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Article by DailyStocks_admin    (11-11-08 06:36 AM)

Bruker BioSciences Corp. CEO FRANK H LAUKIEN bought 55769 shares on 11-03-2008 at $4.47

BUSINESS OVERVIEW

Our Business

We design, manufacture, service and market analytical and life science systems and associated products to address the rapidly evolving needs of our customers in life science research, pharmaceutical, biotechnology and molecular diagnostics research, as well as in materials and chemical analysis in various industries and government applications. As of December 31, 2007, the period end for which this Annual Report on Form 10-K is being filed, Bruker BioSciences Corporation was the publicly traded parent company of Bruker AXS Inc., Bruker Daltonics Inc. and Bruker Optics Inc. On February 26, 2008, Bruker BioSciences Corporation closed its acquisition of the Bruker BioSpin Group, and renamed itself Bruker Corporation. Under United States Generally Accepted Accounting Principles, the acquisition of the Bruker BioSpin Group will be accounted for as an acquisition of businesses under common control and as a result, all historical consolidated balance sheets, statements of operations, statements of cash flows and notes to the consolidated financial statements in future filings with the Securities and Exchange Commission (SEC) will be restated by combining the historical consolidated financial statements of Bruker Corporation with those of the Bruker BioSpin Group. The information contained in Item 1. Business in this Annual Report on Form 10-K discusses Bruker Corporation as it legally existed on December 31, 2007, and does not include information about the Bruker BioSpin Group. Information relating to the Bruker BioSpin Group and a description of its operations are set forth in the Company's Definitive Proxy Statement on Schedule 14A, filed with the Securities and Exchange Commission on January 17, 2008.

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Bruker AXS is a leading developer and provider of life science and advanced materials research tools based on X-ray technology tools for advanced X-ray and OES-spark instrumentation used in non-destructive molecular materials and elemental analysis in academic, research and industrial applications.

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Bruker Daltonics is a leading developer and provider of innovative life-science tools based on mass spectrometry and also develops and provides a broad range of field analytical systems for chemical, biological, radiological and nuclear (CBRN) detection.

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Bruker Optics is a leading developer and provider of research, analytical and process analysis instruments and solutions based on infrared, near-infrared, FT-Raman, Dispersive Raman and time-domain magnetic resonance spectroscopy.

Competitive Strengths and Strategy

We believe our key competitive strengths include our:

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broad product and service offerings in the markets we serve;

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commitment to innovative, reliable and performance leading products and solutions for our customers;

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premier global brand;

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extensive intellectual property portfolio; and

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worldwide global manufacturing, distribution and logistics networks.

Our strategy is to capitalize on our proven ability to innovate and generate rapid revenue growth, both organically and through acquisitions. We believe our commitment to be an even more significant leader within our markets, to maintain above industry-standard growth and to leverage our continued research and development and distribution investments, will enhance our operating margins and improve our earnings and cash flow generation.

Business Segments

We currently report financial results on three reportable operating segments: Bruker AXS, Bruker Daltonics and Bruker Optics.

Bruker AXS' systems are advanced instruments that use extremely short wavelengths of energy to determine the characteristics of matter and the three-dimensional structure of molecules. Depending on the application, our X-ray systems utilize one of three core X-ray analysis methods: single crystal diffraction, known as SCD or X-ray crystallography; polycrystalline X-ray diffraction, known as XRD or X-ray diffraction; and X-ray fluorescence, known as XRF. Using our modular platforms, we often combine each of these three technology applications with sample preparation tools, automation, consumables and data analysis software. Our products, which have particular application in structural proteomics, drug discovery, nanotechnology research and materials science fields, provide our customers with the ability to determine the three-dimensional structure of specific molecules, such as proteins, and to characterize and determine the composition of materials down to the dimensions used in nanotechnology. Our customers include biotechnology and pharmaceutical companies, nanotechnology companies, semiconductor companies, raw material manufacturers, chemical companies, academic institutions and other businesses involved in materials analysis. We market some of our handheld XRF systems through distribution arrangements with a third party.

Bruker Daltonics' mass spectrometers are sophisticated devices that measure the mass or weight of a molecule and can provide accurate information on the identity, quantity and primary structure of molecules. Our mass spectrometry-based solutions often combine advanced mass spectrometry instrumentation; automated sampling and sample preparation robots; reagent kits and other disposable products, called consumables, used in conducting tests, or assays; and powerful bioinformatics software. We offer mass spectrometry systems and integrated solutions for applications in multiple existing and emerging life-science markets including genomics, expression proteomics, clinical proteomics, metabolic and peptide biomarker profiling, drug discovery and development, molecular diagnostics research and molecular and systems biology, as well as basic molecular medicine research. Our substantial investment in research and development allows us to design, manufacture and market a broad array of products intended to meet the rapidly growing needs of our diverse customer base. Our customers include pharmaceutical companies, biotechnology companies, proteomics companies, molecular diagnostics companies, academic institutions and government agencies. In addition, we market some of our life science systems through strategic distribution arrangements with Agilent Technologies, Inc. (Agilent) Sequenom, Inc. (Sequenom) and others. We are also a worldwide leader in supplying mass spectrometry-based and other systems for CBRN detection in emergency response, homeland security and defense applications.

Bruker Optics manufactures and distributes research, analytical and process analysis instruments based on infrared (IR), near-infrared (NIR), FT-Raman, Dispersive Raman and time-domain magnetic resonance (TD-NMR) spectroscopy. These products are utilized in industry, government and academia for a wide range of applications and solutions for life science, pharmaceutical analysis, food and agricultural analysis in research and development, quality control and process analysis applications. As with all spectroscopic techniques, vibrational spectroscopy can be used to identify a compound and to investigate the composition of a sample. Bruker Optics utilizes Fourier Transform (FT-IR, FT-NIR and FT-Raman) and the dispersive (Raman) measurement techniques on an extensive range of laboratory and process spectrometers. Infrared spectroscopy is a type of absorption spectroscopy that uses the infrared part of the electromagnetic spectrum. Raman spectroscopy relies on the Raman scattering of a monochromatic light that yields similar and complementary analytical information. Infrared and Raman spectroscopy are widely used in both research and industry as a simple, rapid, non-destructive and reliable technique for applications ranging from basic sample identification and quality control to advanced research. The Bruker Optics product line is complemented by a wide range of sampling

accessories and techniques which include microanalysis, high-throughput screening and many others, to help users find suitable solutions to analyze their samples effectively.

Products and Solutions


Bruker AXS

Bruker AXS' X-ray systems integrate powerful detectors with advanced X-ray sources, computer-controlled positioning systems, sample handling devices and data collection and analysis software to acquire, analyze and manage elemental and molecular information. These integrated solutions address many of the matter characterization and structure needs of the life science, pharmaceutical, semiconductor, raw material and research industries across a broad range of applications. We provide high speed, sensitive systems for a variety of areas, including three-dimensional structure determination, protein crystal screening and molecular structure determination for the structural proteomics market as well as the small molecule drug discovery market. Additionally, we provide high-speed, automated systems for elemental analysis as well as high throughput, cost-effective systems for other areas, including combinatorial screening. We also sell other systems such as thermal analyzers, primarily in Japan, which measure the physical characteristics of materials as a function of temperature and can be used in development, production and characterization of materials in a variety of industries.

Bruker AXS X-ray systems are based on the following five core technology applications:

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XRD —Polycrystalline X-ray diffraction, often referred to using the term X-ray diffraction;

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XRF —X-ray fluorescence, also called X-ray spectrometry, including handheld XRF systems;

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SCD —Single crystal X-ray diffraction, often referred to as X-ray crystallography;

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MA —X-ray microanalysis; and

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OES-spark —Optical emission spectroscopy for metals analysis.


XRD systems investigate polycrystalline samples or thin films with single wavelength X-rays. The atoms in the polycrystalline sample scatter the X-rays to create a unique diffraction pattern recorded by a detector. Computer software processes the pattern and produces a variety of information, including stress, texture, qualitative and quantitative phase composition, crystallite size, percent crystallinity and layer thickness, composition, defects and density of thin films and semiconductor material. Our XRD systems combine modular, high precision and high quality ergonomic designs with broad applications for use in basic research and industrial process control. Our XRD systems contribute to a reduction in the development cycles for new products in the catalyst, polymer, electronic, optical material and semiconductor industries.

XRF systems determine the elemental composition of a material and provide a full qualitative and quantitative analysis. Our XRF systems direct X-rays at a sample, and the atoms in the sample absorb the X-ray energy. The elements in the sample then emit X-rays which are characteristic for each element. The system collects the X-rays, and the software analyzes the resulting data to determine the elements which are present. Our XRF products provide automated solutions on a turn-key basis in response to the industrial marketplace demand for automated, controlled production processes that reduce product and process cost, increase output and improve product quality. Our XRF products cover substantially all of the periodic table and can analyze solid, powder or liquid samples. In addition, our XRF products require minimal sample preparation.

Bruker AXS' Aftermarket

In addition to system and solution sales, Bruker AXS generates revenues from sales of service, consumables and related products. Bruker AXS' aftermarket sales contributed revenue of $59.7 million, $47.3 million and $34.1 million in 2007, 2006 and 2005, respectively. Given the demands our products face in the field, general maintenance and replacement of consumables such as X-ray tubes and other parts is routine. We supply a large quantity of replacement X-ray tubes to customers over the lives of our systems. Upon expiration of the warranty period, we generate service revenues from our customers through service contracts, repair calls, training and other support services. Service revenue is generated either through post-warranty service contracts or on-demand service calls. The number of customers entering into service contracts varies by geographic region.

In addition to providing service, consumables and replacement parts, we generate recurring revenue through the sale to our customers of a variety of accessory items, including sample handling devices, temperature and pressure control devices, enhanced X-ray optics and software packages. We also provide system upgrades to customers who desire to upgrade, rather than replace, older systems.


Bruker Daltonics

Bruker Daltonics has developed a suite of mass spectrometry instruments that address a wide range of life sciences applications. Mass spectrometry is the method of choice for primary structure analysis, including the determination of amino acid sequence and post-translational modifications and protein quantification. As a result, mass spectrometry is a key enabling technology of the expression proteomics laboratory. Mass spectrometers are also increasingly used for the discovery of peptide, protein or metabolite biomarkers and panels or patterns of biomarkers. These biomarkers can be used for toxicity screening or to assess drug efficacy in pre-clinical trials in pharmaceutical drug development. They are also used in clinical research and validation studies in an effort to develop the emerging field of protein molecular diagnostics.

Mass spectrometers are devices for measuring the mass, or weight, of intact molecules and of fragments of molecules which can provide structural information on the molecule. Mass spectrometry systems employ an ionization source which creates charged molecules and a mass separation/detection component that separates these charged molecules on the basis of mass to detect their presence and quantity. Mass spectrometry has been used in physics and chemistry for over fifty years. Over the past fifteen years, mass spectrometry has emerged as a powerful research tool in the life sciences. For example, mass spectrometers can determine the identity, amount, structure, sequence and other biological properties of small molecules, like drug candidates and metabolites, as well as large biomolecules, like proteins and DNA.

Time-of-flight spectrometers measure mass based on the time it takes for charged molecules to travel from the ionization source to the detection component. With the ability to analyze more than 10,000 samples per day, these mass spectrometers currently have the highest sample throughput and can analyze the broadest range of masses of any mass spectrometer for use in the fields of genomics and proteomics. Our time-of-flight mass spectrometry solutions make use of this potential for increased speed by automating various steps of the analysis. Our time-of-flight solutions combine high sensitivity, accuracy and throughput to generate large volumes of accurate raw data, primarily for peptide analysis and proteomics in general.

Bruker Daltonics' life science solutions are based on the following four core mass spectrometry technology platforms:

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MALDI-TOF —Matrix-assisted laser desorption ionization time-of-flight mass spectrometry, including tandem time-of-flight systems (MALDI-TOF/TOF);

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ESI-TOF —Electrospray ionization time-of-flight spectrometry, including tandem mass spectrometry systems based on ESI-quadrupole-TOF mass spectrometry (ESI-Q-q-TOF);

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FTMS —Fourier transform mass spectrometry, including hybrid systems with a quadrupole front end (Q-q-FTMS); and

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ITMS —Ion trap mass spectrometry.

MALDI-TOF mass spectrometers utilize an ionization process to analyze solid samples using a laser that combines high sample throughput with high mass range and sensitivity. Our MALDI-TOF mass spectrometers are particularly useful for: (a) oligonucleotide and synthetic polymer analysis; (b) protein identification and quantification; (c) peptide de novo sequencing; (d) determination of post-translational modifications of proteins; (e) interaction proteomics and protein function analysis; (f) drug discovery and development; and (g) fast body fluid and tissue peptide or protein biomarker detection.

These products can also utilize our AnchorChip microarrays that prepare samples for analysis. These microarrays employ patented microfluidics technology that improves sensitivity and reduces analysis time per sample by concentrating, or "anchoring," the sample in a precisely defined location.

ESI-TOF mass spectrometers utilize an electrospray ionization process to analyze liquid samples. This ionization process, which does not dissociate the molecules, allows for rapid data acquisition and analysis of large biological molecules. ESI-TOF mass spectrometers are particularly useful for: (a) identification, protein analysis and functional complex analysis in proteomics and protein function; (b) molecular identification in metabonomics, natural product and drug metabolite analysis; (c) combinatorial chemistry high throughput screening, or HTS; and (d) fast liquid chromatography mass spectrometry, or LC/MS, in drug discovery and development. We currently offer the following ESI-TOF instruments:

FTMS systems utilize high-field superconducting magnets to offer the highest resolution, selectivity, and mass accuracy currently achievable in mass spectrometry. Our systems based on this technology often eliminate the need for time-consuming separation techniques in complex mixture analyses. In addition, our systems can fragment molecular ions to perform exact mass analysis on all fragments to determine molecular structure. FTMS systems are particularly useful for: (a) the study of structure and function of biomolecules including proteins, DNA and natural products; (b) complex mixture analysis including body fluids or combinatorial libraries; (c) high throughput proteomics and metabonomics; and (d) top-down proteomics of intact proteins without the need for enzymatic digestion of the proteins prior to analysis. We continue to offer next-generation hybrid FTMS systems which combine a traditional external quadrupole mass selector and hexapole collision cell, with a high-performance ITMS systems collect all ions simultaneously, which improves sensitivity relative to previous quadrupole mass spectrometers. Ion trap mass spectrometers are particularly useful for: (a) sequencing and identification based on peptide structural analysis; (b) quantitative liquid chromatography mass spectrometry; (c) identification of combinatorial libraries; and (d) generally enhancing the speed and efficiency of the drug discovery and development process.

Chemical, Biological, Radiological and Nuclear (CBRN) Detection

We sell a wide range of portable analytical and bioanalytical detection systems and related products for CBRN detection. Our customers use these devices for nuclear, biological agent and chemical agent defense applications, anti-terrorism, law enforcement and process and facilities monitoring. Our CBRN detection products use many of the same technology platforms as our life science products, as well as additional technologies, including infrared remote detection and ion mobility spectrometry for handheld chemical detectors. We also provide integrated, comprehensive detection suites which include our multiple detection systems, consumables, training and simulators.

Bruker Daltonics' Aftermarket

In addition to system and solution sales, Bruker Daltonics generates revenue from consumables, automation and separation products, training and services, and bioinformatics and software. Bruker Daltonics' aftermarket sales contributed revenue of $27.4 million, $28.6 million and $30.6 million in 2007, 2006 and 2005, respectively. We sell consumables for preparing, purifying and processing samples prior to mass spectrometric analyses as well as consumables for collecting samples for CBRN detection.

Upon expiration of the warranty period associated with a system sale, which is typically one year, we also generate service revenues from our customers through service contracts, repair calls, training and other support services. Service revenue is generated either through post-warranty service contracts or on-demand service calls. The number of customers entering into service contracts varies by geographic region.

In addition to providing service, consumables and replacement parts, we generate recurring revenue through the sale to our customers of a variety of accessory items. Among other things, we have automated control software to integrate separation devices and robotics into our solutions, we provide bioinformatics software to generate useable information from large volumes of raw data, and we offer intuitive data acquisition and analysis software on a Microsoft Windows platform to make our systems accessible to non-experts.


Bruker Optics

Bruker Optics manufactures and distributes research, analytical and process analysis instruments based on infrared (IR), near-infrared (NIR), Raman and time-domain magnetic resonance (TD-NMR) spectroscopy. These products are utilized in industry, government and academia for a wide range of applications and solutions for life science, pharmaceutical analysis, food and agricultural analysis in research and development, quality control and process analysis applications. As with all spectroscopic techniques, vibrational spectroscopy can be used to identify a compound and to investigate the composition of a sample. Bruker Optics utilizes Fourier Transform (FT-IR, FT-NIR and FT-Raman) and the dispersive (Raman) measurement techniques on an extensive range of laboratory and process spectrometers. Infrared spectroscopy is a type of absorption spectroscopy that uses the infrared part of the electromagnetic spectrum. Raman spectroscopy relies on the Raman scattering of a monochromatic light that yields similar and complementary analytical information. Infrared and Raman spectroscopy are widely used in both research and industry as a simple, rapid, non-destructive and reliable technique for applications ranging from basic sample identification and quality control to advanced research. The Bruker Optics' product line is complemented by a wide range of sampling accessories and techniques which include microanalysis, high-throughput screening and many others, to help users find the best suitable solution to analyze their samples effectively.

Bruker Optics systems are based on the following four core technology applications:

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FT-IR —Fourier transform infrared spectroscopy is an interferometry-based IR technology;

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FT-NIR —Fourier transform near infrared spectroscopy;

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FT Raman —Raman spectroscopy is the measurement of the wavelength and intensity of inelastically scattered light from molecules, utilizing an interferometry-based technology; and

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Dispersive Raman —Raman spectroscopy is the measurement of the wavelength and intensity of inelastically scattered light from molecules, utilizing a grating-based technology.

FT-IR, or Fourier transform infrared spectroscopy, is an interferometry-based IR technology offering a faster, more sensitive means of analysis than traditional IR spectroscopy. FT-IR is more time efficient because an entire spectrum is collected at once, rather than sequentially scanning from one wavelength to another across the spectrum. Traditional FT-IR users include the pharmaceutical, petrochemical, forensic/analytical, materials science and research sectors.

FT-NIR , or Fourier transform near infrared spectroscopy, is a more recent addition to laboratory NIR technologies. This technological advancement is heavily utilized in the pharmaceutical, food/agriculture and chemical industries. Given that FT-NIR instruments measure the entire spectrum simultaneously, they are faster and more sensitive, with lower noise levels. The inherent design of an FT-NIR system also provides for an internal calibration on every scan and it is ideal for process environments. The pharmaceutical industry is the leading user of FT-NIR instruments, and applications include quality control, research and development, and process analytical technology. The food and agricultural industry is the second largest user of FT-NIR instrumentation, with much of its demand derived from the large installed base of conventional dispersive NIR systems that have long been used in that area.

FT-Raman spectroscopy is the measurement of the wavelength and intensity of inelastically scattered light utilizing an interferometer. The Raman scattered light occurs at wavelengths that are shifted from the incident light by the energies of molecular vibrations. Like FT-IR, the Raman spectrum provides information on molecular structure. The mechanism of Raman scattering is different from that of infrared absorption, in that Raman and IR spectra provide complementary information. Typical applications are in structure determination, qualitative analysis and quantitative analysis. Raman is useful for the identification of both organic and inorganic compounds and functional groups. It is a non-destructive technique, and can be used for the analysis of both liquids and solid surfaces. Raman is well suited for use in the polymer and pharmaceutical industries, and has applications in the metals, electronics, semiconductor and pulp and paper industries. The technique also has applications in the life sciences, forensics and artwork authentication.

CEO BACKGROUND

Collin J. D'Silva
Age 51
Director Since 2000
From 1997 to April 2006, Mr. D'Silva served as the Chief Executive Officer of Transgenomic, Inc., a life science company involved in SNP discovery, in Omaha, Nebraska. Until January 2007, Mr. D'Silva also served as the Chairman of the board of directors of Transgenomic. From 1988 to 1997, Mr. D'Silva was President and Chief Executive Officer of CETAC Technologies, Inc, a company designing instrumentation for elemental analysis. Mr. D'Silva holds a B.S. degree and a Masters in Industrial Engineering from Iowa State University as well as a M.B.A. from Creighton University.


Stephen W. Fesik, Ph.D.
Age 54
2008 Nominee
Dr. Fesik is currently the Divisional Vice President of Cancer Research of Abbott Laboratories, a global, broad-based health care company devoted to the discovery, development, manufacture and marketing of pharmaceuticals and medical products, including nutritionals, devices and diagnostics headquartered in Illinois. Dr. Fesik joined Abbott Laboratories in 1983 and since that time served in various research and scientific capacities until being named to his current position in 2000. From 2003 to 2006, Dr. Fesik served as a member of the Scientific Advisory Board of the Bruker BioSpin Group and in 2003 was awarded a lifetime achievement award in nuclear magnetic resonance by European Advanced Semiconductors, a Bruker BioSpin Group subsidiary. In 2003, Dr. Fesik was named a Distinguished Research Fellow of Abbott Laboratories' Volwiler Society. Dr. Fesik has received numerous awards for his scientific research and scholarship and currently serves on a number of research and scientific advisory boards. Prior to joining Abbott Laboratories, from 1981 to 1983, Dr. Fesik was a postdoctoral associate at Yale University's Department of Biophysics and Biochemistry. Dr. Fesik holds a Ph.D. in Medicinal Chemistry from the University of Connecticut.


Dirk D. Laukien, Ph.D.
Age 43
Director Since 2008
Dr. Dirk Laukien is a Senior Vice President of the Company and has served in this capacity since July 1, 2006. Dr. Dirk Laukien also serves as the President of Bruker Optics and had served in this capacity for more than five years prior to July 1, 2006, the date we acquired our Bruker Optics subsidiary. Dirk Laukien also serves as co-CEO of the Bruker BioSpin Group and, since 1989, has served as co-President and director of Bruker BioSpin Corporation and as a director of Bruker AG. Dirk Laukien is the brother of Frank Laukien, a director of the Company as well as the Company's President and CEO, and Joerg Laukien, a director of the Company and an executive officer of the Bruker BioSpin Group. Dirk Laukien received his B.A. in Physics from Brandeis University and a Ph.D. in Physics from Tufts University.


Richard M. Stein
Age 56
Director Since 2000
Mr. Stein has served as the Company's secretary since 2000. Mr. Stein has been a partner with Nixon Peabody LLP, a law firm, or a predecessor entity, Hutchins, Wheeler & Dittmar, since January 1993. Mr. Stein holds a B.A. degree from Brandeis University and a J.D. from Boston College Law School.


Bernhard Wangler
Age 57
Director Since 2000
Mr. Wangler has been a German tax consultant and principal partner with Kanzlei Wangler in Karlsruhe, Germany since July 1983. He has been a Certified Public Accountant in Germany since 1984. Mr. Wangler holds a Master of Economics and Commerce degree and an M.B.A. from the University of Mannheim, Germany.


Tony W. Keller, Ph.D.
Age 71
Director Since 2008
Dr. Keller currently serves as Executive Chairman of the Bruker BioSpin Group, chairman of the board of Bruker BioSpin AG, and as a director of Bruker BioSpin Inc. In addition, in 2008 prior to the completion of the Bruker BioSpin Group acquisition, Dr. Keller was elected to serve as President of the Board of BioSpin Invest AG. Until recently, Dr. Keller was co-CEO of the Bruker BioSpin Group and served in that capacity for more than five years. Dr. Keller also served as a Managing Director of Bruker BioSpin GmbH until his retirement effective December 31, 2007. Dr. Keller joined the Bruker BioSpin Group in 1964 with the establishment of Spectrospin AG by the late Dr. GĂĽnther Laukien, and has served the Bruker BioSpin Group in a variety of capacities since that time. Dr. Keller holds honorary doctorates from the Technical University of Berlin and from the University of Queensland.


Richard D. Kniss
Age 67
Director Since 2003
Mr. Kniss joined the Company's board of directors in July 2003 in connection with the merger of Bruker Daltonics and Bruker AXS and joined the former Bruker AXS board of directors in June 2001. Mr. Kniss was Senior Vice President and General Manager for Agilent Technologies, Chemical Analysis Group, a producer of gas and liquid chromatographs, mass spectrometers and spectrophotometers, from August 1999 until March 2001. Prior to the spin-off of Agilent from the Hewlett Packard Company, from 1995 to 1999, Mr. Kniss was Vice President and General Manager of the Chemical Analysis Group for Hewlett Packard. In March 2004, Mr. Kniss became chairman of the board of directors of AviaraDx, Inc. (formerly Arcturus Bioscience, Inc.), a life-science tools company. Mr. Kniss holds a B.S. from Brown University and an M.B.A. from Stanford University.


Joerg C. Laukien
Age 54
Director Since 2005
Mr. Joerg Laukien is the Chief Operating Officer of the European Bruker BioSpin companies. Joerg Laukien has been a director and President of Bruker BioSpin MRI, Inc. in Billerica, Massachusetts since 1997, President of Bruker BioSpin MRI GmbH in Ettlingen, Germany since 1998, President of Bruker Elektronik GmbH in Rheinstetten, Germany since 1991, a director of Bruker BioSpin Inc. in Billerica, Massachusetts since 2000, a director of Bruker BioSpin SA in Wissembourg, France since 1998, a director of Bruker BioSpin s.r.l. in Italy since 1992, and a director of Techneon AG in Zurich, Switzerland since 1999. Joerg Laukien is the brother of Dr. Frank Laukien, the Chairman, President and Chief Executive Officer of the Company and Dirk Laukien, a director and executive officer of the Company. Mr. Laukien holds a B.A. from the Verwaltungs- und Wirtschafts-Akademie in Karlsruhe, Germany.


William A. Linton
Age 60
Director Since 2000
Dr. Linton serves as the lead director of our board of directors. He was appointed lead director in March 2004 by the independent members of the board of directors. As lead director, Dr. Linton performs the usual responsibilities of a lead director including setting the agenda for board meetings and acting as a liaison between management and the board of directors. Dr. Linton has served as the Chairman and Chief Executive Officer of Promega Corporation, a life science supply company, in Madison, Wisconsin since 1978. Dr. Linton received a B.S. degree from University of California, Berkeley in 1970 and an honorary Ph.D. from Hannam University (Korea) in 2004. Dr. Linton has been a Director of the Wisconsin Technology Council since 2001 and serves as a director of ALSSA (Analytical & Life Science Systems Association), an industry association.


Wolf-Dieter Emmerich, Ph.D.
Age 67
Director Since 2007
Dr. Emmerich currently serves as a consultant to Erich Netzsch Holding, the parent company of Netzsch Instruments, a developer and manufacturer of high-precision instruments for Thermal Analysis and thermophysical properties measurement headquartered in Selb, Germany. Netzsch's products are employed in research and quality control in a range of industrial applications. Dr. Emmerich joined Netzsch Instruments Ltd. in 1970 and served the Netzsch Group in a variety of capacities until his retirement in 2005. Dr. Emmerich assumed worldwide responsibility for the Analyzing and Testing business unit in 1980 and was appointed to serve on the Executive Board of the Netzsch Group in 1995. Dr. Emmerich currently serves as Chairman of the Advisory Board of the ANALYTICA International Trade Fair, a leading European trade show for companies involved in the analysis, laboratory-technology and life-science sectors, and on the board of the Bayreuth University Society. Dr. Emmerich holds a Physicist degree and a Ph.D. in physics from the University of Erlangen-Nuremberg.

Brenda J. Furlong
Age 60
Director Since 2007
From July 2003 to August 2006, Ms. Furlong served as Managing Director and Head of Fixed Income of Columbia Management Group, the primary investment management division of Bank of America Corporation. Prior to joining Columbia Management, Ms. Furlong was with The Hartford Financial Services Group, where she served as Chief Investment Officer and was President of Hartford Investment Management Company from October 1999 to November 2001, and also served as Senior Vice President—Capital Planning & Development from November 1996 to September 1999. From 1979 to December 1995, Ms. Furlong was with ITT Sheraton Corporation, where, from May 1988 to December 1995, she served as Vice President and Treasurer. Ms. Furlong has been a member of the Board of Trustees of the Perkins School for the Blind in Watertown, Massachusetts since 2002. Ms. Furlong holds an M.B.A. from Northeastern University, an M.A. in international studies from American University and a B.A. in political science and sociology from Whittier College.


Frank H. Laukien, Ph.D.
Age 48
Director Since 1991
Dr. Laukien has been the Chairman, President and Chief Executive Officer of the Company since the inception of its predecessor company in February 1991. He also served as Executive Chairman of the former Bruker AXS from August 2002 until the merger of Bruker Daltonics and Bruker AXS in July 2003. In addition, from October 1997 to August 2002, he served as the Chairman of the board of directors and, from October 1997 to March 2000, as the Chief Executive Officer, of the former Bruker AXS. Since December 2002, Dr. Laukien has served as Co-Chief Executive Officer of the worldwide Bruker BioSpin group of companies. Dr. Frank H. Laukien is the brother of Joerg C. Laukien, a director of the Company and an executive officer of the Bruker BioSpin Group, and Dirk D. Laukien, an executive officer and director of the Company and an executive officer of Bruker Optics and the Bruker BioSpin Group. Dr. Frank Laukien holds a B.S. degree from the Massachusetts Institute of Technology, as well as a Ph.D. in chemical physics from Harvard University. From October 2002 until October 2003, he was Chairman of ALSSA (Analytical & Life Science Systems Association), an industry association. Since 2006, Dr. Laukien has served as a trustee of the Rivers School.


Richard A. Packer
Age 50
Director Since 2007
Since November 1999, Mr. Packer has been the Chairman and Chief Executive Officer of ZOLL Medical Corporation (ZOLL), a publicly-traded manufacturer of resuscitation devices and related software solutions. From 1996 until his appointment to Chairman and Chief Executive Officer in 1999, Mr. Packer served as ZOLL's President, Chief Operating Officer and Director. From 1992 to1996, he served as ZOLL's Chief Financial Officer and Vice President of Operations. Prior to joining ZOLL, Mr. Packer served for five years as Vice President of various functions for Whistler Corporation, a consumer electronics company. Before joining Whistler in 1987, Mr. Packer was a manager with the consulting firm of PRTM/KPMG, specializing in operations of high technology companies. Mr. Packer is the past Chairperson of MassMEDIC, the industry council for Medical Devices in Massachusetts. He currently serves as a board member of the Massachusetts Medical Device Development Center, a University of Massachusetts initiative to incubate medical device companies. Mr. Packer holds an M.B.A. from the Harvard Business School, as well as B.S. and M. Eng. degrees from Rensselaer Polytechnic Institute.

MANAGEMENT DISCUSSION FROM LATEST 10K

EXECUTIVE OVERVIEW

Bruker Corporation and its wholly-owned subsidiaries design, manufacture, market and service proprietary life science and materials research systems based on mass spectrometry core technology platforms, X-ray technologies, optical emission spectroscopy (OES), and molecular spectroscopy technologies. We also manufacture and distribute a broad range of field analytical systems for chemical, biological, radiological and nuclear, or CBRN, detection. Our financial results as of December 31, 2007, are reported on the basis of three reportable segments: Bruker AXS, Bruker Daltonics and Bruker Optics. Following the recent acquisition of the Bruker BioSpin Group management will reevaluate the way the business is managed and the internal reporting structure. The changes in the internal reporting structure may require us to change our segment reporting in the future.

On February 26, 2008, we completed our of the Bruker BioSpin Group. Both the Company and the Bruker BioSpin Group were majority owned by six affiliated stockholders prior to the acquisition. As a result, our acquisition of the Bruker BioSpin Group is considered a combination of companies under common control, and will be accounted for at historical carrying values. Historical consolidated balance sheets, statements of operations, statements of cash flows and notes to the consolidated financial statements in future filings with the Securities and Exchange Commission, beginning with the Company's Quarterly Report on Form 10-Q for the period ending March 31, 2008, will be restated by combining the historical consolidated financial statements of Bruker Corporation with those of the Bruker BioSpin Group. In addition, because the transaction is accounted for as an acquisition of businesses under common control all one-time transaction costs have been expensed as incurred, rather than being added to goodwill. During the year ended December 31, 2007, we incurred and expensed acquisition related charges totaling $4.7 million, which consisted of legal fees, investment banking, accounting fees, compensation earned by the special committee of the Company's Board of Directors and antitrust regulation filing fees. We expect to incur an additional $3.1 million of acquisition related charges, consisting primarily of investment banking fees, in the first quarter of 2008.

With the addition of the Bruker BioSpin Group, we enhanced our position as a leading supplier for life science and materials research. The technologies of the Bruker BioSpin Group are particularly complementary to the accurate-mass electrospray time-of-flight mass spectrometers of Bruker Daltonics and the single-crystal diffraction X-ray spectrometers of Bruker AXS which will create revenue synergies and provide opportunities to supply customers with equipment packages that have a broader range of applications and value. We believe the addition of the Bruker BioSpin Group will also enhance our distribution in the Americas, Europe and Asia and our sales and service infrastructure, all of which should provide us with revenue growth opportunities and accelerate our drive to improve our margins, net income and operating cash flows.

On July 1, 2006, we completed our acquisition of Bruker Optics. Both the Company and Bruker Optics were majority owned by five affiliated stockholders prior to the acquisition. As a result, our acquisition of Bruker Optics is considered a business combination of companies under common control. Accordingly, the acquisition of Bruker Optics, as it relates to the portion under common ownership (approximately 96%), has been accounted for at historical carrying values. The portion not under the common ownership of the five affiliated stockholders (approximately 4%) has been accounted for using the purchase method of accounting (fair value) on a pro rata basis. The excess purchase price of the interest not under common control over the fair value of the related net assets acquired has been accounted for as goodwill and intangible assets. Because the acquisition was accounted for as a combination of companies under common control, all one-time transaction costs have been expensed as incurred rather than being added to goodwill. During the year ended December 31, 2006, we incurred and expensed acquisition related charges totaling $5.7 million, which consisted of investment banking, legal and accounting fees, compensation earned by the special committee of the Company's Board of Directors and a Bruker Optics officer, and antitrust regulation filing fees. The historical financial statements within this MD&A have been presented as if the companies had always been combined.

With the addition of Bruker Optics, we increased and diversified our market presence, technology base, product line, global distribution and customer support capabilities. The addition of Bruker Optics increased our 'critical mass' in many of the markets we serve, created revenue synergies, diversified our customer and revenue base and expanded our product and service offerings, providing us with revenue growth opportunities, as well as opportunities to improve our margins, net income and operating cash flows. The acquisition of Bruker Optics also provides us with access to new market segments and applications, particularly in pharmaceutical process analytical technologies and pharma-forensics, as well as in food and beverage and feed and agricultural analysis.

In addition to Bruker Optics, we acquired KeyMaster Technologies, Inc. in July 2006 and Quantron GmbH in September 2006. KeyMaster provided us with access to the fast growing handheld portable X-ray analysis market. We believe the technologies KeyMaster has developed, and the markets it serves, are highly complementary to our core business. Quantron complements our existing stationary X-ray fluorescence systems for metal foundries, as well as our handheld X-ray fluorescence product line. The operating results of KeyMaster and Quantron have been included in the results of the Bruker AXS segment from the date of their acquisitions.

Bruker AXS engages primarily in the business of manufacturing and distributing advanced instrumentation and automated solutions based on X-ray technology and OES-spark with the purpose of addressing the needs of our customers in the discovery of new drugs, drug targets and advanced materials, as well as individual QA/QC applications. Typical customers of Bruker AXS' products and solutions include biotechnology and pharmaceutical companies, semiconductor industries, chemical, cement, metals and petroleum companies, raw material manufacturers, and academic and government research institutions. Bruker Daltonics is a leading manufacturer of innovative mass spectrometry-based instruments and accessories used by pharmaceutical, biotechnology, proteomics and molecular diagnostic companies, academic institutions, and government agencies in their research that can also be integrated and used along with other analytical instruments. Bruker Daltonics also manufactures and distributes a broad range of field analytical systems for CBRN detection. Bruker Optics is a leading developer, manufacturer and provider of research, analytical and process analysis instruments and solutions based on infrared and Raman molecular spectroscopy technology. Typical customers of Bruker Optics' products and solutions include pharmaceutical and biotechnology companies, cement and petroleum companies, food, beverage and agricultural industries, and academic and government research institutions.

We maintain major technical and manufacturing centers in Europe, North America and Japan, we have sales offices located throughout the world and our corporate headquarters are located in Billerica, Massachusetts. Our business strategy is to capitalize on our proven ability to innovate and generate rapid revenue growth, both organically and through acquisitions. Our revenue growth strategy combined with continued improvements to our gross profit margins and increased leverage on our research and development, sales and marketing and distribution investments and general and administrative expenses are expected to enhance our operating margins and improve our earnings in the future.

For the year ended December 31, 2007, our revenue grew by approximately 26% to $547.6 million. Of this revenue growth, approximately 17% was organic, 7% was the impact of foreign exchange and the remaining 2% was due to acquisitions. We continue to focus on improving our profitability and our gross profit margins for product and service revenues improved from 45.6% in 2006 to 46.2% in 2007, reflecting improvements realized from ongoing gross profit margin improvement programs. We continue to invest in sales and marketing initiatives and research and development, primarily headcount increases and material purchases, which have increased sales and marketing and research and development costs year-over-year. We expect these investments to result in increased revenues in future periods.

We adopted Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standards ("SFAS") No. 123(R), Share-Based Payment ("SFAS No. 123(R)"), on January 1, 2006. This standard revised the measurement, valuation and recognition of financial accounting and reporting standards for equity-based compensation plans contained in SFAS No. 123, Accounting for Stock-Based Compensation . SFAS No. 123(R) requires the measurement and recognition of compensation expense for all share-based payment awards, including employee stock options, based on estimated fair values on the date of the grant. We adopted SFAS No. 123(R) using the modified prospective transition method. In accordance with the modified prospective transition method, our consolidated financial statements for prior periods have not been restated to reflect, and do not include, the impact of SFAS No. 123(R). For the years ended December 31, 2007 and 2006, we recorded stock-based compensation expense of $1.6 million and $1.1 million, net of tax, respectively. Stock-based compensation was not material to the overall results of operations or specific line items within the consolidated statements of operations in any of the periods presented.

CRITICAL ACCOUNTING POLICIES

The discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires that we make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those related to revenue recognition, allowance for doubtful accounts, inventories, goodwill, long-lived assets, warranty costs and income taxes. We base our estimates and judgments on historical experience, current market and economic conditions, industry trends and other assumptions that we believe are reasonable and form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.

We believe the following critical accounting policies to be both those most important to the portrayal of our financial condition and those that require the most subjective judgment.

Revenue recognition. We recognize revenue from system sales when persuasive evidence of an arrangement exists, the price is fixed or determinable, title and risk of loss has been transferred to the customer and collectibility of the resulting receivable is reasonably assured. Title and risk of loss is generally transferred to the customer upon receipt of a signed customer acceptance form for a system that has been shipped, installed, and for which the customer has been trained. As a result, the timing of customer acceptance or readiness could cause our reported revenues to differ materially from expectations. When products are sold through an independent distributor, a strategic distribution partner or an unconsolidated affiliated distributor, which assumes responsibility for installation, we recognize the system sale when the product has been shipped and title and risk of loss have been transferred. Our distributors do not have price protection rights or rights of return; however, our products are typically warranted to be free from defect for a period of one year. Revenue is deferred until cash is received when a significant portion of the fee is due over one year after delivery, installation and acceptance of a system. For arrangements with multiple elements, we recognize revenue for each element based on the fair value of the element, provided all other criteria for revenue recognition have been met. The fair value for each element provided in multiple element arrangements is typically determined by referencing historical pricing policies when the element is sold separately. Changes in our ability to establish the fair value for each element in multiple element arrangements could affect the timing of revenue recognition. Revenue from accessories and parts is recognized upon shipment and service revenue is recognized as the services are performed. Grant revenue is recognized when we complete the services required under the grant.

Warranty costs. We normally provide a one-year parts and labor warranty with the purchase of equipment. The anticipated cost for this one-year warranty is accrued upon recognition of the sale and is included as a current liability on the balance sheet. Although our facilities undergo quality assurance and testing procedures throughout the production process, our warranty obligation is affected by product failure rates, material usage and service delivery costs incurred in correcting a product failure. Although our actual warranty costs have historically been consistent with expectations, to the extent warranty claim activity or costs associated with servicing those claims differ from our estimates, revisions to the warranty accrual may be required.

Inventories. Inventories are stated at the lower of cost or market, with costs determined by the first-in, first-out method for a majority of subsidiaries and by average-cost for one international location. We maintain an allowance for excess and obsolete inventory to reflect the expected un-saleable or un-refundable inventory based on an evaluation of slow moving products. If ultimate usage or demand varies significantly from expected usage or demand, additional write-downs may be required, resulting in a charge to operations.

Goodwill, other intangible assets and other long-lived assets. We evaluate whether goodwill is impaired annually and when events occur or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying amount. Fair value is determined using market comparables for similar businesses or forecasts of discounted future cash flows. We also review other intangible assets and other long-lived assets when indication of potential impairment exists, such as a significant reduction in cash flows associated with the assets. Should the fair value of our long-lived assets decline because of reduced operating performance, market declines, or other indicators of impairment, a charge to operations for impairment may be necessary.

Allowance for doubtful accounts. We maintain allowances for doubtful accounts for estimated losses resulting from the inability of our customers to pay amounts due. If the financial condition of our customers were to deteriorate, reducing their ability to make payments, additional allowances would be required, resulting in a charge to operations.

Income taxes. We estimate the degree to which tax assets and loss carryforwards will result in a benefit based on expected profitability by tax jurisdiction, and provide a valuation allowance for tax assets and loss carryforwards that we believe will more likely than not go unused. If it becomes more likely than not that a tax asset or loss carryforward will be used for which a reserve has been provided, we reverse the related valuation allowance. If our actual future taxable income by tax jurisdiction differ from estimates, additional allowances or reversals of reserves may be necessary.

RESULTS OF OPERATIONS

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

Revenue

Bruker AXS

Bruker AXS' revenue increased by $64.5 million, or 35.9% to $244.0 million for the year ended December 31, 2007, compared to $179.5 million for the comparable period in 2006. Included in this change in revenue is approximately $10.6 million from the impact of foreign exchange. Excluding the effect of foreign exchange, revenue increased 30.0%. The increase in revenue excluding the effect of foreign exchange is attributable to an increase in x-ray diffraction and x-ray fluorescence system sales, to higher other system revenue and higher aftermarket revenue, and to the businesses acquired in the second half of 2006, which represented approximately 4.9% of revenue growth.

Bruker Daltonics

Bruker Daltonics' revenue increased by $28.9 million, or 18.1% to $188.6 million for the year ended December 31, 2007, compared to $159.7 million for the comparable period in 2006. Included in this change in revenue is approximately $11.8 million from the impact of foreign exchange. Excluding the effect of foreign exchange, revenue increased 10.7%. The increase in revenue excluding the effect of foreign exchange is a result of increased direct sales of life science systems and CBRN detection systems, partially offset by reduced OEM sales for certain life science systems and reduced grant revenue. Aftermarket revenues include accessory sales, consumables, training and services.

Bruker Optics

Bruker Optics' revenue increased by $17.0 million, or 16.1% to $122.5 million for the year ended December 31, 2007, compared to $105.5 million for the comparable period in 2006. Included in this change in revenue is approximately $5.7 million from the impact of foreign exchange. Excluding the effect of foreign exchange, revenue increased 10.7%. The increase in revenue excluding the effect of foreign exchange is attributable to an increase in molecular spectroscopy systems sales year-over-year, partially offset by reduced revenues associated with our order with the Chinese State Food and Drug Administration. For the year ended December 31, 2007, we recognized $7.9 million in revenue from our order with the Chinese State Food and Drug Administration compared with $8.7 million in revenue from this order in the same period in 2006. This order with the Chinese State Food and Drug Administration was completed in 2007 and we do not expect to recognize any molecular spectroscopy systems revenue from this order in 2008. Other systems revenue relates primarily to the distribution of products not manufactured by Bruker Optics. Aftermarket revenues include accessory sales, consumables, training and services.



MANAGEMENT DISCUSSION FOR LATEST QUARTER


RESULTS OF OPERATIONS



Three Months Ended June 30, 2008 Compared to the Three Months Ended June 30, 2007



Consolidated Results



The following table presents our results for the three months ended June 30, 2008 and 2007 (dollars in thousands):

Revenue



Our revenue increased by $73.1 million, or 30.7%, to $311.5 million for the three months ended June 30, 2008, compared to $238.3 million for the comparable period in 2007. Included in this change in revenue is approximately $26.9 million from the impact of foreign exchange. Excluding the effect of foreign exchange, revenue increased by 19.4%. The increase in revenue, excluding the effect of foreign exchange, is attributable to increases in system and aftermarket revenues in the BioScience segment and system and wire revenues in the BioSpin segment.



Cost of Revenue



Our cost of product and service revenue for the three months ended June 30, 2008, was $182.8 million, resulting in a gross profit margin of 41.3%, compared to cost of product and service revenue of $138.4 million, resulting in a gross profit margin of 41.9% for the comparable period of 2007. Cost of revenue for the three months ended June 30, 2008 and 2007 includes charges of approximately $2.1 million and $1.5 million, respectively, to write down certain inventories to the lower of cost or market. The decrease in gross profit margins is attributable primarily to changes in foreign currency exchange rates, primarily the Euro, as a majority of our production is performed in Europe. Additionally, the mix of products sold and pricing pressure in certain markets and certain product lines contributed to the decrease in gross profit margins.



Sales and Marketing



Our sales and marketing expense for the three months ended June 30, 2008 increased to $46.2 million, or 14.9% of product and service revenue, from $37.0 million, or 15.6% of product and service revenue, for the comparable period of 2007. The increase in sales and marketing expense is attributable to higher commissions and other selling expenses associated with the increase in revenue. Additionally, increases in headcount resulting from our continued investment in direct sales, inside sales, product specialists and application resources have contributed to an increase in sales and marketing expense.



General and Administrative



Our general and administrative expense for the three months ended June 30, 2008 increased to $17.2 million, or 5.5% of product and service revenue, from $13.4 million, or 5.7% of product and service revenue, for the comparable period of 2007. The increase is attributable to additional headcount, primarily in the BioSpin segment, and was related to Bruker BioSpin becoming part of a publicly-traded company.



Research and Development



Our research and development expense for the three months ended June 30, 2008 increased to $36.5 million, or 11.8% of product and service revenue, from $27.7 million, or 11.6% of product and service revenue, for the comparable period of 2007. The increase in research and development expenses is attributable primarily to changes in foreign currency exchange rates, primarily the Euro, as a majority of our research and development is performed in Europe. We also incurred higher material costs associated with new product development.



Acquisition-Related Charges



On December 3, 2007, we announced that we had entered into a definitive agreement to acquire all of the stock of Bruker BioSpin. The acquisition of Bruker BioSpin was approved by our shareholders on February 25, 2008 and was completed on February 26, 2008. The acquisition represented a combination of companies under common control due to a majority of ownership of both Bruker Corporation and Bruker BioSpin by the same individuals and, as a result, transaction costs are expensed as incurred. During the three months ended June 30, 2008, the Company incurred and expensed acquisition-related charges totaling $0.4 million, which consisted primarily of legal fees.



Interest and Other Income (Expense), Net



Interest and other income (expense), net during the three months ended June 30, 2008, was $3.5 million, compared to $2.2 million during the three months ended June 30, 2007.



During the three months ended June 30, 2008, the major component within interest and other income (expense), net, was gains on foreign currency transactions of $3.3 million. These gains offset some of the foreign exchange losses recorded in the first quarter of 2007 and were partially the result of more timely settlement of inter-company balances and a reduction of foreign currency denominated assets, principally cash.



During the three months ended June 30, 2007, the major components within interest and other income (expense), net, were net interest income of $1.8 million and gains on foreign currency transactions of $1.2 million.



Provision for Income Taxes



Our effective tax rate reflects our tax provision for non-U.S. entities only, since no benefit was recognized for losses incurred in the U.S. We will maintain a full valuation allowance for our U.S. net operating losses until evidence exists that it is more likely than not that the loss carryforward amounts will be utilized to offset U.S. taxable income.

Our tax rate may change over time as the amount and mix of income and taxes outside the U.S. changes. The effective tax rate is calculated using our projected annual pre-tax income or loss and is affected by research and development tax credits, the expected level of other tax benefits, and the impact of changes to the valuation allowance, as well as changes in the mix of our pre-tax income and losses among jurisdictions with varying statutory tax rates and credits.



The income tax provision for the three months ended June 30, 2008, was $10.2 million compared to an income tax provision of $6.3 million for the three months ended June 30, 2007, representing effective tax rates of 31.9% and 26.2%, respectively.



Minority Interest in Consolidated Subsidiaries



Minority interest in consolidated subsidiaries for the three months ended June 30, 2008 and 2007 was $0.1 million. The minority interest in subsidiaries represents the minority shareholders’ proportionate share of net income of those subsidiaries for the three months ended June 30, 2008 and 2007. The minority interest relates to our two majority-owned indirect subsidiaries, InCoaTec GmbH and Bruker Baltic Ltd.



Net Income



Our net income for the three months ended June 30, 2008, was $21.7 million, or $0.13 per diluted share, compared to net income of $17.7 million, or $0.11 per diluted share, for the comparable period of 2007.



Segment Results



Revenue

BioScience Segment Revenues



BioScience segment revenue increased by $36.4 million, or 29.3%, to $160.6 million for the three months ended June 30, 2008, compared to $124.2 million for the comparable period in 2007. Included in this change in revenue is approximately $11.5 million from the impact of foreign exchange. Excluding the effect of foreign exchange, revenue increased by 20.0%. The increase in revenue, excluding the effect of foreign exchange, is attributable to increases in system revenues across several of the product lines, in particular X-ray systems, molecular spectroscopy systems and chemical detections systems, as well as higher aftermarket revenue. Revenue in the three months ended June 30, 2007 includes $2.6 million of molecular spectroscopy revenue that was recognized from our order with the Chinese State Food and Drug Administration. The order from the Chinese State Food and Drug Administration was completed during 2007 and we did not recognize any system revenue from this order during the three months ended June 30, 2008.



System revenues in the BioScience segment include X-ray systems, mass spectrometry systems, CBRN detection systems and molecular spectroscopy systems. Other system revenues in the BioScience segment relate primarily to the distribution of products not manufactured by the BioScience segment. Aftermarket revenues in the BioScience segment include accessory sales, consumables, training and services.



BioSpin Segment Revenues



BioSpin segment revenue increased by $38.0 million, or 30.2%, to $163.8 million for the three months ended June 30, 2008, compared to $125.8 million for the comparable period in 2007. Included in this change in revenue is approximately $15.4 million from the impact of foreign exchange. Excluding the effect of foreign exchange, revenue increased by 18.0%. The increase in revenue, excluding the effect of foreign exchange, is attributable to increases in magnetic resonance system revenues, offset partially by lower aftermarket revenue.



System and wire revenues in the BioSpin segment include nuclear magnetic resonance systems, magnetic resonance imaging systems, electron paramagnetic resonance systems, Minispec systems, power supplies and our LTS and HTS wire business. Other system revenues in the BioSpin segment relate primarily to the distribution of products not manufactured by the BioSpin segment. Aftermarket revenues in the BioSpin segment include accessory sales, consumables, training and services.



Income from Operations

BioScience segment income from operations for the three months ended June 30, 2008, was $6.7 million, resulting in an operating margin of 4.2%, compared to income from operations of $8.1 million, resulting in an operating margin of 6.5%, for the comparable period of 2007. The decrease in income from operations was driven by lower gross profit margins and increases in operating expenses offset partially by an increase in revenue. The increase in costs is, in part, attributable to changes in foreign currency exchange rates, primarily the Euro, as a majority of our production and research and development is performed in Europe. However, increases in headcount, primarily in sales and marketing, and research and development material costs also contributed to the increase in expenses for the three months ended June 30, 2008.



BioSpin segment income from operations for the three months ended June 30, 2008, was $26.5 million, resulting in an operating margin of 16.2%, compared to income from operations of $16.0 million, resulting in an operating margin of 12.7%, for the comparable period of 2007. The increase in income from operations was attributable primarily to an increase in revenue and higher gross profit margins offset partially by higher operating expenses. The increase in gross profit margins is the result of improved utilization driven by higher revenues. The increase in costs relates primarily to research and development expenses and is associated with changes in foreign currency exchange rates and higher material costs and salaries associated with new product development.

CONF CALL

Bill Knight

Thank you, Madge. Good morning and welcome to Bruker Corporation first quarter 2008 financial results conference call. With me on today's call are Frank Laukien, President and CEO and Brian Monahan, our Corporate Controller.

On February 26, 2008, Bruker BioSciences Corporation closed its acquisition of the Bruker BioSpin Group and renamed itself Bruker Corporation. Under US GAAP, this transaction is accounted for as an acquisition of businesses under common control, and as a result all one-time transaction costs are expensed in a period in which they're incurred, rather than being added to goodwill.

In addition, expenses incurred subsequent to the completion of the acquisition, such as interest expenses incurred on acquisition-related debt are not reflected in the financial results of periods prior to the date of the acquisition as they typically would be in pro forma financials in an acquisition of an unrelated party.

Upon the closing of the transaction, all historical financial statements are now required to be restated by combining the historical consolidated financial statements of Bruker BioSciences Corporation with those of the Bruker BioSpin Group.

During the call today, the discussion of financial results for the first full quarter of 2008 and of 2007, reflect the combined historical consolidated financial statements of Bruker BioSciences Corporation with those of the Bruker BioSpin Group.

As many of you know, on April 21, 2008, we issued a press release pre-announcing selective preliminary financial results for the first quarter of 2008 due to an unexpected significant foreign exchange loss in the first quarter. Early this morning, we issued our normal first quarter 2008 earnings release.

On today's call, Frank will provide an overview of the business and our first quarter financial results and I'll follow up with a more detailed discussion of our financial results. And then we will open up the line for questions.

Before getting started, I would like to read our Safe Harbor statement. This discussion will include forward-looking statements. These statements are based on current expectations, but are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

Including but not limited to risks and uncertainties relating to the integration of businesses we have acquired or may acquire in the future, changing technologies, product development and market acceptance of our products, the cost and pricing of our product, manufacturing, competition, dependences on collaborative partners and key suppliers, capital spending and government funding policies, changes in governmental regulations and intellectual property rights, litigation, exposure to foreign currency fluctuations and other risk factors discussed from time-to-time in the filings with the Securities and Exchange Commission.

We expressly disclaim any intent or obligation to update any forward-looking statements other than as required by law. During this call, we may refer to certain financial measures that are not in accordance with US GAAP such as the charges incurred in connection with the acquisition of the Bruker BioSpin Group, interest expense associated with the acquisition-related debt and foreign exchange losses.

Non-GAAP financial measures are not meant to be a better presentation or a substitute for results of operations prepared in accordance with US GAAP. We believe that discussing these measures helps investors to again a better understanding of our core operating results and future prospects consistent with how management measures and forecasts the company's performance. Especially when comparing such results to previous periods or forecasts.

I will now turn the call over to our President and CEO, Frank Laukien.

Frank Laukien

Thank you, Bill. Good morning, everyone. We appreciate you joining us for the review of the first quarter of 2008. Overall, I believe we can be very pleased with the fundamental business developments in the first quarter, which included the addition of Bruker BioSpin to the Bruker Group of companies, which effectively double the size of the company, and represents a significant step-up in our financial performance, profitability and cash flows.

As well as the introduction of several very important and truly innovative product and solutions, which we expect will further strengthen our leadership position in high performance scientific instrumentation.

Our first quarter financial performance was not fully satisfactory in terms of revenue growth and operating margin expansion. Although both were within the typical ranges and fluctuations that we expect to see for the combined company. As we have stated a number of times before, our company sees significant quarterly fluctuations, and just recently, we had an outstanding fourth quarter 2007 followed by a weaker first quarter 2008.

We encourage everyone to always take a look at the last 12 months trends rather than reading too much into any given quarter. For example, in the last 12 months, specifically in the period including the second quarter '07 to the first quarter 2008, our combined revenue was $1.042 billion in revenue, growing approximately 20% compared to the combined revenue of the previous 12 months period.

Also, in these last 12 months, our operating margin was 12.9% excluding acquisition charges. And for the same last 12 months period, our EPS was $0.61 per share, excluding acquisition charges and FX losses.

Turning to the first quarter now, in the first quarter of 2008, our GAAP bottom line was negatively impacted by expected acquisition-related charges and by mostly unexpected foreign exchange losses. And Bill will provide details later on to help better understand this.

Starting with the financial highlights, in the first quarter of 2008, our combined revenue increased 15% to just over 238 million, compared to combined revenue of $207 million in the first quarter of 2007 with foreign currency translation contributing about 10% to this revenue growth rate.

Our GAAP earnings per diluted share were zero pennies per share in the first quarter of 2008, compared to $0.09 pennies per share in the first quarter of 2007. Included in our GAAP earnings per share for the first quarter of 2008, were foreign exchange losses of $0.06 per diluted share, Bruker BioSpin acquisition-related expenses of four pennies per diluted share and interest expense on acquisition-related debt of $0.01 per diluted share with a cumulative effect of $0.10 per diluted share.

Without these acquisition charges and FX losses, we would have been at first quarter 2008 EPS of about $0.09 per share, which I believe was the street consensus prior to our preannouncement.

Nonetheless, we were not fully satisfied with our operational performance in the first quarter, and we will be taking further steps to streamline our operations in order to accelerate our growth and our margin expansion.

We ended the first quarter 2008 with a strong cash position, which enabled us in mid-April to pay down approximately $55 million of the debt we incurred to acquire the Bruker BioSpin Group.

We expect to also repay an additional $80 million in acquisition debt this week, probably as early as tomorrow. As I briefly mentioned earlier, the addition of the Bruker BioSpin Group to the Bruker Group of Companies was a significant event in the first quarter.

This combination continues to be very well received by our customers, employees, partners and shareholders, and has created an unmatched portfolio of technologies and product for scientific and clinical research and development. As well as for industrial analysis, safety testing, homeland defense and quality control.

Our relentless pursuit of innovation and quality, and our significant ongoing investments in research and development, enables us to continue to expand our product portfolio. I won't discuss all of our recent product developments and introductions, but I did want to highlight a few that have been particularly well-received.

We recently announced our breakthrough benchtop SMART X2S Crystal-to-Structure, small molecule X-ray diffraction system, which for the first time allows chemists without crystallography training to obtain routine small molecule three-dimensional structures under full automation.

This SMART X2S product earned the Pittcon Editors' 2008 gold award. We also introduced our novel and unique benchtop S2 PICOFOX TXRF, or total reflection XRF system for easy-to-use and robust ultra-trace elemental analysis with very simple and cost-effective sample preparation.

This transportable S2 PICOFOX system is expected to compliment or replace atomic absorption and ICP in many pharma, geological, mining, environmental and food testing applications. This product won the Pittcon Editors' bronze award.

Bruker Daltonics, our mass spec our mass spec group just announced that it received ISO 13485 certification for development, manufacturing and distribution of mass spectrometry systems for in vitro diagnostics, or IVD. This ISO certification is an important milestone in the development of our IVD business particularly in the fields of clinical proteomics, clinical microbiology and molecular imaging in pathology.

Finally, we recently announced our new Complete Molecular Confidence, our CMC solution, which is a comprehensive integrated toolkit for the on-the-fly molecular formula determination and automated or interactive structure verification for small molecules, combining accurate mass Electrospray TOF mass spectrometry with NMR.

Now I wanted to talk briefly about our new Advanced Supercon business, which most of you probably are not yet familiar with but for which we have very high expectations. Just last week we announced the hiring of Tom Rosa, a superconductivity industry veteran who is now the CFO and Senior VP of our advanced Supercon business.

Our Advanced Supercon business includes superconducting wire and device technologies and products that are comprised of advanced low temperatures, superconducting wires for clinical MRI magnets, NMR magnets, FTMS magnets as well as for magnets used in major accelerator or international research facilities such as the ITER nuclear fusion project and high-temperature superconductors, or HTS with applications in next-generation magnetic technologies, energy storage, and power grid stabilization as well as advanced HTS industrial motors and generators.

We believe the growth potential of the Advanced Supercon business outside of Bruker's traditional scientific instrumentation markets is significant, which is why we are developing a management team focused exclusively on developing and unlocking this value.

As I said earlier, there were a lot of positive fundamental developments in the first quarter, which positioned us well for the future. Now here is our CFO Bill Knight again with a more in-depth look at our financial results for the first quarter.

Bill Knight

Okay. Thanks Mike. During the first quarter of 2008, revenues grew by 15% to $238 million or by approximately 5% when we exclude foreign exchange tailwinds. Gross profit margins were 47.4% in the first quarter of 2008, versus 45.6% in the first quarter of 2007.

Despite the gross margin headwind that we faced due to the weak dollar, and the fact that we manufacture a majority of our products in European countries, we delivered improved gross margins year-over-year. This is in part due to volume leverage and a favorable product mix in the quarter, but it is also the result of hard work over the past several years to improve our gross margins. Improving our gross margins continues to be a key initiative for us and we see additional opportunities for improvement.

Our operating profit in the first quarter of 2008 was $15.9 million or 6% of revenue, down from $19.7 million or 9.5% in the first quarter of 2007. Included in the operating results for the first quarter of 2008 were $5.8 million of Bruker BioSpin acquisition-related expenses, including approximately $2 million of German real estate transfer taxes. Excluding these acquisition-related charges, our operating income increased 10% year-over-year.

Sales and marketing expenses as a percentage of revenue increased year-over-year due to continued investments and direct sales, inside sales, product specialists and application resources, as well as higher sales commissions on usually strong revenues generated through third-party distributors during the quarter.

G&A expenses also increased as a percentage of revenue year-over-year, primarily due to incremental expenses incurred by the Bruker BioSpin Group, associated with headcount now that they must meet the new reporting deadlines of a public company. R&D also increased as a percentage of revenue year-over-year. While our revenues are geographically diverse, our R&D activities are primarily performed in Europe. So this increase is largely due to foreign exchange rate changes.

Typically, we don't spend a lot of time discussing the components of other income and expense, but this quarter we had some unusual items that wanted discussions.

In the first quarter of 2008, we incurred approximately $12 million pre-tax of foreign exchange losses, which after-tax resulted in a reduction of our earnings per share of $0.06. These foreign exchange losses were primarily driven by the continued weakening of the US dollar, as well as by an unexpected strengthening of the Swiss franc relative to both the US dollar and the euro by approximately 11% and 3% respectively during the five weeks between the closing of the acquisition of the Bruker BioSpin Group on February 26, 2008 and the end of the first quarter of 2008.

The foreign exchange losses in the first quarter of 2008 relate primarily to the reevaluation of intercompany receivables and loans within the Bruker Group, and to large cash balances held by Swiss Bruker BioSpin subsidiary in various non-Swiss franc currencies. We intend to reduce the future effects of currency fluctuations by enhancing our treasury activities and capabilities, which included the hiring of a Treasurer in March 2008 with global oversight and responsibilities.

Specific activities we are targeting to reduce the effects of currency fluctuations on our financial results include programs to more effectively hedge or settle intercompany balances, and to reduce non-functional currency holdings.

In addition, we are aggressively paying down some of the debt incurred to acquire the Bruker BioSpin Group as Frank mentioned earlier, which will minimize our interest expense going forward.

Regarding the debt under our new credit facility, in an effort to balance our fixed floating-rate mix, we've recently fixed 60% of our $150 million amortizing five-year term loan. We locked in at an attractive all-in rate of just under 4%.

Swapping a portion of our debt-to-fixed provides us with low long-term rates and interest rate expense uncertainty while still allowing us to take advantage of the low current LIBOR rates.

As for our effective tax rate during the first quarter of 2008, we incurred $4.3 million of income tax expense on pre-tax income of $3.7 million resulting in an effective tax rate of 114%.

This unusually high tax rate is a direct result of the acquisition-related charges, which we cannot tax benefit in the foreign exchange losses, as they were predominantly incurred in locations where we have very low tax rates, so the tax benefit was very modest.

Excluding these two items, our effective tax rate would have been in the 30% range in the first quarter of 2008. Frank already discussed the bottom-line results earlier, so I won't repeat those again.

So with that, I will turn the call back over to the operator for Q&A.

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