Good afternoon everyone, and welcome to the Bruker's Fourth Quarter and Full Year Earnings Conference Call. (Operator Instructions) Please also note, today's event is being recorded. And at this time, I’d like to turn the conference call over to Joshua Young. Sir, you may begin.

Thank you very much, Jamie. Good afternoon. I'd like to welcome everyone to Bruker's fourth quarter and full year 2013 earnings conference call. My name is Joshua Young, and I am Vice President of Investor Relations for Bruker. Joining me on today's call are Frank Laukien, our President and CEO; and Charlie Wagner, Bruker's Executive Vice President and Chief Financial Officer. In addition to the earnings release that we issued earlier today, we will be referencing a slide presentation during today's call. The PDF of this presentation can be downloaded by clicking on Bruker's investor relations website or by clicking or accessing the file through the audio webcast player during the webcast. During today's call, we will be highlighting non-GAAP financial information. A reconciliation of our GAAP to our non-GAAP financial statements is including -- is included in our earnings release and in our webcast presentation. Before we begin, I'd like to reference Bruker's Safe Harbor statement, which I show on Slide 2. During the course of this conference call, we will be making forward-looking statements regarding future events or the financial performance of the company that involve risks and uncertainties. The company's actual results may differ materially from the projections described in such statements. Factors that might cause such differences include but are not limited to those discussed in today's earnings release and in our Form 10-K, as well as other subsequent SEC filings. Also note that the following information is related to current business conditions and our outlook as of today, February 18, 2014. Consistent with our prior practice, we do not intend to update our projections based on new information, future events or other reasons prior to the release of our first quarter 2014 financial results. We will begin today's call with Frank providing a business summary of our fourth quarter and full year 2013 performance. Charlie will then cover our financials for the fourth quarter in more detail and provide guidance for 2014. Now I'd like to turn the call over to our CEO, Frank Laukien.

Thank you Joshua. Good afternoon and thank you for joining us on the call today. I will begin the presentation on Slide #4. I am pleased to report that Bruker generated stronger year-over-year financial performance in the fourth quarter despite facing quite a challenging comparison with a good Q4 2012. Anyway in Q4 ‘13, we reported revenues of $552 million which reflected year-over-year organic revenue growth of approximately 6% in the fourth quarter. Our non-GAAP operating margin expanded by 60 basis points year-over-year to 14.7% and we reported year-over-year non-GAAP earnings per share growth of 11% in the fourth quarter. Finally, we generated unusually strong cash flow of $122 million in the fourth quarter of 2013, which was driven in part by higher profitability and our efforts to improve our working capital. The driver of our stronger performance in Q4 2013 was the performance of our BioSpin group which generated double-digit year-over-year revenue growth in the quarter. This unusually high revenue growth was driven by a surge in customer installations and acceptances in Q4 of 2013. From a divisional perspective, our BioSpin magnetic resonance division drove most of the growth with European academic customers being the biggest contributor. Additionally our BioSpin preclinical imaging division bounced back sequentially in Q4 from a weak Q3 ‘13 to pose the strong fourth quarter. Our CALID group posted year-over-year mid-single-digit revenue growth in the fourth quarter, which was driven by our life science and diagnostics for our -- excuse me, life science and clinical division or LSC. And finally our BMAT group experienced a mid-teen percentage year-over-year revenue decline in Q4 consistent with our previous expectations. So in summary, we had a stronger quarter of financial performance and there are a number of positive developments that we can take away from Q4 of 2013.…

Thanks, Frank. I will now provide some additional details on Q4 and full year 2013 performance before providing our financial outlook for the year 2014. On Slide 10, I show a snapshot of our Q4 2013 non-GAAP results. Total revenues were $552.1 million, an increase of nearly 7% from the fourth quarter of 2012. Year-over-year revenue growth, combined with lower operating expenses drove positive operating leverage as both non-GAAP operating income and earnings per share grew approximately 11% over Q4 2012. One of the highlights of the quarter was our free cash flow, which totaled $122.4 million and nearly doubled from Q4 of last year. This reflects some of the improvements we're making in working capital management and our higher business volumes. Keep in mind that our free cash flow has not been strongly seasonal with most of our annual cash flow in Q4 can also vary considerably from quarter-to-quarter. Turning to Slide 11, I show the revenue bridge for the fourth quarter. Reported growth of 6.7% year-over-year in Q4 2013, included organic revenue growth of 6.2% and a relatively small positive effect from changes in foreign exchange rates due to a strengthening euro versus the dollar during the quarter. On Slide 12, I show our Q4 2013 non-GAAP operating results in more detail. Our Q4 2013 non-GAAP gross margin of 40% is a decrease of 260 basis points on a year-over-year basis. Approximately, half of the decrease is related to changes in foreign exchange rates with the remainder of the decline primarily related to mix and other drivers. Part of the negative mix is due to the Q4 2013 revenue decline in the BMAT Group, which generate higher gross margins in other parts of the group of portfolio. BMAT had record revenues in Q4 2012, and a mid-teen year-over-year…

Thank you. Jamie, please assemble the Q&A roster.

(Operator Instructions) And our first question comes from Tycho Peterson from J.P. Morgan. Please go ahead with your question.

Hey, guys. Thanks for taking the question. First on cash flow, obviously a nice step up there, I understand you have some seasonal elements there. But can you maybe, Charlie, just talk a little bit about where you ended the quarter in terms of backlog conversion times and your latest thoughts on cash flow expectations forward for this year?

Yeah. Obviously, with the revenue outperformance in Q4, we had some success in converting backlog. Obviously, we are working on in all of our businesses is better processes from order, all the way to cash. I wouldn't say that we are necessarily firing on all cylinders, but we are making progress and Frank commented on a strong year that Optics had. Part of that, was them getting better at managing their revenue cycle. Obviously, BioSpin in the fourth quarter really did a very good job of getting installations and acceptances done and that accounted for a big part of our revenue over performance there. So, I would say in every business we are working on that and in Q4 13, there were some standout performances in terms of reducing backlog there. So from a cash flow standpoint, we still have a long way to go. I’m pleased with where we ended up in Q4, given the starting point, but we believe that we have the opportunity to take inventory down meaningfully, while we focused on receivables in 2014 and in general expect to be able to generate even healthier cash flow in 2014.

And then for Frank, you called out recovering and some businesses preclinical in particular, I think these some competitive exits in that market. So can you maybe talk to how much of it is just sustainable underlying improvements in the market versus some share shift? And then for NMR similar question, you introduced a line of helium free magnets last year, was there kind of upsell to the install base or how we think about the sustainability of some of those trends?

Good questions, Tycho. This is Frank. So in the preclinical imaging space, first part of your question, we obviously entered fairly reasonably in 2013 and late 2012. The microCT business as I said in my prepared remarks that microCT business, the former SkyScan business particularly in the life sciences did well in 2013. And I think that trend looks sustainable. I think we have strong products there and good demand for these capabilities. It’s still early days for us in molecular imaging which as you know we acquired from Carestream in Q4 2012. Moving that operation up to our and consolidating that into our Massachusetts operations here in Billerica and reworking that business unit took quite a bit of effort in 2013 and some expense. We now see emerging growth in our bookings there, but it is still early days. There clearly an optical molecular imaging, were not the market leader. There is another clear market leader who is very strong in that space and it’s generally competitive, but I think we can reach a reasonable position there and have these complementary optical molecular imaging systems that complement what we’re doing in MRI magnetic particle imaging microCT. As you know in preclinical MRI, there has been a competitive shift which one of our competitors announced in the fourth quarter of 2013. So that may begin to -- that hasn’t really affected 2013 all that much, but I mean there is clearly a bit of a market share shift there to be expected, given that that competitor will no longer compete in this preclinical MRI niche if you will. That’s the overall growth in the preclinical imaging markets, probably are not entirely clear. They were weaker in the beginning of last year and probably more recently it’s been the competitive trends that have masked if you like and maybe in a positive way what the underlying secular market growth rate is. So perhaps we can give you a clearer view on that later in 2014. In NMR, we finally started making magnets so long but you also asked about NMR cryo consumption free magnet, they still have cryogens, they don’t consume any. That uptake is rather gradual and tends to be more of a factor at this point at least in countries that are emerging economies and in countries and locations where perhaps new research sites are being created and where the usual logistics and infrastructure to support a major research university or medical school previously hadn’t been available. So it’s a gradual uptake of that new technology. We still think it’s where the future is, but that may very well be a 10-year adoption, not a 1 or 2 year adoption.

Okay, thank you.

Our next question comes from Doug Schenkel from Cowen and Company. Please go ahead with your question.

Good afternoon, and thanks for taking my questions. So my question is really on operating margins. I think your guidance implies and I apologize to call this out while I was doing the math. But I think your guidance implies that you expect operating margins to improve 50, 60 basis points year-over-year in 2014. I guess if you keep in mind headwinds from last year, foreign exchange utilization and mix, I think one could argue that those should at least partially reverse this year. And accordingly maybe the margin improvement would be a little bit better. I think another way of framing this is, I think you’re essentially guiding margins to a level that’s about in line with what you did in 2012 on a revenue base that was quite a bit lower. So I was just wondering if you could just spend a little time talking about what's driving margins to these levels, why couldn’t it be a lot better and really what level of investment and changes beings baked in that maybe keeping margins a little bit lower than what might have expected?

Yes. And so Doug I don’t exactly what’s in your model obviously with the 10% to 14% earnings growth that we guided to depending on what your assumptions are. I said that’s more of a 75 to a 125 basis point increase. So it depends on what you had assumed for other expenses and tax rate and shares and the like. So that for us if you could just say 100 basis improvement year-over-year on 3% of 4% revenue growth, we think it is a good start. We made a lot of changes in 2013, committed to having those benefits show through in the operating margin in 2014 and I think that will clearly be the case and that’s clearly what’s implied in our guidance here. In terms of the headwinds, we call them out that the 2013 headwinds, they don't reverse in 2014, they just don't occur to the same extent. And the one I will call out for you is currency. We commented on the significant impact the currency had in 2013. If you just take a snapshot of today's rate, it’s the headwind again in 2014. The euro has continued to strengthen versus the dollar which gives us a little bit of benefit on the top line, but it really does hurt us on the bottom line. And so, we've already kind of lost ground if you will on currency in 2014. That’s reflected in our guidance. But again you got to take that into account as well. So I think we are pleased with what’s implied in the guidance that shows the benefits of the programs that we completed in 2013.

That's helpful and I'll go back and check my math because that sounds a lot better than what it was back in ‘12. Thanks for that. That's helpful. And I guess second question, clearly a really good close to the year from a revenue standpoint, it does sound like in various parts of your prepared remarks that you were noting that there were maybe some revenue that was pushed from Q3 to Q4 or in some revenue that was maybe pushed forward. I know it’s hard to do this with a lot of precision, but is it possible that we just make an attempt to how much revenue came into the quarter that was really driven by timing and the impact of Q1 accordingly?

This is Frank. I think it’s hard to quantitate but yes I think did align at the end of Q4 and we got the acceptance that usually we built in a little bit of cushion there because some just won’t come through and look into the next quarter and not much of that occurred at the end of Q4. So our Q4 revenue indeed was a little bit higher than our own expectations and some I can’t quantify for you but obviously some amount, some several million we would have other expected to slip into Q1 and we’re pleased to have them in Q4 of course, but that’s not -- that even with infinity good systems that just depends little bit on the timing of our customers, putting signatures and accepting systems, signatures on paper, so that’s never ever going to be completely predictable.

And our next question comes from Jon Groberg from Macquarie. Please go ahead with your question.

Thanks and congratulations on a great end of the year. So if you are on your slide 8 Frank, if you were to, I think you mentioned $15 million, $20 million or so of activities that you are targeting in 2014. You mentioned one that happened in January which was divesting the machine shop, but if you kind of were of think about these buckets in 2014 and that $15 million, $20 million in spend. Could you give us a flavor of what you’re doing in ’14 for 2015 and what kind of cost you expect to save as you move in 2015 from these actions?

We can’t give you the -- we're still working through that and pieces becoming clear, but the aggregate amount we may have a better feel for by midyear 2014. As you can see with restructuring estimates of $15 million to $20 million in ’14, that’s still substantial which is good I think we are -- I think that is what we are going in the company, it’s a little lower than 2013 when we reached nearly $25 million of restructuring. Some of it is if you like, it’s pre-programmed, some of the outsourcing actions that we signed up to and signed with contract manufacturing partners already in 2013 will lead to predict of all restructuring charges on which will come through 2014. Some of them are new items like the divestiture of the Bruker Daltonics if you like, [life tech machine] that Charlie mentioned in his prepared remarks and other lean outsourcing restructuring projects are being analyzed and a couple of them I have mentioned already at CAM where we have taken some additional steps in the commercial organization, but I am really not got to be able to answer your real question which is what will be the benefit, the run rate benefit of these 2014 actions. Very generally we would think that maybe proportionally not enough to the amount but proportionally they maybe similar to what we achieved out of our 2013 restructuring, but I think that we are going to give you much better clarity how that will help us in 2015 probably by midyear.

Jon maybe another way to express Frank’s comments there about proportionality is, most of these programs tend to have a 1 to 2 year payback on them. So the one-time costs are paid back in 1 to 2 years in terms of savings. So that’s the point of our proportionality, so not the same absolute number as the 2013 programs but proportionally.

Okay, that’s helpful. And then Charlie on your comment, I was going to actually ask about because I think Frank also mentioned more stock aligning employees more shareholders, you mentioned share count do you have a view as to what the share count is going to be in 2014, what we should expect?

I don’t have that at my fingertips, Jon. I mean, there is nothing so we didn’t expand the equity program this year to align a larger part of the population with shareholder value, but it’s not such a large expansion that it drives some sort of differentiated movement in the share count. So whatever it’s been trending in the last couple of years is roughly about you can model for ’14.

So outside of share count then you’re probably just talking about the tax rate going up to 29% to 30% in terms of some of the other expense. I am just trying to think if there is anything else in the math in terms of guidance from ’13, ’14?

Nothing extraordinary.

Okay, thanks.

Our next question comes from Isaac Ro from Goldman Sachs. Please go ahead with your questions.

Good afternoon, guys. Thanks for taking the question. Charlie and Frank I wanted to ask sort of a general question on R&D spending. If we look at sort of the history of the company you’ve had a hallmark of being pretty innovative in driving organic growth ahead of the peer group, thanks to all the R&D spending. I was hoping you maybe comment on the health of the innovation at the company given all the changes organizationally at the company, how do you feel about the pipeline of new products this year, do you think that will be meaningfully contributor, just trying to figure out how much new products will drive your organic growth outlook this year?

This is Frank. Hi, Isaac. Generally obviously as our R&D spending still at the high end of the industry which is where we want to be, I think that’s been our focus it more on our organic growth, ROIC, metrics like those, innovations. In addition to the transformation that we talked about a lot, it’s remained a key driver of our business success and it’s very inherent in our culture. R&D spending over the years gradually, leveraging upwards and maybe at some point slightly below 10% but still very significant. With the new PCL processes where we face, engage and manage our investments perhaps a little bit more explicitly and clearly, we actually think we will get as much of commercial innovation and banks of the buck out of it, I mean it will be more banks for the buck by targeting them for the higher margin and growth opportunities. So you’ve seen in 2013 a very mix picture in some years previous to that and prior to that we had similar growth rates among the groups and obviously in 2013 we had some very star contrast with the more industrial focus BMAT group having a strong weakness in markets despite their very impressive new products which they continue to bring out off in 2013. And of course quite good our reasonable growth in the bio and CALID life science oriented and more research oriented I guess the oriented two groups. So in terms of new products flow and innovation, we expect 2014 to be again a very strong year and of course we don’t discuss what we intend to do during the year. We don’t show our cards so to speak with our show in the product roadmap. For competitive reasons we will bring out new products throughout the years. It’s not all focused on, excuse me -- Beacon Analytical or ASMS, of course those are important but there is a lot of other conferences. So you will see that pretty evenly spread throughout the year for fluorescence microscopy or for pre-clinical imaging, the conferences in fact many of them are later in the year. But we expect in summary, a very strong new product flow also in 2014.

Got it. That’s helpful. And just maybe one for Charlie on the numbers, I think in the beginning there was a question on free cash flow performance is up, I think over $50 million this quarter year on year and a reasonable chunk of that was from inventory. So, I’m just wondering if Charlie, if you could give us some color as how we should think about continued inventory improvement this year, I mean the cadence of that quarter-to-quarter. Can you expand your visibility on the inventory trends?

Yeah. So inventory, just generally speaking, 2014 inventory, again should be a source of cash. We expect inventory to go down on an absolute basis and down on a DIO basis. Beyond that, I’m not going to guide more specifically on that. Quarter-to-quarter, just given the seasonality in the business, we tend to build inventory earlier in the year and blow it out later in the year. So it’s not a smooth, linear process but you can look at the seasonality year-over-year.

Fair enough. Thanks so much, guys.

Yeah.

(Operator Instructions) And our next question comes from Derek DeBruin from Bank of America Merrill Lynch. Please go ahead with your question.

Hi, good afternoon.

Hi, Derek.

Hey, a couple of quickies on the BEST guidance or the best outlook for 2014, can you remind us what the Rosatom number will be in 2014 and what it was in 2013, just trying to get a sense on year-over-year comps?

2013, it was about $6 million of revenue at a very high margin. 2014, it’s more like $8 million to $10 million but at a very low margin as we work to complete the contract.

Okay. So does that stand if you sort of that back that up? Is that mean, you are outside of the licensing, is that organic revenue in the BEST business declining from the (inaudible)?

For what period, Derek?

On just year-over-year, I am just trying to get a sense on the organic sort of ex-Rosatom contribution, what the core, what the best of this is doing?

For 2013, you are talking about?

2014. 2014, the guidance for BEST in 2014.

I don’t think we have the numbers exactly at those slides the way you are asking. But we are looking at BEST growth in the mid single-digits in 2014 and I think even if we took out Rosatom in ‘13 and ’14, is that what you are asking?

Yes.

Yeah. That would still be growing, but I can’t sight your growth rate right now.

Okay. Perfect. And then just one quickie on this 1-D, you said your NMR bookings were up. I’m just curious, are these higher margins, are you getting better pricing on your new bookings as opposed to the older bookings, are you -- I guess you are getting more pricing discipline out of your sale force?

We would like to think that that’s the case and that’s certainly, we are managing towards that end, yeah so.

Great. Great. Thank you. Okay, bye. Thank you.

And our next question comes from Ross Muken from ISI Group. Please go ahead with your question.

Hi. This is Vijay in for Ross. Thanks for taking my question. Just one question on CAM division, just given some of the changes at CAM, what’s the impact on the longer-term revenue and margin profile for that business?

Okay. Vijay, this is Frank. I think, we are focusing at CAM on margin improvement. We are not necessarily focusing on growth or gaining market share at this point in time. And so without going into a lot of numbers here, our long-term goal from perhaps two or three years ago to turn that into a $250 million revenue division are very-very long-term at this point. It’s obviously closer to a $100 million division and the focus is not going to be on primarily on growth but really on the quality of the revenues and on the margins. And that’s how we are looking at it, as we have focused more on areas where we have markets applications or products where we have unique capabilities and higher value propositions and accordingly the better margin opportunity.

Thanks for those comments, Frank. And just maybe one quick follow-up on what was be the gross margin for the BEST and BSI segments in the quarter?

We will have to give you that offline.

Okay. Got it. Thanks, guys.

And our next question comes from Dan Leonard from Leerink. Please go ahead with your question.

Thank you. Just to clarify in your 2014 guidance, are you forecasting a high single-digit revenue decline in BMAT in 2014?

No. We are looking at somewhat similar growth rate for the three major groups, which would all be positive in 2014.

Got it. I thought you meant similar to their 2013 results.

That’s a good clarification, Dan. Thank you. And now, we meant similar to each other and more groups work closely together and all being positive, so we apologize if we didn’t make that sufficiently clear but it’s a good question.

No worries. Got it. And then, my follow-up question, if you are thinking about improving operating margins by roughly 100 bps in 2014, how should we think of the mix of that improvement between gross margin and OpEx? Thank you.

Yeah. Dan, obviously, we made quite a bit of progress in 2013 managing OpEx. And I am sure you’ve observed a lot of our restructuring and outsourcing programs that are aimed at our manufacturing and supply chain footprint. So the expectation for 2014 is that more of the improvement would come at the gross margin line than below that.

Got it. Thank you.

And our next question comes from Brandon Couillard from Jefferies. Please go ahead with your question.

Hey, good afternoon. Charlie, could you give us a sense of why organic orders were in the fourth quarter and if you could give us a view just around the book to bill, specifically within BSI that would be helpful?

I will just give you some qualitative comments. We don’t disclose those numbers specifically. And I think Frank commented that order growth in the year was healthy, was kind of in the neighborhood of revenue growth. Again, it doesn’t make a lot of sense to drill too deeply into order growth in a quarter just because of such significant year-over-year variability. But nevertheless as Frank pointed out, we exited the year with strong orders in Biospin. As Frank pointed out that BMAT order growth grew year-over-year in the second half and also sequentially in the second half. And then order growth in CALID was reasonable all year long. So there is nothing remarkable about fourth quarter orders per say that’s very different than what we saw over the course of the year.

Thanks. And could you speak to any effect that the Japanese stimulus may have had in the fourth quarter? Does that actually translate into revenue and should we think about that being a tailwind to the topline into the -- let’s say, the first half of the year?

Brandon, this is Frank. Again, undoubtedly, there were some Japanese special supplementary budget revenue in Q4, but I can’t quantitative for you right now in exactly that way. And we expect that there would be some also in calendar Q1 and calendar Q2 of 2014. As you know, the Japanese fiscal year requires that we deliver these instruments before the end of March and we are already delivering Q4, more of them in Q1. But some of them that don’t get accepted and turn into revenue until typically Q2, so it’s fairly spread out over a number of quarters, so it doesn’t come in all in one quarter.

Yeah. That’s helpful. Last one for Charlie. What are we expecting, what should we be expecting for net interest expense as well as the minority interest line next year.

Yes, we would just take that one offline, okay?

Super. Thanks.

Our next question comes from Steve Willoughby from Cleveland Research. Please go ahead with our question.

Hey guys. Thanks for taking my question. Just wondering if you could provide a little bit more color as to what you are doing in the CAM business in terms of narrowing its focus and narrowing its products. Just wondering kind of what things you are going to deemphasizing versus things you are going to be emphasizing?

Steve, this is Frank. I understand the question very well and we prefer not to comment at this point in time. As we are still analyzing some of that and some of it has occurred obviously, I keep it somewhat generic. There are number of areas where we have products with good gross margins and there are markets where we are pretty plugged in, and we think we understand the customer requirements quite well. And we think we have a differentiated value proposition and again for competitive reasons, I would like to not get more granular than this with apologies, so hopefully (inaudible) if you are understanding?

No, it’s double understandable. Then just two other quick ones, we are just wondering in your 2014 guidance, how much of a headwinds you are thinking about in terms of the impact from currency right now?

I mean, disappointed to look on my screen a little while ago and see that the euro was at 1.38 today, but we are probably talking at least $0.05 relative to 2013 rates.

Okay. And then just the final thing is, I was wondering if there was any update into the potential timing if you guys beginning you to provide some segment gathered within the BSI segment?

We will evaluate that over the course of this year. The roof structure and the reporting around the group structure isn’t quite a year old at this point or is just a year old. I think we would like to take a little bit more time with that to make sure that internally our management reporting is where we want to be and so perhaps later in the year we will talk about that.

Okay. Thanks very much.

Our next question comes from Amanda Murphy from William Blair. Please go ahead with your question.

Hi. Thanks. I actually had a follow-up question to Tycho’s question earlier on size and demand. I think earlier in the year, you have spoken to the U.S. being strong and then it seems like now Europe is taken over. Does that just accomplish you, or is there something underlying that demand shift?

It’s actually even more complicated, Amanda. Again, this is Frank. A lot of the revenue that we generated in Europe in the second half of ’13, that’s where orders that may have come already from 2012. And the strength in bookings in the United States in NMR that surprised us as well in 2013. A fair amount of that will then return into 2014 revenue and this isn’t any of debt of the NIH budgets, are now improving therefore its demand perhaps improving. None of that has gone into 2013. Yet obviously, so we are looking forward to that perhaps providing an additional gentle tailwind to bookings at least in 2014 but that remains to be seen. It remains to be seen how quickly that will be affected, it’s more of the timing I think.

Got it. Okay. And then just another one on gross margins, so I think you mentioned mix having affect in the quarter and I am assuming that’s something to do with BEST. But I guess I am curious more about 2014, and to the extent that we are thinking about margins for the year. Is there something we should think about around product mix and maybe a shipment timing in terms of how that might affect gross margins through 2014?

Yeah, Amanda. This is Charlie. The 2013 Q4 comment around mix was more aimed at BMAT. BMAT had record revenues in Q4 2012 and record gross margins associated with those record revenues. And then it had a significant revenue decline year-over-year in the fourth quarter of 2013 with a corresponding hit to their gross margins so. And BMAT on average has gross margins that are higher than the company average, so that was the negative mix comment there. As for 2014, with revenue growth rates -- year-over-year revenue growth rates similar in the three major BSI groups, there is nothing specific about mix that I would call out nor is there anything necessarily about a quarters that I would call out. Perhaps, the only kind of tough comp if you will, will be the timing of the Rosatom revenue from 2013, which was at least that impact was smaller in ‘13 than it was in ’12. So that was a $13 million -- excuse me $6 million high margin revenue in 2013. But no, that I wouldn't call out anything specific about the quarters.

Okay. Got it, thanks very much.

Our next question comes from Luke Sergott from Wells Fargo Securities. Please go ahead with your question.

Hi, this is Tim Evans. Given your comment about the margin, Charlie, can you give us a little more clarity on the other income line. I would think that most inputs in that line is your interest expense and then the exchange gains and losses on the foreign exchange. Do you normally keep the foreign exchange gains and losses at zero, when you, kind of, look at it going forward or are you actually forecasting something in that line?

Yeah, listen we’ll take that offline, but you're right, the characterization is correct. It’s mostly interest expense and foreign exchange gains and losses and a handful of other things. And obviously with rates continuing to move as they are, there is that we do have some assumption about foreign exchange gains and losses for 2014.

Okay. All right. And then just one for Frank, the demand from European academic customers, does that feel sustainable to you, is that kind of a long-term trend at least a trend we should expect for the full year?

Probably, I think European academic spending maybe excluding some Mediterranean countries that had obviously financial problems and still due to some extent has been really much more consistent and may be even elections come and go but that’s sort of the long-term investment that the European Union and many European governments are pretty committed to. There has been more of a trend change in the U.K., where academic spending had been rather anemic for several years and that was partially reversed in 2013 and that seems to, that positive trend seems to continue to go on in 2014. Perhaps also one trend that would sort of a transitory -- former part Central/Eastern Europe getting European funding to build their academic infrastructures, that was more of a 2011, ‘12 bookings theme and some of that came through in ‘13. But again that might get into too much granularity. I think the simpler answer is with U.K. providing some additional tailwind that seems to be sustainable at Easter ‘14 and a lot of the rest of Europe has pretty long term 5 and 10 year plans that seem to be not really politically in play every year but that seem to be sustainable in our opinion.

Okay. Thank you.

Our next question comes from Bryan Brokmeier from Maxim Group. Please go ahead with your question.

Hi. Given the organizational changes, were normally active on the M&A front 2013. Now its more cash in the bank and strong cash flow generation expect in 2014. And a lot of the major leadership changes behind you. So how should we think about your use of cash in 2014 and specifically how are you thinking about M&A in 2014 versus 2013?

Still so much muted demand for M&A. I mean, we’re always keeping our eyes open. Yeah, of course some long-term discussion that we've had with often smaller companies that we think have good product lines and good management and so on. And you can never predict the timing of whether it's ever they become actionable but not very active in the M&A market, not a high priority. We think, we have -- continue to have so much opportunity internally through product innovation and organic growth and through that -- would be now referred to as the transformation. So last year we did one smallish acquisition, the year before that we did two. They forgot to predict how this year will go but probably comfortable to those years rather than anticipating or looking for larger or mix type acquisitions.

And actually top-line growth exceeds your expectations. Would you invest more of that money back into your business to accelerate come of the organizational transformation that you have planned for the next few years or would you -- should we expect to see that margin hit the bottom line?

I think, we’re doing the right amount of investment and those are in our business plans and therefore also ultimately in our guidance. So I don’t see -- I think the answer is mostly, if there was the markets were better and its demand and bookings and whatever we can turn of course still into revenue in 2014. If there was any uptick in that, it would primarily we’d like to see bottom line improvements from that.

Okay, thanks and just a last question. Charlie, earlier stated that most of the cost savings programs have one or two-year paybacks. Were you just talking about 2014 program or does that also apply to what’s behind you from 2013?

It applies to both years.

All right. Thanks a lot.

Our next question comes from Sung Ji Nam with Cantor. Please ahead with your question.

Hi, thanks. I have a very quick question, maybe follow-up to Doug’s earlier question on operating margins. Could we anticipate more steady improvement going forward in your view or do you think there will continue to be large variability from year to year. I’m just trying to get a better sense of kind of what kind of visibility you guys have at this point in terms of your longer-term goals and the potential that you have?

Could you just clarify the question you talked about spending improvement, I'm not sure I understand exactly what you're trying to ask?

You talked about 75Q, 125 basis point improvement this year. Just kind of wondering going forward beyond that, was wondering if you could anticipate kind of a steady improvement in operating margin or if you can -- there will be a lot of variability from year to year? And I’m assuming kind of crunchy mutual environment and not too much I guess, variable in terms of environment?

Yeah, listen I appreciate the question. We’re not at a point yet where we’re giving any sort of guidance beyond 2014. We are committed to kind of a consistent multiyear improvement in our operating margins. We’re not ready yet to characterize, how that plays out year-over-year-over-year.

And our next question comes from Eric Criscuolo from Mizuho. Please go ahead with your question.

Hi. Good afternoon. Thanks for taking my question, just filling in for Peter tonight. On the SG&A, it was lower than we expected in the quarter. Is there anything that was especially helping lower that SG&A spend?

Well, I think, if you just look at the -- again I don’t know what you had in your model for Q4. But if you look at the full year, I think we did a nice job with OpEx, both SG&A and R&D were down on an absolute basis year-over-year down slightly but obviously that implies a great deal of control in some decision-making on our part, which I think is an improvement and help to mitigate some of the revenue mix and the gross margin differences. So some of that Q4 would have been, I mean there was a little bit of benefit in Q4 from some of the 2013 restructuring actions particularly in BMAT. Lot of the BMAT actions happened kind of rightsizing happened at the end of Q3, into the beginning of Q4. So that would have a little bit of benefit there. But nothing beyond that, nothing exceptional I would point to in Q4.

Okay. And then in the Bruker MAT business, is there any hint on those industrial markets, the semi, the data storage et cetera, is there any hint or any upcoming trends that show that business will start to improve going forward?

Eric, this is Frank, we see some gradual, sequential and year-over-year improvement low to mid-single-digit. I wouldn’t call that in industrial markets. I don’t see the double digit growth that we may have seen coming out of a deeper recession obviously in 2009 -- late 2009, 2010. That’s a gradual recovery and it is a marvel recovery. It’s getting better. We’re expecting growth from lower comps, however in BMAT in 2014 but it’s not as strong. We don't see the evidence of a strong recovery yet. We see bits and pieces but then we also see things that point the other way. So on average, on balance, it seems like a rather gradual recovery. I could accelerate but we just haven't seen the evidence yet of that in Q3 or Q4 of last year.

Great, thank you.

Our next question comes from Dan Arias from UBS. Please go ahead with your question.

Yeah, thanks. Jumped on a bit late here, so apologies if this has been commented on but maybe just a quick two-parter on BioSpin, Frank, how ASPs for shipped NMR systems been trending. And has there been any change in lead times at all, be a mix that might make revenue recognition timing something worth noting with thinking about as we think about the pacing in ‘14? Thanks.

Dan, good question. This is Frank. We were still working obviously in 2013 and to so some extent in 2014 through older backlog. And I don’t think there has been any remarkable shift in bookings that would make the quarterly timing of revenue recognition more or less predictable in 2014. Some quarters you have helium shortages and you get slow down a little bit, other quarters like in the Q4 that all of a sudden it’s not a problem. But there’s a really tactical things you experience almost country by country in the last couple of weeks of the quarter. So I don’t mean to get into too much detail but there is something in here and degree of revenue recognition fluctuation from quarter-to-quarter that will matter even with perfect systems being entirely predictable, especially in BioSpin where we have so many $0.5 million and $1 million and $2 million and some even larger systems.

And our final question comes from Paul Knight from Janney Capital Markets. Please go ahead with your question.

Hi guys, thanks for taking the question. This is actually Brian Kip on behalf of Paul. I just wanted to touch a little bit deeper into your first quarter guidance. I know you guys guided to about similar dynamic as you saw in the first quarter last year. Just thinking from a macro level and your orders commentary, last year we’re continuing resolution during first half of last year. European markets hadn’t quite stabilized. You see some improvement there, especially academics side as you guys alluded to -- from a order weaker depends on who you talk to. And, I think U.S. coming off of -- the NIH down 9% last year to some modest increase this year. Just trying to get an understanding of why you think 1Q is going to be as flattish as you saw last year in regards to that macro environment?

You’re right. It's really just quarterly fluctuation, a little bit of over performance in Q4. And as I said any quarter the mega trend. And I think what we really are working very hard to deliver is the 3% to 4% growth for the full year 2014 and 10% to 14% EPS growth on a growth basis of that type. That’s our guidance but we did on our words, people did the fact that because Q4 was a bit stronger than what we had expected. Though the revenue acceptance saw the line in the Q4, which was good, but it does take a way a little bit from Q1.

Okay. And just quick follow-up on your PCI business, I mean 3Q you decided some push out that you I think you’ve commented on today than you saw some revenue recognition there. But prior year, some of these things might have pushed out for ‘14. Is that still the case or do you think most of those higher push-ups recognized in 4Q?

No, somewhere I recognized in Q4 of ‘13 and others are still in the pipeline for revenue recognition in ‘14. So not all of it was in Q4 of ‘13. Good cash for 2013.

Thank you very much.

And ladies and gentlemen, at this time we've reached the end of today's time allotted for the Q&A session. And I would like to turn the conference call back over to Mr. Young for closing remarks.

Thank you. Thanks everybody for joining us this evening. We invite you to meet with Bruker at the upcoming Citi, Cowen and Barclay Healthcare conferences during the first quarter. We also encourage you to come to our headquarters in Billerica, Massachusetts. Thank you for your attention and have a nice day.