- -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM 10-Q (MARK ONE) <TABLE> <C> <S> /X/ QUARTERLY REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 </TABLE> FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000 <TABLE> <C> <S> / / TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 </TABLE> FOR THE TRANSITION PERIOD FROM ______________ TO ______________ COMMISSION FILE NUMBER ___________________ ------------------------ BRUKER DALTONICS INC. (Exact name of registrant as specified in its charter) <TABLE> <S> <C> DELAWARE 04-3110160 (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 15 FORTUNE DRIVE, BILLERICA, MA 01821 (Address of principal executive (zip code) offices) </TABLE> (978) 663-3660 (Registrant's telephone number, including area code) ------------------------ Check whether the registrant: (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes /X/ No / / As of October 31, 2000 there were 54,700,000 shares of the Registrant's common stock outstanding.
<TABLE> <CAPTION> PAGE NUMBER ----------- <S> <C> <C> PART I FINANCIAL INFORMATION ITEM 1: Financial Statements (Unaudited) Consolidated Condensed Balance Sheets as of September 30, 2000 and December 31, 1999................................ 3 Consolidated Condensed Statements of Operations for the three months and nine months ended September 30, 2000 and September 30, 1999........................................ 4 Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 2000 and September 30, 1999.... 5 Notes to Consolidated Condensed Financial Statements........ 6 ITEM 2: Management's Discussion and Analysis of Financial Condition 10 and Results of Operations................................. ITEM 3: Quantitative and Qualitative Disclosures of Market Risk..... 12 PART II OTHER INFORMATION ITEM 1: Legal Proceedings........................................... 13 ITEM 2: Changes in Securities and use of proceeds................... 13 ITEM 3: Defaults Upon Senior Securities............................. 13 ITEM 4: Submission of Matters to a Vote of Security Shareholders.... 13 ITEM 5: Other Information........................................... 13 ITEM 6: Exhibits and Reports on Form 8-K............................ 13 SIGNATURES.................................................. 14 </TABLE> 2
PART I FINANCIAL INFORMATION BRUKER DALTONICS INC. CONSOLIDATED CONDENSED BALANCE SHEETS (IN THOUSANDS) <TABLE> <CAPTION> SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------- ------------ (UNAUDITED) <S> <C> <C> ASSETS Current assets: Cash and cash equivalents................................. $104,464 $ 2,443 Accounts receivable, net.................................. 6,924 12,204 Due from affiliated companies............................. 4,592 -- Inventories............................................... 31,351 25,442 Other assets.............................................. 3,482 1,431 -------- ------- Total current assets........................................ 150,813 41,520 Property, plant and equipment, net.......................... 21,434 25,351 Intangible and other assets................................. 711 438 -------- ------- TOTAL ASSETS................................................ $172,958 $67,309 ======== ======= LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Short-term bank borrowings................................ $ -- $ 2,496 Accounts payable and accrued expenses..................... 9,007 12,208 Due to affiliated companies............................... 3,267 1,496 Other liabilities......................................... 17,966 13,240 -------- ------- Total current liabilities................................... 30,240 29,440 Long-term debt.............................................. 11,237 12,844 Other long term liabilities................................. 11,949 14,967 Common stock, $0.01 par value, authorized 100,000,000 shares, issued and outstanding 54,700,000 in 2000 and 45,500,000 in 1999........................................ 547 455 Other stockholders' equity.................................. 118,985 9,603 -------- ------- Total stockholders' equity.................................. 119,532 10,058 -------- ------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $172,958 $67,309 ======== ======= </TABLE> See accompanying notes. 3
BRUKER DALTONICS INC. CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (DOLLAR AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED) <TABLE> <CAPTION> THREE MONTHS ENDED NINE MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------- ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- <S> <C> <C> <C> <C> Product revenues........................................ $22,169 $17,243 $53,273 $42,184 Other revenues.......................................... 521 764 1,539 3,408 ------- ------- ------- ------- Net revenues............................................ 22,690 18,007 54,812 45,592 COSTS AND OPERATING EXPENSES: Cost of product revenue............................... 11,524 8,800 25,854 21,835 Sales and marketing................................... 3,321 3,122 9,060 7,888 General and administrative............................ 1,333 757 3,569 2,529 Research and development.............................. 5,935 4,264 14,551 11,372 Patent litigation costs............................... -- -- 303 538 ------- ------- ------- ------- Total costs and operating expenses...................... 22,113 16,943 53,337 44,162 ------- ------- ------- ------- Operating income from continuing operations............. 577 1,064 1,475 1,430 Other income (expenses), net............................ 613 (225) 289 (525) ------- ------- ------- ------- Income from continuing operations before provision for income taxes.......................................... 1,190 839 1,764 905 Provision for income taxes.............................. 609 445 928 480 ------- ------- ------- ------- Income from continuing operations....................... 581 394 836 425 Income from discontinued operations, net of income taxes................................................. 52 75 184 266 ------- ------- ------- ------- NET INCOME.............................................. $ 633 $ 469 $ 1,020 $ 691 ======= ======= ======= ======= NET INCOME PER SHARE--BASIC AND DILUTED INCOME FROM CONTINUING OPERATIONS................................. $ 0.01 $ 0.01 $ 0.02 $ 0.01 INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES................................................. 0.00 0.00 0.00 0.01 ------- ------- ------- ------- NET INCOME.............................................. $ 0.01 $ 0.01 $ 0.02 $ 0.02 </TABLE> See accompanying notes. 4
BRUKER DALTONICS INC. CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (IN THOUSANDS) (UNAUDITED) <TABLE> <CAPTION> NINE MONTHS ENDED SEPTEMBER 30, ------------------- 2000 1999 -------- -------- <S> <C> <C> Net cash provided by continuing operations.................. $ 160 $ 4,669 Net cash provided by discontinued operations................ 69 466 -------- ------- Net cash provided by operating activities................... 229 5,135 INVESTING ACTIVITIES Purchases of property and equipment......................... (1,995) (2,400) Acquisition of business, net of cash acquired............... (85) -- -------- ------- Net cash used in investing activities....................... (2,080) (2,400) FINANCING ACTIVITIES Proceeds from issuance of common stock...................... 109,702 -- Proceeds from short-term borrowings......................... 4,464 2,102 Payments on short-term borrowings........................... (6,851) -- Payments to affiliated companies, net....................... (3,265) (4,767) -------- ------- Net cash provided by (used in) financing activities......... 104,050 (2,665) Effect of exchange rate changes............................. (178) (20) -------- ------- NET CHANGE IN CASH AND CASH EQUIVALENTS..................... 102,021 50 CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD............ 2,443 1,135 -------- ------- CASH AND CASH EQUIVALENTS AT END OF PERIOD.................. $104,464 $ 1,185 ======== ======= </TABLE> SEE ACCOMPANYING NOTES. 5
BRUKER DALTONICS INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS 1. DESCRIPTION OF BUSINESS Bruker Daltonics Inc. and its wholly-owned subsidiaries (the "Company") design, manufacture and market proprietary life science systems based on its mass spectrometry core technology platforms. The Company also sells a broad range of field analytical systems for substance detection and pathogen identification. The Company maintains major technical centers in Europe, North America and Japan. Bruker Daltonics allocates substantial capital and resources to research and development and is party to various collaborations and strategic alliances. The Company's diverse customer base includes pharmaceutical companies and biotechnology companies, academic institutions and government agencies. The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany accounts and transactions have been eliminated in consolidation. The consolidated condensed financial statements as of September 30, 2000 and for the three and nine months ended September 30, 1999 and 2000 have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and nine months ended September 30, 2000 are not necessarily indicative of the results that may be expected for the year ending December 31, 2000. The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. The balance sheet at December 31, 1999 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's registration statement on Form S-1 for the year ended December 31, 1999. 2. INVENTORIES The components of inventories were as follows: (in thousands) <TABLE> <CAPTION> SEPTEMBER 30, DECEMBER 31, 2000 1999 ------------- ------------ (UNAUDITED) <S> <C> <C> Raw materials....................................... $ 8,600 $ 5,850 Work-in-process..................................... 11,722 10,776 Finished goods...................................... 11,029 8,816 ------- ------- $31,351 $25,442 ======= ======= </TABLE> 6
BRUKER DALTONICS INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED) 3. EARNINGS PER SHARE Basic earnings per share is calculated by dividing net earnings by the weighted-average number of common shares outstanding during the period. The diluted earnings per share computation includes the effect of shares which would be issuable upon the exercise of outstanding stock options, reduced by the number of shares which are assumed to be purchased by the Company from the resulting proceeds at the average market price during the period. The following table sets forth the computation of basic and diluted average shares outstanding for the periods indicated. <TABLE> <CAPTION> THREE MONTHS NINE MONTHS ENDED ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------- ------------------- 2000 1999 2000 1999 -------- -------- -------- -------- <S> <C> <C> <C> <C> Average shares outstanding--basic........................... 51,261 45,500 47,434 45,500 Net effect of dilutive stock options--based on treasury stock method.............................................. 628 -- 628 -- ------ ------ ------ ------ Average shares outstanding--diluted......................... 51,889 45,500 48,062 45,500 </TABLE> 4. COMPREHENSIVE INCOME (LOSS) Total comprehensive income (loss) was $(277) and $(492) for the three and nine months ended September 30, 2000 and $793 and $(125) for the three and nine months ended September 30, 1999. 5. STOCK SPLIT On February 14, 2000, the Board of Directors of Bruker Daltonics Inc. authorized a seven-for-one stock split in the form of a stock dividend. Shareholders of record received six additional shares of common stock for every share they owned. All common shares and per share data in the accompanying financial statements have been restated to reflect the stock split. 6. STOCK OPTIONS In February 2000, the Board of Directors adopted and the Stockholders approved the 2000 Stock Option Plan ("the Plan"). The Plan provides for the issuance of up to 2,188,000 shares of Common Stock in connection with stock options or other awards under the Plan. The Plan allows a committee of the Board of Directors (the "Committee") to grant incentive stock options, non-qualified stock options, stock appreciation rights and stock awards (including the use of restricted stock and phantom shares). The Committee has the authority to determine which employees will receive the rewards, the amount of the awards, and other terms and conditions of the award. In February 2000, the Committee granted stock options for 783,135 shares of common stock, which vest over three-to-five year periods. 7. DISCONTINUED OPERATIONS In 1999, the Company decided to discontinue its Fourier Transform-Infrared (FT-IR) business. The FT-IR business unit sells and services FT-IR instruments to a variety of markets outside the Company's core technology platform of mass spectrometry. The Company completed the sale of its FT-IR business to Bruker Optik GmbH, an affiliated entity, in the first half of 2000 for a price which approximates the net book value of the assets and liabilities of the business. 7
BRUKER DALTONICS INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED) 8. CONTINGENCIES The Company's wholly-owned subsidiary, Bruker Daltonik GmbH, has a $5.1 million and $5.8 million accrued liability at September 30, 2000 and December 31, 1999, respectively, related to certain patent infringement litigation filed by a competitor. In 1997, the competitor initiated an action in the United States District Court of Massachusetts alleging patent infringement against the Company and Hewlett-Packard. The competitor also filed a request for an investigation of its patent infringement claims with the United States International Trade Commission (ITC) and has filed suit against the Company in Germany. In 1998, the ITC found in favor of the Company and in 1999 the Court of Appeals for the Federal Circuit confirmed, in part, the ITC decision in favor of the Company. The competitor has filed patent infringement suits related to the same patents litigated in front of the ITC in Massachusetts Federal Court, against which the Company has filed summary judgment motions of non-infringement and non-validity, respectively. In 1999, the Company filed an antitrust suit against the competitor in Massachusetts Federal Court. The Company believes that it has meritorious defenses to the competitor's claims and intends to vigorously defend itself. Related litigation against the same competitor is presently pending in various courts in Germany. The Company is presently not permitted to sell ion traps in Germany, but has appealed this decision, and also has challenged the validity of the competitor's patents involved in the German patent court in Munich. Decisions on the above matters are expected in 2001. Based on a review of the current facts and circumstances, management of the Company and its subsidiary believe that the amount of the accrued liability is a reasonable estimate of the exposure to loss associated with these matters, representing, principally, anticipated legal fees. While acknowledging the uncertainties of litigation, the Company believes that these matters will be resolved without a material effect on the Company's financial position or results of operations. However, an unfavorable outcome of these matters could result in a material adverse impact on the Company's financial statements, although an estimate of such impact cannot be made. Other lawsuits, claims and proceedings of a nature considered normal to its businesses may be pending from time to time against the Company and its subsidiary. The Company believes the outcome of these proceedings, if any, will not have a material impact on the Company's financial position or results of operations. 9. RECENT ACCOUNTING PRONOUNCEMENTS In June 1998, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS"). SFAS No. 133 establishes accounting and reporting standards for derivative instruments, including certain derivative instruments, embedded in other contracts, and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. In July 1999, the FASB issued Statement of Financial Accounting Standards No. 137 Accounting for Derivative Instruments and Hedging Activities- Deferral of the Effective Date of FASB Statement No. 133 ("SFAS 137"). SFAS 137 deferred the effective date of SFAS 133 until the first fiscal year beginning after June 15, 2000. We will adopt the standard during January 2001. Management believes that SFAS 133 will not have a material effect on the financial position or results of operation of the Company. In December 1999, the Securities and Exchange Commission issued Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements," or SAB 101, which provides guidance on the 8
BRUKER DALTONICS INC. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (CONTINUED) 9. RECENT ACCOUNTING PRONOUNCEMENTS (CONTINUED) recognition, presentation, and disclosure of revenue in financial statements filed with the SEC. SAB 101 outlines the basic criteria that must be met to recognize revenue and provides guidance for disclosures related to revenue recognition policies. The Company's revenue recognition policy is in compliance with the provisions of SAB 101. 10. SUBSEQUENT EVENTS On September 12, 2000 the Company entered into a strategic alliance agreement with Geneva Proteomics, Inc. ("GeneProt"). Under the agreement, GeneProt will purchase 51 mass spectrometry systems, as well as consumables and support. The Company will also make a strategic equity investment, in both cash and stock, in GeneProt, and both companies will collaborate and share technologies for industrial-scale proteomics. The Company, as part of the equity investment, will invest $7 million in cash and $3 million in the Company's own stock. The consummation of this equity transaction is expected to occur during the fourth quarter 2000. 9
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS RESULTS OF OPERATIONS PRODUCT REVENUE. Total product revenue for the three months ended September 30, 2000 increased $5 million, or 28.6%, to $22.2 million compared to $17.2 million in 1999. Life science systems revenue and substance detection systems revenue as a percentage of product revenue was 65% and 20%, respectively, in 2000 as compared to 55% and 45%, respectively, in 1999. The increase in product revenue in 2000 was fueled by a continuing strong demand for our life science products in various product lines by new and existing customers. Product revenue for the nine months ended September 30, 2000 increased $11.1 million, or 26%, to $53.3 million compared to $42.2 million in 1999. Life science product revenue and substance detection product revenue as a percentage of product revenue was 62% and 28%, respectively, in 2000 as compared to 49% and 51%, respectively, in 1999. OTHER REVENUE. Other revenue for the three months ended September 30, 2000 decreased $243,000, or 32%, to $521,000 compared to $764,000 in 1999. This decrease was due to the completion of certain projects for early-stage research and development which were funded by grants from the German government and the Advanced Technology Program of the National Institute of Standards and Technologies in the United States. While we historically have obtained significant funding under grant awards for early-stage research and development activity, we anticipate this funding will be significantly reduced in the future, since these grants are typically provided to small or private companies with limited access to capital. Other revenue for the nine months ended September 30, 2000 decreased $1.9 million, or 54.9%, to $1.5 million in 2000 compared to $3.4 million in 1999. COST OF PRODUCT REVENUE. Cost of product revenue for the three months ended September 30, 2000 increased $2.7 million, or 31%, to $11.5 million compared to $8.8 million in 1999. The cost of product revenue as a percentage of product revenue was 52% in 2000 as compared to 51% in 1999. The increase for the quarter relates to an increase in sales to our strategic alliance partners, which tend to have lower gross margins. Certain initial set-up production charges in our Switzerland facility and the related expansion of our production personnel in our German facilities also contributed to this increase. Cost of product revenue for the nine months ended September 30, 2000 increased $4 million, or 18.4%, to $25.9 million compared to $21.8 million in 1999. The cost of product revenue as a percentage of product revenue was 48.5% in 2000 as compared to 51.8% in 1999. This decrease is due to a combination of stronger revenues from new life science products which have a lower cost of product revenue, increased efficiencies in the manufacturing operations throughout the year and lower material costs driven by an increase in volume discounts. SALES AND MARKETING. Sales and marketing expenses for the three months ended September 30, 2000 increased $200,000, or 6.4%, to $3.3 million compared to $3.1 million in 1999. Sales and marketing expenses as a percentage of net revenues were 14.6% in 2000 and 17.3% in 1999. Sales and marketing expenses for the nine months ended September 30, 2000 increased $1.2 million, or 15%, to $9.1 million compared to $7.9 million in 1999. The dollar increase was due to higher sales commissions earned by our direct sales force as a result of an increase in the number of units sold and the addition of a few distribution subsidiaries not in operation during the nine months ended September 30, 1999. Sales and marketing expenses as a percentage of net revenues were 16.5% in 2000 and 17.3% in 1999. 10
GENERAL AND ADMINISTRATIVE. General and administrative expenses for the three months ended September 30, 2000 increased $575,000, or 76%, to $1.3 million compared to $757,000 in 1999. As a percentage of net revenues, general and administrative expenses increased to 5.9% in 2000 as compared to 4.2% in 1999, as a result of approximately a $237,000 non-cash charge to compensation expense related to our stock option grants as well as various other charges related to being a public company. General and administrative expenses for the nine months ended September 30, 2000 increased $1.1 million, or 41%, to $3.6 million compared to $2.5 million in 1999. As a percentage of net revenues, general and administrative expenses increased to 6.4% in 2000 and 5.5% in 1999. The increase relates to various charges incurred as a result of becoming a public company. RESEARCH AND DEVELOPMENT. Research and development expenses for the three months ended September 30, 2000 increased $1.6 million, or 39.2%, to $5.9 million in 2000 compared to $4.3 million in 1999. As a percentage of net revenues, research and development expenses increased to 26.2% in 2000 compared to 23.7% in 1999. The dollar increase in 2000 was due to increased staffing and the related personnel costs and late stage testing costs incurred for our new products scheduled for introduction in early 2001. In addition, a few new major development projects have been started for newer products and applications, primarily in proteomics and SNP genotyping. Research and development expenses for the nine months ended September 30, 2000 increased $3.2 million, or 28%, to $14.6 million compared to $11.4 million in 1999. As a percentage of net revenues, research and development expenses increased from 24.9% in 1999 to 26.5% in 2000. OTHER INCOME (EXPENSES), NET. Other income, net for the three months ended September 30, 2000 was $613,000, compared to an other expense, net of $(225,000) in 1999. The difference relates to the additional funding raised in our equity offering during the third quarter of 2000 and the payoff of our outstanding short-term lines of credit both in the United States and Germany. Other income, net for the nine months ended September 30, 2000 was $289,000 as compared to an other expense, net of $(525,000) in 1999. INCOME FROM DISCONTINUED OPERATIONS, NET OF INCOME TAXES. Income from discontinued operations net of income taxes for the three months ended September 30, 2000 decreased $23,000, or 31%, to $52,000 compared to $75,000 in 1999. Income from discontinued operations is related to the disposal of our infrared sales group in March 2000. Income from discontinued operations net of income taxes for the nine months ended September 30, 2000 decreased $82,000, or 31.1%, to $184,000 compared to $266,000 in 1999. LIQUIDITY AND CAPITAL RESOURCES Presently, we anticipate that our existing capital resources and the proceeds from our equity offering will meet our operating and investing needs through the end of 2001. Historically, we have financed our growth through a combination of cash provided from operations, debt financing and issuance of common stock. During 2000, net cash provided by operating activities was $229,000, primarily as a result of net income for the period and the interest income generated from the increase in cash and cash equivalents from our equity offering in the third quarter. We used $2 million of cash during the first nine months of 2000 for capital expenditures. Such capital expenditures were made to improve productivity and expand manufacturing capacity. We expect to continue to make capital investments focused on enhancing the efficiency of our operations and supporting our growth. 11
Other current assets increased at September 30, 2000 as compared to December 31, 1999. The increase in other current assets was principally due to an increase in prepaid expenses, a VAT receivable in Germany and the timing of other receivables. In August 1999, we entered into a revolving line of credit with Citizens Bank in the United States in the amount of $2.5 million. As of September 30, 2000 there were no amounts outstanding. This line, which is secured by portions of our inventory, receivables and equipment in the United States, was used to support working capital and expires July 31, 2001. We also maintained revolving lines of credit of approximately $6.2 million with German banks. As of September 30, 2000 there were no amounts outstanding. Our German lines of credit are unsecured. No material capital expenditure commitments were outstanding as of September 30, 2000. Our future capital uses and requirements depend on numerous factors, including our success in selling our existing products, our progress in research and development, our ability to introduce and sell new products, our sales and marketing expenses, our need to expand production capacity, costs associated with possible acquisitions, expenses associated with unforeseen litigation, regulatory changes, and competition and technological developments in the market. FORWARD LOOKING INFORMATION The matters discussed in this report contain forward-looking statements that involve risks and uncertainties. The Company's actual results could differ materially from those discussed herein. Such statements are made pursuant to the safe harbor provisions of the "Private Securities Litigation Reform Act of 1995." The preceding discussion of the financial condition and results of operations of the Company should be read in conjunction with the interim condensed consolidated financial statements and the notes thereto included in Part I, Item I of this Quarterly Report on Form 10-Q and the consolidated financial statements and notes thereto contained in the Company's Prospectus dated August 3, 2000. IMPACT OF FOREIGN CURRENCIES We sell our products in many countries and a substantial portion of our sales and a portion of our costs and expenses are denominated in foreign currencies, especially in Euro. Historically, our realized foreign exchange gains and losses have not been material. Accordingly, we have not hedged our foreign currency position in the past. However, as we expand our sales internationally, we plan to evaluate our currency risks and we may enter into foreign exchange contracts from time to time to mitigate foreign currency exposure. ITEM 3: QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK The information called for by this item is provided under the captions "Liquidity and Capital Resources" and "Impact of Foreign Currencies" under Item 2: Management's Discussion and Analysis of Financial Condition and Results of Operations. 12
PART II OTHER INFORMATION ITEM 1: LEGAL PROCEEDINGS Information with respect to this item is incorporated by reference to the Note 8 of the Notes to Consolidated Condensed Financial Statements under Item I of Part I of this Report on Form 10-Q, which Note begins on page 8 hereto. ITEM 2: CHANGES IN SECURITIES AND USE OF PROCEEDS On August 3, 2000, a registration statement on Form S-1 (No. 333-34820) was declared effective by the Securities and Exchange Commission, pursuant to which 9,200,000 shares of our common stock were offered and sold by us at a price of $13 per share, generating gross offering proceeds of approximately $119.6 million. The managing underwriters were UBS Warburg LLC, CIBC World Markets and Thomas Weisel Partners LLC. In connection with the offering, we incurred $8.4 million in underwriting discounts and commissions, and approximately $1.5 million in other related expenses. The net proceeds from the offering, after deducting the foregoing expenses, were approximately $110 million. We have used a portion of the net proceeds of the offering to fund our continuing research and development activities and for working capital and other general corporate purposes. Additionally, we have used approximately $7 million of the net proceeds to pay off a portion our outstanding bank debt. ITEM 3: DEFAULTS UPON SENIOR SECURITIES None. ITEM 4: SUBMISSION OF MATTERS TO A VOTE OF SECURITY SHAREHOLDERS None. ITEM 5: OTHER INFORMATION None ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits. 27.1 Financial Data Schedule (c) Current Reports on Form 8-K. We did not file any reports on Form 8-K during the quarter ended September 30, 2000. 13
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. <TABLE> <S> <C> <C> BRUKER DALTONICS INC. By: ----------------------------------------- Frank H. Laukien, Ph.D. PRESIDENT, CHAIRMAN, CHIEF EXECUTIVE OFFICER, AND DIRECTOR (PRINCIPAL EXECUTIVE Date: November , 2000 OFFICER) By: ----------------------------------------- John J. Hulburt, CPA CORPORATE CONTROLLER AND TREASURER (PRINCIPAL FINANCIAL AND ACCOUNTING Date: November , 2000 OFFICER) </TABLE> 14