Note 3—Acquisitions

Acquisitions Completed in 2012

In March 2012, the Company completed the acquisition of SkyScan N.V. (the "SkyScan business"), a privately owned company based in Belgium that provides advanced, high-resolution micro-computed tomography systems for three-dimensional X-ray imaging in preclinical imaging applications and materials research markets. The Company expects synergies from combining the SkyScan business into its current product portfolio. The acquisition of the SkyScan business is being accounted for under the acquisition method. The components and fair value allocation of the consideration transferred in connection with the SkyScan business are as follows (in millions):


Consideration Transferred:
Cash paid	$	24.6
Cash acquired		(2.9	)
Contingent consideration		3.7

Total consideration transferred	$	25.4

Allocation of Consideration Transferred:
Accounts receivable	$	3.1
Inventories		6.6
Other current assets		0.3
Property, plant and equipment		2.3
Intangible assets:
Existing technology		7.2
Customer relationships		6.4
Goodwill		10.3
Liabilities assumed		(10.8	)

Total consideration transferred	$	25.4

The fair value allocation includes contingent consideration in the amount of $3.7 million, which represents the estimated fair value of future payments to the former shareholders of the SkyScan business based on achieving annual revenue targets for the years 2012-2014. The maximum potential future payments related to the contingent consideration is capped at approximately $5.9 million. The Company's allocation of the consideration transferred in connection with the acquisition of the SkyScan business will be finalized in the first quarter of 2013 upon final valuation procedures. The final fair value allocation of the purchase price may differ from the information presented in these consolidated financial statements. The weighted-average amortization period for intangible assets acquired in connection with the SkyScan business is 7 years for existing technology and 10 years for customer relationships.

The results of the SkyScan business, including the amount allocated to goodwill, have been included in the Scientific Instruments segment from the date of acquisition. Pro forma financial information reflecting the acquisition of the SkyScan business has not been presented because the impact on revenues, net income and net income per common share attributable to Bruker Corporation shareholders is not material.

Acquisitions Completed in 2011

In October 2011, the Company completed the acquisition of Center for Tribology, Inc. (the "tribology business"), a privately owned company based in California, U.S.A. The acquired business provides nano-mechanical and tribological test instrumentation for basic materials research and industrial manufacturing in a range of fields, including biomedical, petroleum, microelectronics, energy, and automotive markets. The tribology business expands the Company's nano surfaces business into an adjacent market that the Company could not previously address. The Company acquired the tribology business for $12.7 million in cash and a contingent consideration arrangement that could require the Company to pay the former shareholder of the tribology business an additional $1.5 million in each of the years 2012 and 2013. The former shareholder of the tribology business will earn the contingent consideration if certain revenue and gross profit margin targets are achieved in 2012 and 2013 and their employment continues at the Company. The targets were not achieved for 2012. Under the purchase agreement $1.6 million of the purchase price was paid into escrow pending the resolution of indemnification obligations and working capital obligations of the former shareholder of the acquired business. The Company anticipates the final settlement of the amounts in escrow to occur in 2013.

In April 2011, the Company completed the acquisition of Michrom Bioresources Inc. (the "HPLC business"), a privately owned company based in California, U.S.A., that provides high performance liquid chromatography instrumentation, accessories and consumables to the life science market. High performance liquid chromatography is a chromatographic technique that can separate a mixture of compounds and is often used as the front-end to a mass spectrometer to identify, quantify and purify the individual components of the sample. The acquisition of the HPLC business expands the Company's mass spectrometry businesses. The Company acquired the HPLC business for $1.1 million in cash, 134,362 shares of unrestricted common stock and 156,823 shares of restricted common stock. The restricted common stock will vest over a five year period and is contingent on continuing employment with the Company. Under the purchase agreement $0.1 million of cash and 10% of the total shares issued were paid into escrow pending the resolution of indemnification obligations and working capital obligations of the former shareholders of the acquired business. Final settlement of the amounts in escrow occurred in 2012.

The acquisition of the tribology business and the HPLC business were accounted for under the acquisition method. The components of the consideration transferred and the allocation of the consideration transferred for these businesses is as follows (in millions):

	Tribology			HPLC

Consideration Transferred:
Cash paid	$	12.7		$	1.1
Stock issued		—			2.9
Cash acquired		(0.2	)		(0.2	)

Total consideration transferred	$	12.5		$	3.8

Allocation of Consideration Transferred:
Accounts receivable	$	1.5		$	0.2
Inventory		1.0			1.3
Property, plant and equipment		—			0.2
Intangible assets:
Existing technology and related patents		12.0			1.3
Customer and distributor relationships		0.6			1.5
Tradename		—			0.1
In-process research and development		0.1			—
Goodwill		3.5			1.2
Liabilities assumed		(6.2	)		(2.0	)

Total consideration transferred	$	12.5		$	3.8

The fair value of the 134,362 shares of unrestricted common stock issued in connection with the HPLC business was determined based on the closing market price of the Company's common shares on the acquisition date, or $21.28 per share.

The fair value of the contingent consideration arrangement in the acquisition of the tribology business is not included in the total consideration transferred because it is forfeited if the former shareholder's employment is terminated. Similarly, the fair value of the restricted common stock issued in the acquisition of the HPLC business is not included in the total consideration transferred because it is forfeited if the former shareholders' employment is terminated. Because these arrangements are forfeited if employment is terminated, the amounts are considered to be compensation for post-combination service and will be accounted for as compensation expense over the period the contingent amounts, if any, are earned.

The allocation of the consideration transferred in connection with the tribology business was completed in 2012. The allocation of the consideration transferred in connection with the HPLC business was completed in 2011.

The acquisition of the tribology business and the HPLC business were made at prices above the fair value of the net acquired assets, resulting in $3.5 million and $1.2 million of goodwill, respectively. The Company was willing to pay these prices based on expectations of synergies that will result from combining the businesses with the Company's existing operations. These synergies include expanded product offerings to adjacent markets that the Company was previously not able to address in a comprehensive manner and leveraging selling, general and administrative expenses.

In performing the purchase price allocation, the Company considered, among other factors, its intention for future use of the acquired assets, analyses of historical financial performance, and estimates of future cash flows from the tribology and HPLC products and services. The purchase price was allocated based upon the fair value of the identified assets acquired and liabilities assumed as of the acquisition date from a market participant's perspective.

The Company used the multi-period excess-earnings method, a form of the income approach, to value the existing technology and patents related to the tribology and HPLC businesses. The principle behind this method is that the value of the intangible asset is equal to the present value of the after-tax cash flows attributable to the intangible asset only. The Company also used the multi-period excess-earnings method to value the customer relationships acquired in the connection with the HPLC business and the IPR&D acquired with the tribology business. The multi-period excess-earnings method was used to value the customer relationships acquired in the connection with the HPLC business because the customer relationships were deemed to be one of the primary cash generating assets acquired in the transaction. The Company used the lost-profit/avoided cost method, a form of the income approach, to value the distributor relationships related to the tribology business. The principle behind this method is that the economic value of an asset can be estimated based on the total costs that were avoided by having the asset in place. The Company used the relief from royalty method, a form of the income approach, to value the tradenames acquired in the HPLC business. The principle behind this method is that the value of the intangible asset is equal to the present value of the after-tax royalty savings attributable to owning the intangible asset. The weighted-average amortization periods for intangible assets acquired in connection with the tribology and HPLC businesses are 7.1 years for existing technology and related patents, 6.8 years for customer and distributor relationships and 1 year for tradenames. IPR&D is carried at its initial fair value and will be amortized to expense upon completion of development. If further development becomes unfeasible or is abandoned, the carrying value of the IPR&D will be expensed in the period it occurs.

Transaction costs associated with the acquisition of the tribology and HPLC businesses were expensed as incurred. The Company incurred $1.1 million in expenses that are included in other charges, net in the consolidated statements of income and comprehensive income for the year ended December 31, 2011. These costs consist primarily of professional fees.

The results of the tribology and HPLC businesses have been included in the Scientific Instruments segment from the date of acquisition. Pro forma financial information reflecting the acquisition of these businesses has not been presented because the impact on revenues, net income and net income per common share attributable to Bruker Corporation shareholders is not material.

Acquisitions Completed in 2010

In October 2010, the Company completed the acquisition of Veeco Metrology Inc., a scanning probe microscopy and optical industrial metrology instruments business (the "nano surfaces business"), from Veeco Instruments Inc. ("Veeco") for cash consideration of $230.4 million. The Company financed the acquisition with $167.6 million borrowed under a revolving credit agreement and the balance with cash on hand. The acquired business complements the Company's existing atomic force microscopy products and expanded the Company's offerings to industrial and applied markets, specifically in the fields of materials and nanotechnology research and analysis. $22.9 million of the purchase price was paid into escrow pending the resolution of indemnification obligations and working capital obligations of the seller. In October 2011, the escrow was released to Veeco.

In May 2010, the Company completed the acquisition of three former Varian, Inc. ("Varian") product lines, which Agilent Technologies, Inc. ("Agilent") divested in connection with its acquisition of Varian. The Company acquired certain assets and assumed certain liabilities in Varian's inductively coupled plasma mass spectrometry instruments business, gas chromatography instruments business, and gas chromatography triple-quadrupole mass spectrometry instruments business (collectively, the "chemical analysis business") for cash consideration of $37.5 million. The acquired business complements the Company's existing mass spectrometry products and expands the Company's offerings to industrial and applied markets.

The acquisitions of the nano surfaces business and chemical analysis business were accounted for under the acquisition method. The components of the consideration transferred and the allocation of the consideration transferred for these businesses, including measurement period adjustments recorded in 2011, are as follows (in millions):

	Nano Surfaces			Chemical Analysis

Consideration Transferred:
Cash paid	$	230.4		$	37.5

Total consideration transferred	$	230.4		$	37.5

Allocation of Consideration Transferred:
Accounts receivable	$	21.8		$	—
Notes receivable		—			10.3
Inventory		33.5			16.9
Other current assets		8.1			—
Property, plant and equipment		18.0			2.4
Intangible assets:
Existing technology and related patents		89.7			7.1
Customer and distributor relationships		1.5			15.8
In-process research and development		21.3			—
Goodwill		49.0			0.4
Liabilities assumed		(12.5	)		(15.4	)

Total consideration transferred	$	230.4		$	37.5

The Company finalized the allocation of the consideration transferred in connection with the nano surfaces business in the third quarter of 2011. The Company finalized the allocation of the consideration transferred in connection with the chemical analysis business in the fourth quarter of 2010. Measurement period adjustments made to the acquisition date fair values of the nano surfaces business in 2011 consisted of a reclassification of $2.0 million from goodwill to intangible assets in connection with finalizing the fair value of a license agreement that was acquired in the transaction.

The acquisitions of the nano surfaces business and the chemical analysis business were made at prices above the fair value of the net acquired assets, resulting in $49.0 million and $0.4 million of goodwill, respectively. The Company was willing to pay these prices based on expectations of synergies that will result from combining the businesses with the Company's existing operations. These synergies include expanded product offerings to applied analytical markets that the Company was previously not able to address in a comprehensive manner and leveraging selling, general and administrative expenses.

Transaction costs associated with the acquisitions of the nano surfaces and chemical analysis businesses have been expensed as incurred. The Company incurred $3.1 million and $4.6 million in expenses that are included in other charges, net in the consolidated statements of income and comprehensive income for the years ended December 31, 2011 and 2010, respectively. The costs incurred in 2011 consist primarily of transition costs whereby Agilent and Veeco provided administrative services on behalf of the Company for defined periods. The transition service arrangements expired in 2011. In 2010, transaction costs include $2.8 million of transition costs provided by Agilent and Veeco and transaction expenses of $1.8 million consisting of various professional fees.

The results of the nano surfaces business and the chemical analysis business have been included in the Scientific Instruments segment from the date of acquisition.

The following table sets forth unaudited pro forma financial information reflecting the acquisition of the nano surfaces business as if the acquisition had occurred on January 1, 2010, for the year ended December 31, 2010 (in millions, except per share date):

	2010 (Unaudited)

Revenue	$	1,410.7
Net income attributable to Bruker Corporation		97.0
Net income per common share attributable to Bruker Corporation shareholders:
Basic and diluted	$	0.59

Pro forma financial information reflecting the acquisition of the chemical analysis business has not been presented because the impact on revenues, net income and net income per common share attributable to Bruker Corporation shareholders is not material.