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Item 1A. Risk Factors

2022-02-28 compared with 2021-03-01 · 184 added, 116 removed, 378 unchanged (44% of the section changed)

ITEM 1A RISK FACTORS

The following risk factors should be considered in conjunction with the other information included in this Annual Report on Form 10-K.

This report may include forward-looking statements that involve risks and uncertainties.

In addition to those risk factors discussed elsewhere in this report, we identify the following risk factors, which could affect our actual results and cause actual results to differ materially from those in the forward-looking statements.

This report may include forward-looking

statements that involve risks and uncertainties.

Risk Factor Summary

Our business is subject to numerous risks and uncertainties, including those described in Item 1A “Risk Factors.” These risks include, but are not limited to, the following:

● Our financial condition and results of operations for fiscal 2021 will be adversely affected by the ongoing COVID-19 pandemic;

Our business is subject to numerous risks and uncertainties, including those described in Item 1A “

Risk Factors .”

These risks include, but are not limited to, the following:

Our financial condition and results of operations for fiscal 2022 may continue to be adversely affected by the COVID-19

Supply chain issues, including increasing demand for certain components used in our products and production delays, has and could continue to result in significant additional costs and manufacturing inefficiencies, which could adversely impact our revenue, increase our manufacturing costs and have a material adverse effect on our operating results.

Unfavorable economic or political conditions in the countries in which we operate may have an adverse impact on our business results or financial condition;

We derive a significant portion of our revenue from international sales and are subject to the operational risks of doing business in foreign countries;

Adverse global economic conditions, geopolitical tensions and other conditions that impact our increasingly global operations could have a negative effect on our business, results of operations and financial condition and liquidity.

If our products fail to achieve and sustain sufficient market acceptance across their broad intended range of applications, we will not generate expected revenue;

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Our debt may adversely affect our cash flow and may restrict our investment opportunities or limit our activities;

The transition away from LIBOR may adversely affect our cost to obtain financing;

If we lose our strategic partners, our marketing and sales efforts could be impaired;

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Our manufacture and sale of products could lead to product liability claims for which we could have substantial liability;

● Responding to claims relating to improper handling, storage or disposal of hazardous chemicals and radioactive and biological materials which we use could be time consuming and costly;

We are subject to environmental laws and regulations, which may impose significant compliance or other costs on us;

We operate as an entrepreneurial, decentralized company, which presents both benefits and certain risks.

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Risks Related to Our Business and Industry

Our financial condition and results of operations for fiscal 2021 may continue to be adversely affected by the ongoing novel coronavirus disease- 2019, or COVID-19, pandemic.

In December 2019, a novel strain of coronavirus, now referred to as COVID-19, surfaced in Wuhan, China.

In March 2020, the COVID-19 outbreak was declared a pandemic by the World Health Organization.

The virus has spread globally.

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

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

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

Certain jurisdictions, including many within the United States, have also begun implementing policies with the goal of re-opening these markets only to return to restrictions in the face of increases in new COVID-19 cases or new strains of the virus.

For example, a number of states, including California, Massachusetts and New Jersey where we have significant operations, issued shelter in place or stay-at-home orders during the first half of 2020.

Although these states have begun implementing phased re-opening policies, 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 if cases increase as a result of children returning to school.

We have experienced decreased work efficiency and productivity as a result of the increased number of our employees working from home.

In addition, with this remote working model where employees are increasingly accessing our systems through VPN or remote internet connections, we may be subject to increased security risks, including the risks of cyberattacks or data breaches.

Additionally, if any of our key leaders contract the virus and are unable to perform their duties for a period of time as the result of illness, our business, results of operations or financial condition could be adversely affected.

In addition, in 2020, a number of our production facilities had to either temporarily close or operate on a reduced capacity.

Most commercial activities in sales and marketing, and customer demonstrations and

applications training, are either being conducted remotely or postponed.

Customer purchasing departments are operating at reduced capacity, and many customers have delayed or cut capital expenditures and operating budgets.

Even where customers have re-opened their sites, they may not be operating at pre-pandemic productivity levels in an effort to accommodate safety protocols.

Any resurgence of the virus or the emergence of new strains of the virus may require us and 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 adversely impacted and will likely 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.

These disruptions of our employees, distributors, suppliers or customers have impacted and will likely continue to impact our global sales and operating results.

During 2020, our revenue declined 4.1% compared to 2019, primarily due to COVID-19 related disruptions.

We continue to monitor and assess the effects of the COVID-19 pandemic on our commercial operations, including its continued impact on our revenue and operations in 2021 and beyond.

However, we cannot at this time accurately predict what effects these conditions will ultimately have on our operations due to continued uncertainties relating to the length or the severity of the disease, the duration of the outbreak, and the length or severity of the travel restrictions, business closures, and other safety and precautionary measures imposed by the governments of impacted countries or the effectiveness of any COVID-19 vaccines.

Our financial condition and results of operations for fiscal 2022 may continue to be adversely affected by the COVID-19

The impact of the worldwide COVID-19

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

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

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

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

a number of countries, including the United States, implemented and some continue to implement significant restrictions on travel, shelter in place or stay at home orders, and business closures.

While some of these restrictions were loosened in certain jurisdictions, some markets have returned to restrictions in the face of increases in new COVID-19

cases, particularly as more contagious strains of the virus emerge.

Many of our employees in jurisdictions in which we have significant operations continue to work remotely.

In addition, certain Asia Pacific geographies where we operate are continuing to experience significant disruptions relating to COVID-19.

Much of the commercial activity in sales and marketing, and customer demonstrations and applications training, is still either being conducted remotely or postponed.

Even where customers have re-opened

their sites, some still operate at productivity levels that are below pre-pandemic

levels in an effort to accommodate safety protocols and as a result of pandemic-related supply chain disruptions.

Any resurgence of the virus or the emergence of new strains of the virus, particularly any new strains which are more easily transmitted or which are resistant to existing vaccines, may require us or our customers to close or partially close operations once again.

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

Further, global supply chains, including for semiconductor chips, components and raw materials such as copper, continue to be disrupted, causing shortages, which has impacted our ability to manufacture and supply our products.

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

This disruption of our employees, distributors, suppliers and customers has historically impacted and may continue to impact our global sales and future operating results.

In September 2021, President Biden issued an Executive Order requiring certain COVID-19

precautions for government contractors and their subcontractors, including mandatory employee vaccination (subject to medical and religious exemptions).

In November 2021, the Department of Labor’s Occupational Safety and Health Administration, or OSHA, issued an Emergency Temporary Standard, or ETS, requiring that all employers with at least 100 employees ensure that their employees are fully vaccinated for COVID-19

or obtain a negative COVID-19

test at least once a week.

The Executive Order was preliminarily enjoined by several U.S.

federal district courts, the U.S.

Supreme Court preliminarily stayed the OSHA ETS in January 2022, and OSHA subsequently withdrew the ETS.

While we are not currently subject to any vaccine mandate, any requirement to mandate COVID-19

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

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

It continues to be our policy to encourage each of our employees to be fully vaccinated against COVID-19.

We are continuing to monitor and assess the ongoing effects of the COVID-19

pandemic on our commercial operations in 2022.

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

The pandemic has also adversely affected the economies and financial markets of many countries, which has affected and may continue to affect demand for our products and our operating results.

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

We evaluate estimates, judgments and methodologies on an ongoing basis.

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

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

The full extent to which the COVID-19

pandemic will directly or indirectly impact future business, results of operations and financial condition, including sales, expenses, reserves and allowances, manufacturing, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19,

the continued emergence of new strains of the virus, the effectiveness and availability of vaccines, the willingness of individuals to receive vaccines (including to protect against any new strains of the virus), and the actions taken to contain or treat the virus, as well as the economic impact on local, regional, national and international customers and markets.

We have made estimates of the impact of COVID-19

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

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

Supply chain issues, including increasing demand for certain components used in our products and production delays, has and could continue result in significant additional costs and manufacturing inefficiencies, which could adversely impact our revenue, increase our manufacturing costs and have a material adverse effect on our operating results.

We have experienced supply chain interruptions as a result of the COVID-19 pandemic, general global economic conditions, a tight labor market and other factors, including natural events and disasters.

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

Supply shortages and longer lead times for components used in our products,

including limited source components, can result in significant additional costs and inefficiencies in manufacturing.

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

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

Unfavorable economic or political conditions in the countries in which we operate may have an adverse impact on our business results or financial condition.

Our businesses and results of operations are affected by international, national and regional economic and political conditions.

Our businesses or financial results may be adversely impacted by unfavorable changes in economic or political conditions in the countries and markets in which we operate, including, among others, adverse changes in interest rates or tax rates, volatility in financial and commodity markets, contraction in the availability of credit in the marketplace, and changes in capital spending patterns.

Our revenue from U.S.

operations represented approximately 25% and 23% of total consolidated revenue for fiscal 2021 and 2020, respectively.

Our revenue from operations in Europe represented approximately 38% and 35% of total consolidated revenue for the fiscal years 2020 and 2019, respectively.

Our revenue from operations in Europe represented approximately 38% of total consolidated revenue for both fiscal years 2021 and 2020.

Our revenue from operations in the Asia Pacific region represented approximately 30% and 32% of total consolidated revenue in each of the corresponding periods.

Economic factors that could adversely influence demand for our products include continued uncertainty about global economic conditions, including as a result of the pandemic, leading to ongoing reductions in investment, changes in government spending levels and/or priorities, the size and availability of government budgets, customers’ and suppliers’ access to credit and other macroeconomic factors affecting government, academic or industrial spending behavior.

Economic factors that could adversely influence demand for our products include the impact of geopolitical tensions and any related sanctions implemented, continued uncertainty about global economic conditions, including as a result of the pandemic, leading to ongoing reductions in investment, changes in government spending levels and/or priorities, the size and availability of government budgets, customers’ and suppliers’ access to credit and other macroeconomic factors affecting government, academic or industrial spending behavior.

Slower economic growth or a deterioration in economic conditions could result in a decrease in government funding for scientific research, a delay in orders from current or potential customers or a reduction in purchases of our products.

We cannot predict how changes in economic conditions or political instability will affect our customers and suppliers or how any negative impact on our customers and suppliers might adversely impact our business results or financial condition.

As a global company, our performance is affected by global economic conditions as well as geopolitical tensions and other conditions with global reach.

In recent years, concerns about the global economic outlook have adversely affected market and business conditions in general.

Macroeconomic weakness and uncertainty make it more difficult for us to manage our operations and accurately forecast revenue, gross margin and expenses.

Geopolitical tensions, such as Russia’s recent incursion into Ukraine, ongoing conflicts between the United States and China, tariff and trade policy changes, economic sanctions, increasing potential of conflict involving countries in Asia that are critical to our supply chain operations, such as Taiwan and China, have resulted in increasing global tensions and create uncertainty for global commerce.

As a result of economic sanctions on Russia we may face disruptions to our operations within Russia, among other challenges.

Sustained or worsening of global economic conditions and increasing geopolitical tensions may increase our cost of doing business, materially disrupt our supply chain operations, cause our customers to reduce or delay spending and intensify pricing pressures.

Any or all of these factors could negatively affect demand for our products and our business, financial condition and result of operations.

We derive a significant portion of our revenue from international sales and are subject to the operational risks of doing business in foreign countries.

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operations represented approximately 75% and 77% of our total consolidated revenue for fiscal 2021 and 2020, respectively.

Our international operations are, and will continue to be, subject to a variety of risks associated with conducting business internationally, many of which are beyond

Our international operations are, and will continue to be, subject to a variety of risks associated with conducting business internationally, many of which are beyond our control.

These risks, which may adversely affect our ability to achieve and maintain profitability and our ability to sell our products internationally, include:

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changes in regulatory requirements;

● legislation and regulation, including tariffs, relating to the import or export of high technology products;

legislation and regulation, including tariffs, relating to the import or export of high technology products, which legislation and regulation may conflict with U.S.

law and may have an adverse impact on our business results;

the imposition of government controls;

● political and economic instability, including the impact of COVID-19, the possibility of an economic recession in certain key markets such as Germany, international hostilities, acts of terrorism and governmental restrictions, inflation, trade relationships and military and political alliances;

political and economic instability, including the impact of COVID-19,

the possibility of an economic recession in certain key markets such as Germany, international hostilities and resulting sanctions, acts of terrorism and governmental restrictions, inflation, trade relationships and military and political alliances;

costs and risks of deploying systems in foreign countries;

● compliance with export laws and controls and trade embargoes in multiple jurisdictions;

compliance with export laws and controls and trade embargoes in multiple jurisdictions, which may conflict with U.S.

law and may have an adverse impact on our business results;

limited intellectual property rights;

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and local laws affecting the activities of U.S.

companies abroad, including the United States Foreign Corrupt Practices Act, or FCPA, and local anti-bribery laws.

companies abroad, including the United States Foreign Corrupt Practices Act, or FCPA, and local anti-bribery

The United States has implemented tariffs on certain imported goods.

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There are significant fines associated with non-compliance.

In 2020, the Court of Justice of the European Union invalidated the EU-US Privacy Shield Framework, removed a key mechanism for transfers of personal data from the European Union to the United States and altered the international data transfer under GDPR.

In 2020, the Court of Justice of the European Union invalidated the EU-US

Privacy Shield Framework, removed a key mechanism for transfers of personal data from the European Union to the United States and altered the international data transfer under GDPR.

The decision has caused uncertainty for multinational companies about how they can properly transfer personal data from the EU to the US and the cost and effort to comply with such decision could cause disruption of data transfers and have a material adverse effect on our business.

While the impact of these factors is difficult to predict, any one or more of these factors could adversely affect our operations in the future.

We previously had identified material weaknesses in our internal control over financial reporting, which has now been remediated.

Any failure to maintain effective internal control over financial reporting could result in material misstatements in our financial statements and cause investors to lose confidence in our reported financial information, which in turn could cause the trading price of our securities to decline.

Our management is responsible for establishing and maintaining adequate internal control over our financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act.

As disclosed in our Annual Report on Form 10-K for the year ended December 31, 2019, management identified material weaknesses in our internal control over financial reporting as of the end of the end of that fiscal year.

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Effective internal controls are necessary for us to provide reliable and accurate financial statements and to effectively prevent fraud.

We devote significant resources and time to comply with the internal control over financial reporting requirements of the Sarbanes Oxley Act of 2002 and continue to enhance our controls.

In the year ended December 31, 2020, we remediated the previously disclosed material weakness in our internal controls over the accounting for income taxes and revenue recognition.

However, we cannot be certain that we will be able to prevent future significant deficiencies or material weaknesses.

Inadequate internal controls could cause investors to lose confidence in our reported financial information, which could have a negative effect on investor confidence in our financial statements, the trading price of our stock and our access to capital.

We may lose money when we exchange foreign currency received from international sales into U.S.

Our competitive position and reported financial results may be adversely affected when we exchange foreign currency received from international sales into U.S.

Dollars and by fluctuations in currency exchange rates.

A significant portion of our business is conducted in currencies other than the U.S.

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As a result, currency fluctuations among the U.S.

Dollar and the currencies in which we do business have caused, and will continue to cause, foreign currency translation gains and losses.

In addition, currency fluctuations could cause the price of our products to be more or less competitive than our principal competitors’ products.

Dollar and the currencies in which we do business could cause the price of our products to be more or less competitive than our principal competitors’ products.

Currency fluctuations will increase or decrease our cost structure relative to those of our competitors, which could lessen the demand for our products and affect our competitive position.

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We cannot predict the effectiveness of these transactions or their impact upon our future operating results, and from time to time they may negatively affect our quarterly earnings.

Our reported financial results may be adversely affected by fluctuations in currency exchange rates.

In addition to the foreign currency exposure associated with differences between where our products are manufactured and sold by us and our competitors, our exposure to currency exchange rate fluctuations results from the currency translation exposure associated with the preparation of our consolidated financial statements, as well as from the exposure associated with transactions of our subsidiaries that are denominated in a currency other than the respective subsidiary’s functional currency.

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Moreover, as exchange rates vary, revenue and other operating results may differ materially from our expectations.

The effects of changes in currency exchange rates increased our 2020 revenue by approximately $29.4 million, or 1.4%, decreased our 2019 revenue by approximately $50.3 million, or 2.7%, and increased our 2018 revenue by approximately $25.5 million, or 1.4%.

The effects of changes in currency exchange rates increased our 2021 revenue by approximately $43.3 million, or 2.2%, increased our 2020 revenue by approximately $29.4 million, or 1.4%, and decreased our 2019 revenue by approximately $50.3 million, or 2.7%.

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

In the years ended December 31, 2020 and 2019, we recorded net gains from currency translation adjustments of $22.0 million and net losses of $20.0 million, respectively.

In the years ended December 31, 2021 and 2020, we recorded net losses from currency translation adjustments of ($26.4) million and net gains of $22.0 million, respectively.

Additionally, to the extent monetary assets and liabilities, including cash and debt, are held in a different currency than the reporting subsidiary’s functional currency, fluctuations in currency exchange rates may have a significant impact on our reported financial results, and may lead to increased earnings volatility.

We may record significant gains or losses related to both the translation of assets and liabilities held by our subsidiaries into local currencies and the remeasurement of inter-company receivables and loan balances.

Goodwill, intangible assets and other long-lived assets are subject to impairment which could negatively impact our operating results.

Goodwill, intangible assets and other long-lived

assets are subject to impairment which could negatively impact our operating results.

We have recorded goodwill, intangible assets and other long-lived assets that must be periodically evaluated for potential impairment.

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Our ability to realize the value of these assets will depend on the future cash flows of the reporting unit in addition to how well we integrate the businesses we acquire.

We did not record any impairment losses for the year ended December 31, 2020.

We have recorded impairment losses of $1.7 million and $0.6 million for the years ended December 31, 2019 and 2018, respectively.

We did not record any impairment losses for the years ended December 31, 2021 and December 31, 2020.

We recorded impairment losses of $1.7 million for the year ended December 31, 2019.

If our products fail to achieve and sustain sufficient market acceptance across their broad intended range of applications, we will not generate expected revenue.

Our business strategy depends on our ability to successfully commercialize a broad range of products based on our technology platforms, including magnetic resonance technology, pre-clinical imaging technology, mass spectrometry technology, X-ray technology, atomic force microscopy technology, stylus and optical metrology technology, fluorescence microscopy technology, infrared technology and superconducting magnet technologies for use in a variety of life science, chemistry and materials analysis applications.

Our business strategy depends on our ability to successfully commercialize a broad range of products based on our technology platforms, including magnetic resonance technology, pre-clinical

imaging technology, mass spectrometry technology, X-ray

technology, atomic force microscopy technology, ChipCytometry technology, stylus and optical metrology technology, fluorescence microscopy technology, infrared technology and superconducting magnet technologies for use in a variety of life science, chemistry and materials analysis applications.

Some of our products have only recently been commercially launched and have achieved only limited sales to date.

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Our intended customers may be reluctant to make the substantial capital investment generally needed to acquire our products or to incur the training and other costs involved with replacing their existing systems with our products.

We also may not be able to convince our intended customers that our systems are an attractive and cost-effective alternative to other technologies and systems for the acquisition, analysis and management of molecular, cellular and microscopic information.

We also may not be able to convince our intended customers that our systems are an attractive and cost-effective

alternative to other technologies and systems for the acquisition, analysis and management of molecular, cellular and microscopic information.

Because of these and other factors, our products may fail to gain or sustain market acceptance.

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Rapidly changing technology could make some or all of our product lines obsolete unless we are able to continually improve our existing products and develop new products.

Because substantially all of our products are based on our technology platforms, including magnetic resonance technology, mass spectrometry technology, X-ray technology, atomic force microscopy technology, fluorescence microscopy technology, stylus and optical metrology technology and infrared technology, we are particularly vulnerable to any technological advances that would make these techniques obsolete as the basis for analytical systems in any

of our markets.

Because substantially all of our products are based on our technology platforms, including magnetic resonance technology, mass spectrometry technology, X-ray

technology, atomic force microscopy technology, fluorescence microscopy technology, ChipCytometry technology, stylus and optical metrology technology and infrared technology, we are particularly vulnerable to any technological advances that would make these techniques obsolete as the basis for analytical systems in any of our markets.

To meet the evolving needs of our customers, we must rapidly and continually enhance our current and planned products and services and develop and introduce new products and services.

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Competition has in the past subjected, and is likely in the future to subject, our products to pricing pressure.

Many of our competitors have more experience in the market and substantially greater financial, operational, marketing and technical resources than we do, which could give them a competitive advantage in areas such as research and development, production, marketing and distribution.

Our ability to compete successfully will depend, in part, on our ability to develop proprietary products that reach the market in a timely manner and are technologically superior to, less expensive than, or more cost-effective than, other currently marketed products.

Many of our competitors have more experience in the market and substantially greater financial,

operational, marketing and technical resources than we do, which could give them a competitive advantage in areas such as research and development, production, marketing and distribution.

than, other currently marketed products.

If investment in life and material science research spending declines, our ability to generate revenue may suffer.

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Any significant decline in research and development expenditures by our life science and material science customers could significantly decrease our sales.

In addition, a substantial portion of our sales are to non-profit and government entities, which are dependent on government support for scientific research.

In addition, a substantial portion of our sales are to non-profit

and government entities, which are dependent on government support for scientific research.

Any decline in this support could decrease the ability of these customers to purchase our products.

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Our CBRNE detection products are subject to many of the same risks associated with our life science products, including vulnerability to rapid technological change, dependence on mass spectrometry and other technologies and substantial competition.

In addition, our CBRNE detection products and certain FT-IR products are generally sold to government agencies under long-term contracts.

These contracts generally involve lengthy pre-contract negotiations and product development.

In addition, our CBRNE detection products and certain FT-IR

products are generally sold to government agencies under long-term contracts.

These contracts generally involve lengthy pre-contract

negotiations and product development.

We may be required to devote substantial working capital and other resources prior to obtaining product orders.

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In the ordinary course of business, we collect and store sensitive data, including intellectual property, other proprietary information and personally identifiable information.

Despite our security measures, our information technology and infrastructure may be vulnerable to cyber-attacks by hackers or breached due to employee error, malfeasance, or other disruptions.

Despite our security measures, our information technology and infrastructure may be vulnerable to cyber-attacks by hackers, including intrusions designed to access and exfiltrate information and to disrupt and lock-up

access to systems for the purpose of demanding ransom payments, or breached due to employee error, malfeasance, or other disruptions.

If this data is compromised, destroyed or inappropriately disclosed, it could have a material adverse effect, including damage to our reputation, loss of customers, significant expenses to address and resolve the issues, fines or litigation or other proceedings by affected individuals, business partners or regulatory authorities.

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We may not be able to obtain additional financing on terms acceptable to us or at all.

Furthermore, a majority of our cash, cash equivalents and short-term investments is generated from foreign operations, with $514.9 million, or 70.4% held by foreign subsidiaries as of December 31, 2020.

Furthermore, a majority of our cash, cash

equivalents and short-term investments is generated from foreign operations, with $646.9 million, or 55.4% held by foreign subsidiaries as of December 31, 2021.

We may incur significant tax consequences relocating cash from our foreign operations to the United States.

Our financial condition and results of operations could be adversely impacted if we are unable to maintain a sufficient level of cash flow in the United States to address our funding requirements through cash from operations and timely repatriation of cash from overseas or other sources obtained at an acceptable cost.

Additionally, the agreements governing our debt require that we maintain certain financial ratios related to maximum leverage and minimum interest coverage and contain affirmative and negative covenants, including among others, timely provision of audited financial statements, restrictions on liens, indebtedness of the Company and its subsidiaries, asset sales, dividends and transactions with affiliates.

Additionally, the agreements governing our debt require that we maintain certain financial ratios related to maximum leverage and minimum interest coverage and contain affirmative and negative covenants, including among others, timely provision of audited consolidated financial statements, restrictions on liens, indebtedness of the Company and its subsidiaries, asset sales, dividends and transactions with affiliates.

Our ability to comply with these financial restrictions and covenants is dependent on our operations and performance, which is subject to prevailing economic conditions and other factors, including factors that are beyond our control such as foreign currency translation rates and interest rates.

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On July 27, 2017, the U.K.

Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit London Interbank Offered Rate, or LIBOR, rates after 2021.

As a result, LIBOR may be discontinued in 2021.

While there is no consensus on what rate or rates may become accepted alternatives to LIBOR, the Alternative Reference Rates Committee, a steering committee comprised of U.S.

Financial Conduct Authority announced that it intends to stop persuading or compelling banks to submit London Interbank Offered Rate, or LIBOR, rates.

As a result of this change, certain LIBOR tenors and currencies were eliminated by the end of December 2021 with all other tenors and currencies of LIBOR to be eliminated by the end of June 2023.

The Alternative Reference Rates Committee, a steering committee comprised of U.S.

financial market participants, selected and the Federal Reserve Bank of New York started in May 2018 to publish the Secured Overnight Finance Rate, or SOFR, as an alternative to LIBOR.

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These factors include interpretations of existing tax laws, the accounting for stock options and other share-based compensation, changes in tax laws and rates, future levels of research and development spending, changes in accounting standards, changes in the mix of earnings in the various tax jurisdictions in which we operate, the outcome of examinations by the U.S.

Internal Revenue Service and other tax authorities, the accuracy of our estimates for unrecognized tax benefits and realization of deferred tax assets and changes in overall levels of pre-tax earnings.

Internal Revenue Service and other tax authorities, the accuracy of our estimates for unrecognized tax benefits and realization of deferred tax assets and changes in overall levels of pre-tax

A change in tax laws, treaties or regulations, or their interpretation, of any country in which we operate could result in a higher tax rate on our earnings, which could result in a significant negative impact on our earnings and cash flow from operations.

In addition to the passage of the Tax Cuts and Jobs Act in 2017 in the United States, there are currently multiple initiatives for comprehensive tax reform underway in other key jurisdictions where we have operations.

For example, the Biden administration has proposed significant changes to the tax laws of the United States, including proposals that would have the combined effect of increasing the U.S.

taxation on profits earned outside the U.S.

In addition to proposed tax law reforms in the United States, there are currently multiple initiatives for comprehensive tax reform underway in other key jurisdictions where we have operations.

We assess the impact of various international tax reform proposals and modifications to existing tax treaties in all jurisdictions where we have operations that could result in a material impact on our income taxes.

We cannot predict whether any other specific legislation will be enacted or the terms of any such legislation.

Beginning in 2022, the Tax Cuts and Jobs Act of 2017 (“TCJA”) eliminates the option to deduct research and development expenditures currently and requires taxpayers to amortize them over five years pursuant to the Internal Revenue Code.

We cannot predict whether any other specific legislation that

would have an adverse impact on our income taxes will be enacted or the terms of any such legislation.

However, if such proposals were enacted, or if modifications were to be made to certain existing treaties, the consequences could have a materially adverse impact on us, including increasing our tax burden, increasing costs of our tax compliance or otherwise adversely affecting our financial condition, results of operations and cash flows.

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costs related to acquisitions of technology or businesses.

We can experience quarter-to-quarter fluctuations in our operating results as a result of various factors, some of which are outside our control, such as:

We can experience quarter-to-quarter

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

the timing of governmental stimulus programs and academic research budgets;

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the time required to obtain governmental licenses.

These factors have in the past affected the amount and timing of revenue recognized on sales of our products and receipt of related payments and will continue to do so in the future.

These factors have in the past affected the amount and timing of revenue recognized on sales of our products and receipt of related payments and will likely continue to do so in the future.

Accordingly, our operating results in any particular quarter may not necessarily be an indication of any future quarter’s operating performance.

Historically we have higher levels of revenue in the fourth quarter of the year compared to the first, second and third quarters, which we believe is primarily the result of our customers’ budgeting cycles.

Quarter-to-quarter comparisons of our results of operations should not be relied upon as an indication of our future performance.

Quarter-to-quarter

comparisons of our results of operations should not be relied upon as an indication of our future performance.

It is likely that in some future quarters, our results of operations may be below the expectations of public market analysts and investors.

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The ownership of our shares is highly concentrated, which could cause or exacerbate volatility in our share price as well as have significant influence over us.

As of February 18, 2021, Laukien family members, including our Chairman, President and Chief Executive Officer Frank Laukien and his brother, Joerg Laukien, owned, in the aggregate, approximately 31% of our outstanding common stock.

As of February 15, 2022, Laukien family members, including our Chairman, President and Chief Executive Officer (“CEO”) Frank Laukien and his brother, Joerg Laukien, owned, in the aggregate, approximately 32% of our outstanding common stock.

We may also repurchase shares in the future, which could further increase the concentration of our share ownership.

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In recent years, we have paid dividends on our common stock.

In February 2021, we announced that our Board had declared a quarterly dividend of $0.04 per share that will be payable in March 2021.

In February 2022, we announced that our Board of Directors (“Board”) had declared a quarterly dividend of $0.05 per share that, will be payable in March 2022.

There is no guarantee that such dividends will continue indefinitely.

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In addition, if we are unable to maintain our relationships with strategic partners, our businesses may suffer.

Failures by our present or future strategic partners, or our inability to maintain existing or enter into new arrangements with strategic partners for product distribution, could materially impede the growth of our businesses and our ability to generate sufficient revenue and profits.

Failures by our present or future strategic partners, or our inability to maintain

existing or enter into new arrangements with strategic partners for product distribution, could materially impede the growth of our businesses and our ability to generate sufficient revenue and profits.

We face risks related to sales through distributors and other third parties that we do not control, which could harm our business.

We sell some products through third party agents, including distributors and value-added resellers.

We sell some products through third party agents, including distributors and value-added

This exposes us to various risks, including competitive pressure, concentration of sales volumes, credit risks, and compliance risks.

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Risks related to our use of distributors may reduce sales, increase expenses, and weaken our competitive position.

Moreover, violations of the FCPA or similar anti-bribery laws by distributors or other third-party agents could materially and adversely impact our business, reputation and results of operations.

Moreover, violations of the FCPA or similar anti-bribery

laws by distributors or other third-party agents could materially and adversely impact our business, reputation and results of operations.

Dependence on contract manufacturing may adversely affect our ability to bring products to market and damage our reputation.

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Any of these factors could adversely affect our revenues and profitability.

In particular, our X-ray microanalysis business, which manufactures and sells accessories for electron microscopes, is partially dependent on cooperation from larger manufacturers of electron microscopes.

In particular, our X-ray

microanalysis business, which manufactures and sells accessories for electron microscopes, is partially dependent on cooperation from larger manufacturers of electron microscopes.

Additionally, our elemental analysis business purchases certain optical detectors from a single supplier, PerkinElmer, Inc., the sole supplier of these detector components.

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We may not be able to obtain sufficient quantities of required components on the same or substantially the same terms.

Additionally, consolidation among our suppliers could result in other sole source suppliers for us in the future.

Additionally, consolidation among our suppliers could result in other sole source suppliers for us in the

Other events that could affect our ability to source materials, manufacture or distribute our products include fire, natural disaster or extreme weather or a pandemic and the impact of those events on our and our suppliers’ and contract manufacturers’ operations.

Supply shortages and increasing prices of raw materials could adversely affect the gross profit of the Bruker BioSpin Group and the BEST Segment.

The last few years have seen periodic supply shortages and sharp increases in the prices for various raw materials, in part due to high demand from developing countries.

Bruker BioSpin and BEST rely on some of these materials for the production of their products.

In particular, for its superconducting magnet production, both for the horizontal and vertical magnet series, Bruker BioSpin relies on the availability of copper, steel and the metallic raw materials for traditional low-temperature superconducting wires.

Similarly, BEST relies on the availability of niobium titanium for its production of low-temperature superconducting materials and devices.

Supply shortages and increasing prices of raw materials could adversely affect our gross profit.

The last few years have seen periodic supply shortages and sharp increases in the prices for various raw materials, in part due to high demand from developing countries, which have been exacerbated by the COVID-19

We rely on some of these materials for the production of our products.

For example, in our superconducting magnet production, both for the horizontal and vertical magnet series, we rely on the availability of copper, steel and the metallic raw materials for traditional low-temperature

superconducting wires.

Similarly, our BEST Segment relies on the availability of niobium titanium for its production of low-temperature

superconducting materials and devices.

Higher prices for these commodities will increase the production cost of superconducting wires and superconducting magnets and may adversely affect gross profits.

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This type of increase would have an immediate effect on the production costs of superconducting magnets and may negatively affect the profit margins for those products.

In addition, an increase in raw material costs could affect the production cost of the superconducting wire produced by BEST and of superconducting wire used by Bruker BioSpin.

Bruker BioSpin and its customers also rely on liquid helium to operate superconducting magnets.

In order to operate superconducting magnets, we and our customers rely on liquid helium.

Helium is controlled by the Federal Helium Reserve and is subject to price changes.

Shortages of liquid helium associated with federal price controls or depleted natural reserves could have an adverse impact on producing and operating BioSpin’s superconducting magnets and may also drive increases in helium pricing and negatively impact the profit margins of those products.

Shortages of liquid helium associated with federal price controls or depleted natural reserves could drive increases in helium pricing and have an adverse impact on producing and operating our superconducting magnets, which may negatively impact the profit margins of those products.

Risks Related to Our Intellectual Property Rights

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We may not be able to obtain such a license on commercially reasonable terms, if at all, especially if the patent holder is a competitor.

In addition, even if we can obtain a license, it may be non-exclusive, which will permit others to practice the same technology licensed to us.

In addition, even if we can obtain a license, it may be non-exclusive,

which will permit others to practice the same technology licensed to us.

We also may be required to pay substantial damages to the patent holder in the event of infringement.

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If we have supplied infringing products to third parties for marketing by them or licensed third parties to manufacture, use or market infringing products, we may be obligated to indemnify these third parties for any damages they may be required to pay to the patent holder and for any losses the third parties may sustain themselves as the result of lost sales or license payments they are required to make to the patent holder.

Any successful infringement action brought against us may also adversely affect marketing of the infringing product in other markets not covered by the infringement action, as well as our marketing of other products based on similar technology.

Any successful infringement action brought against us may also adversely affect marketing of the infringing product

in other markets not covered by the infringement action, as well as our marketing of other products based on similar technology.

Furthermore, we will suffer adverse consequences from a successful infringement action against us even if the action is subsequently reversed on appeal, nullified through another action or resolved by settlement with the patent holder.

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Failure to obtain adequate patent protection for our proprietary technology could materially impair our ability to be commercially competitive.

In addition to patent protection, we also rely on the protection of trade secrets, know-how and confidential and proprietary information.

In addition to patent protection, we also rely on the protection of trade secrets, know-how

and confidential and proprietary information.

To maintain the confidentiality of trade secrets and proprietary information, we generally seek to enter into confidentiality agreements with our employees, consultants and strategic partners upon the commencement of a relationship with us.

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The loss or exposure of our trade secrets and other proprietary information would impair our competitive advantages and could have a material adverse effect on our operating results, financial condition and future growth prospects.

Furthermore, others may have, or may in the future independently develop, substantially similar or superior know-how and technology.

Furthermore, others may have, or may in the future independently develop, substantially similar or superior know-how

and technology.

We may be involved in lawsuits to protect or enforce our patents that are brought by us which could be expensive and time consuming and, if determined adversely, could adversely affect our patent position.

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We are vigorously defending against these claims.

On September 23, 2019, in a complaint filed in the Düsseldorf, Germany, District Court, Micromass UK Limited, 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.

On February 17, 2020, Micromass expanded its complaint in Düsseldorf to assert another recently granted European patent in Germany.

We are vigorously defending against these claims and we do not expect any material losses associated with this matter in excess of amounts already accrued.

Risks Related to Legal, Regulatory and Compliance

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There is an inherent risk of potential product liability due to the existence of these high magnetic fields, associated stray fields outside the magnet, and the handling of the cryogens associated with superconducting magnets.

In addition, our MALDI Biotyper product has an IVD-CE mark and U.S.

In addition, our MALDI Biotyper product has an IVD-CE

mark and U.S.

FDA approval and is used for the identification of microorganisms.

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We may not be able to maintain product liability insurance on acceptable terms, if at all, and insurance may not provide adequate coverage against potential liabilities.

Responding to claims relating to improper handling, storage or disposal of hazardous chemicals and radioactive and biological materials which we use could be time consuming and costly.

We use controlled hazardous and radioactive materials in our business and generate wastes that are regulated as hazardous wastes under U.S.

federal, and Massachusetts, California, New Jersey, Washington and Wisconsin state environmental and atomic energy regulatory laws and under equivalent provisions of law in those and other jurisdictions in which our research and manufacturing facilities are located.

Our use of these substances and materials is subject to stringent, and periodically changing, regulation that can impose costly compliance obligations on us and has the potential to adversely affect our manufacturing activities.

The risk of accidental contamination or injury from these materials cannot be completely eliminated.

If an accident with these substances occurs, we could be held liable for any damages that result, in addition to incurring clean-up costs and liabilities, which can be substantial.

Additionally, an accident could damage our research and manufacturing facilities resulting in delays and increased costs.

We are subject to environmental laws and regulations, which may impose significant compliance or other costs on us.

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Accordingly, we may become subject to additional compliance costs or environmental liabilities which may be significant and could materially harm our results of operations or financial condition.

Specifically, we use controlled hazardous and radioactive materials in our business and generate wastes that are regulated as hazardous wastes under U.S.

The risk of accidental contamination or injury from these materials cannot be completely eliminated.

If an accident with these substances occurs, we could be held liable for any damages that result, in addition to incurring clean-up

costs and liabilities, which can be substantial.

Additionally, an accident could damage our research and manufacturing facilities resulting in delays and increased costs.

We are subject to existing and potential additional regulation and government inquiry, which can impose burdens on our operations and narrow the markets for our products.

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adverse publicity affecting both us and our customers;

investigations or notices of non-compliance, fines, injunctions, and civil penalties;

investigations or notices of non-compliance,

fines, injunctions, and civil penalties;

import or export restrictions;

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In addition, negative publicity and product liability claims resulting from any adverse regulatory action could have a material, adverse effect on our financial condition and results of operations.

There are similar foreign regulations.

For instance, the coming into force of the European Union Directive in May 2022 by the IVD Regulation (EU) 2017/746 imposes a stricter regime on manufacturers of IVDs and our products currently approved under the Directive must be recertified under the Regulation by May 2024.

Further, the adoption of the European Union Directive by the IVD Regulation (EU) 2017/746, which will take effect in May 2022, imposes a stricter regime on manufacturers of IVDs and our products currently approved under the Directive must be recertified under the Regulation by May 2024.

We have been, are, and expect to be in the future, subject to inquiries from the government agencies that enforce these regulations, including the U.S.

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Internal Revenue Service, the U.S.

Department of Labor, the U.S.

Department of Homeland Security, the U.S.

Department of Justice, the Securities and Exchange Commission, the Federal Trade Commission, U.S.

Department of Justice, the SEC, the Federal Trade Commission, U.S.

Customs and Border Protection and the U.S.

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In addition, failure to comply with these regulations or obtain or maintain necessary permits and licenses could result in a variety of fines or other censures or an interruption in our business operations which may have a negative impact on our ability to generate revenues and could adversely affect our financial condition and results of operations.

Failure to maintain effective internal controls may cause a loss of investor confidence in the reliability of our financial statements or cause us to delay filing our periodic reports with the SEC and adversely affect our stock price.

The SEC, as directed by Section 404 of the Sarbanes-Oxley Act of 2002, adopted rules requiring public

companies to include a report of management on internal control over financial reporting in their annual reports on Form 10-K

that contain an assessment by management of the effectiveness of our internal control over financial reporting.

In addition, our independent registered public accounting firm must attest to and report on the

effectiveness of our internal control over financial reporting.

Although we test our internal control over financial

reporting in order to ensure compliance with the Section 404 requirements, our failure to maintain adequate internal controls over financial reporting could result in an adverse reaction in the financial marketplace due to a loss of investor confidence in the reliability of our financial statements or a delay in our ability to timely file our periodic reports with the SEC, which ultimately could negatively impact our stock price.

We operate as an entrepreneurial, decentralized company, which presents both benefits and certain risks.

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Other companies may have difficulty acquiring us, even if doing so would benefit our stockholders, due to provisions under our corporate charter and bylaws, as well as Delaware law.

Provisions in our certificate of incorporation, as amended, and our bylaws, as well as Delaware law could make it more difficult for other companies to acquire us, even if doing so would benefit our stockholders.

Our certificate of incorporation, as amended, and bylaws contain the following provisions, among others, which may inhibit an acquisition of our company by a third party:

Provisions in our restated certificate of incorporation, and our amended and restated bylaws, as well as Delaware law could make it more difficult for other companies to acquire us, even if doing so would benefit our stockholders.

Our restated certificate of incorporation, and amended and restated bylaws contain the following provisions, among others, which may inhibit an acquisition of our company by a third party:

a staggered Board of Directors, where stockholders elect only a minority of the board each year;

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the ability of our Board of Directors to issue up to 5,000,000 shares of preferred stock without a stockholder vote.

ITEM 1B UNRESOLVED STAFF COMMENTS

UNRESOLVED STAFF COMMENTS

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors