems commencing March 1, 2022. In addition, pursuant to the Patent License Agreement, all claims between the parties in connection with this and other pending infringement matters were settled and dismissed with prejudice. The settlement of this matter did not and is not expected to materially impact the Company’s results of operations. In addition, we are subject to regulation by national, state and local government agencies in the United States and other countries in which we operate. From time to time, we are the subject of governmental investigations often involving regulatory, marketing and other business practices. These governmental investigations may result in the commencement of civil and criminal proceedings, fines, penalties and administrative remedies which could have a material adverse effect on our financial position, results of operations and/or liquidity. ITEM IA. RISK FACTORS In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, Item 1A. “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2020, which could materially affect our business, financial condition or future results. The risks described in this report and in our Annual Report on Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results. Our financial condition and results of operations for fiscal 2021 may be adversely affected by the COVID-19 pandemic. The impact of the worldwide COVID-19 pandemic has been and will likely continue to be extensive in many geographies and aspects of society. The pandemic has resulted in and will likely continue to result in disruptions to the global economy, as well as businesses, supply chains and capital markets around the world. Impacts to our business included temporary closures in 2020 of many of our government and university customers and our suppliers, disruptions or restrictions on our employees’ and customers’ ability to travel, and delays in product installations or shipments to and from affected countries. In an effort to halt the outbreak of COVID-19, a number of countries, including the United States, have implemented and continue to implement significant restrictions on travel, shelter in place or stay at home orders, and business closures. While some of these restrictions are loosening in certain jurisdictions, some markets have returned to restrictions in the face of increases in new COVID-19 cases or new strains of the virus. A number of states, including California, Massachusetts and New Jersey where we have significant operations, have implemented phased re-opening policies as vaccines to protect against the virus continue to be administered. However, many of our employees in these areas continue to work remotely, and any re-openings may be delayed or pulled back if the virus continues to spread or as new strains of the virus emerge, in particular if existing vaccines are determined to be less effective against these new strains than against earlier strains. In addition, a number of our production facilities had to either temporarily close or operate on a reduced capacity in 2020. Much of the commercial activity in sales and marketing, and customer demonstrations and applications training, is still either being conducted remotely or postponed. Many customer purchasing departments are still operating at reduced capacity, and many customers could delay or cut capital expenditures and operating budgets due to ongoing pandemic-related concerns. Even where customers have re-opened their sites, many still operate at productivity levels that are below pre-pandemic levels in an effort to accommodate safety 30 Table of Contents protocols. Any resurgence of the virus or the emergence of new strains of the virus, particularly any new strains which are resistant to existing vaccines, may require us or our customers to close or partially close operations once again. These travel restrictions, business closures and operating reductions at Bruker, our customers, our distributors, and/or our suppliers have and may continue to adversely impact our operations worldwide, including our ability to manufacture, sell or distribute our products, as well as cause temporary closures of our foreign distributors, or the facilities of suppliers or customers. Global supply chains, including for semiconductor chips and other component products, have been disrupted causing shortages, which could impact our ability to manufacture or supply our products. This disruption of our employees, distributors, suppliers or customers has and may continue to impact our global sales and future operating results. We anticipate that the COVID-19 pandemic and challenges to our customers’ and our own operations may continue to have a negative impact on our second quarter 2021 financial results. We are continuing to monitor and assess the effects of the COVID-19 pandemic on our commercial operations, including its continued impact on our revenue in 2021. However, we cannot at this time accurately predict what effects these conditions will ultimately have on our operations due to uncertainties relating to the severity of the disease, including the impact of any resurgence of the virus, the continued emergence of new strains of the virus, the effectiveness and availability of vaccines, the willingness of individuals to receive vaccines, (including to protect against any new strains of the virus), and the length or severity of the travel restrictions, business closures, and other safety and precautionary measures imposed by the governments of impacted countries. The pandemic has also adversely affected the economies and financial markets of many countries, which has affected and likely may continue to affect demand for the Company’s products and its operating results. There have been no other material changes to the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020.