Part I [Business](index=3&type=section&id=Item%201.%20Business) Bio-Rad Laboratories is a global manufacturer and distributor of life science research and clinical diagnostics products, operating in two segments with significant international sales and subject to extensive regulations 2021 Business Segment Sales Breakdown | Segment | Percentage of Net Sales (FY 2021) | | :--- | :--- | | Life Science | 48% | | Clinical Diagnostics | 52% | 2021 Geographic Sales Breakdown | Region | Percentage of Net Sales (FY 2021) | | :--- | :--- | | United States | 39% | | International | 61% | - The Life Science segment addresses an estimated worldwide market of approximately **$19 billion**, serving customers in research, biopharmaceutical production, and food safety[13](index=13&type=chunk) - The Clinical Diagnostics segment serves an estimated worldwide market of approximately **$16 billion**, providing over **3,000 products** for in vitro diagnostics (IVD) to clinical laboratories[14](index=14&type=chunk)[15](index=15&type=chunk) - The company owns over **2,200 U.S. and international patents** and numerous trademarks, but believes its primary competitive advantage lies in its knowledge, technology, and specialized skills[17](index=17&type=chunk) - As of December 31, 2021, the company had approximately **7,900 employees**, with **46% in the Americas**, **39% in EMEA**, and **15% in Asia Pacific**[39](index=39&type=chunk) [Risk Factors](index=9&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant operational, market, and financial risks, including supply chain disruptions, intense competition, foreign currency fluctuations, and IT system challenges - The COVID-19 pandemic has caused and may continue to cause supply chain challenges, including shortages of raw materials like plastics and electronic components, leading to **significant backorders and delays** expected to continue in 2022[48](index=48&type=chunk)[51](index=51&type=chunk) - International operations, which generated **61% of net sales in 2021**, expose the company to risks from complex foreign laws, trade restrictions, and geopolitical events like Brexit[56](index=56&type=chunk)[57](index=57&type=chunk) - Changes in the market value of the company's significant equity position in Sartorius AG **materially impact financial results** and could potentially lead to the company being deemed an "investment company" under the Investment Company Act of 1940[71](index=71&type=chunk)[72](index=72&type=chunk) - The company is engaged in a multi-year implementation of a new global ERP system, which has experienced delays and could **adversely affect business operations** if significant disruptions occur[78](index=78&type=chunk) - The company is subject to substantial government regulation, including from the FDA and the EU's new In-Vitro Diagnostics Regulation (EU IVDR), which imposes stricter requirements and could **increase costs or delay product marketing**[88](index=88&type=chunk)[92](index=92&type=chunk) - A **significant majority of voting stock** is held by the Schwartz family, allowing them to elect a majority of directors and control matters affecting the company, which may create conflicts of interest[118](index=118&type=chunk)[119](index=119&type=chunk) [Unresolved Staff Comments](index=22&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company has no unresolved staff comments from the Securities and Exchange Commission - **None**[123](index=123&type=chunk) [Properties](index=23&type=section&id=Item%202.%20Properties) The company operates principal manufacturing and research facilities globally for its Life Science and Clinical Diagnostics segments, utilizing both owned and leased properties Principal Manufacturing and Research Locations | Segment | Location | Ownership | | :--- | :--- | :--- | | Life Science | Singapore | Leased | | Life Science | Oxford, England | Leased | | Clinical Diagnostics | Irvine, California | Leased | | Clinical Diagnostics | Greater Seattle Area, Washington | Leased | | Clinical Diagnostics | Lille, France | Owned | | Clinical Diagnostics | Cressier, Switzerland | Owned/Leased | | Clinical Diagnostics | Dreieich, Germany | Owned/Leased | | Shared | Greater San Francisco Bay Area, CA | Owned/Leased | | Shared | Greater Paris Area, France | Leased | | Shared | Leipzig, Germany | Leased | [Legal Proceedings](index=23&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal claims in the ordinary course of business, with no expected material adverse effect on its financial position or results - The company is a party to various claims and legal actions arising in the ordinary course of business but does not expect any resulting liability to have a **material adverse effect** on its financial results or position[126](index=126&type=chunk) [Mine Safety Disclosures](index=23&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section is not applicable to the company's operations - **Not applicable**[127](index=127&type=chunk) Part II [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=24&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) Bio-Rad's common stock trades on the NYSE, with **no history or current plans for cash dividends**, and a share repurchase program with **$223.1 million** remaining - The company has **never paid a cash dividend** and has **no present plans** to do so[129](index=129&type=chunk) - As of December 31, 2021, **$223.1 million** remained available under the authorized Share Repurchase Program No shares were purchased during the three months ended December 31, 2021[130](index=130&type=chunk) [Reserved](index=25&type=section&id=Item%206.%20Reserved) This item is reserved and contains no information [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In FY2021, net sales grew **14.8%** to **$2.92 billion**, driven by segment growth, with net income significantly boosted by a **$4.93 billion** gain from equity securities Financial Performance Summary (FY 2021 vs. FY 2020) | Metric | 2021 | 2020 | Change | | :--- | :--- | :--- | :--- | | Net Sales | $2.92B | $2.55B | +14.8% | | Currency-Neutral Sales Growth | 12.7% | N/A | N/A | | Gross Margin | 56.1% | 56.5% | -0.4 p.p. | | Net Income | $4.25B | $3.81B | +11.5% | | Change in Fair Value of Securities | +$4.93B | +$4.50B | +9.6% | Segment Sales Growth (FY 2021 vs. FY 2020) | Segment | Reported Growth | Currency-Neutral Growth | | :--- | :--- | :--- | | Life Science | +13.7% | +12.0% | | Clinical Diagnostics | +16.1% | +13.6% | - In October 2021, the company acquired Dropworks, Inc., a digital PCR development company, for a total consideration of **$125.5 million** to complement its Life Science offerings[140](index=140&type=chunk)[141](index=141&type=chunk) - A restructuring plan announced in February 2021, primarily impacting European operations, resulted in charges of **$64.4 million** for the year ended December 31, 2021[142](index=142&type=chunk) - In November 2021, the company extended a **€400 million** collateralized loan to Sartorius-Herbst Beteiligungen II GmbH, due in 2029[143](index=143&type=chunk) - Net cash provided by operations increased to **$656.5 million** in 2021 from **$575.3 million** in 2020, primarily due to higher sales, increased dividends from Sartorius AG, and lower interest payments[191](index=191&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are foreign currency exchange rates and interest rates, managed through operational means and derivatives, with interest rate risk deemed insignificant - The company **manages foreign exchange risk** through operational means (e.g., matching revenues and costs in the same currency) and by using forward foreign exchange contracts[210](index=210&type=chunk) - A hypothetical **10% adverse movement** in foreign exchange rates would result in an approximate net-present-value **loss of $32.8 million** on the company's derivative positions as of December 31, 2021[211](index=211&type=chunk) - Interest rate risk associated with debt instruments was **not significant** as of December 31, 2021, as the debt consists primarily of fixed-rate instruments[212](index=212&type=chunk) [Financial Statements and Supplementary Data](index=38&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for FY2021, including the auditor's report and various financial statements - This item includes the company's **audited consolidated financial statements** and the report from its independent registered public accounting firm, **KPMG LLP**[214](index=214&type=chunk)[216](index=216&type=chunk) - The auditor's report identified **two critical audit matters**: the assessment of the lease term for reagent rental agreements and the accounting for the investment in Sartorius AG, specifically evaluating the ability to exercise significant influence[220](index=220&type=chunk)[224](index=224&type=chunk)[227](index=227&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=89&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) This section is not applicable to the company - **Not applicable**[452](index=452&type=chunk) [Controls and Procedures](index=90&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and procedures and internal control over financial reporting were effective as of December 31, 2021 - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of the end of the fiscal year[454](index=454&type=chunk) - Management concluded that the company's internal control over financial reporting was **effective** as of December 31, 2021, based on the COSO framework[456](index=456&type=chunk) - **No changes** in internal control over financial reporting occurred during the year that materially affected, or are reasonably likely to materially affect, these controls[458](index=458&type=chunk) [Other Information](index=91&type=section&id=Item%209B.%20Other%20Information) The Board adopted an Executive Change in Control Severance Plan on February 10, 2022, providing benefits to named executive officers upon qualifying termination - On February 10, 2022, the company's board of directors adopted an **Executive Change in Control Severance Plan**[461](index=461&type=chunk) - The plan provides benefits such as **cash severance**, **pro-rated bonuses**, **COBRA reimbursement**, and **accelerated equity vesting** for named executive officers upon a qualifying termination following a change in control[462](index=462&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=92&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This section is not applicable to the company - **Not applicable**[465](index=465&type=chunk) Part III [Directors, Executive Officers and Corporate Governance](index=92&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information on directors, executive officers, and corporate governance is **incorporated by reference** from the 2022 Proxy Statement, and the company has a **code of ethics** - Required information is **incorporated by reference** from the company's 2022 Proxy Statement[466](index=466&type=chunk) - The company has adopted a **code of business ethics and conduct** applicable to all employees and directors, available on its website[467](index=467&type=chunk) [Executive Compensation](index=93&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive compensation, including discussion, tables, and termination payments, is **incorporated by reference** from the 2022 Proxy Statement - Required information regarding executive compensation is **incorporated by reference** from the 2022 Proxy Statement[469](index=469&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=93&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is **incorporated by reference** from the 2022 Proxy Statement, with **1,897,388** securities available for future issuance under equity plans - Information on security ownership is **incorporated by reference** from the 2022 Proxy Statement[470](index=470&type=chunk) Equity Compensation Plan Information (as of Dec 31, 2021) | Plan Category | Securities to be Issued Upon Exercise | Weighted-Average Exercise Price | Securities Remaining for Future Issuance | | :--- | :--- | :--- | :--- | | Approved by security holders | 567,301 | $246.41 | 1,897,388 | | Not approved by security holders | — | — | — | [Certain Relationships and Related Transactions, and Director Independence](index=93&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information on related party transactions and director independence is **incorporated by reference** from the company's 2022 Proxy Statement - Required information is **incorporated by reference** from the 2022 Proxy Statement[472](index=472&type=chunk) [Principal Accountant Fees and Services](index=93&type=section&id=Item%2014.%20Principal%20Accountant%20Fees%20and%20Services) **KPMG LLP** serves as the independent registered public accounting firm, with fee and service information **incorporated by reference** from the 2022 Proxy Statement - The company's independent registered public accounting firm is **KPMG LLP**[472](index=472&type=chunk) - Required information on accountant fees and services is **incorporated by reference** from the 2022 Proxy Statement[473](index=473&type=chunk) Part IV [Exhibits and Financial Statement Schedules](index=94&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section indexes financial statements, notes the omission of schedules, and lists all exhibits filed or **incorporated by reference** into the Form 10-K - This item provides an **index to the financial statements** (located in Item 8) and a **list of all exhibits** filed as part of the report[474](index=474&type=chunk)[475](index=475&type=chunk) [Form 10-K Summary](index=97&type=section&id=Item%2016.%20Form%2010-K%20Summary) This item is not applicable, and no summary is provided - **None**[487](index=487&type=chunk)

Part I – Financial Information [Financial Statements](index=4&type=section&id=Part%20I%20%E2%80%93%20Financial%20Information) Presents unaudited condensed consolidated financial statements for Q3 and nine months ended September 30, 2021, including balance sheets, income, cash flows, and equity changes [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets increased to **$19.95 billion** from **$12.97 billion** by September 30, 2021, driven by a rise in other investments and stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | **Total Current Assets** | $2,466,286 | $2,139,835 | | **Other Investments** | $16,230,635 | $9,561,140 | | **Total Assets** | **$19,953,380** | **$12,972,618** | | **Total Current Liabilities** | $649,916 | $631,536 | | **Total Liabilities** | $4,621,002 | $3,092,678 | | **Total Stockholders' Equity** | **$15,332,378** | **$9,879,940** | [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Q3 2021 net sales grew **15.4%** to **$747.0 million**, with net income surging to **$3.93 billion** due to equity security gains; nine-month net sales reached **$2.19 billion** Q3 2021 vs Q3 2020 Financial Performance (in thousands, except per share data) | Metric | Q3 2021 | Q3 2020 | | :--- | :--- | :--- | | **Net Sales** | $747,049 | $647,263 | | **Gross Profit** | $437,435 | $367,311 | | **Income from Operations** | $156,804 | $109,600 | | **Change in fair market value of equity securities** | $4,868,659 | $1,580,350 | | **Net Income** | **$3,928,033** | **$1,314,824** | | **Diluted EPS** | $129.96 | $43.64 | Nine Months 2021 vs 2020 Financial Performance (in thousands, except per share data) | Metric | Nine Months 2021 | Nine Months 2020 | | :--- | :--- | :--- | | **Net Sales** | $2,189,776 | $1,755,787 | | **Gross Profit** | $1,239,660 | $977,667 | | **Income from Operations** | $382,448 | $235,715 | | **Change in fair market value of equity securities** | $7,078,753 | $3,591,509 | | **Net Income** | **$5,819,561** | **$2,967,165** | | **Diluted EPS** | $192.76 | $98.46 | [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash from operating activities for the nine months ended September 30, 2021, increased to **$498.6 million**, with a **$197.4 million** overall increase in cash and equivalents Nine Months Ended September 30 Cash Flow Summary (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $498,597 | $290,594 | | **Net cash used in investing activities** | ($229,954) | ($10,141) | | **Net cash used in financing activities** | ($60,064) | ($101,157) | | **Net increase in cash, cash equivalents, and restricted cash** | $197,405 | $182,450 | [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Detailed notes cover accounting policies, a **$31.6 million** Q3 IP settlement, a **$7.1 billion** gain from Sartorius AG investment, a **$58.0 million** restructuring liability, and the **$125 million** acquisition of Dropworks, Inc - In Q3 2021, the company recognized **$31.6 million** in revenue from a settlement of an intellectual property litigation for infringing product sales from November 2018 through July 2021[30](index=30&type=chunk) - The fair market value of equity securities, primarily the investment in Sartorius AG, increased by **$7.08 billion** in the first nine months of 2021[56](index=56&type=chunk)[57](index=57&type=chunk) - A strategy-driven restructuring plan was announced in February 2021, primarily impacting European operations. As of September 30, 2021, the company has a restructuring liability of **$58.0 million**[98](index=98&type=chunk)[99](index=99&type=chunk) - Subsequent to the quarter end, on October 15, 2021, Bio-Rad acquired Dropworks, Inc. for approximately **$125 million** to complement its Digital PCR product offerings[110](index=110&type=chunk) [Management's Discussion and Analysis (MD&A)](index=31&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) MD&A highlights Q3 2021 sales growth of **15.4%** and nine-month growth of **24.7%**, driven by Life Science and Clinical Diagnostics segments, with strong liquidity and **$498.6 million** in operating cash flow [Results of Operations](index=33&type=section&id=Results%20of%20Operations) Q3 2021 net sales increased **15.4%** to **$747.0 million**, with gross margin improving to **58.6%**; nine-month net sales grew **24.7%** to **$2.19 billion** across segments Q3 2021 vs Q3 2020 Sales Growth | Segment | Q3 2021 Sales | Growth (Reported) | Growth (Currency-Neutral) | | :--- | :--- | :--- | :--- | | **Life Science** | $373.5M | 15.3% | 13.9% | | **Clinical Diagnostics** | $372.2M | 15.5% | 13.7% | | **Total Net Sales** | **$747.0M** | **15.4%** | **13.8%** | Nine Months 2021 vs 2020 Sales Growth | Segment | Nine Months 2021 Sales | Growth (Reported) | Growth (Currency-Neutral) | | :--- | :--- | :--- | :--- | | **Life Science** | $1.07B | 33.7% | 30.3% | | **Clinical Diagnostics** | $1.11B | 17.5% | 13.9% | | **Total Net Sales** | **$2.19B** | **24.7%** | **21.2%** | - Consolidated gross margin for Q3 2021 increased to **58.6%** from **56.7%** in Q3 2020, partly due to a one-time royalty revenue of **$31.6 million** which contributed **2.0 percentage points** to the Life Science segment's gross margin[126](index=126&type=chunk) [Liquidity and Capital Resources](index=37&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity with **$1.34 billion** in cash and equivalents, **$498.6 million** in operating cash flow for nine months, and **$223.1 million** remaining for share repurchases - As of September 30, 2021, the company had **$1.34 billion** in cash, cash equivalents, and short-term investments[151](index=151&type=chunk) - Net cash provided by operations for the nine months ended September 30, 2021, was **$498.6 million**, a significant increase from **$290.6 million** in the same period of 2020[154](index=154&type=chunk) - The company repurchased **$50.0 million** of its Class A common stock in Q1 2021. As of September 30, 2021, **$223.1 million** remained available under the Share Repurchase Program[158](index=158&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) No material changes to market risk disclosures were reported for the nine months ended September 30, 2021 - There were no material changes in market risk disclosures during the nine months ended September 30, 2021[163](index=163&type=chunk) [Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of September 30, 2021, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[165](index=165&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, internal controls[166](index=166&type=chunk) Part II – Other Information [Legal Proceedings](index=38&type=section&id=Part%20II%20%E2%80%93%20Other%20Information) The company is involved in ordinary course legal actions, but does not anticipate a material adverse effect on its financial position or results - The company does not expect any ongoing legal proceedings to have a material adverse effect on its financial results, position, or liquidity[96](index=96&type=chunk)[167](index=167&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) Key risks include COVID-19 impacts, international operations (**61%** of net sales), competition, cyberattacks, currency fluctuations, and the material impact of Sartorius AG investment value changes - The COVID-19 pandemic continues to pose risks, affecting product demand, raw material supply, and transportation logistics[170](index=170&type=chunk)[171](index=171&type=chunk)[173](index=173&type=chunk) - Significant international operations (**61%** of net sales) expose the company to complex foreign laws, currency fluctuations, and geopolitical risks like Brexit[176](index=176&type=chunk)[177](index=177&type=chunk) - Changes in the market value of the company's investment in Sartorius AG materially impact financial results and could potentially cause the company to be deemed an 'investment company' under the Investment Company Act[192](index=192&type=chunk)[193](index=193&type=chunk) - The company faces risks of information system breaches and cyberattacks, which could misappropriate confidential data and disrupt operations[184](index=184&type=chunk) - The business is subject to risks from supply chain interruptions, particularly for components and raw materials sourced from a limited number of suppliers[222](index=222&type=chunk)[223](index=223&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) As of September 30, 2021, **$223.1 million** remained available for share repurchases, with no shares purchased during Q3 2021 Share Repurchase Activity (Q3 2021) | Period | Total Shares Purchased | Average Price Paid | Remaining Authorization | | :--- | :--- | :--- | :--- | | July 2021 | 0 | N/A | $223.1M | | August 2021 | 0 | N/A | $223.1M | | September 2021 | 0 | N/A | $223.1M |

[PART I – FINANCIAL INFORMATION](index=4&type=section&id=Part%20I%20–%20Financial%20Information) This section presents Bio-Rad Laboratories, Inc.'s unaudited condensed consolidated financial statements and management's discussion for the period ended June 30, 2021 [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Bio-Rad Laboratories, Inc.'s unaudited condensed consolidated financial statements for the period ended June 30, 2021, including balance sheets, income statements, comprehensive income statements, cash flow statements, statements of changes in stockholders' equity, and detailed notes to these financial statements [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section provides a snapshot of Bio-Rad's financial position, detailing assets, liabilities, and stockholders' equity as of June 30, 2021, and December 31, 2020 **Condensed Consolidated Balance Sheets (In thousands):** | Item | June 30, 2021 | December 31, 2020 | | :----------------------------------- | :------------ | :---------------- | | **ASSETS:** | | | | Cash and cash equivalents | $732,836 | $662,205 | | Short-term investments | $428,562 | $328,913 | | Total current assets | $2,289,093 | $2,139,835 | | Other investments | $11,580,390 | $9,561,140 | | Total assets | $15,117,556 | $12,972,618 | | **LIABILITIES AND STOCKHOLDERS' EQUITY:** | | | | Total current liabilities | $587,052 | $631,536 | | Deferred income taxes | $2,542,189 | $2,076,785 | | Total liabilities | $3,522,676 | $3,092,678 | | Total stockholders' equity | $11,594,880 | $9,879,940 | | Total liabilities and stockholders' equity | $15,117,556 | $12,972,618 | - Total assets increased by **$2.14 billion (16.5%)** from December 31, 2020, to June 30, 2021, primarily driven by a significant increase in 'Other investments'[8](index=8&type=chunk) - Total stockholders' equity increased by **$1.71 billion (17.4%)** from December 31, 2020, to June 30, 2021[9](index=9&type=chunk) [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) This section presents Bio-Rad's financial performance over specific periods, detailing net sales, gross profit, operating income, and net income, along with earnings per share **Condensed Consolidated Statements of Income (In thousands, except per share data) (Unaudited):** | Item | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | $715,931 | $536,880 | $1,442,727 | $1,108,524 | | Gross profit | $401,598 | $292,988 | $802,225 | $610,356 | | Income from operations | $124,782 | $51,742 | $225,644 | $126,115 | | Change in fair market value of equity securities | $(1,030,691) | $(1,183,488) | $(2,210,094) | $(2,011,159) | | Net income | $914,114 | $966,429 | $1,891,528 | $1,652,341 | | Basic earnings per share | $30.71 | $32.59 | $63.49 | $55.52 | | Diluted earnings per share | $30.32 | $32.15 | $62.70 | $54.84 | - Net sales increased by **33.4%** for the three months ended June 30, 2021, and by **30.1%** for the six months ended June 30, 2021, compared to the respective prior-year periods[10](index=10&type=chunk) - Net income decreased for the three months ended June 30, 2021, but increased for the six months ended June 30, 2021, primarily influenced by changes in the fair market value of equity securities[10](index=10&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section details Bio-Rad's comprehensive income, including net income and other comprehensive income (loss) components, such as foreign currency translation adjustments **Condensed Consolidated Statements of Comprehensive Income (In thousands) (Unaudited):** | Item | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $914,114 | $966,429 | $1,891,528 | $1,652,341 | | Other comprehensive income (loss), net of income taxes | $56,732 | $87,813 | $(157,290) | $26,206 | | Comprehensive income | $970,846 | $1,054,242 | $1,734,238 | $1,678,547 | - Other comprehensive income (loss) for the six months ended June 30, 2021, was a loss of **$157.3 million**, primarily due to foreign currency translation adjustments[11](index=11&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section outlines Bio-Rad's cash inflows and outflows from operating, investing, and financing activities for the six months ended June 30, 2021, and 2020 **Condensed Consolidated Statements of Cash Flows (In thousands, unaudited):** | Item | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $268,234 | $154,930 | | Net cash used in investing activities | $(148,604) | $(100,995) | | Net cash used in financing activities | $(44,482) | $(101,596) | | Net increase (decrease) in cash, cash equivalents, and restricted cash | $70,046 | $(50,519) | | Cash, cash equivalents, and restricted cash at end of period | $737,161 | $612,132 | - Net cash provided by operating activities increased significantly to **$268.2 million** for the six months ended June 30, 2021, up from **$154.9 million** in the prior year, driven by higher sales and Sartorius AG dividends[13](index=13&type=chunk)[156](index=156&type=chunk) - Net cash used in investing activities increased to **$148.6 million**, primarily due to increased net cash outflows from marketable securities and investments, partially offset by no acquisitions in 2021 compared to the Celsee acquisition in 2020[13](index=13&type=chunk)[158](index=158&type=chunk) - Net cash used in financing activities decreased to **$44.5 million**, mainly due to a **$50.0 million** decrease in cash used for treasury stock repurchases[13](index=13&type=chunk)[159](index=159&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This section details the changes in Bio-Rad's stockholders' equity, including net income, other comprehensive income, stock issuance, and treasury stock transactions **Condensed Consolidated Statements of Changes in Stockholders' Equity (In thousands) (Unaudited):** | Item | Balance at Dec 31, 2020 | Net Income (Q1 2021) | Other Comprehensive Loss (Q1 2021) | Issuance of Common Stock (Q1 2021) | Stock Compensation Expense (Q1 2021) | Purchase of Treasury Stock (Q1 2021) | Balance at Mar 31, 2021 | Net Income (Q2 2021) | Other Comprehensive Income (Q2 2021) | Issuance of Common Stock (Q2 2021) | Stock Compensation Expense (Q2 2021) | Reissuance of Treasury Stock (Q2 2021) | Balance at Jun 30, 2021 | | :----------------------------------- | :---------------------- | :------------------- | :--------------------------------- | :--------------------------------- | :----------------------------------- | :--------------------------------- | :---------------------- | :------------------- | :--------------------------------- | :--------------------------------- | :----------------------------------- | :------------------------------------- | :---------------------- | | Common Stock | $3 | — | — | — | — | — | $3 | — | — | — | — | — | $3 | | Additional Paid-in Capital | $429,376 | — | — | $4,052 | $11,673 | — | $445,101 | — | — | $3,548 | $11,428 | $(379) | $459,698 | | Treasury Stock | $(99,907) | — | — | — | — | $(49,998) | $(149,905) | — | — | — | — | $443 | $(149,462) | | Retained Earnings | $9,268,012 | $977,414 | — | — | — | — | $10,245,426 | $914,114 | — | — | — | $(65) | $11,159,475 | | Accumulated Other Comprehensive Income (Loss) | $282,456 | — | $(214,022) | — | — | — | $68,434 | — | $56,732 | — | — | — | $125,166 | | Total Stockholders' Equity | $9,879,940 | $977,414 | $(214,022) | $4,052 | $11,673 | $(49,998) | $10,609,059 | $914,114 | $56,732 | $3,548 | $11,428 | $(1) | $11,594,880 | - Total stockholders' equity increased from **$9.88 billion** at December 31, 2020, to **$11.59 billion** at June 30, 2021, primarily due to net income and additional paid-in capital, partially offset by treasury stock repurchases and other comprehensive loss[16](index=16&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements, covering accounting policies, fair value measurements, and other critical financial information [1. BASIS OF PRESENTATION AND USE OF ESTIMATES](index=11&type=section&id=1.%20BASIS%20OF%20PRESENTATION%20AND%20USE%20OF%20ESTIMATES) This note outlines the basis for preparing the unaudited condensed consolidated financial statements in accordance with GAAP, emphasizing the use of management estimates and assumptions. It details the company's revenue recognition policies, including treatment of multiple performance obligations, product returns, service revenues, and reagent rental agreements. It also provides disaggregated revenue by geographic region and information on warranty provisions and allowance for doubtful accounts, along with recent accounting pronouncements adopted - Revenue from contracts with customers is recognized upon transfer of control of promised products or services, net of estimated product returns[22](index=22&type=chunk)[25](index=25&type=chunk) - Reagent rental agreements, predominantly operating leases with variable payments, accounted for approximately **2%** and **3%** of total revenue for the three and six months ended June 30, 2021 and 2020, respectively[33](index=33&type=chunk) **Net Sales Disaggregated by Geographic Region (in millions):** | Region | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Europe | $229.1 | $174.0 | $476.7 | $369.7 | | Asia | $172.1 | $129.0 | $341.0 | $240.4 | | United States | $274.6 | $205.4 | $546.0 | $434.9 | | Other | $40.1 | $28.5 | $79.0 | $63.5 | | Total net sales | $715.9 | $536.9 | $1,442.7 | $1,108.5 | **Changes in Allowance for Doubtful Accounts (in millions):** | Item | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Balance at beginning of period | $19.8 | $20.2 | | Provision for expected credit losses | $0.6 | $1.2 | | Write-offs charged against the allowance | $(3.1) | $(1.2) | | Recoveries collected | — | $0.1 | | Balance at end of period | $17.3 | $20.3 | [2. FAIR VALUE MEASUREMENTS](index=15&type=section&id=2.%20FAIR%20VALUE%20MEASUREMENTS) This note details the company's fair value measurements for financial assets and liabilities, categorized into Level 1, 2, and 3 inputs. It highlights significant equity securities, particularly the investment in Sartorius AG, and available-for-sale debt investments. The note also covers foreign currency exchange contracts used for hedging and the accounting for other investments **Financial Assets and Liabilities Carried at Fair Value (in millions) as of June 30, 2021:** | Item | Level 1 | Level 2 | Level 3 | Total | | :----------------------------------- | :------ | :------ | :------ | :-------- | | **Financial assets:** | | | | | | Cash equivalents | $102.7 | $78.4 | — | $181.1 | | Restricted investments | $6.8 | — | — | $6.8 | | Equity securities | $11,607.8 | — | — | $11,607.8 | | Available-for-sale investments | — | $359.9 | — | $359.9 | | Forward foreign exchange contracts | — | $0.7 | — | $0.7 | | Total financial assets | $11,717.3 | $439.0 | — | $12,156.3 | | **Financial liabilities:** | | | | | | Forward foreign exchange contracts | — | $0.5 | — | $0.5 | | Contingent consideration | — | — | $0.1 | $0.1 | | Total financial liabilities | — | $0.5 | $0.1 | $0.6 | - The company's investment in Sartorius AG significantly impacts financial results, with fair market value changes resulting in gains of **$1.03 billion** and **$2.21 billion** for the three and six months ended June 30, 2021, respectively[53](index=53&type=chunk) - As of June 30, 2021, Bio-Rad owns approximately **37%** of Sartorius AG's ordinary voting shares and **28%** of its preference shares[54](index=54&type=chunk) **Summary of Forward Foreign Exchange Contracts (in millions) as of June 30, 2021:** | Contract Type | Notional Value | Unrealized (Gain)/Loss | | :----------------------------------- | :------------- | :--------------------- | | Contracts to sell foreign currency | $274.5 | $0.1 (Loss) | | Contracts to purchase foreign currency | $203.5 | $(0.3) (Gain) | [3. GOODWILL AND OTHER PURCHASED INTANGIBLE ASSETS](index=21&type=section&id=3.%20GOODWILL%20AND%20OTHER%20PURCHASED%20INTANGIBLE%20ASSETS) This note provides a breakdown of goodwill by segment and details identifiable purchased intangible assets, including their weighted-average remaining amortization periods, purchase price, accumulated amortization, and net carrying amounts. It also reports the amortization expense for these assets **Goodwill by Segment (in millions) as of June 30, 2021 and December 31, 2020:** | Segment | Goodwill | Accumulated Impairment Losses | Goodwill, Net | | :----------------------------------- | :------- | :---------------------------- | :------------ | | Life Science | $277.9 | $(41.8) | $236.1 | | Clinical Diagnostics | $349.2 | $(293.4) | $55.8 | | Total | $627.1 | $(335.2) | $291.9 | **Purchased Intangible Assets (in millions) as of June 30, 2021:** | Asset Type | Weighted-Average Remaining Amortization Period (years) | Purchase Price | Accumulated Amortization | Net Carrying Amount | | :----------------------------------- | :----------------------------------------------------- | :------------- | :----------------------- | :------------------ | | Customer relationships/lists | 5.38 | $114.0 | $(89.1) | $24.9 | | Know how | 4.25 | $193.7 | $(174.7) | $19.0 | | Developed product technology | 13.68 | $217.6 | $(111.8) | $105.8 | | Licenses | 7.26 | $65.3 | $(39.0) | $26.3 | | Tradenames | 7.58 | $6.4 | $(4.3) | $2.1 | | Covenants not to compete | 3.47 | $4.6 | $(2.4) | $2.2 | | Other | — | $0.1 | $(0.1) | — | | Total definite-lived intangible assets | | $601.7 | $(421.4) | $180.3 | | In-process research and development | | $4.6 | — | $4.6 | | Total purchased intangible assets | | $606.3 | $(421.4) | $184.9 | **Amortization Expense (in millions):** | Period | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Amortization expense | $7.2 | $7.2 | $14.4 | $13.1 | [4. SUPPLEMENTAL CASH FLOW INFORMATION](index=23&type=section&id=4.%20SUPPLEMENTAL%20CASH%20FLOW%20INFORMATION) This note provides a reconciliation of net income to net cash provided by operating activities, detailing various adjustments including depreciation, share-based compensation, changes in fair market value of equity securities, and changes in working capital accounts **Reconciliation of Net Income to Net Cash Provided by Operating Activities (in millions):** | Item | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :----------------------------------- | :----------------------------- | :----------------------------- | | Net income | $1,891.5 | $1,652.3 | | Depreciation and amortization | $66.4 | $68.3 | | Share-based compensation | $23.1 | $18.5 | | Changes in fair market value of equity securities | $(2,210.1) | $(2,011.2) | | Increase in deferred income taxes | $503.8 | $437.4 | | Net cash provided by operating activities | $268.2 | $154.9 | - A significant non-cash adjustment to reconcile net income to operating cash flow is the change in fair market value of equity securities, which was a negative **$2.21 billion** for the six months ended June 30, 2021[76](index=76&type=chunk) [5. LONG-TERM DEBT](index=24&type=section&id=5.%20LONG-TERM%20DEBT) This note details the company's long-term debt, primarily consisting of finance leases and other debt, and provides information on its $200.0 million unsecured revolving credit facility. The company had no outstanding borrowings under the credit agreement as of June 30, 2021, and was in compliance with all financial ratios and covenants **Long-Term Debt (in millions):** | Item | June 30, 2021 | December 31, 2020 | | :----------------------------------- | :------------ | :---------------- | | Finance leases and other debt | $12.5 | $14.1 | | Less current maturities | $(1.7) | $(1.8) | | Long-term debt | $10.8 | $12.3 | - Bio-Rad has a **$200.0 million** unsecured revolving credit facility, with no outstanding borrowings as of June 30, 2021, and was in compliance with all covenants[79](index=79&type=chunk)[80](index=80&type=chunk) - The reduction in interest expense for the six months ended June 30, 2021, was primarily due to the repayment of **$425.0 million** Senior Notes in December 2020[131](index=131&type=chunk)[145](index=145&type=chunk) [6. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)](index=25&type=section&id=6.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME%20(LOSS)) This note presents the components of accumulated other comprehensive income (loss), including foreign currency translation adjustments, foreign post-employment benefits adjustments, and net unrealized holding gains on available-for-sale investments, along with reclassification adjustments and income tax effects **Accumulated Other Comprehensive Income (Loss) (in millions):** | Component | Balance at Jan 1, 2021 | Other Comprehensive (Loss) Income, before reclassifications | Amounts reclassified from AOCI | Income Tax Effects | Other Comprehensive (Loss) Income, net of income taxes | Balance at Jun 30, 2021 | | :----------------------------------- | :--------------------- | :---------------------------------------------------------- | :----------------------------- | :----------------- | :----------------------------------------------------- | :---------------------- | | Foreign currency translation adjustments | $298.6 | $(158.4) | — | $0.2 | $(158.2) | $140.4 | | Foreign post-employment benefits adjustments | $(26.0) | $1.3 | $1.6 | $(0.3) | $2.6 | $(23.4) | | Net unrealized holding gains on available-for-sale investments | $9.8 | $(2.0) | $(0.1) | $0.5 | $(1.6) | $8.2 | | Total accumulated other comprehensive income (loss) | $282.4 | $(159.1) | $1.5 | $0.4 | $(157.2) | $125.2 | - Accumulated other comprehensive income decreased from **$282.4 million** at January 1, 2021, to **$125.2 million** at June 30, 2021, primarily due to foreign currency translation adjustments[82](index=82&type=chunk) [7. EARNINGS PER SHARE](index=26&type=section&id=7.%20EARNINGS%20PER%20SHARE) This note outlines the calculation of basic and diluted earnings per share, including the weighted average number of common shares outstanding and the effect of potentially dilutive securities **Weighted Average Common Shares Outstanding (in thousands):** | Item | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic weighted average shares outstanding | 29,764 | 29,652 | 29,793 | 29,759 | | Effect of potentially dilutive stock options and restricted stock awards | 384 | 406 | 374 | 372 | | Diluted weighted average common shares outstanding | 30,148 | 30,058 | 30,167 | 30,131 | | Anti-dilutive shares | 23 | 3 | 23 | 40 | [8. OTHER INCOME AND EXPENSE, NET](index=26&type=section&id=8.%20OTHER%20INCOME%20AND%20EXPENSE,%20NET) This note details the components of other (income) expense, net, including interest and investment income, net realized gains on investments, impairment losses, and gains on divestitures **Other (Income) Expense, Net (in millions):** | Item | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest and investment income | $(0.7) | $(10.0) | $(19.0) | $(12.8) | | Net realized gains on investments | — | $(0.2) | $(0.1) | $(0.6) | | Other-than-temporary impairment loss on investment | — | $4.6 | $0.8 | $4.6 | | Gain on divestiture of a division | — | $(11.7) | — | $(11.7) | | Other expense | $0.8 | $0.1 | $1.0 | — | | Other (income) expense, net | $0.1 | $(17.2) | $(17.3) | $(20.5) | - Other (income) expense, net, shifted from **$17.2 million** income in Q2 2020 to **$0.1 million** loss in Q2 2021, primarily due to a **$11.7 million** gain on the sale of the Informatics division in Q2 2020 and timing of Sartorius AG dividends[87](index=87&type=chunk)[134](index=134&type=chunk) [9. INCOME TAXES](index=27&type=section&id=9.%20INCOME%20TAXES) This note provides the effective income tax rates for the periods presented and discusses the company's assessment of deferred tax assets, ongoing tax examinations, and liabilities for unrecognized tax benefits **Effective Income Tax Rates:** | Period | 2021 | 2020 | | :----------------------------------- | :--- | :--- | | Three Months Ended June 30 | 21.0% | 22.4% | | Six Months Ended June 30 | 22.9% | 23.0% | - The decrease in the effective income tax rate for the three months ended June 30, 2021, was primarily due to the release of reserves from the lapse of certain statutes of limitations[89](index=89&type=chunk)[135](index=135&type=chunk) - Gross unrecognized tax benefits were **$53.1 million** as of June 30, 2021, a decrease from **$55.8 million** at December 31, 2020, mainly due to the release of reserves[93](index=93&type=chunk) - The company believes it is reasonably possible that unrecognized tax benefits could decrease by up to **$18.8 million** within the next twelve months due to expected outcomes of examinations or expiration of statutes of limitations[94](index=94&type=chunk) [10. SEGMENT INFORMATION](index=27&type=section&id=10.%20SEGMENT%20INFORMATION) This note presents financial information for Bio-Rad's two operating segments: Life Science and Clinical Diagnostics, along with a reconciliation of total segment profit to consolidated income before income taxes. It also notes a change in allocation methodology for operating expenses and interest expense starting in 2021 **Segment Net Sales (in millions):** | Segment | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Life Science | $334.2 | $252.1 | $700.7 | $479.2 | | Clinical Diagnostics | $380.2 | $283.2 | $738.8 | $623.4 | | Other Operations | $1.5 | $1.6 | $3.2 | $5.9 | | Total Net Sales | $715.9 | $536.9 | $1,442.7 | $1,108.5 | **Segment Net Profit (Loss) (in millions):** | Segment | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Life Science | $64.6 | $35.4 | $166.9 | $59.1 | | Clinical Diagnostics | $60.1 | $10.5 | $58.2 | $54.3 | | Other Operations | $(0.3) | $0.1 | $(0.2) | $1.2 | | Total Segment Profit | $124.4 | $46.0 | $224.9 | $114.6 | - Life Science segment sales increased by **32.6%** (**27.1%** currency neutral) in Q2 2021 and **46.2%** (**41.1%** currency neutral) in H1 2021, driven by qPCR, Western Blotting, Droplet Digital PCR, and Process Media products, including those supporting COVID-19 research[126](index=126&type=chunk)[140](index=140&type=chunk) - Clinical Diagnostics segment sales increased by **34.3%** (**28.0%** currency neutral) in Q2 2021 and **18.5%** (**14.1%** currency neutral) in H1 2021, primarily due to higher lab utilization and growth in the quality controls business as the market recovers from COVID-19[127](index=127&type=chunk)[141](index=141&type=chunk) [11. LEGAL PROCEEDINGS](index=28&type=section&id=11.%20LEGAL%20PROCEEDINGS) This note states that Bio-Rad is involved in various legal claims and actions in the ordinary course of business. While the company does not currently believe these will have a material adverse effect on its financial position, it cannot guarantee the ultimate outcome - Bio-Rad is a party to various claims and legal actions arising in the ordinary course of business[99](index=99&type=chunk) - Management does not believe that any ultimate liability from these matters will have a material adverse effect on results of operations, financial position, or liquidity, but cannot provide absolute assurance[99](index=99&type=chunk) [12. RESTRUCTURING COSTS](index=29&type=section&id=12.%20RESTRUCTURING%20COSTS) This note details the company's strategy-driven restructuring plan, announced in February 2021, which primarily impacts European operations through position elimination, function consolidation, and manufacturing relocation. It provides the restructuring accrual and the impact on various expense categories - In February 2021, Bio-Rad announced a restructuring plan to improve operating performance, primarily affecting European operations by eliminating positions, consolidating functions, and relocating manufacturing to Asia[101](index=101&type=chunk) - The restructuring plan is expected to be substantially complete by the end of **2022**[101](index=101&type=chunk) **Restructuring Accrual and Expense Impact (in millions):** | Item | June 30, 2021 Accrual | Three Months Ended June 30, 2021 Expense Impact | Six Months Ended June 30, 2021 Expense Impact | | :----------------------------------- | :-------------------- | :---------------------------------------------- | :-------------------------------------------- | | Total restructuring accrual | $61.6 | | | | Cost of goods sold | | $1.1 | $25.0 | | Selling, general and administrative expense | | $(6.9) | $27.8 | | Research and development expense | | $(1.9) | $15.1 | [13. LEASES: FINANCE AND OPERATING WHERE WE ACT AS LESSEE](index=29&type=section&id=13.%20LEASES:%20FINANCE%20AND%20OPERATING%20WHERE%20WE%20ACT%20AS%20LESSEE) This note describes Bio-Rad's accounting for operating and finance leases where it acts as a lessee, including the recognition of right-of-use (ROU) assets and lease liabilities. It provides details on lease costs, cash flows, balance sheet information, weighted average lease terms, discount rates, and maturities of lease liabilities **Components of Lease Expense (in millions):** | Item | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Operating lease cost | $11.8 | $12.4 | $23.5 | $25.0 | | Total finance lease cost | $0.3 | $0.3 | $0.7 | $0.7 | | Sublease income | $0.7 | $0.7 | $1.5 | $1.5 | **Supplemental Balance Sheet Information Related to Leases (in millions):** | Item | June 30, 2021 | December 31, 2020 | | :----------------------------------- | :------------ | :---------------- | | Operating lease right-of-use assets | $190.2 | $202.1 | | Total operating lease liabilities | $199.5 | $211.6 | | Total finance lease liabilities | $11.3 | $11.5 | **Weighted Average Lease Term and Discount Rate:** | Item | June 30, 2021 | December 31, 2020 | | :----------------------------------- | :------------ | :---------------- | | Operating leases - in years | 8 | 8 | | Finance leases - in years | 16 | 16 | | Operating leases - discount rate | 3.8% | 3.9% | | Finance leases - discount rate | 6.2% | 6.2% | [14. SUBSEQUENT EVENT](index=31&type=section&id=14.%20SUBSEQUENT%20EVENT) This note discloses a subsequent event where Bio-Rad entered into a Settlement and Patent Cross License Agreement with 10x Genomics, Inc. on July 26, 2021, resolving all outstanding litigation. Bio-Rad will receive approximately $32 million in Q3 2021 and both companies will pay royalties through December 31, 2030 - On July 26, 2021, Bio-Rad entered a Settlement and Patent Cross License Agreement with 10x Genomics, Inc., resolving all litigation[112](index=112&type=chunk) - Bio-Rad will receive approximately **$32 million** from 10x Genomics in Q3 2021, primarily for royalties and interest related to past infringing product sales[112](index=112&type=chunk) - Both companies will pay royalties to each other for licensed products and services through December 31, **2030**[112](index=112&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=32&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on Bio-Rad's financial performance, condition, and results of operations for the three and six months ended June 30, 2021, compared to the prior year. It covers net sales, gross margins, operating expenses, non-operating items, and liquidity, highlighting the impact of the COVID-19 pandemic, restructuring efforts, and the investment in Sartorius AG - Bio-Rad operates in two reportable segments: Life Science and Clinical Diagnostics, providing specialized tools for biological research and clinical diagnostics products[115](index=115&type=chunk) - Approximately **62%** of year-to-date 2021 consolidated net sales are derived from international locations, with Europe being the largest international region, exposing the company to foreign currency fluctuations[118](index=118&type=chunk) - The COVID-19 pandemic has led to continued but moderate demand for COVID-19 related products, while other businesses experienced recovery due to higher lab utilization[119](index=119&type=chunk)[127](index=127&type=chunk)[141](index=141&type=chunk) **Key Financial Ratios (as a percentage of sales):** | Item | Three Months Ended June 30, 2021 | Three Months Ended June 30, 2020 | Six Months Ended June 30, 2021 | Six Months Ended June 30, 2020 | | :----------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net sales | 100.0% | 100.0% | 100.0% | 100.0% | | Cost of goods sold | 43.9% | 45.4% | 44.4% | 44.9% | | Gross profit | 56.1% | 54.6% | 55.6% | 55.1% | | Selling, general and administrative expense | 29.8% | 35.3% | 30.4% | 34.5% | | Research and development expense | 8.9% | 9.7% | 9.5% | 9.1% | | Change in fair market value of equity securities | 144.0% | 220.4% | 153.2% | 181.4% | | Net income | 127.7% | 180.0% | 131.1% | 149.1% | - Consolidated gross margins improved to **56.1%** in Q2 2021 (from **54.6%** in Q2 2020) and **55.6%** in H1 2021 (from **55.1%** in H1 2020), driven by favorable product mix and lower customs duty in Life Science, and favorable product costs in Clinical Diagnostics[128](index=128&type=chunk)[142](index=142&type=chunk) - SG&A expenses increased in absolute terms but decreased as a percentage of sales, while R&D expenses increased due to headcount, employee-related expenses, and strategic initiatives, including those related to the Celsee acquisition and restructuring[129](index=129&type=chunk)[130](index=130&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - The company's liquidity is supported by **$1.17 billion** in cash, cash equivalents, and short-term investments as of June 30, 2021, and access to a **$200.0 million** unsecured revolving credit facility[151](index=151&type=chunk)[153](index=153&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) This section states that there have been no material changes in the company's disclosures about market risk during the six months ended June 30, 2021, compared to the Annual Report on Form 10-K for the year ended December 31, 2020 - No material changes in market risk disclosures were identified for the six months ended June 30, 2021, compared to the prior annual report[163](index=163&type=chunk) [Item 4. Controls and Procedures](index=38&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms that Bio-Rad's management, with the participation of the CEO and CFO, evaluated the effectiveness of its disclosure controls and procedures as of June 30, 2021, and concluded they were effective. It also states that no material changes in internal control over financial reporting occurred during the quarter - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2021[165](index=165&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended June 30, 2021[166](index=166&type=chunk) [PART II – OTHER INFORMATION](index=38&type=section&id=Part%20II%20–%20Other%20Information) This section provides additional information beyond the financial statements, covering legal proceedings, risk factors, equity security sales, and other required disclosures [Item 1. Legal Proceedings](index=38&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 11 of the condensed consolidated financial statements for details on legal proceedings, indicating that the company is involved in various claims but does not anticipate a material adverse effect on its financial position or results of operations - The company refers to Note 11 for information on legal proceedings, stating that while it is a party to various claims, no material adverse effect on financial results is currently anticipated[99](index=99&type=chunk)[167](index=167&type=chunk) [Item 1A. Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks that could materially affect Bio-Rad's business, operations, financial condition, or stock price. Key risks include the ongoing impact of the COVID-19 pandemic, challenges in international operations, intense competition, the need for continuous product innovation, cybersecurity threats, foreign currency fluctuations, the volatility of the Sartorius AG investment, difficulties with ERP system implementation, organizational restructuring, intellectual property risks, global economic conditions, government funding reductions, healthcare industry changes, regulatory compliance, acquisition integration, product quality issues, reliance on key personnel, supply chain disruptions, and tax liabilities - The COVID-19 pandemic continues to pose risks, including potential decreases in demand for certain products, supply chain challenges (plastics, resins, electronic components), increased freight costs, and operational disruptions due to outbreaks at facilities[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk)[175](index=175&type=chunk) - International operations (**62%** of net sales) expose the company to complex foreign and U.S. laws, regulatory risks, and foreign currency fluctuations, which can increase costs and impact reported sales[118](index=118&type=chunk)[176](index=176&type=chunk)[177](index=177&type=chunk)[191](index=191&type=chunk) - Changes in the market value of the Sartorius AG investment materially impact financial results, and its significant value could lead to the company being deemed an 'investment company' under the Investment Company Act, limiting access to capital markets[192](index=192&type=chunk)[193](index=193&type=chunk)[195](index=195&type=chunk) - The company faces risks from highly competitive markets, the need to develop new products, potential breaches of information systems, difficulties with ERP system implementation, and challenges in integrating acquired companies[181](index=181&type=chunk)[183](index=183&type=chunk)[184](index=184&type=chunk)[187](index=187&type=chunk)[199](index=199&type=chunk)[216](index=216&type=chunk)[217](index=217&type=chunk) - Substantial government regulation, particularly in the healthcare industry (FDA, foreign counterparts), and changes in tax laws or rates, could adversely affect business operations and financial condition[209](index=209&type=chunk)[210](index=210&type=chunk)[213](index=213&type=chunk)[225](index=225&type=chunk)[227](index=227&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=52&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section provides information on Bio-Rad's share repurchase program, including the authorization amount and shares repurchased during the three months ended June 30, 2021. It also notes the reissuance of treasury stock for employee compensation - The Board of Directors authorized a share repurchase program, increased in July 2020 by an additional **$200.0 million**, with **$223.1 million** remaining as of June 30, 2021[248](index=248&type=chunk) - During Q1 2021, the company repurchased **89,506** shares of Class A common stock for **$50.0 million** under the program[160](index=160&type=chunk) - No shares were purchased under the program during the three months ended June 30, 2021[251](index=251&type=chunk) - **1,164** shares of Class A treasury stock were reissued in Q2 2021 to fulfill employee grants under the restricted stock program, resulting in a **$65 thousand** loss[161](index=161&type=chunk) [Item 3. Defaults Upon Senior Securities](index=53&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities during the reporting period - No defaults upon senior securities were reported[252](index=252&type=chunk) [Item 4. Mine Safety Disclosures](index=53&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable[252](index=252&type=chunk) [Item 5. Other Information](index=53&type=section&id=Item%205.%20Other%20Information) This section states that there is no other information to report - No other information is reported[252](index=252&type=chunk) [Item 6. Exhibits](index=54&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the report, including certifications from the CEO and CFO, and Inline XBRL documents - Exhibits include CEO and CFO certifications (Section 302 and Section 906 of Sarbanes-Oxley Act) and Inline XBRL documents[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk) [SIGNATURES](index=55&type=section&id=Signatures) This section contains the official signatures of the company's Chairman, President, CEO, and CFO, certifying the report's contents - The report is signed by Norman Schwartz, Chairman of the Board, President and Chief Executive Officer, and Ilan Daskal, Executive Vice President, Chief Financial Officer, on July 30, 2021[256](index=256&type=chunk)

PART I – FINANCIAL INFORMATION [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents Bio-Rad's unaudited condensed consolidated financial statements for Q1 2021, including balance sheets, income, comprehensive income, cash flows, equity changes, and detailed notes on accounting policies, fair value, goodwill, debt, and segment information [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Condensed Consolidated Balance Sheets (in thousands) | Metric | March 31, 2021 (in thousands) | December 31, 2020 (in thousands) | | :----- | :---------------------------- | :------------------------------- | | Total Assets | $13,933,160 | $12,972,618 | | Total Liabilities | $3,324,101 | $3,092,678 | | Total Stockholders' Equity | $10,609,059 | $9,879,940 | | Other Investments | $10,503,038 | $9,561,140 | - Total assets increased by **$960.5 million**, primarily driven by a significant increase in other investments[6](index=6&type=chunk)[7](index=7&type=chunk) [Condensed Consolidated Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Condensed Consolidated Statements of Income (in thousands) | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | YoY Change | | :----- | :----------------------------------------------- | :----------------------------------------------- | :--------- | | Net Sales | $726,796 | $571,644 | +27.1% | | Gross Profit | $400,627 | $317,368 | +26.2% | | Income from Operations | $100,862 | $74,373 | +35.6% | | Change in Fair Market Value of Equity Securities | $(1,179,403) | $(827,671) | N/A (Gain) | | Net Income | $977,414 | $685,912 | +42.5% | | Basic EPS | $32.77 | $22.97 | +42.7% | | Diluted EPS | $32.38 | $22.72 | +42.5% | - Net income significantly increased by **42.5%**, largely influenced by a substantial gain from the change in fair market value of equity securities[8](index=8&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Condensed Consolidated Statements of Comprehensive Income (in thousands) | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | YoY Change | | :----- | :----------------------------------------------- | :----------------------------------------------- | :--------- | | Net Income | $977,414 | $685,912 | +42.5% | | Foreign Currency Translation Adjustments, net of income taxes | $(214,323) | $(62,011) | N/A | | Other Comprehensive Loss, net of income taxes | $(214,022) | $(61,607) | N/A | | Comprehensive Income | $763,392 | $624,305 | +22.3% | - Comprehensive income increased by **22.3%** despite a significant foreign currency translation adjustment loss[10](index=10&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Condensed Consolidated Statements of Cash Flows (in thousands) | Metric | Three Months Ended March 31, 2021 (in thousands) | Three Months Ended March 31, 2020 (in thousands) | YoY Change | | :----- | :----------------------------------------------- | :----------------------------------------------- | :--------- | | Net Cash Provided by Operating Activities | $113,610 | $62,808 | +80.9% | | Net Cash Used in Investing Activities | $(48,327) | $(12,422) | +289.0% | | Net Cash Used in Financing Activities | $(47,347) | $(98,617) | -52.0% | | Net Increase (Decrease) in Cash, Cash Equivalents, and Restricted Cash | $10,589 | $(54,208) | N/A | - Net cash provided by operating activities increased significantly by **80.9%** year-over-year[12](index=12&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Condensed Consolidated Statements of Changes in Stockholders' Equity (in thousands) | Metric | December 31, 2020 (in thousands) | March 31, 2021 (in thousands) | Change | | :----- | :------------------------------- | :---------------------------- | :----- | | Total Stockholders' Equity | $9,879,940 | $10,609,059 | +$729,119 | | Net Income | N/A | $977,414 | N/A | | Other Comprehensive Loss, net of tax | N/A | $(214,022) | N/A | | Purchase of Treasury Stock | N/A | $(49,998) | N/A | - Total stockholders' equity increased by **$729.1 million**, primarily driven by net income, partially offset by other comprehensive loss and treasury stock repurchases[16](index=16&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [1. BASIS OF PRESENTATION AND USE OF ESTIMATES](index=10&type=section&id=1.%20BASIS%20OF%20PRESENTATION%20AND%20USE%20OF%20ESTIMATES) Details GAAP basis for unaudited financial statements, management estimates, key accounting policies (revenue, reagent rentals, warranties, doubtful accounts), and recent accounting pronouncement adoptions [Basis of Presentation](index=10&type=section&id=Basis%20of%20Presentation) - The unaudited condensed consolidated financial statements are prepared in accordance with GAAP and reflect all necessary normal recurring adjustments[19](index=19&type=chunk) - Interim period results are not necessarily indicative of the results for the entire year[19](index=19&type=chunk) [Use of Estimates](index=10&type=section&id=Use%20of%20Estimates) - Management makes estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, and expenses[21](index=21&type=chunk) - Estimates are based on historical experience and market-specific assumptions, but actual results could differ materially[21](index=21&type=chunk) [Revenue Recognition](index=10&type=section&id=Revenue%20Recognition) - Revenue is recognized from product sales, services, intellectual property licenses, and instrument rentals upon transfer of control to customers[22](index=22&type=chunk) - Contracts with multiple products and services are generally accounted for as distinct performance obligations, requiring judgment in allocation and timing[24](index=24&type=chunk) - A provision for estimated product returns is recorded at the time revenue is recognized, reducing the transaction price[25](index=25&type=chunk) [Reagent Rental Agreements](index=11&type=section&id=Reagent%20Rental%20Agreements) - Reagent rental agreements provide instrument use and consumables on a per-test basis, often including maintenance and training[29](index=29&type=chunk) - These arrangements are predominantly classified as operating leases with variable payments, recognized as income upon delivery or consumption of reagents[33](index=33&type=chunk) Revenue from Lease elements of reagent rental arrangements | Revenue Source | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :------------- | :-------------------------------- | :-------------------------------- | | Lease elements of reagent rental arrangements (as % of total revenue) | 2% | 3% | [Contract costs](index=12&type=section&id=Contract%20costs) - Costs to obtain contracts (e.g., sales force incentives) are expensed as incurred if the amortization period is one year or less[34](index=34&type=chunk) - These costs are recorded within Selling, general and administrative expense[34](index=34&type=chunk) [Disaggregation of Revenue](index=12&type=section&id=Disaggregation%20of%20Revenue) This section disaggregates revenue by geographic region and details deferred revenue balances Net Sales by Geographic Region (in millions) | Geographic Region | Three Months Ended March 31, 2021 (in millions) | Three Months Ended March 31, 2020 (in millions) | YoY Change | | :---------------- | :---------------------------------------------- | :---------------------------------------------- | :--------- | | Europe | $247.7 | $195.7 | +26.6% | | Asia | $168.9 | $111.4 | +51.6% | | United States | $271.4 | $229.5 | +18.3% | | Other | $38.8 | $35.0 | +10.9% | | Total Net Sales | $726.8 | $571.6 | +27.1% | - Deferred revenue increased from **$60.0 million** at December 31, 2020, to **$66.2 million** at March 31, 2021[36](index=36&type=chunk) [Warranty liabilities](index=13&type=section&id=Warranty%20liabilities) - Warranty costs are estimated and recorded at the time revenue is recognized, based on historical experience and specific warranty terms[38](index=38&type=chunk) Warranty Liabilities (in millions) | Metric | Three Months Ended March 31, 2021 (in millions) | Three Months Ended March 31, 2020 (in millions) | | :----- | :---------------------------------------------- | :---------------------------------------------- | | Balance at beginning of period | $9.8 | $9.0 | | Provision for warranty | $2.7 | $1.9 | | Actual warranty costs | $(2.6) | $(2.7) | | Balance at end of period | $9.9 | $8.2 | [Allowance for Doubtful Accounts](index=13&type=section&id=Allowance%20for%20Doubtful%20Accounts) - Trade accounts receivable are recorded at net invoice value, with reserves for uncollectible amounts based on historical loss rates and forward-looking estimates[40](index=40&type=chunk) Allowance for Doubtful Accounts (in millions) | Metric | Three Months Ended March 31, 2021 (in millions) | Three Months Ended March 31, 2020 (in millions) | | :----- | :---------------------------------------------- | :---------------------------------------------- | | Balance at beginning of period | $19.8 | $20.2 | | Provision (recovery) for expected credit losses | $(0.6) | $(0.8) | | Write-offs charged against the allowance | $(0.6) | $(0.5) | | Balance at end of period | $18.6 | $18.9 | [Recent Accounting Pronouncements Adopted](index=14&type=section&id=Recent%20Accounting%20Pronouncements%20Adopted) - The company adopted ASU 2020-04 (Reference Rate Reform), ASU 2020-01 (Investments), and ASU 2019-12 (Income Taxes)[43](index=43&type=chunk)[44](index=44&type=chunk) - None of the adopted ASUs are expected to have a material impact on the condensed consolidated financial statements[43](index=43&type=chunk)[44](index=44&type=chunk) [2. FAIR VALUE MEASUREMENTS](index=14&type=section&id=2.%20FAIR%20VALUE%20MEASUREMENTS) Details fair value measurements, classifying financial assets and liabilities into a three-level hierarchy, with breakdowns for cash, investments, equity securities (Sartorius AG), and foreign exchange contracts [Fair Value Hierarchy](index=14&type=section&id=Fair%20Value%20Hierarchy) - Fair value is determined based on market participant assumptions, prioritizing observable inputs[45](index=45&type=chunk) - The fair value hierarchy consists of Level 1 (quoted prices in active markets), Level 2 (other significant observable inputs), and Level 3 (significant unobservable inputs)[45](index=45&type=chunk) [Financial Assets and Liabilities](index=15&type=section&id=Financial%20Assets%20and%20Liabilities) Financial Assets and Liabilities at Fair Value (in millions) | Category | March 31, 2021 (in millions) | December 31, 2020 (in millions) | | :------- | :--------------------------- | :------------------------------ | | Total Financial Assets at Fair Value | $10,925.9 | $9,990.5 | | Level 1 Assets | $10,601.1 | $9,666.8 | | Level 2 Assets | $324.8 | $323.7 | | Level 3 Assets | $0 | $0 | | Total Financial Liabilities at Fair Value | $1.8 | $1.7 | - As of March 31, 2021, total financial assets carried at fair value were **$10.93 billion**, predominantly in Level 1 equity securities[47](index=47&type=chunk) [Equity Securities](index=17&type=section&id=Equity%20Securities) - A **$1,179.4 million** gain from the change in fair market value of equity securities was recorded for the three months ended March 31, 2021, primarily due to the investment in Sartorius AG[53](index=53&type=chunk) - As of March 31, 2021, Bio-Rad owns approximately **37%** of Sartorius AG's ordinary voting shares and **28%** of its preference shares[54](index=54&type=chunk) [Available-for-sale investments](index=17&type=section&id=Available-for-sale%20investments) Available-for-sale Investments (in millions) | Investment Type | March 31, 2021 (in millions) | December 31, 2020 (in millions) | | :-------------- | :--------------------------- | :------------------------------ | | Total Available-for-sale investments | $282.3 | $267.6 | | Corporate debt securities | $162.2 | $133.2 | | U.S. government sponsored agencies | $71.8 | $76.9 | - Unrealized losses of **$0.1 million** as of March 31, 2021, are due to market conditions (interest rates, economic conditions) and not credit concerns[63](index=63&type=chunk)[65](index=65&type=chunk) [Forward Foreign Exchange Contracts](index=20&type=section&id=Forward%20Foreign%20Exchange%20Contracts) - Forward foreign exchange contracts are used to manage foreign exchange risk of intercompany receivables and payables, not for speculative purposes[68](index=68&type=chunk) Forward Foreign Exchange Contracts (in millions) | Contract Type | Notional Value (in millions) | Unrealized Gain/Loss (in millions) | | :------------ | :--------------------------- | :--------------------------------- | | Sell foreign currency | $284.0 | $(0.4) | | Purchase foreign currency | $252.3 | $0 | [Other Investments](index=20&type=section&id=Other%20Investments) This section provides a table detailing other investments, including those measured at cost and equity method investments Other Investments (in millions) | Investment Type | March 31, 2021 (in millions) | December 31, 2020 (in millions) | | :-------------- | :--------------------------- | :------------------------------ | | Investments measured at cost | $6.5 | $0.5 | | Equity method investments | $35.2 | $38.4 | [3. GOODWILL AND OTHER PURCHASED INTANGIBLE ASSETS](index=21&type=section&id=3.%20GOODWILL%20AND%20OTHER%20PURCHASED%20INTANGIBLE%20ASSETS) Details goodwill and other purchased intangible assets, noting stable net goodwill, a slight decrease in total purchased intangibles, and quarterly amortization expense [Goodwill](index=21&type=section&id=Goodwill) Goodwill, net (in millions) | Segment | Goodwill, net (in millions) | | :------ | :-------------------------- | | Life Science | $236.1 | | Clinical Diagnostics | $55.8 | | Total | $291.9 | - Net goodwill remained unchanged at **$291.9 million** from December 31, 2020, to March 31, 2021[72](index=72&type=chunk) [Purchased Intangible Assets](index=21&type=section&id=Purchased%20Intangible%20Assets) Purchased Intangible Assets, Net Carrying Amount (in millions) | Intangible Asset Type | March 31, 2021 Net Carrying Amount (in millions) | December 31, 2020 Net Carrying Amount (in millions) | | :-------------------- | :----------------------------------------------- | :------------------------------------------------ | | Customer relationships/lists | $26.8 | $29.4 | | Know how | $20.1 | $21.2 | | Developed product technology | $108.5 | $111.0 | | Licenses | $27.2 | $28.2 | | Tradenames | $2.2 | $2.4 | | Covenants not to compete | $2.4 | $2.5 | | In-process research and development | $4.6 | $4.8 | | Total purchased intangible assets | $191.8 | $199.5 | - Total purchased intangible assets, net, decreased slightly to **$191.8 million** at March 31, 2021[73](index=73&type=chunk) [Amortization Expense](index=22&type=section&id=Amortization%20Expense) Amortization Expense (in millions) | Metric | Three Months Ended March 31, 2021 (in millions) | Three Months Ended March 31, 2020 (in millions) | | :----- | :---------------------------------------------- | :---------------------------------------------- | | Amortization expense | $7.2 | $5.9 | - Amortization expense related to purchased intangible assets increased to **$7.2 million** for the three months ended March 31, 2021[75](index=75&type=chunk) [4. SUPPLEMENTAL CASH FLOW INFORMATION](index=22&type=section&id=4.%20SUPPLEMENTAL%20CASH%20FLOW%20INFORMATION) Provides a reconciliation of net income to net cash from operating activities, highlighting non-cash adjustments like fair value changes in equity securities and deferred income taxes Supplemental Cash Flow Information (in millions) | Adjustment | Three Months Ended March 31, 2021 (in millions) | Three Months Ended March 31, 2020 (in millions) | | :--------- | :---------------------------------------------- | :---------------------------------------------- | | Net income | $977.4 | $685.9 | | Depreciation and amortization | $32.7 | $33.6 | | Share-based compensation | $11.7 | $9.7 | | Change in fair market value of equity securities | $(1,179.4) | $(827.7) | | Increase in deferred income taxes | $274.8 | $171.8 | | Net cash provided by operating activities | $113.6 | $62.8 | - Net cash provided by operating activities was **$113.6 million**, with a significant non-cash adjustment from the change in fair market value of equity securities[76](index=76&type=chunk) [5. LONG-TERM DEBT](index=23&type=section&id=5.%20LONG-TERM%20DEBT) Details long-term debt, which decreased to $10.9 million, and the $200.0 million unsecured revolving credit facility, noting no outstanding borrowings and compliance with financial covenants [Principal Components of Long-Term Debt](index=23&type=section&id=Principal%20Components%20of%20Long-Term%20Debt) Long-Term Debt (in millions) | Metric | March 31, 2021 (in millions) | December 31, 2020 (in millions) | | :----- | :--------------------------- | :------------------------------ | | Finance leases and other debt | $12.6 | $14.1 | | Less current maturities | $(1.7) | $(1.8) | | Long-term debt | $10.9 | $12.3 | - Long-term debt, net of current maturities, decreased to **$10.9 million** at March 31, 2021[77](index=77&type=chunk) [Credit Agreement](index=23&type=section&id=Credit%20Agreement) - Bio-Rad has a **$200.0 million** unsecured revolving credit facility maturing in April 2024[78](index=78&type=chunk) - No outstanding borrowings under the Credit Agreement as of March 31, 2021, but **$0.2 million** was utilized for domestic standby letters of credit[78](index=78&type=chunk) - The company was in compliance with all financial ratios and covenants as of March 31, 2021[79](index=79&type=chunk) [6. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)](index=24&type=section&id=6.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME%20%28LOSS%29) Details components of accumulated other comprehensive income (loss), which significantly decreased to $68.4 million due to a substantial foreign currency translation adjustment loss Accumulated Other Comprehensive Income (Loss) (in millions) | Component | January 1, 2021 (in millions) | March 31, 2021 (in millions) | Change | | :-------- | :---------------------------- | :--------------------------- | :----- | | Foreign currency translation adjustments | $298.6 | $84.3 | $(214.3) | | Foreign other postemployment benefits adjustments | $(26.0) | $(24.1) | +$1.9 | | Net unrealized holding gains on available-for-sale investments | $9.8 | $8.2 | $(1.6) | | Total accumulated other comprehensive income (loss) | $282.4 | $68.4 | $(214.0) | - Accumulated other comprehensive income decreased by **$214.0 million**, primarily driven by foreign currency translation adjustments[81](index=81&type=chunk) [7. EARNINGS PER SHARE](index=25&type=section&id=7.%20EARNINGS%20PER%20SHARE) Provides basic and diluted earnings per share calculations, showing increases to $32.77 and $32.38 respectively for Q1 2021, reflecting higher net income Earnings Per Share | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | YoY Change | | :----- | :-------------------------------- | :-------------------------------- | :--------- | | Basic Net Income Per Share | $32.77 | $22.97 | +42.7% | | Diluted Net Income Per Share | $32.38 | $22.72 | +42.5% | | Basic Weighted Average Shares Outstanding (in thousands) | 29,823 | 29,865 | -0.14% | | Diluted Weighted Average Common Shares (in thousands) | 30,186 | 30,196 | -0.03% | - Both basic and diluted EPS increased by over **42%** year-over-year, reflecting the increase in net income[85](index=85&type=chunk) [8. OTHER INCOME AND EXPENSE, NET](index=25&type=section&id=8.%20OTHER%20INCOME%20AND%20EXPENSE%2C%20NET) Details components of other income and expense, net, which significantly increased to $17.4 million for Q1 2021, driven by higher investment income and realized gains Other Income and Expense, Net (in millions) | Component | Three Months Ended March 31, 2021 (in millions) | Three Months Ended March 31, 2020 (in millions) | YoY Change | | :-------- | :---------------------------------------------- | :---------------------------------------------- | :--------- | | Investment income | $(18.3) | $(2.8) | N/A | | Realized gains on investments | $(0.1) | $(0.4) | N/A | | Other-than-temporary impairment loss on investment | $0.8 | $0 | N/A | | Other (income) expense, net | $(17.4) | $(3.3) | N/A | - Other income, net, increased by **$14.1 million**, primarily due to Sartorius AG dividends of **$19.0 million** in Q1 2021[86](index=86&type=chunk)[132](index=132&type=chunk) [9. INCOME TAXES](index=26&type=section&id=9.%20INCOME%20TAXES) Discusses income tax rate and unrecognized tax benefits, noting an increased effective tax rate of 24.7% due to restructuring and gross unrecognized tax benefits of $57.5 million Effective Income Tax Rate | Metric | Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | | :----- | :-------------------------------- | :-------------------------------- | | Effective income tax rate | 24.7% | 23.7% | - The increase in effective income tax rate was due to the restructuring initiative announced in February 2021[133](index=133&type=chunk) Gross Unrecognized Tax Benefits (in millions) | Metric | March 31, 2021 (in millions) | December 31, 2020 (in millions) | | :----- | :--------------------------- | :------------------------------ | | Gross unrecognized tax benefits | $57.5 | $55.8 | - Within the next 12 months, unrecognized tax benefits could decrease by up to **$16.7 million**, primarily related to various foreign jurisdictions[93](index=93&type=chunk) [10. SEGMENT INFORMATION](index=26&type=section&id=10.%20SEGMENT%20INFORMATION) Provides financial information by operating segment for Q1 2021, detailing net sales and profit/loss for Life Science and Clinical Diagnostics, and noting the recast segment reporting methodology Segment Financial Information (in millions) | Segment | Net Sales (2021, in millions) | Net Sales (2020, in millions) | Segment Net Profit (Loss) (2021, in millions) | Segment Net Profit (Loss) (2020, in millions) | | :------ | :---------------------------- | :---------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Life Science | $366.5 | $227.2 | $102.3 | $23.7 | | Clinical Diagnostics | $358.5 | $340.3 | $(1.9) | $43.8 | | Other Operations | $1.8 | $4.1 | $0.1 | $1.1 | - Starting in 2021, all operating expenses, interest expense, and corporate overhead are fully allocated to reportable segments, and historical segment information has been recast[96](index=96&type=chunk) [11. LEGAL PROCEEDINGS](index=27&type=section&id=11.%20LEGAL%20PROCEEDINGS) Details ongoing legal claims and actions, where ultimate liability is not estimable, but management believes no material adverse effect on financial results, position, or liquidity is expected - The company is a party to various claims, legal actions, and complaints arising in the ordinary course of business[98](index=98&type=chunk) - Management does not believe any ultimate liability will have a material adverse effect on results of operations, financial position, or liquidity, but resolution could be material depending on the level of income for the period[98](index=98&type=chunk) [12. RESTRUCTURING COSTS](index=27&type=section&id=12.%20RESTRUCTURING%20COSTS) Details the February 2021 strategy-driven restructuring plan, primarily impacting European operations, with a $71.2 million accrual and $75.6 million in employee termination benefits charged to expense - A strategy-driven restructuring plan was announced in February 2021 to improve operating performance, primarily impacting European operations[99](index=99&type=chunk) - The plan includes elimination of positions, consolidation of functions, and relocation of manufacturing operations from Europe to Asia, expected to be substantially complete by the end of 2022[99](index=99&type=chunk) Restructuring Costs (in millions) | Metric | March 31, 2021 (in millions) | | :----- | :--------------------------- | | Restructuring accrual | $71.2 | | Charged to expense - employee termination benefits | $75.6 | | Cash payments | $(2.0) | [13. LEASES: FINANCE AND OPERATING WHERE WE ACT AS LESSEE](index=28&type=section&id=13.%20LEASES%3A%20FINANCE%20AND%20OPERATING%20WHERE%20WE%20ACT%20AS%20LESSEE) Describes operating and finance leases for buildings, vehicles, and equipment, with ROU assets and liabilities recognized based on present value, totaling $207.6 million for operating and $11.4 million for finance leases [Lease Expense Components](index=28&type=section&id=Lease%20Expense%20Components) Lease Expense Components (in millions) | Lease Expense Component | Three Months Ended March 31, 2021 (in millions) | Three Months Ended March 31, 2020 (in millions) | | :---------------------- | :---------------------------------------------- | :---------------------------------------------- | | Operating lease cost | $11.7 | $12.6 | | Total finance lease cost | $0.3 | $0.3 | | Sublease income | $0.7 | $0.7 | [Supplemental Cash Flow Information](index=29&type=section&id=Supplemental%20Cash%20Flow%20Information) Cash Flow from Leases (in millions) | Cash Flow from Leases | Three Months Ended March 31, 2021 (in millions) | Three Months Ended March 31, 2020 (in millions) | | :-------------------- | :---------------------------------------------- | :---------------------------------------------- | | Operating cash flows from operating leases | $11.8 | $11.4 | | Operating cash flows from finance leases | $0.1 | $0.2 | | Financing cash flows from finance leases | $0.2 | $0.1 | | Operating lease ROU assets obtained | $4.2 | $10.8 | [Balance Sheet Information](index=29&type=section&id=Balance%20Sheet%20Information) Lease Balance Sheet Information (in millions) | Metric | March 31, 2021 (in millions) | December 31, 2020 (in millions) | | :----- | :--------------------------- | :------------------------------ | | Operating lease right-of-use assets | $196.2 | $202.1 | | Total operating lease liabilities | $207.6 | $211.6 | | Total finance lease liabilities | $11.4 | $11.5 | [Maturities of Lease Liabilities](index=30&type=section&id=Maturities%20of%20Lease%20Liabilities) Lease Liabilities Maturities | Metric | Operating Leases | Finance Leases | | :----- | :--------------- | :------------- | | Weighted Average Remaining Lease Term (years) | 8 | 16 | | Weighted Average Discount Rate | 3.9% | 6.2% | | Total Lease Payments (in millions) | $246.4 | $19.7 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=30&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides an overview of Bio-Rad's business, discusses COVID-19 and restructuring impacts, and analyzes Q1 2021 results of operations, liquidity, and capital resources [Overview](index=30&type=section&id=Overview) - Bio-Rad is a multinational manufacturer and distributor of life science research and clinical diagnostics products, organized into two reportable segments[113](index=113&type=chunk) - International sales accounted for approximately **63%** of year-to-date 2021 consolidated net sales, making the company susceptible to foreign currency exchange fluctuations[116](index=116&type=chunk) - Much of the company's revenues are recurring due to customer requirements for standardization[115](index=115&type=chunk) [COVID-19](index=31&type=section&id=COVID-19) - The COVID-19 pandemic has impacted and is expected to continue to disrupt parts of the company's business operations, financial conditions, and results[117](index=117&type=chunk) - The company saw strong demand for products associated with COVID-19 testing and related research, but also experienced decreases in product demand in certain other businesses[117](index=117&type=chunk)[160](index=160&type=chunk) - Ongoing challenges include raw material and component supply, transportation issues, and potential facility shutdowns due to outbreaks[161](index=161&type=chunk)[162](index=162&type=chunk) [Restructuring](index=31&type=section&id=Restructuring) - A strategy-driven restructuring plan was announced in February 2021 to improve operating performance[118](index=118&type=chunk) - The plan primarily impacts European operations, including position eliminations, function consolidation, and manufacturing relocation to Asia, expected to be substantially complete by the end of 2022[118](index=118&type=chunk) Restructuring Expenses (in millions) | Expense Category | Three Months Ended March 31, 2021 (in millions) | | :--------------- | :---------------------------------------------- | | Cost of goods sold | $23.9 | | Selling, general and administrative expense | $34.7 | | Research and development expense | $17.0 | | Total Restructuring Expenses | $75.6 | [Results of Operations -- Sales, Margins and Expenses](index=31&type=section&id=Results%20of%20Operations%20--%20Sales%2C%20Margins%20and%20Expenses) This section analyzes consolidated and segment net sales, gross margins, and operating expenses for the three months ended March 31, 2021 Consolidated and Segment Net Sales (in millions) | Metric | Q1 2021 | Q1 2020 | YoY Change | Currency Neutral YoY Change | | :----- | :------ | :------ | :--------- | :-------------------------- | | Consolidated Net Sales | $726.8M | $571.6M | +27.1% | +23.4% | | Life Science Sales | $366.5M | $227.2M | +61.3% | +56.9% | | Clinical Diagnostics Sales | $358.5M | $340.3M | +5.4% | +2.2% | Consolidated Margins and Expenses | Metric | Q1 2021 | Q1 2020 | | :----- | :------ | :------ | | Consolidated Gross Margin | 55.1% | 55.5% | | Selling, General and Administrative Expense (% of sales) | 31.1% | 33.9% | | Research and Development Expense (% of sales) | 10.2% | 8.6% | - Life Science segment growth was primarily driven by qPCR, Western Blotting, Droplet Digital PCR, and Process Media products, with a significant portion from COVID-19 related products[124](index=124&type=chunk) - Clinical Diagnostics margins were significantly impacted by **$23.9 million** in expenses related to the restructuring plan[126](index=126&type=chunk) [Results of Operations – Non-operating](index=33&type=section&id=Results%20of%20Operations%20%E2%80%93%20Non-operating) This section analyzes non-operating items including interest expense, foreign currency exchange, changes in fair market value of equity securities, and other income for Q1 2021 Non-operating Results (in millions) | Metric | Q1 2021 (in millions) | Q1 2020 (in millions) | YoY Change | | :----- | :-------------------- | :-------------------- | :--------- | | Interest Expense | $0.4 | $5.7 | -93.0% | | Foreign Currency Exchange Losses, net | $0.1 | $0.9 | -88.9% | | Change in Fair Market Value of Equity Securities | $1,179.4 (gain) | $827.7 (gain) | +42.5% | | Other Income, net | $17.4 | $3.3 | +427.3% | - Interest expense decreased significantly due to the repayment of **$425.0 million** Senior Notes in December 2020[129](index=129&type=chunk) - Other income, net, increased substantially, primarily due to **$19.0 million** in Sartorius AG dividends in Q1 2021 (compared to none in Q1 2020)[132](index=132&type=chunk) [Liquidity and Capital Resources](index=34&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's cash, cash equivalents, short-term investments, and credit facility, assessing their adequacy to meet operational and strategic objectives Liquidity Metrics (in billions) | Metric | March 31, 2021 (in billions) | | :----- | :--------------------------- | | Cash, cash equivalents and short-term investments | $1.03 | | % held in foreign subsidiaries | 31% | - The company has access to a **$200.0 million** unsecured revolving credit facility, with no outstanding borrowings as of March 31, 2021[138](index=138&type=chunk) - Management believes current liquidity is adequate to meet objectives for operations, R&D, capital additions, and acquisitions[138](index=138&type=chunk) [Cash Flows from Operations](index=34&type=section&id=Cash%20Flows%20from%20Operations) This section analyzes the increase in net cash provided by operating activities, primarily driven by higher customer receipts and Sartorius AG dividends Net Cash Provided by Operations (in millions) | Metric | Q1 2021 (in millions) | Q1 2020 (in millions) | YoY Change | | :----- | :-------------------- | :-------------------- | :--------- | | Net Cash Provided by Operations | $113.6 | $62.8 | +80.9% | - The increase was primarily due to higher cash received from customers (COVID-19 related sales) and Sartorius AG dividends[143](index=143&type=chunk) - These increases were partially offset by higher cash paid to suppliers, employees (including restructuring programs), and for income taxes[143](index=143&type=chunk) [Cash Flows from Investing Activities](index=35&type=section&id=Cash%20Flows%20from%20Investing%20Activities) This section analyzes the significant increase in net cash used in investing activities, primarily due to changes in marketable securities and investments Net Cash Used in Investing Activities (in millions) | Metric | Q1 2021 (in millions) | Q1 2020 (in millions) | YoY Change | | :----- | :-------------------- | :-------------------- | :--------- | | Net Cash Used in Investing Activities | $48.3 | $12.4 | +289.5% | - The increase was primarily attributable to a **$38.0 million** increase in net cash outflows from maturities, sales, and purchases of marketable securities and investments, partially offset by lower capital expenditures[146](index=146&type=chunk) [Cash Flows from Financing Activities](index=35&type=section&id=Cash%20Flows%20from%20Financing%20Activities) This section analyzes the decrease in net cash used in financing activities, primarily attributable to lower cash used for treasury stock repurchases Net Cash Used in Financing Activities (in millions) | Metric | Q1 2021 (in millions) | Q1 2020 (in millions) | YoY Change | | :----- | :-------------------- | :-------------------- | :--------- | | Net Cash Used in Financing Activities | $47.3 | $98.6 | -52.0% | - The decrease was primarily attributable to a **$50.0 million** decrease in cash used to purchase treasury stock[147](index=147&type=chunk) [Treasury Shares](index=35&type=section&id=Treasury%20Shares) This section details the company's share repurchase program, including the number of Class A shares repurchased and the remaining authorization Treasury Share Repurchases | Metric | Q1 2021 | Q1 2020 | | :----- | :------ | :------ | | Class A Common Stock Repurchased (shares) | 89,506 | 291,941 | | Cost of Repurchases (in millions) | $50.0 | $100.0 | | Remaining under Share Repurchase Program (in millions) | $223.1 | N/A | - As of March 31, 2021, **$223.1 million** remained under the Share Repurchase Program[148](index=148&type=chunk) [Recent Accounting Pronouncements Adopted](index=35&type=section&id=Recent%20Accounting%20Pronouncements%20Adopted) This section confirms no substantial changes in significant accounting policies during Q1 2021, beyond those detailed in Note 1 - No substantial changes in significant accounting policies during the three months ended March 31, 2021, other than those discussed in Note 1[122](index=122&type=chunk)[149](index=149&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=35&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Reports no material changes in market risk disclosures for Q1 2021 compared to the prior year's Annual Report on Form 10-K - No material changes in market risk disclosures during the three months ended March 31, 2021, compared to the Annual Report on Form 10-K for the year ended December 31, 2020[150](index=150&type=chunk) [Item 4. Controls and Procedures](index=35&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms effective disclosure controls and procedures as of March 31, 2021, with no material changes to internal control over financial reporting identified during the quarter [Disclosure Controls and Procedures](index=35&type=section&id=Disclosure%20Controls%20and%20Procedures) - Disclosure controls and procedures are designed to ensure timely and accurate reporting of information required by the Securities Exchange Act of 1934[151](index=151&type=chunk) - Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of March 31, 2021, operating at a reasonable assurance level[153](index=153&type=chunk) [Changes to Internal Control Over Financial Reporting](index=36&type=section&id=Changes%20to%20Internal%20Control%20Over%20Financial%20Reporting) - No changes in internal control over financial reporting occurred during the quarter ended March 31, 2021, that have materially affected, or are reasonably likely to materially affect, internal control over financial reporting[154](index=154&type=chunk) PART II – OTHER INFORMATION [Item 1. Legal Proceedings](index=36&type=section&id=Item%201.%20Legal%20Proceedings) Refers to Note 11 for legal proceedings, where management believes no material adverse effect on financial results, position, or liquidity is expected, despite unestimable ultimate liability - Refer to Note 11, 'Legal Proceedings' in Part I, Item 1 for details[155](index=155&type=chunk) - Management does not believe any ultimate liability from legal matters will have a material adverse effect on results of operations, financial position, or liquidity[98](index=98&type=chunk) [Item 1A. Risk Factors](index=36&type=section&id=Item%201A.%20Risk%20Factors) Outlines significant factors and uncertainties that could materially affect Bio-Rad's business, including COVID-19, international operations, competition, product development, cybersecurity, foreign currency, and Sartorius AG market value [Business, Economic, Legal and Industry Risks](index=36&type=section&id=Business%2C%20Economic%2C%20Legal%20and%20Industry%20Risks) Details various business, economic, legal, and industry risks, including pandemics, international operations, market competition, product development, cybersecurity, and regulatory compliance [Pandemics or disease outbreaks, such as the COVID-19 pandemic](index=36&type=section&id=Pandemics%20or%20disease%20outbreaks%2C%20such%20as%20the%20COVID-19%20pandemic) - The COVID-19 pandemic continues to adversely affect the United States and global economies, as well as aspects of the company's operations[158](index=158&type=chunk) - Demand for COVID-19 testing and research products increased, but other businesses experienced decreases due to reduced customer operations[160](index=160&type=chunk) - Ongoing challenges include raw material and component supply, transportation issues, and potential facility shutdowns due to outbreaks[161](index=161&type=chunk)[162](index=162&type=chunk) [International operations expose us to additional costs and legal and regulatory risks](index=37&type=section&id=International%20operations%20expose%20us%20to%20additional%20costs%20and%20legal%20and%20regulatory%20risks) - Significant international operations (**63%** of net sales) expose the company to complex foreign and U.S. laws and regulations, increasing costs and risks[165](index=165&type=chunk) - Violations could result in fines, criminal sanctions, export license requirements, cessation of business activities, and reputational damage[168](index=168&type=chunk) - Past FCPA violations and a dispersed international sales organization make compliance challenging[168](index=168&type=chunk) [The industries and market segments in which we operate are highly competitive](index=38&type=section&id=The%20industries%20and%20market%20segments%20in%20which%20we%20operate%20are%20highly%20competitive) - The life science and clinical diagnostics markets are highly competitive, with some competitors possessing greater financial resources[169](index=169&type=chunk) - Competitive and regulatory conditions restrict the ability to fully recover higher costs through price increases, leading to pricing pressures, especially in public tenders[169](index=169&type=chunk) [We may not be able to grow our business because of our failure to develop new or improved products](index=38&type=section&id=We%20may%20not%20be%20able%20to%20grow%20our%20business%20because%20of%20our%20failure%20to%20develop%20new%20or%20improved%20products) - Future growth depends on the ability to continuously improve product offerings and introduce new product lines and extensions that integrate technological advances[170](index=170&type=chunk) - Failure to integrate technological advances or successfully launch new products could lead to product obsolescence and adversely affect the business[170](index=170&type=chunk)[171](index=171&type=chunk) [Breaches of our information systems could have a material adverse effect on our business and results of operations](index=39&type=section&id=Breaches%20of%20our%20information%20systems%20could%20have%20a%20material%20adverse%20effect%20on%20our%20business%20and%20results%20of%20operations) - The company experiences ongoing attempts by computer programmers and hackers to attack and penetrate security controls[172](index=172&type=chunk) - Risks include misappropriation of confidential customer, supplier, employee, or proprietary business information, operational disruptions, regulatory sanctions, and reputational damage[172](index=172&type=chunk) - Increased use of remote work arrangements and rapidly evolving work scenarios in response to the COVID-19 pandemic expose the company to additional risk of cyberattack and disruption[172](index=172&type=chunk) [If our information technology systems are disrupted, or if we fail to successfully implement, manage and integrate our information technology and reporting systems](index=39&type=section&id=If%20our%20information%20technology%20systems%20are%20disrupted%2C%20or%20if%20we%20fail%20to%20successfully%20implement%2C%20manage%20and%20integrate%20our%20information%20technology%20and%20reporting%20systems) - A serious disruption of IT systems could have a material adverse effect on the business, results of operations, and financial condition[173](index=173&type=chunk)[174](index=174&type=chunk) - The company depends on IT systems to process orders, manage inventory, collect accounts receivable, and maintain cost-effective operations[174](index=174&type=chunk) - Failure to successfully manage and integrate IT systems could adversely affect the business[175](index=175&type=chunk) [We are subject to foreign currency exchange fluctuations](index=40&type=section&id=We%20are%20subject%20to%20foreign%20currency%20exchange%20fluctuations) - A significant portion of operations and sales outside the United States exposes the company to fluctuations in foreign currencies relative to the U.S. dollar[178](index=178&type=chunk) - A strengthening U.S. dollar negatively impacts consolidated net sales, while a weakening U.S. dollar increases international operating expenses[178](index=178&type=chunk) [Changes in the market value of our position in Sartorius AG materially impact our financial results and might cause us to be deemed an investment company](index=40&type=section&id=Changes%20in%20the%20market%20value%20of%20our%20position%20in%20Sartorius%20AG%20materially%20impact%20our%20financial%20results%20and%20might%20cause%20us%20to%20be%20deemed%20an%20investment%20company) - Changes in the market value of the Sartorius AG investment materially impact consolidated statements of income, leading to significant gains or losses independent of operating performance[179](index=179&type=chunk) - The position in Sartorius AG risks the company being deemed an 'investment company' under the Investment Company Act, limiting access to capital markets[179](index=179&type=chunk)[217](index=217&type=chunk) - The company's share price may change significantly based on Sartorius AG's market valuation, unrelated to actual business performance[180](index=180&type=chunk) [We may incur losses in future periods due to write-downs in the value of financial instruments](index=40&type=section&id=We%20may%20incur%20losses%20in%20future%20periods%20due%20to%20write-downs%20in%20the%20value%20of%20financial%20instruments) - The company holds positions in various financial instruments, including equity and asset-backed securities, which are subject to volatile and illiquid financial markets[181](index=181&type=chunk)[182](index=182&type=chunk) - A decline in market value or illiquidity could result in significant losses due to write-downs or inability to convert positions to cash without substantial losses[181](index=181&type=chunk)[182](index=182&type=chunk) [We may experience difficulties implementing our new global enterprise resource planning system](index=41&type=section&id=We%20may%20experience%20difficulties%20implementing%20our%20new%20global%20enterprise%20resource%20planning%20system) - The multi-year implementation of a new global enterprise resource planning (ERP) system requires significant investment of human and financial resources[183](index=183&type=chunk) - Risks include significant delays, increased costs, and operational disruptions that could adversely affect critical business functions like order processing, invoicing, and contractual obligations[183](index=183&type=chunk) [Recent and planned changes to our organizational structure could negatively impact our business](index=41&type=section&id=Recent%20and%20planned%20changes%20to%20our%20organizational%20structure%20could%20negatively%20impact%20our%20business) - Recent and planned organizational changes, including the European reorganization, carry risks of management and employee distraction, business disruption, and supply issues[184](index=184&type=chunk) - Potential negative impacts include workforce attrition, inability to attract or retain key employees, and reduced employee morale or productivity[184](index=184&type=chunk) [Risks relating to intellectual property rights may negatively impact our business](index=41&type=section&id=Risks%20relating%20to%20intellectual%20property%20rights%20may%20negatively%20impact%20our%20business) - The company relies on a combination of copyright, trade secret, patent, and trademark laws to protect its intellectual property rights and products[185](index=185&type=chunk) - Risks include intellectual property rights being challenged, invalidated, circumvented, or infringed by unauthorized third parties[185](index=185&type=chunk) - Litigation could result in substantial costs, forced product redesigns, or required royalty payments[185](index=185&type=chunk) [Global economic and geopolitical conditions could adversely affect our operations](index=41&type=section&id=Global%20economic%20and%20geopolitical%20conditions%20could%20adversely%20affect%20our%20operations) - Challenging global economic conditions, exacerbated by the COVID-19 pandemic, are causing decreased demand for some products, increased competition, and downward pressure on prices[186](index=186&type=chunk) - A weakening of macroeconomic conditions may adversely affect suppliers, leading to supply interruptions[186](index=186&type=chunk) - Further escalation of tariffs or other trade barriers could adversely impact profitability and competitiveness[186](index=186&type=chunk) [Reductions in government funding and the capital spending programs of our customers](index=42&type=section&id=Reductions%20in%20government%20funding%20and%20the%20capital%20spending%20programs%20of%20our%20customers) - The capital spending programs of customers (universities, labs, government agencies) significantly affect demand for the company's products[189](index=189&type=chunk) - Decreases in government funding or reallocations of customer budgets could materially and adversely affect the business[189](index=189&type=chunk) [Changes in the healthcare industry](index=42&type=section&id=Changes%20in%20the%20healthcare%20industry) - Significant changes in the healthcare industry, driven by cost reduction efforts, are increasing pressure on pricing and reimbursement for medical products and services[190](index=190&type=chunk) - Reductions in third-party payor reimbursements (e.g., Medicare, Medicaid) for clinical diagnostic tests could adversely affect the Clinical Diagnostics business[191](index=191&type=chunk)[192](index=192&type=chunk) [We are subject to substantial government regulation](index=43&type=section&id=We%20are%20subject%20to%20substantial%20government%20regulation) - The company's products, particularly Clinical Diagnostic products, are subject to extensive U.S. (FDA) and foreign government regulations[195](index=195&type=chunk) - Non-compliance can lead to severe enforcement actions, including fines, injunctions, product recalls, and operational shutdowns[195](index=195&type=chunk) - Evolving regulations (e.g., European IVD devices, stricter registration rules in other countries) create uncertain approval timelines and additional costs[197](index=197&type=chunk) [We cannot assure you that we will be able to integrate acquired companies, products or technologies into our company successfully](index=44&type=section&id=We%20cannot%20assure%20you%20that%20we%20will%20be%20able%20to%20integrate%20acquired%20companies%2C%20products%20or%20technologies%20into%20our%20company%20successfully) - Acquisitions may yield less-than-anticipated benefits and divert management's time and resources[201](index=201&type=chunk) - Risks include assuming contingent liabilities and recording impairment charges for goodwill and other intangible assets[201](index=201&type=chunk) [Product quality and liability issues could harm our reputation and negatively impact our business, results of operations and financial condition](index=44&type=section&id=Product%20quality%20and%20liability%20issues%20could%20harm%20our%20reputation%20and%20negatively%20impact%20our%20business%2C%20results%20of%20operations%20and%20financial%20condition) - Quality issues with complex instruments, reagents, and components can lead to significant costs for remediation and product launch delays[202](index=202&type=chunk) - Defects, unapproved uses, or inadequate risk disclosure could result in product recalls or product liability claims, harming reputation and customer relationships[202](index=202&type=chunk) [Lack of key personnel could hurt our business](index=44&type=section&id=Lack%20of%20key%20personnel%20could%20hurt%20our%20business) - The company operates in a technical and competitive environment, requiring highly qualified scientists and specialized manufacturing staff[203](index=203&type=chunk) - Intense competition for these professionals, particularly in Northern California, poses a risk of failing to retain or attract sufficient qualified personnel[203](index=203&type=chunk) [A reduction or interruption in the supply of components and raw materials](index=45&type=section&id=A%20reduction%20or%20interruption%20in%20the%20supply%20of%20components%20and%20raw%20materials) - Manufacturing relies on the timely delivery of quality components and materials from numerous global suppliers, some of whom are sole suppliers[206](index=206&type=chunk) - The regulatory environment can hinder the ability to quickly establish additional or replacement sources for some components or materials[206](index=206&type=chunk) - Supply reductions, interruptions, or poor quality could adversely affect manufacturing operations and related product sales[206](index=206&type=chunk) [We may have higher than anticipated tax liabilities](index=45&type=section&id=We%20may%20have%20higher%20than%20anticipated%20tax%20liabilities) - The company is subject to income taxes in the United States and many foreign jurisdictions, requiring estimation, judgment, and calculations for tax liabilities[207](index=207&type=chunk) - Disagreements with tax authorities during audits could result in additional tax assessments, negatively impacting operating results and financial condition[207](index=207&type=chunk) [Changes in tax laws or rates, changes in the interpretation of tax laws or changes in the jurisdictional mix of our earnings](index=45&type=section&id=Changes%20in%20tax%20laws%20or%20rates%2C%20changes%20in%20the%20interpretation%20of%20tax%20laws%20or%20changes%20in%20the%20jurisdictional%20mix%20of%20our%20earnings) - Changes in tax laws (e.g., U.S. Tax Cuts and Jobs Act, proposed 'American Jobs Plan' and 'Made in America Tax Plan') could increase the effective tax rate and cash tax liability[210](index=210&type=chunk)[211](index=211&type=chunk) - The tax effect of the Sartorius AG position and the adoption of BEPS recommendations could negatively impact the effective tax rate[212](index=212&type=chunk) [Environmental, health and safety regulations and enforcement proceedings](index=46&type=section&id=Environmental%2C%20health%20and%20safety%20regulations%20and%20enforcement%20proceedings) - Operations are subject to federal, state, local, and foreign environmental, health, and safety regulations[214](index=214&type=chunk) - Non-compliance or releases of hazardous substances could lead to significant capital and operating costs, fines, liabilities for damages, and operational restrictions[215](index=215&type=chunk) [Our debt may restrict our future operations](index=46&type=section&id=Our%20debt%20may%20restrict%20our%20future%20operations) - The company's revolving credit facility contains covenants that restrict business operations, including incurring additional debt, acquisitions, and dividend payments[216](index=216&type=chunk) - Breach of these covenants could result in a default, making all borrowed amounts due and payable[216](index=216&type=chunk) - Potential classification as an investment company due to Sartorius AG holdings could further limit access to capital markets and additional financing[217](index=217&type=chunk) [We are subject to healthcare laws and regulations and could face substantial penalties if we are unable to fully comply with such laws](index=47&type=section&id=We%20are%20subject%20to%20healthcare%20laws%20and%20regulations%20and%20could%20face%20substantial%20penalties%20if%20we%20are%20unable%20to%20fully%20comply%20with%20such%20laws) - The company is subject to extensive U.S. federal, state, and foreign healthcare regulations, including the Anti-Kickback Statute, false claims laws, and HIPAA[219](index=219&type=chunk) - Non-compliance could lead to significant penalties, including civil and criminal penalties, fines, exclusion from Medicare and Medicaid programs, and operational restructuring[220](index=220&type=chunk) [Risks Related to Being a Public Company](index=48&type=section&id=Risks%20Related%20to%20Being%20a%20Public%20Company) As a public company, Bio-Rad faces risks related to maintaining effective internal controls over financial reporting, where failure could lead to material misstatements and stock price decline [Our failure to establish and maintain effective internal control over financial reporting](index=48&type=section&id=Our%20failure%20to%20establish%20and%20maintain%20effective%20internal%20control%20over%20financial%20reporting) - Maintaining effective disclosure controls and procedures and internal controls over financial reporting is necessary for producing reliable financial statements[223](index=223&type=chunk) - Any failure could result in material misstatements, missed reporting obligations, loss of public confidence, and a decline in the trading price of common stock[223](index=223&type=chunk) [General Business Risks](index=48&type=section&id=General%20Business%20Risks) General business risks include natural disasters, terrorist attacks, acts of war, or other uncontrollable events that could damage facilities, disrupt operations, and lead to unrecoverable losses [Natural disasters, terrorist attacks, acts of war or other events beyond our control](index=48&type=section&id=Natural%20disasters%2C%20terrorist%20attacks%2C%20acts%20of%20war%20or%20other%20events%20beyond%20our%20control) - Natural disasters (e.g., earthquakes, wildfires), terrorist attacks, acts of war, or public health issues (e.g., COVID-19) could damage manufacturing and distribution facilities[224](index=224&type=chunk)[225](index=225&type=chunk) - Such events may result in interruptions to business and losses that exceed insurance coverage, adversely affecting operations and financial condition[225](index=225&type=chunk) [Risks Related to Our Common Stock](index=48&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) Risks include significant voting control by the Schwartz family, influencing fundamental changes and potentially delaying control changes, and a forum selection provision that could increase costs for stockholders' claims [A significant majority of our voting stock is held by the Schwartz family](index=48&type=section&id=A%20significant%20majority%20of%20our%20voting%20stock%20is%20held%20by%20the%20Schwartz%20family) - The Schwartz family's ownership of Class A and Class B Common Stock enables them to elect a majority of directors and control fundamental company matters[227](index=227&type=chunk) - This concentration of ownership and voting power may have the effect of delaying or preventing a change in control of the company[227](index=227&type=chunk) [The forum selection provision in our bylaws could increase costs to bring a claim](index=49&type=section&id=The%20forum%20selection%20provision%20in%20our%20bylaws%20could%20increase%20costs%20to%20bring%20a%20claim) - The bylaws designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain claims[230](index=230&type=chunk) - This provision may increase costs, discourage claims, or limit stockholders' ability to bring a claim in a judicial forum they find more favorable[230](index=230&type=chunk) - The application of the choice of forum provision may be limited in some instances by applicable law, such as federal securities laws[231](index=231&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=49&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports on the company's share repurchase program, detailing Q1 2021 repurchases of 89,506 Class A shares for $50.0 million, with $223.1 million remaining - The Board of Directors authorized a share repurchase program, which was increased in July 2020 to allow for an additional **$200.0 million** of stock repurchases[232](index=232&type=chunk) Share Repurchase Program | Metric | Three Months Ended March 31, 2021 | | :----- | :-------------------------------- | | Class A Shares Purchased | 89,506 | | Average Price Paid per Share | $558.60 | | Total Cost of Repurchases (in millions) | $50.0 | | Remaining under Share Repurchase Program (in millions) | $223.1 | - As of March 31, 2021, **$223.1 million** remained under the Share Repurchase Program[148](index=148&type=chunk) [Item 3. Defaults Upon Senior Securities](index=50&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) The company reported no defaults upon senior securities for the period - No defaults upon senior securities[236](index=236&type=chunk) [Item 4. Mine Safety Disclosures](index=50&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[236](index=236&type=chunk) [Item 5. Other Information](index=50&type=section&id=Item%205.%20Other%20Information) Reports the results of the Annual Meeting of Stockholders on April 27, 2021, including the election of directors and ratification of KPMG LLP as independent auditors [Submission of Matters to a Vote of Security Holders](index=50&type=section&id=Submission%20of%20Matters%20to%20a%20Vote%20of%20Security%20Holders) - The Annual Meeting of Stockholders was held on April 27, 2021[237](index=237&type=chunk) - All nominated directors were elected with affirmative votes[237](index=237&type=chunk) - KPMG LLP was ratified as the company's independent auditors for the fiscal year ending December 31, 2021[237](index=237&type=chunk) [Item 6. Exhibits](index=51&type=section&id=Item%206.%20Exhibits) Lists exhibits filed with the report, including CEO and CFO certifications (Sections 302 and 906) and various Inline XBRL documents - Includes Chief Executive Officer and Chief Financial Officer certifications pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002[238](index=238&type=chunk) - Various Inline XBRL documents (instance, schema, calculation, definition, labels, presentation) are filed as exhibits[239](index=239&type=chunk) SIGNATURES - The report was signed on April 30, 2021, by Norman Schwartz, Chairman of the Board, President and Chief Executive Officer, and Ilan Daskal, Executive Vice President, Chief Financial Officer[241](index=241&type=chunk)

[INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS](index=3&type=section&id=INFORMATION%20RELATING%20TO%20FORWARD-LOOKING%20STATEMENTS) This report contains forward-looking statements regarding future performance and objectives, which are subject to significant risks and uncertainties - Forward-looking statements in this annual report involve future financial performance, operating results, plans, and objectives, which are subject to risks and uncertainties that could cause actual results to differ materially from expectations[6](index=6&type=chunk) - Risk factors include the impact of the COVID-19 pandemic, global economic conditions, new product development capabilities, competition, foreign exchange fluctuations, reduced government funding, supply chain issues, product quality and liability, acquisition integration, and international legal and regulatory risks[6](index=6&type=chunk) [Part I.](index=3&type=section&id=Part%20I.) [Business Overview](index=3&type=section&id=Item%201.%20Business) Bio-Rad Laboratories, Inc, a multinational manufacturer, operates through its Life Science and Clinical Diagnostics segments [General](index=3&type=section&id=General) The company manufactures and distributes products for the life science research and clinical diagnostics markets globally - Bio-Rad Laboratories, Inc is a multinational manufacturer and global distributor of products for life science research and clinical diagnostics[7](index=7&type=chunk) - The company operates a direct sales channel in 36 countries, supplemented by distributors and agents[7](index=7&type=chunk) [Description of Business](index=3&type=section&id=Description%20of%20Business) The company's business is divided into Life Science and Clinical Diagnostics, with significant international sales Net Sales Breakdown for 2020 | Metric | Percentage (%) | | :--- | :--- | | **By Business Segment:** | | | Life Science | 49 | | Clinical Diagnostics | 51 | | **By Geographic Region:** | | | United States | 39 | | Other Global Markets | 61 | - The Life Science segment offers approximately 6,000 reagents, apparatus, and laboratory instruments for markets including proteomics, genomics, biopharmaceutical production, cell biology, and food safety, with a global addressable market of about **$14 billion**[10](index=10&type=chunk) - The Clinical Diagnostics segment provides over 3,000 products, including more than 300 in-vitro diagnostic (IVD) tests, focusing on high-margin, high-growth market segments with a global addressable market of about **$16 billion**[11](index=11&type=chunk)[12](index=12&type=chunk) [Raw Materials and Components](index=4&type=section&id=Raw%20Materials%20and%20Components) The company faces procurement challenges due to the COVID-19 pandemic and reliance on single-source suppliers for certain components - The company utilizes a variety of chemicals, biological materials, and electronic components, most of which are available from multiple sources, though the COVID-19 pandemic has created procurement challenges and certain components rely on single suppliers[13](index=13&type=chunk) [Patents, Trademarks and Licenses](index=5&type=section&id=Patents%2C%20Trademarks%20and%20Licenses) The company's competitive advantage relies on its extensive intellectual property portfolio and specialized expertise - The company holds over **2,200 U.S. and international patents** and numerous trademarks, supplemented by third-party patent licenses, and considers its knowledge, technology, and expertise crucial for product development and manufacturing[15](index=15&type=chunk) [Seasonal Operations and Backlog](index=5&type=section&id=Seasonal%20Operations%20and%20Backlog) The company's business is not inherently seasonal, and it does not maintain a significant order backlog - The company's business is not inherently seasonal, although summer holidays in Europe typically affect third-quarter sales and operating income[16](index=16&type=chunk) - The market is characterized by short delivery lead times, resulting in no significant order backlog, which management deems unimportant for the overall business[16](index=16&type=chunk) [Sales and Marketing](index=5&type=section&id=Sales%20and%20Marketing) The company employs a direct sales force and various intermediaries to serve a diverse global customer base - The company's global operations are supported by approximately **880 direct sales and sales management personnel**, complemented by distributors, agents, and other sales and marketing intermediaries[17](index=17&type=chunk)[18](index=18&type=chunk) - The customer base is broad and diverse, including universities, research institutions, hospitals, laboratories, diagnostic manufacturers, and companies in the biotechnology, pharmaceutical, chemical, and food industries[19](index=19&type=chunk) - Sales are influenced by external factors such as government grants and research contracts, while international operations face risks from government regulations, import restrictions, and foreign exchange fluctuations[20](index=20&type=chunk)[21](index=21&type=chunk) [Competition](index=5&type=section&id=Competition) The company operates in highly competitive markets against a range of competitors from startups to large multinational corporations - The markets served by the company are highly competitive, with competitors ranging from start-up companies to large multinational corporations[22](index=22&type=chunk) - Key competitors in the Life Science segment include Becton Dickinson, GE Biosciences, Merck Millipore, and Thermo Fisher Scientific, with competition based on performance specifications and integrated solutions[23](index=23&type=chunk) - Major competitors in the Clinical Diagnostics segment include Roche, Abbott Laboratories, Siemens, Danaher, and Thermo Fisher, with competition based on service, quality, and product portfolio[24](index=24&type=chunk) [Research and Development](index=6&type=section&id=Research%20and%20Development) The company invests heavily in research and development to drive innovation across all business areas - The company conducts extensive R&D activities across all business areas, with approximately **880 employees** globally engaged in R&D to continuously develop new products and applications[25](index=25&type=chunk) [Regulatory Matters](index=6&type=section&id=Regulatory%20Matters) The company's products and operations are subject to stringent regulations from the FDA and other global authorities - The company's products, primarily diagnostic and blood donor screening products, are subject to strict regulation by the U.S. FDA and other national government agencies covering development, testing, manufacturing, marketing, post-market surveillance, distribution, advertising, and labeling[26](index=26&type=chunk) - The company is also subject to healthcare regulations and enforcement by federal, state, and foreign jurisdictions, including anti-kickback, fraud and abuse, false claims, privacy and security, and physician sunshine acts[27](index=27&type=chunk) - Product sales depend on the coverage and reimbursement levels from third-party payors, and healthcare reform measures may limit reimbursement amounts, thereby affecting sales and revenue[28](index=28&type=chunk) - The company's operations must also comply with federal, state, local, and foreign environmental laws and regulations concerning transportation, emissions, and hazardous waste handling[31](index=31&type=chunk) [Human Capital Resources](index=7&type=section&id=Human%20Capital%20Resources) The company focuses on fostering a diverse, equitable, and inclusive culture for its global workforce of approximately 8,000 employees - As of December 31, 2020, the company had approximately **8,000 employees**, with about 45% in the Americas, 40% in Europe, the Middle East, and Africa, and 15% in the Asia Pacific region[33](index=33&type=chunk) - The company is committed to a diverse, equitable, and inclusive work culture, actively recruiting, developing, and retaining a diverse talent pool, with mandatory training for management and employees[34](index=34&type=chunk) - The company offers a competitive total rewards package, including salary, bonuses, stock awards, health benefits, a 401(k) plan, and an employee stock purchase plan, while implementing pay equity strategies[35](index=35&type=chunk) - Employee health, well-being, and safety are high priorities, with safety performance managed and tracked globally and COVID-19 response measures implemented[36](index=36&type=chunk)[38](index=38&type=chunk) - The company provides management and employee training programs to support growth and development, including an educational reimbursement program, with learning shifted to virtual platforms due to the pandemic[39](index=39&type=chunk) [Available Information](index=8&type=section&id=Available%20Information) The company's SEC filings are publicly available on the SEC's website and the company's investor relations website - Bio-Rad files annual, quarterly, and current reports, proxy statements, and other documents with the SEC, which are available on the SEC's website (http://www.sec.gov)[40](index=40&type=chunk) - The company's website (www.bio-rad.com) provides free access to its Form 10-Ks, 10-Qs, and 8-Ks, and their amendments[41](index=41&type=chunk) [Risk Factors](index=8&type=section&id=Item%201A.%20Risk%20Factors) The company faces numerous risks including the COVID-19 pandemic's impact, international operational complexities, and a highly competitive market environment [Business, Economic, Legal and Industry Risks](index=9&type=section&id=Business%2C%20Economic%2C%20Legal%20and%20Industry%20Risks) The company is exposed to a wide range of operational, financial, and regulatory risks that could materially affect its performance - The **COVID-19 pandemic** has adversely affected and is expected to continue to adversely affect the company's business, operations, financial condition, and results of operations, including decreased demand for certain products, supply chain challenges, and personnel risks[45](index=45&type=chunk)[46](index=46&type=chunk)[47](index=47&type=chunk)[48](index=48&type=chunk)[49](index=49&type=chunk)[50](index=50&type=chunk) - International operations, accounting for **61% of 2020 net sales**, face risks from complex foreign and U.S. laws, data privacy requirements, labor laws, tax laws, anti-corruption laws, trade restrictions, and Brexit, which could result in fines, sanctions, or reputational damage[52](index=52&type=chunk)[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) - The life science and clinical diagnostics markets are **highly competitive**, with some competitors having greater financial resources, potentially leading to pricing pressure and loss of market share[57](index=57&type=chunk)[58](index=58&type=chunk) - Future growth depends on **new product development** and existing product improvements; failure to integrate technological advancements or launch new products successfully could render products obsolete and adversely affect the business[59](index=59&type=chunk) - **Information system security breaches**, such as the 2019 cyberattack, could lead to the disclosure of confidential information, business interruptions, customer loss, regulatory penalties, and revenue loss[60](index=60&type=chunk)[61](index=61&type=chunk) - The implementation of a global **Enterprise Resource Planning (ERP) system** may face significant delays, increased costs, and operational disruptions[73](index=73&type=chunk) - **Foreign currency fluctuations**, such as a strengthening U.S. dollar, could negatively impact consolidated net sales reported in U.S. dollars and increase hedging costs[65](index=65&type=chunk)[66](index=66&type=chunk) - Changes in the market value of the **Sartorius AG investment** could significantly impact financial performance and may cause the company to be deemed an "investment company," limiting its access to capital markets[68](index=68&type=chunk)[69](index=69&type=chunk)[70](index=70&type=chunk) - Reductions in **government funding** and customer capital spending plans could adversely affect demand for the company's products[78](index=78&type=chunk)[79](index=79&type=chunk) - Changes in the **healthcare industry**, such as managed care trends, healthcare reform, and reduced third-party payor reimbursement, could adversely affect the gross margins and product utilization of the clinical diagnostics business[81](index=81&type=chunk)[82](index=82&type=chunk)[83](index=83&type=chunk) - **Strict government regulations**, such as FDA oversight of medical devices, and regulatory changes could lead to product approval delays, restricted market access, fines, or business interruptions[84](index=84&type=chunk)[85](index=85&type=chunk)[87](index=87&type=chunk)[88](index=88&type=chunk) - **Acquisition integration** may divert management resources and presents risks of contingent liabilities, goodwill impairment, and failure to achieve expected benefits[91](index=91&type=chunk)[92](index=92&type=chunk) - **Product quality and liability issues** could damage the company's reputation, customer relationships, and financial condition[93](index=93&type=chunk) - A lack of **key technical personnel** could impact product development, marketing, and sales capabilities[94](index=94&type=chunk) - **Supply chain disruptions** for components and raw materials could affect manufacturing operations and product sales[96](index=96&type=chunk)[97](index=97&type=chunk) - Higher-than-expected **tax liabilities** and changes in tax laws could adversely affect the financial condition and results of operations[98](index=98&type=chunk)[99](index=99&type=chunk)[100](index=100&type=chunk)[101](index=101&type=chunk) - **Environmental, health, and safety regulations** and enforcement actions could lead to increased capital and operating costs, fines, or business damage[103](index=103&type=chunk)[104](index=104&type=chunk)[105](index=105&type=chunk) - **Restrictive covenants in debt agreements** could affect the company's ability to operate and capitalize on business opportunities, with defaults potentially leading to debt acceleration[106](index=106&type=chunk)[107](index=107&type=chunk) [Risks Related to Being a Public Company](index=21&type=section&id=Risks%20Related%20to%20Being%20a%20Public%20Company) The company faces risks associated with maintaining effective internal controls and meeting public reporting obligations - Failure to establish and maintain effective **internal control over financial reporting** could result in material misstatements in financial statements, failure to meet reporting obligations, and damage to investor confidence[112](index=112&type=chunk)[113](index=113&type=chunk) [General Business Risks](index=21&type=section&id=General%20Business%20Risks) Uncontrollable external events could disrupt the company's operations and supply chain - Natural disasters, terrorist attacks, war, or other uncontrollable events could cause damage or disruption to the company, its employees, facilities, information systems, suppliers, and customers[114](index=114&type=chunk)[115](index=115&type=chunk) [Risks Related to Our Common Stock](index=21&type=section&id=Risks%20Related%20to%20Our%20Common%20Stock) The concentration of voting power and charter provisions present risks to minority shareholders - The **Schwartz family holds a majority of the company's voting stock**, enabling them to elect a majority of directors and control corporate affairs, which may lead to conflicts of interest with minority shareholders[116](index=116&type=chunk) - **Forum selection clauses** in the company's charter could increase claim costs and limit shareholders' ability to bring lawsuits in certain judicial forums[118](index=118&type=chunk)[119](index=119&type=chunk)[120](index=120&type=chunk) [Unresolved Staff Comments](index=22&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) There are no unresolved staff comments in this report - No unresolved staff comments[121](index=121&type=chunk) [Properties](index=23&type=section&id=Item%202.%20Properties) Bio-Rad owns and leases numerous properties worldwide for its manufacturing, research, administrative, and sales operations - The company owns its corporate headquarters located in Hercules, California[124](index=124&type=chunk) Principal Manufacturing and Research Locations | Business Segment | Location | Owned/Leased | | :--- | :--- | :--- | | Life Science | San Francisco Bay Area, CA | Owned/Leased | | | Singapore | Leased | | | Oxford, United Kingdom | Leased | | Clinical Diagnostics | San Francisco Bay Area, CA | Owned/Leased | | | Irvine, CA | Leased | | | Greater Seattle Area, WA | Leased | | | Lille, France | Owned | | | Greater Paris Area, France | Leased | | | Nazareth-Eke, Belgium | Leased | | | Cressier, Switzerland | Owned/Leased | | | Dreieich, Germany | Owned/Leased | - Most manufacturing and research facilities also house administrative, sales, and distribution activities, and the company leases additional office and warehouse facilities globally[124](index=124&type=chunk) [Legal Proceedings](index=23&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal matters arising from its ordinary course of business - The company is a party to various claims, legal proceedings, and complaints arising in the ordinary course of business[125](index=125&type=chunk) - Management does not currently believe that any ultimate liability will have a material adverse effect on the company's financial results, condition, or liquidity, but cannot guarantee the final outcome[125](index=125&type=chunk) [Mine Safety Disclosures](index=23&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) Mine safety disclosures are not applicable to this report - Mine safety disclosures are not applicable[126](index=126&type=chunk) [Part II.](index=24&type=section&id=Part%20II.) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=24&type=section&id=Item%205.%20Market%20for%20Registrant's%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) This section details the market for Bio-Rad's common stock, shareholder information, and the company's stock repurchase program [Information Concerning Common Stock](index=24&type=section&id=Information%20Concerning%20Common%20Stock) Bio-Rad's Class A and B common stock are listed on the NYSE, and the company maintains an active stock repurchase program - Bio-Rad's Class A and Class B common stock are listed on the New York Stock Exchange under the ticker symbols **BIO** and **BIOb**, respectively[128](index=128&type=chunk) - As of February 10, 2021, there were **174 holders of Class A common stock** and **99 holders of Class B common stock**[128](index=128&type=chunk) - The company has **never paid cash dividends** and has no current plans to do so[128](index=128&type=chunk) Stock Repurchase Program | Metric | Description | | :--- | :--- | | November 2017 Authorization | Board authorized repurchase of up to $250 million of common stock | | July 2020 Increase | Board authorized an additional repurchase of up to $200 million of stock | | Remaining Authorization as of Dec 31, 2020 | $273.1 million | [Stock Performance Graph](index=25&type=section&id=Stock%20Performance%20Graph) The stock performance graph compares Bio-Rad's cumulative shareholder return against market indices and a peer group - The stock performance graph compares the cumulative shareholder return of the company's Class A common stock with the S&P 400 MidCap Index and a selected peer group over the last five years[132](index=132&type=chunk) - The peer group includes Danaher, Becton Dickinson, Thermo Fisher Scientific, Meridian Bioscience, and PerkinElmer, reflecting the company's participation in both the life science research products and clinical diagnostics markets[132](index=132&type=chunk) [Selected Financial Data](index=26&type=section&id=Item%206.%20Selected%20Financial%20Data) This section presents key financial data for Bio-Rad Laboratories, Inc for the five-year period ending December 31, 2020 Selected Financial Data (2016-2020) | Metric (in thousands of dollars, except per share data) | 2020 | 2019 | 2018 | 2017 | 2016 | | :--- | :--- | :--- | :--- | :--- | :--- | | Net sales | 2,545,626 | 2,311,659 | 2,289,415 | 2,160,153 | 2,068,172 | | Cost of goods sold | 1,107,804 | 1,054,663 | 1,066,264 | 972,450 | 929,744 | | Gross profit | 1,437,822 | 1,256,996 | 1,223,151 | 1,187,703 | 1,138,428 | | Selling, general and administrative expenses | 800,267 | 824,625 | 834,783 | 806,790 | 814,697 | | Research and development expenses | 226,598 | 202,710 | 199,196 | 250,157 | 205,708 | | Goodwill and long-lived asset impairment losses | — | — | 292,513 | 11,506 | 62,305 | | Interest expense | 21,861 | 23,416 | 23,962 | 23,014 | 23,380 | | Foreign currency exchange losses, net | 1,771 | 2,245 | 2,861 | 9,128 | 4,542 | | Changes in fair value of equity securities | (4,495,825) | (2,030,987) | (606,230) | — | — | | Other income, net | (24,488) | (26,094) | (36,593) | (10,697) | (13,764) | | Income before taxes | 4,907,638 | 2,261,081 | 512,659 | 97,805 | 41,560 | | Income tax (provision) benefit | (1,101,371) | (502,406) | (147,045) | 24,444 | (15,560) | | Net income | 3,806,267 | 1,758,675 | 365,614 | 122,249 | 26,000 | | Basic earnings per share | 127.86 | 58.93 | 12.25 | 4.12 | 0.88 | | Diluted earnings per share | 126.20 | 58.27 | 12.10 | 4.07 | 0.88 | | Total assets | 12,972,618 | 8,008,859 | 5,611,068 | 4,273,012 | 3,850,504 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%207.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section analyzes the company's financial performance for the year ended December 31, 2020, highlighting key operational and financial developments [Overview](index=26&type=section&id=Overview) The company operates globally in the life science and clinical diagnostics sectors, serving a diverse customer base - Bio-Rad is a multinational manufacturer and global distributor of products for life science research and clinical diagnostics, operating in two main segments[137](index=137&type=chunk) - The company sells over **9,000 products and services** to a diverse customer base including research, healthcare, education, and government institutions[138](index=138&type=chunk) - Approximately **39% of 2020 consolidated net sales** were from the U.S. and 61% from international markets, with Europe being the largest international region, making foreign exchange fluctuations impactful[141](index=141&type=chunk) [COVID-19](index=27&type=section&id=COVID-19) The COVID-19 pandemic has significantly impacted the company's operations, creating both challenges and opportunities - The COVID-19 pandemic continues to affect the company's business operations, financial condition, and results, with **strong demand for COVID-19 testing and related research products** but decreased demand for other products[142](index=142&type=chunk) [Cyberattack](index=27&type=section&id=Cyberattack) The company successfully managed a 2019 cyberattack with minimal disruption and is covered by insurance - The company detected a cyberattack in December 2019, immediately took affected systems offline, and restored critical systems within days without paying a ransom, with cyberattack insurance coverage in place[143](index=143&type=chunk)[144](index=144&type=chunk) [Acquisitions](index=27&type=section&id=Acquisitions) The company acquired Celsee, Inc to enhance its life science product portfolio - On April 1, 2020, the company acquired Celsee, Inc for a total consideration of **$99.3 million**, including contingent consideration, to complement its life science product line[145](index=145&type=chunk)[146](index=146&type=chunk) [Informatics Divestiture](index=27&type=section&id=Informatics%20Divestiture) The company divested its Informatics division in April 2020 - In April 2020, the company sold its Informatics division for **$12.2 million** and recognized a gain of **$11.7 million**[147](index=147&type=chunk) [Restructurings](index=28&type=section&id=Restructurings) The company has initiated a strategy-driven restructuring plan primarily affecting its European operations - On February 3, 2021, the company initiated a strategy-driven restructuring plan, mainly impacting European operations, involving the elimination of approximately 530 positions and the creation of about 325 new positions, expected to be completed by the end of fiscal 2022[148](index=148&type=chunk) - The restructuring plan is estimated to cost between **$125 million and $130 million**, including approximately $86 million in severance, $19 million in capital expenditures, and $20 million to $25 million in one-time transition costs[148](index=148&type=chunk) [Critical Accounting Policies and Estimates](index=28&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) The company's financial statements rely on key accounting policies and management estimates that are subject to change - The company's financial statements are prepared in accordance with U.S. GAAP, requiring management to make estimates and assumptions that may change due to future events[149](index=149&type=chunk) - **Income tax accounting** involves estimating current tax liabilities and deferred tax assets and liabilities in various jurisdictions and assessing the realizability of deferred tax assets[150](index=150&type=chunk)[151](index=151&type=chunk)[153](index=153&type=chunk) - **Business acquisition accounting** requires estimating the fair value of acquired tangible and intangible assets and assumed liabilities at the acquisition date, with goodwill representing the excess purchase price[154](index=154&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk) - **Goodwill** is tested for impairment annually, or more frequently if impairment indicators exist, by assessing whether a reporting unit's fair value is below its carrying amount[157](index=157&type=chunk)[158](index=158&type=chunk)[159](index=159&type=chunk) - **Intangible assets** such as customer relationships, technology, licenses, and trade names are recorded at cost and amortized over their estimated useful lives of 3 to 20 years[161](index=161&type=chunk)[162](index=162&type=chunk) - **Long-lived assets** are reviewed for impairment when indicators are present by comparing the asset's carrying value to future undiscounted net cash flows[162](index=162&type=chunk)[163](index=163&type=chunk) - **Revenue recognition** is based on the transfer of promised goods or services to customers in an amount that reflects the expected consideration, net of estimated product returns[164](index=164&type=chunk)[166](index=166&type=chunk)[167](index=167&type=chunk) - Revenue from **reagent rental agreements** involves allocating contract consideration to lease and non-lease components and is recognized under ASC 842 and ASC 606[171](index=171&type=chunk)[172](index=172&type=chunk) - **Inventory** is valued at the lower of cost or net realizable value and is written down for excess and obsolete inventory based on product demand forecasts, production requirements, and raw material quality[173](index=173&type=chunk) [Results of Operations - Sales, Gross Margins and Expenses](index=32&type=section&id=Results%20of%20Operations%20-%20Sales%2C%20Gross%20Margins%20and%20Expenses) The company's 2020 results show strong sales growth in Life Science, offset by a decline in Clinical Diagnostics Cost of Goods Sold, Gross Profit, and Expenses as a Percentage of Net Sales | Metric | 2020 (%) | 2019 (%) | | :--- | :--- | :--- | | Net sales | 100.0 | 100.0 | | Cost of goods sold | 43.5 | 45.6 | | Gross profit | 56.5 | 54.4 | | Selling, general and administrative expenses | 31.4 | 35.7 | | Research and development expenses | 8.9 | 8.8 | Annual Change in Net Sales | Metric | 2020 ($ millions) | 2019 ($ millions) | Y-o-Y Growth (%) | Currency-Neutral Growth (%) | | :--- | :--- | :--- | :--- | :--- | | Consolidated Net Sales | 2,545.6 | 2,311.7 | 10.1 | 10.3 | | Life Science Segment Sales | 1,230.0 | 885.9 | 39.0 | 38.6 | | Clinical Diagnostics Segment Sales | 1,310.0 | 1,412.0 | (7.6) | (7.1) | - The **Life Science segment's sales growth** was driven by increases in gene expression, Droplet Digital PCR, and process media product lines, benefiting from COVID-19 diagnostic products, a carry-over effect from the 2019 cyberattack, and a **$32 million intellectual property litigation settlement**[176](index=176&type=chunk) - The **Clinical Diagnostics segment's sales decline** was primarily due to the impact of COVID-19 on customer operations, though it benefited from the carry-over effect of the 2019 cyberattack[178](index=178&type=chunk) - The **consolidated gross margin increased to 56.5%** in 2020 from 54.4% in 2019, mainly due to higher sales in the Life Science segment, a favorable product mix, and lower manufacturing costs[179](index=179&type=chunk) - **Selling, general, and administrative expenses decreased** to $800.3 million in 2020 from $824.6 million in 2019, primarily due to a **$35 million reduction** in travel, marketing, and communication expenses resulting from COVID-19[180](index=180&type=chunk) - **Research and development expenses increased** to $226.6 million in 2020 from $202.7 million in 2019, mainly due to accelerated innovation in key investment areas within the Life Science segment and expenses related to the Celsee business[181](index=181&type=chunk) [Results of Operations – Non-operating](index=33&type=section&id=Results%20of%20Operations%20%E2%80%93%20Non-operating) Non-operating results were significantly influenced by the fair value changes of the company's investment in Sartorius AG Annual Change in Non-operating Financial Data | Metric ($ millions) | 2020 | 2019 | | :--- | :--- | :--- | | Interest expense | 21.9 | 23.4 | | Foreign currency exchange losses, net | 1.8 | 2.2 | | Changes in fair value of equity securities | (4,495.8) | (2,031.0) | | Other income, net | (24.5) | (26.1) | | Effective tax rate | 22.4% | 22.2% | - The change in fair value of equity securities primarily reflects holding gains from the **Sartorius AG investment**, amounting to **$4.5 billion** in 2020 and **$2.03 billion** in 2019[184](index=184&type=chunk) - The decrease in other income, net was mainly due to lower investment income and Sartorius AG dividend income, partially offset by the gain on the sale of the Informatics division[185](index=185&type=chunk) - The effective tax rate was influenced by unrealized gains on equity securities (taxed at approximately 22%), the geographic mix of earnings, and taxes on foreign earnings[186](index=186&type=chunk) [Comparison of the Year Ended December 31, 2019 to the Year Ended December 31, 2018](index=34&type=section&id=Comparison%20of%20the%20Year%20Ended%20December%2031%2C%202019%20to%20the%20Year%20Ended%20December%2031%2C%202018) A comparative analysis of 2019 and 2018 financial results is available in the prior year's Form 10-K report - For a discussion comparing fiscal years 2019 and 2018, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" section in the company's Form 10-K for the fiscal year ended December 31, 2019[190](index=190&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity through operating cash flows, investments, and an undrawn credit facility - The company maintains sufficient liquidity through positive cash flow from operating activities, sales of short-term investments, and a **$200 million unsecured revolving credit facility**, which had no outstanding borrowings as of December 31, 2020[192](index=192&type=chunk) - As of December 31, 2020, the company held **$991.1 million in cash, cash equivalents, and short-term investments**, with approximately 37% held by foreign subsidiaries[193](index=193&type=chunk) - The company plans to repatriate a portion of its foreign earnings unless restricted by local laws or accounting rules or if it would incur significant incremental costs[194](index=194&type=chunk) - The COVID-19 pandemic, government funding, reimbursement limits, and international trade disputes could cause significant shifts in demand for products and services[195](index=195&type=chunk) Cash Flow Summary ($ millions) | Cash Flow Type | 2020 | 2019 | | :--- | :--- | :--- | | Net cash provided by operating activities | 575.3 | 457.9 | | Net cash used in investing activities | (60.3) | (208.9) | | Net cash used in financing activities | (523.0) | (22.8) | - The increase in operating cash flow was primarily due to higher customer collections from increased sales of COVID-19 related products, partially offset by higher payments to suppliers and for employee-related expenses[197](index=197&type=chunk) - The decrease in investing cash outflow was mainly due to a **$159.5 million net increase** from maturities, sales, and purchases of marketable securities and a **$12.2 million gain** from divestitures, partially offset by a **$17.3 million increase** in acquisition payments[200](index=200&type=chunk) - The increase in financing cash outflow was primarily due to the repayment of **$425 million in principal on senior notes** and **$72 million for treasury stock repurchases**[202](index=202&type=chunk) - In 2020, the company repurchased **291,941 shares of Class A common stock for $100 million**; as of December 31, 2020, **$273.1 million** remained available under the stock repurchase program[205](index=205&type=chunk)[207](index=207&type=chunk) [Off-Balance Sheet Arrangements](index=37&type=section&id=Off-Balance%20Sheet%20Arrangements) The company has no significant off-balance sheet arrangements - The company does not have any off-balance sheet arrangements that have or are reasonably likely to have a material effect on its financial condition, results of operations, or liquidity[208](index=208&type=chunk) [Contractual Obligations](index=37&type=section&id=Contractual%20Obligations) This section outlines the company's contractual obligations as of year-end 2020 Contractual Obligations as of December 31, 2020 ($ millions) | Contractual Obligation | Total | Less than 1 year | 1-3 years | 3-5 years | More than 5 years | | :--- | :--- | :--- | :--- | :--- | :--- | | Long-term debt, including current portion | 14.1 | 1.8 | 2.2 | 0.8 | 9.3 | | Interest payments | 8.6 | 0.9 | 1.5 | 1.4 | 4.8 | | Operating lease obligations | 252.9 | 43.6 | 68.3 | 50.4 | 90.6 | | Purchase obligations | 16.6 | 14.1 | 2.3 | 0.2 | — | | Long-term liabilities | 134.0 | 2.7 | 19.3 | 9.4 | 102.6 | - Long-term liabilities primarily consist of other post-retirement benefits and long-term deferred revenue, excluding unrecognized tax liabilities and contingencies for which future cash flows cannot be reasonably estimated[211](index=211&type=chunk) [Recent Accounting Pronouncements Adopted and to be Adopted](index=37&type=section&id=Recent%20Accounting%20Pronouncements%20Adopted%20and%20to%20be%20Adopted) Information on recent accounting pronouncements is detailed in the notes to the consolidated financial statements - Please refer to Note 1 of the Notes to Consolidated Financial Statements for information on recent accounting pronouncements adopted and to be adopted[212](index=212&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company manages financial risks, including foreign exchange and interest rate fluctuations, through operational and financial instruments [Financial Risk Management](index=38&type=section&id=Financial%20Risk%20Management) The company aims to mitigate the impact of market volatility on its cash flows through a structured risk management approach - The company's financial risk management objective is to reduce the volatility of expected cash flows from unexpected changes in foreign exchange and interest rates[214](index=214&type=chunk) - Risks are managed through operational means and financial instruments, including cash, liquid resources, borrowings, and forward foreign exchange contracts, with no speculative derivative trading[214](index=214&type=chunk) [Foreign Exchange Risk](index=38&type=section&id=Foreign%20Exchange%20Risk) The company uses forward contracts and operational strategies to manage currency transaction and translation risks - The company faces transactional currency risk and translation risk from the net assets of its international subsidiaries, which it manages by matching revenues and expenses in the same currency and using forward foreign exchange contracts[215](index=215&type=chunk)[216](index=216&type=chunk) - The primary currencies for forward contracts include the Euro, Swiss Franc, Japanese Yen, Chinese Yuan, and British Pound, with most contracts having a term of 90 days or less[216](index=216&type=chunk) - As of December 31, 2020, a **10% adverse change in foreign exchange rates** would result in a net present value loss of approximately **$18 million** on derivative positions, excluding the offsetting effect of changes in the value of underlying assets and liabilities[217](index=217&type=chunk) [Interest Rate Risk of Debt Instruments](index=38&type=section&id=Interest%20Rate%20Risk%20of%20Debt%20Instruments) The company's exposure to interest rate risk is limited due to its fixed-rate long-term debt and minimal floating-rate debt - Due to the relatively small amount of short-term floating-rate debt instruments, a **10% adverse change in interest rates** would not have a material impact on earnings or cash flows[218](index=218&type=chunk) - Long-term debt instruments are primarily fixed-rate and therefore not subject to interest rate changes[218](index=218&type=chunk) [Financial Statements and Supplementary Data](index=39&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the audited consolidated financial statements and supplementary data for Bio-Rad Laboratories, Inc for the year ended December 31, 2020 [Reports of Independent Registered Public Accounting Firm](index=40&type=section&id=Reports%20of%20Independent%20Registered%20Public%20Accounting%20Firm) The independent auditor's report provides an unqualified opinion on the company's financial statements and internal controls - KPMG LLP issued an **unqualified opinion** on the consolidated financial statements of Bio-Rad Laboratories, Inc as of December 31, 2020 and 2019, stating they are presented fairly in all material respects in conformity with U.S. GAAP[222](index=222&type=chunk) - KPMG LLP also issued an **unqualified opinion** on the effectiveness of the company's internal control over financial reporting as of December 31, 2020[223](index=223&type=chunk)[231](index=231&type=chunk) - The company changed its method of accounting for leases effective January 1, 2019, due to the adoption of ASU 2016-02, Leases, and its related updates[224](index=224&type=chunk) - A **critical audit matter** was the assessment of the lease term for reagent rental agreements, which required a high degree of auditor judgment to design and execute audit procedures[227](index=227&type=chunk)[228](index=228&type=chunk)[229](index=229&type=chunk) [Consolidated Balance Sheets](index=45&type=section&id=Consolidated%20Balance%20Sheets) The consolidated balance sheets present the company's financial position at the end of the 2020 and 2019 fiscal years Consolidated Balance Sheets Summary (as of December 31, in thousands of dollars) | Metric | 2020 | 2019 | | :--- | :--- | :--- | | **Assets:** | | | | Cash and cash equivalents | 662,205 | 660,672 | | Short-term investments | 328,913 | 453,973 | | Inventories | 419,424 | 392,672 | | Total assets | 12,972,618 | 8,008,859 | | **Liabilities and Stockholders' Equity:** | | | | Accounts payable | 139,451 | 107,014 | | Total current liabilities | 631,536 | 905,495 | | Long-term debt, less current portion | 12,258 | 13,579 | | Deferred income taxes | 2,076,785 | 997,787 | | Total liabilities | 3,092,678 | 2,253,802 | | Total stockholders' equity | 9,879,940 | 5,755,057 | [Consolidated Statements of Income](index=47&type=section&id=Consolidated%20Statements%20of%20Income) The consolidated statements of income detail the company's revenues, expenses, and net income over the past three fiscal years Consolidated Statements of Income Summary (for the year ended December 31, in thousands of dollars, except per share data) | Metric | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net sales | 2,545,626 | 2,311,659 | 2,289,415 | | Cost of goods sold | 1,107,804 | 1,054,663 | 1,066,264 | | Gross profit | 1,437,822 | 1,256,996 | 1,223,151 | | Selling, general and administrative expenses | 800,267 | 824,625 | 834,783 | | Research and development expenses | 226,598 | 202,710 | 199,196 | | Operating (loss) income | 410,957 | 229,661 | (103,341) | | Changes in fair value of equity securities | (4,495,825) | (2,030,987) | (606,230) | | Income before taxes | 4,907,638 | 2,261,081 | 512,659 | | Income tax provision | (1,101,371) | (502,406) | (147,045) | | Net income | 3,806,267 | 1,758,675 | 365,614 | | Basic earnings per share | 127.86 | 58.93 | 12.25 | | Diluted earnings per share | 126.20 | 58.27 | 12.10 | [Consolidated Statements of Comprehensive Income](index=48&type=section&id=Consolidated%20Statements%20of%20Comprehensive%20Income) The consolidated statements of comprehensive income report net income and other comprehensive income items Consolidated Statements of Comprehensive Income Summary (for the year ended December 31, in thousands of dollars) | Metric | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net income | 3,806,267 | 1,758,675 | 365,614 | | Other comprehensive income (loss), net of tax: | | | | | Foreign currency translation adjustments | 371,057 | (36,953) | (112,857) | | Foreign other post-retirement benefit adjustments | (3,806) | (7,363) | 7,549 | | Net unrealized holding gains (losses) on available-for-sale investments | 2,553 | 3,926 | (1,187) | | Other comprehensive income (loss), net of tax | 369,804 | (40,390) | (106,495) | | Comprehensive income | 4,176,071 | 1,718,285 | 259,119 | [Consolidated Statements of Cash Flows](index=49&type=section&id=Consolidated%20Statements%20of%20Cash%20Flows) The consolidated statements of cash flows summarize the cash inflows and outflows from operating, investing, and financing activities Consolidated Statements of Cash Flows Summary (for the year ended December 31, in thousands of dollars) | Cash Flow Type | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | 575,328 | 457,897 | 285,494 | | Net cash used in investing activities | (60,250) | (208,889) | (186,978) | | Net cash used in financing activities | (523,041) | (22,758) | (48,680) | | Effect of exchange rate changes on cash | 12,427 | 2,237 | (655) | | Net increase in cash, cash equivalents and restricted cash | 4,464 | 228,487 | 49,181 | | Cash, cash equivalents and restricted cash at end of year | 667,115 | 662,651 | 434,164 | [Consolidated Statements of Changes in Stockholders' Equity](index=50&type=section&id=Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) This statement details the changes in the company's equity accounts over the past three fiscal years Consolidated Statements of Changes in Stockholders' Equity Summary (for the year ended December 31, in thousands of dollars) | Metric | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Stockholders' equity at beginning of year | 5,755,057 | 4,020,331 | 2,930,250 | | Net income | 3,806,267 | 1,758,675 | 365,614 | | Other comprehensive income (loss), net of tax | 369,804 | (40,390) | (106,495) | | Purchase of treasury stock | (100,004) | (28,000) | (48,912) | | Stockholders' equity at end of year | 9,879,940 | 5,755,057 | 4,020,331 | [Notes to Consolidated Financial Statements](index=51&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed disclosures that supplement the information in the consolidated financial statements [Note 1. Significant Accounting Policies](index=51&type=section&id=Note%201.%20Significant%20Accounting%20Policies) This note outlines the significant accounting policies applied in the preparation of the consolidated financial statements - The company's consolidated financial statements include the accounts of Bio-Rad Laboratories, Inc and its wholly-owned and majority-owned subsidiaries, with intercompany balances and transactions eliminated[248](index=248&type=chunk) - **Cash and cash equivalents** include cash and highly liquid investments with original maturities of three months or less, stated at cost, which approximates fair value[249](index=249&type=chunk) - **Short-term restricted investments** of $5.6 million are held to collateralize workers' compensation and general liability insurance[250](index=250&type=chunk) - **Available-for-sale investments** are reported at fair value, with unrealized gains and losses included in other comprehensive income; an expected loss model was adopted effective January 1, 2020[251](index=251&type=chunk) - **Credit risk** is concentrated in cash, investments, foreign exchange contracts, and trade receivables, and is managed through dealings with high-credit-quality financial institutions and ongoing credit evaluations[253](index=253&type=chunk)[254](index=254&type=chunk)[255](index=255&type=chunk) - **Accounts receivable** are recorded at net invoice value, with an allowance for doubtful accounts established based on historical loss rates and future loss estimates[256](index=256&type=chunk) Allowance for Doubtful Accounts Activity ($ millions) | Metric | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Beginning balance | 20.2 | 26.7 | 25.5 | | Provision for expected credit losses (2020), bad debt (reversal) expense (2019 & 2018) | 1.2 | (1.2) | 3.9 | | Write-offs | (1.6) | (6.6) | (2.7) | | Recoveries | — | 1.3 | — | | Ending balance | 19.8 | 20.2 | 26.7 | - **Inventories** are stated at the lower of cost or net realizable value, including materials, labor, and manufacturing overhead, and are written down based on demand forecasts and quality assessments[257](index=257&type=chunk)[173](index=173&type=chunk) - **Property, plant, and equipment** are stated at cost less accumulated depreciation and amortization, with depreciation calculated using the straight-line method over useful lives of 1 to 50 years[260](index=260&type=chunk)[261](index=261&type=chunk) - **Lease arrangements** are accounted for under ASU 2016-02 since January 1, 2019, recognizing most leases as assets and liabilities and enhancing disclosures[263](index=263&type=chunk)[264](index=264&type=chunk)[265](index=265&type=chunk)[310](index=310&type=chunk) - **Intangible assets** include goodwill, acquired technology, licenses, trade names, and customer relationships; finite-lived intangibles are amortized over 3 to 20 years, while indefinite-lived intangibles (goodwill) are tested for impairment annually[266](index=266&type=chunk)[269](index=269&type=chunk)[270](index=270&type=chunk)[271](index=271&type=chunk) - **Income taxes** are accounted for using the asset and liability method, recognizing deferred tax assets and liabilities and assessing their realizability, while recognizing tax benefits for uncertain tax positions[272](index=272&type=chunk)[273](index=273&type=chunk)[275](index=275&type=chunk)[276](index=276&type=chunk) - **Revenue** is recognized upon transfer of promised goods or services to customers in an amount that reflects the expected consideration, net of estimated product returns[278](index=278&type=chunk)[279](index=279&type=chunk)[280](index=280&type=chunk) - Revenue from **reagent rental agreements** involves allocating contract consideration to lease and non-lease components and is recognized under ASC 842 and ASC 606[286](index=286&type=chunk)[287](index=287&type=chunk)[288](index=288&type=chunk)[290](index=290&type=chunk)[291](index=291&type=chunk) - **Research and development costs** are expensed as incurred[296](index=296&type=chunk) - **Foreign currency statements** are translated at year-end exchange rates, with income statement items translated at average rates; translation adjustments are recorded as a separate component of stockholders' equity[298](index=298&type=chunk) - **Forward foreign exchange contracts** are used to manage foreign exchange risk, are measured at fair value, and do not receive hedge accounting treatment[300](index=300&type=chunk) - **Equity investments** are reported at fair value with unrealized gains and losses recognized in the income statement; the equity method is used for investments with significant influence[306](index=306&type=chunk) - **Recently adopted accounting standards** include ASU 2020-04 (Reference Rate Reform), ASU 2018-13 (Fair Value Measurement Disclosures), and ASU 2016-13 (Measurement of Credit Losses on Financial Instruments)[307](index=307&type=chunk)[308](index=308&type=chunk)[310](index=310&type=chunk) - **Accounting standards to be adopted** include ASU 2020-01 (Clarifying Interactions between Equity Securities, Equity Method, and Derivatives) and ASU 2019-12 (Simplifying the Accounting for Income Taxes)[311](index=311&type=chunk)[312](index=312&type=chunk) [Note 2. Acquisitions and Divestitures](index=61&type=section&id=Note%202.%20Acquisitions%20and%20Divestitures) This note details the company's acquisition and divestiture activities during the reporting period - On April 1, 2020, the company acquired **Celsee, Inc for a total consideration of $99.3 million** to complement its life science product line, with **$29.8 million recognized as goodwill**[314](index=314&type=chunk)[315](index=315&type=chunk)[316](index=316&type=chunk)[317](index=317&type=chunk) Fair Value and Estimated Useful Lives of Identifiable Intangible Assets from Celsee Acquisition ($ millions) | Intangible Asset | Fair Value | Estimated Useful Life (years) | | :--- | :--- | :--- | | Developed product technology | 70.3 | 18.9 | | Customer relationships | 3.6 | 4.0 | | Non-compete agreements | 1.4 | 3.0 | | In-process research and development | 4.6 | - | | Total | 79.9 | | - In October 2019, the company acquired a foreign distributor for approximately **$4.2 million**, recognizing **$3.4 million** in customer relationship intangible assets[322](index=322&type=chunk)[323](index=323&type=chunk) - In August 2019, the company acquired **Exact Diagnostics, LLC for approximately $60 million** to accelerate market penetration in quality control and assay validation, with **$28.7 million recognized as goodwill**[325](index=325&type=chunk)[326](index=326&type=chunk) - In March 2019, the company acquired a small, private U.S. company for approximately **$20 million** to expand its life science reagent product line, with **$15.6 million recognized as goodwill**[327](index=327&type=chunk)[328](index=328&type=chunk)[329](index=329&type=chunk) - In April 2020, the company sold its **Informatics division for $12.2 million**, recognizing a gain of **$11.7 million**[330](index=330&type=chunk) [Note 3. Fair Value Measurements and Investments](index=64&type=section&id=Note%203.%20Fair%20Value%20Measurements%20and%20Investments) This note provides details on the fair value measurement of the company's financial assets and liabilities - The company determines fair value based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants, using a three-level fair value hierarchy[332](index=332&type=chunk) Financial Assets and Liabilities by Fair Value Hierarchy as of December 31, 2020 ($ millions) | Financial Instrument | Level 1 | Level 2 | Level 3 | Total | | :--- | :--- | :--- | :--- | :--- | | **Financial Assets:** | | | | | | Cash equivalents | 77.7 | 55.1 | — | 132.8 | | Restricted investments | 6.7 | — | — | 6.7 | | Equity securities | 9,582.4 | — | — | 9,582.4 | | Available-for-sale investments | — | 267.6 | — | 267.6 | | Forward foreign exchange contracts | — | 1.0 | — | 1.0 | | **Financial Liabilities:** | | | | | | Forward foreign exchange contracts | — | 1.0 | — | 1.0 | | Contingent consideration | — | — | 0.7 | 0.7 | - As of December 31, 2020, the company held **12,987,900 ordinary voting shares** and **9,588,908 preference shares of Sartorius AG**, representing approximately 37% of the ordinary voting shares and 28% of the preference shares[339](index=339&type=chunk) - In 2020, changes in the fair value of equity securities resulted in a **gain of $4.4958 billion**, primarily from the Sartorius AG investment[337](index=337&type=chunk) Available-for-Sale Investments as of December 31, 2020 ($ millions) | Investment Type | Amortized Cost | Unrealized Gains | Unrealized Losses | Allowance for Credit Losses | Estimated Fair Value | | :--- | :--- | :--- | :--- | :--- | :--- | | **Short-term investments:** | | | | | | | Corporate debt securities | 130.5 | 2.7 | — | — | 133.2 | | Municipal bonds | 15.0 | 0.2 | — | — | 15.2 | | Asset-backed securities | 35.8 | 0.3 | — | — | 36.1 | | U.S. government sponsored agencies | 74.7 | 2.2 | — | — | 76.9 | | Foreign government bonds | 4.0 | — | — | — | 4.0 | | Other foreign bonds | 2.1 | — | — | — | 2.1 | | **Long-term investments:** | | | | | | | Asset-backed securities | 0.1 | — | — | — | 0.1 | | **Total** | **262.2** | **5.4** | **—** | **—** | **267.6** | - As of December 31, 2020, the company had **no allowance for credit losses** on its available-for-sale investment portfolio, as all payments are expected to be received in full and on time[352](index=352&type=chunk) Forward Foreign Exchange Contracts Summary as of December 31, 2020 ($ millions) | Contract Type | Notional Value | Unrealized Gain (Loss) | | :--- | :--- | :--- | | Contracts to sell foreign currencies maturing Jan-Mar 2021 | 125.3 | (0.4) | | Contracts to purchase foreign currencies maturing Jan-Mar 2021 | 301.6 | 0.4 | - In December 2020, the company's **4.875% Senior Notes matured and were paid in full**[356](index=356&type=chunk) [Note 4. Goodwill and Other Purchased Intangible Assets](index=71&type=section&id=Note%204.%20Goodwill%20and%20Other%20Purchased%20Intangible%20Assets) This note provides a breakdown of goodwill and other purchased intangible assets by business segment Changes in Goodwill by Business Segment ($ millions) | Metric | 2020 Life Science | 2020 Clinical Diagnostics | 2020 Total | 2019 Life Science | 2019 Clinical Diagnostics | 2019 Total | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Net goodwill at beginning of year | 208.3 | 55.8 | 264.1 | 192.7 | 27.1 | 219.8 | | Acquisitions | 29.8 | — | 29.8 | 15.6 | 28.7 | 44.3 | | Other adjustments | (2.0) | — | (2.0) | — | — | — | | Net goodwill at end of year | 236.1 | 55.8 | 291.9 | 208.3 | 55.8 | 264.1 | Information on Identifiable Purchased Intangible Assets as of December 31, 2020 ($ millions) | Intangible Asset | Weighted-Average Amortization Period (years) | Purchase Price | Accumulated Amortization | Net Book Value | | :--- | :--- | :--- | :--- | :--- | | Customer relationships/lists | 5.51 | 116.6 | (87.2) | 29.4 | | Proprietary technology | 4.75 | 196.6 | (175.4) | 21.2 | | Developed product technology | 14.00 | 218.1 | (107.1) | 111.0 | | Licenses | 7.73 | 65.6 | (37.4) | 28.2 | | Trade names | 7.82 | 6.6 | (4.2) | 2.4 | | Non-compete agreements | 3.87 | 4.5 | (2.0) | 2.5 | | Other | — | 0.1 | (0.1) | — | | **Total finite-lived intangible assets** | | **608.1** | **(413.4)** | **194.7** | | In-process research and development | | 4.8 | — | 4.8 | | **Total purchased intangible assets** | | **612.9** | **(413.4)** | **199.5** | - **No impairment losses** related to goodwill and purchased intangible assets were recorded in 2020 and 2019[363](index=363&type=chunk) - Amortization expense for purchased intangible assets was **$27.5 million**, **$23.5 million**, and **$28.3 million** for 2020, 2019, and 2018, respectively[364](index=364&type=chunk) [Note 5. Notes Payable and Long-Term Debt](index=72&type=section&id=Note%205.%20Notes%20Payable%20and%20Long-Term%20Debt) This note details the company's debt instruments, including credit facilities and senior notes - As of December 31, 2020, the company had **$207.2 million available** for borrowing and usage under its domestic and international credit facilities, with **$4.9 million** used for standby letters of credit and guarantee arrangements[365](index=365&type=chunk) Major Components of Long-Term Debt ($ millions) | Debt Type | December 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | 4.875% Senior Notes due 2020 | — | 425.0 | | Less: unamortized discount and issuance costs | — | (0.6) | | Capital leases and other debt | 14.1 | 15.4 | | Less: current portion | (1.8) | (426.2) | | **Long-term debt** | **12.3** | **13.6** | - In December 2020, the **4.875% Senior Notes matured and were paid in full**[367](index=367&type=chunk) - In April 2019, the company entered into a **$200 million unsecured revolving credit facility**, with no outstanding borrowings as of December 31, 2020, but $0.2 million used for standby letters of credit[367](index=367&type=chunk) - The credit agreement requires compliance with financial ratios and covenants, such as leverage and interest coverage ratios, and the company was in compliance with all requirements as of December 31, 2020 and 2019[368](index=368&type=chunk) [Note 6. Income Taxes](index=73&type=section&id=Note%206.%20Income%20Taxes) This note provides a detailed analysis of the company's income tax provision, deferred tax assets and liabilities, and effective tax rate U.S. and International Components of Income Before Taxes ($ millions) | Region | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | United States | 2,339.7 | 1,034.0 | 363.4 | | International | 2,567.9 | 1,227.1 | 149.3 | | **Total income before taxes** | **4,907.6** | **2,261.1** | **512.7** | Components of the Provision for Income Taxes ($ millions) | Tax Type | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | **Current tax expense:** | | | | | U.S. federal | 69.9 | 13.0 | 8.8 | | State | 12.0 | 4.4 | 2.2 | | International | 22.3 | 23.5 | 30.5 | | **Total current tax expense** | **104.2** | **40.9** | **41.5** | | **Deferred tax expense:** | | | | | U.S. federal | 893.5 | 409.7 | 114.0 | | State | 54.0 | 24.4 | 6.6 | | International | 31.5 | 16.1 | 0.3 | | **Total deferred tax expense** | **979.0** | **450.2** | **120.9** | | Non-current tax expense (benefit) | 18.2 | 11.3 | (15.4) | | **Total provision for income taxes** | **1,101.4** | **502.4** | **147.0** | Reconciliation of Effective Tax Rate to Statutory Rate | Item | 2020 (%) | 2019 (%) | 2018 (%) | | :--- | :--- | :--- | :--- | | U.S. statutory rate | 21.0 | 21.0 | 21.0 | | Effect of foreign operations | (9.9) | (9.7) | (4.1) | | Goodwill impairment | — | — | 5.6 | | U.S. tax on foreign income | 10.2 | 10.3 | 15.5 | | U.S. tax reform | — | — | (9.6) | | State taxes | 1.1 | 1.0 | 1.7 | | Other | — | (0.4) | (1.4) | | **Provision for income taxes** | **22.4** | **22.2** | **28.7** | - The effective tax rates for 2020 and 2019 were **22.4% and 22.2%**, respectively, primarily influenced by unrealized gains on equity securities (taxed at approximately 22%), the geographic mix of earnings, and taxes on foreign earnings[374](index=374&type=chunk) Major Components of Deferred Tax Assets and Liabilities ($ millions) | Item | December 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | | **Deferred tax assets:** | | | | Bad debt, inventory and warranty accruals | 29.6 | 23.9 | | Gross deferred tax assets | 247.0 | 205.2 | | Valuation allowance | (44.6) | (67.2) | | **Total deferred tax assets** | **202.4** | **138.0** | | **Deferred tax liabilities:** | | | | Investments and intangible assets | 2,143.4 | 1,001.4 | | **Gross deferred tax liabilities** | **2,227.2** | **1,086.2** | | **Net deferred tax liabilities** | **(2,024.8)** | **(948.2)** | - As of December 31, 2020, federal, state, and foreign net operating loss carryforwards were approximately **$26.3 million**, **$64.5 million**, and **$255 million**, respectively[377](index=377&type=chunk) Reconciliation of Unrecognized Tax Benefits ($ millions) | Item | 2020 | 2019 | 2018 | | :--- | :--- | :--- | :--- | | Unrecognized tax benefits at beginning of year | 39.2 | 29.8 | 54.9 | | Increases for tax positions related to prior years | 14.0 | 7.6 | 0.6 | | Decreases for tax positions related to prior years | (1.5) | (0.7) | (20.2) | | Increases for tax positions related to current year | 3.4 | 3.0 | 4.6 | | Settlements | — | — | (6.8) | | Lapses of statute of limitations | (0.6) | (0.4) | (1.1) | | Currency translation | 1.3 | (0.1) | (2.2) | | **Unrecognized tax benefits at end of year** | **55.8** | **39.2** | **29.8** | - As of December 31, 2020, the cumulative accrued interest and penalties related to unrecognized tax benefits was **$14.3 million**[381](index=381&type=chunk) [Note 7. Stockholders' Equity](index=77&type=section&id=Note%207.%20Stockholders'%20Equity) This note describes the components of stockholders' equity, including common stock classes and the stock repurchase program - Bio-Rad's issued and outstanding stock includes **Class A and Class B common stock**, which are equal in terms of earnings but differ in voting rights and director elections[383](index=383&type=chunk) - The **Schwartz family holds a majority of the company's voting stock**, giving them significant influence over the company[383](index=383&type=chunk) Changes in Issued Common Stock (in thousands of shares) | Stock Type | 2020 Class A | 2020 Class B | 2019 Class A | 2019 Class B | 2018 Class A | 2018 Class B | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Beginning balance | 24,966 | 5,090 | 24,884 | 5,096 | 24,679 | 5,108 | | Conversion of Class B to Class A | 32 | (32) | 24 | (24) | 30 | (30) | | Issuance of common stock | 75 | 18 | 58 | 18 | 175 | 18 | | **Ending balance** | **25,073** | **5,076** | **24,966** | **5,090** | **24,884** | **5,096** | - The Board of Directors authorized a stock repurchase program in November 2017, increased the authorization in July 2020, and had **$273.1 million** remaining for repurchases as of December 31, 2020[385](index=385&type=chunk)[387](index=387&type=chunk) - In 2020, the company repurchased **291,941 shares of Class A common stock for $100 million**[205](index=205&type=chunk) [Note 8. Accumulated Other Comprehensive Income (Loss)](index=78&type=section&id=Note%208.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)) This note details the components and changes in accumulated other comprehensive income (loss) Components of Accumulated Other Comprehensive Income (Loss) ($ millions) | Item | Foreign Currency Translation Adjustments | Foreign Other Post-Retirement Benefit Adjustments | Unrealized Holding Gains (Losses) on Available-for-Sale Investments | Total Accumulated Comprehensive Income (Loss) | | :--- | :--- | :--- | :--- | :--- | | Balance at January 1, 2019 | (35.5) | (14.8) | 3.3 | (47.0) | | Other comprehensive (loss) income before reclassifications | (36.5) | (10.0) | 4.8 | (41.7) | | Amounts reclassified from AOCI | — | 1.5 | (0.4) | 1.1 | | Income tax effect | (0.4) | 1.1 | (0.2) | 0.2 | | Balance at December 31, 2019 | (72.4) | (22.2) | 7.5 | (87.4) | | Other comprehensive income (loss) before reclassifications | 371.9 | (5.3) | 4.0 | 370.6 | | Amounts reclassified from AOCI | — | 0.3 | (0.3) | (0.3) | | Income tax effect | (0.9) | 1.2 | (0.5) | (0.5) | | **Balance at December 31, 2020** | **298.6** | **(26.0)** | **10.0** | **282.4** | - All amounts reclassified from accumulated other comprehensive income were reclassified to other income, net in the Consolidated Statements of Income[388](index=388&type=chunk) [Note 9. Share-Based Compensation/Equity Award an

Financial Performance - Net sales for Q3 2020 were $647.3 million, a 15.5% increase from $560.6 million in Q3 2019, with a currency neutral increase of approximately 14.9%[152] - Sales for the first nine months of 2020 were $1.76 billion, a 4.1% increase from $1.69 billion in the same period of 2019, with a currency neutral increase of approximately 5.0%[164] Segment Performance - Life Science segment sales for Q3 2020 were $324.0 million, a 50.2% increase compared to the same period last year, driven by products supporting COVID-19 testing and research[153] - Clinical Diagnostics segment sales for Q3 2020 were $322.2 million, a decrease of 5.7% compared to Q3 2019, primarily due to lower demand from COVID-19[154] - Life Science segment sales for the first nine months of 2020 were $803.2 million, a 24.7% increase compared to the same period last year, with significant contributions from COVID-19 related products[165] - Clinical Diagnostics segment sales for the first nine months of 2020 were $945.6 million, a decrease of 8.5% compared to the same period last year, impacted by COVID-19[166] Profitability and Margins - Consolidated gross margins for Q3 2020 were 56.7%, up from 54.8% in Q3 2019, with Life Science segment gross margins increasing by approximately 5.3 percentage points[155] Expenses - Selling, general and administrative expenses decreased to $198.2 million or 30.6% of sales in Q3 2020, down from $201.6 million or 36.0% of sales in Q3 2019[156] - SG&A expenses decreased to $581.1 million or 33.1% of sales for the first nine months of 2020, down from $610.5 million or 36.2% of sales in the same period of 2019[169] - Research and development expenses increased to $59.5 million or 9.2% of sales in Q3 2020, compared to $47.9 million or 8.6% of sales in Q3 2019[157] - R&D expenses increased to $160.8 million or 9.2% of sales for the first nine months of 2020, compared to $145.6 million or 8.6% of sales for the same period in 2019[170] Cash Flow and Investments - Net cash provided by operations was $290.6 million for the first nine months of 2020, a decrease from $298.1 million in the same period of 2019[180] - Net cash used in investing activities was $10.1 million for the first nine months of 2020, significantly lower than $147.7 million for the same period in 2019[183] - Net cash used in financing activities was $101.2 million for the first nine months of 2020, compared to $18.0 million for the same period in 2019, primarily due to an $80 million increase in cash used to purchase treasury stock[184] Market Value and Equity - Change in fair market value of equity securities was a gain of $1.58 billion in Q3 2020, compared to a loss of $390.6 million in Q3 2019[161] - The change in fair market value of equity securities resulted in a gain of $3.59 billion for the first nine months of 2020, compared to a gain of $1.38 billion in the same period of 2019[173] Tax and Cash Position - The effective income tax rate was 22.5% for the nine months ended September 30, 2020, slightly down from 22.8% in the same period of 2019[175] - As of September 30, 2020, the company had $1.15 billion in cash, cash equivalents, and short-term investments, with approximately 25% held in foreign subsidiaries[177] - The company had no outstanding borrowings under its $200 million unsecured revolving credit facility as of September 30, 2020[177] Share Repurchase Program - The Board of Directors authorized an increase in the Share Repurchase Program by an additional $200 million, with $273.1 million remaining under the program as of September 30, 2020[189]

Part I – Financial Information [Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents unaudited condensed consolidated financial statements for Q2 2020, reporting net sales of **$536.9 million**, net income of **$966.4 million**, and total assets of **$10.1 billion** Condensed Consolidated Balance Sheet Highlights (As of June 30, 2020) | Account | June 30, 2020 (in thousands) | Dec 31, 2019 (in thousands) | | :--- | :--- | :--- | | **Total Current Assets** | $2,132,584 | $2,180,155 | | **Other Investments** | $6,703,039 | $4,638,205 | | **Total Assets** | $10,097,307 | $8,008,859 | | **Total Current Liabilities** | $926,895 | $905,495 | | **Total Liabilities** | $2,743,905 | $2,253,802 | | **Total Stockholders' Equity** | $7,353,402 | $5,755,057 | Condensed Consolidated Statement of Income Highlights | Metric (in thousands, except EPS) | Q2 2020 | Q2 2019 | YTD 2020 | YTD 2019 | | :--- | :--- | :--- | :--- | :--- | | **Net Sales** | $536,880 | $572,619 | $1,108,524 | $1,126,598 | | **Gross Profit** | $292,988 | $307,769 | $610,356 | $619,531 | | **Income from Operations** | $51,742 | $56,390 | $126,115 | $112,996 | | **Change in Fair Market Value of Equity Securities** | $1,183,488 | $716,389 | $2,011,159 | $1,775,619 | | **Net Income** | $966,429 | $598,810 | $1,652,341 | $1,464,005 | | **Diluted EPS** | $32.15 | $19.86 | $54.84 | $48.60 | - Net cash provided by operating activities for the six months ended June 30, 2020, was **$154.9 million**, a decrease from **$198.3 million** in 2019, while net cash used in investing activities significantly increased to **$101.0 million** from **$37.8 million** due to acquisition payments[12](index=12&type=chunk)[95](index=95&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) These notes detail accounting policies and financial data, covering revenue recognition, the **Celsee acquisition** for **$99.5 million**, **Informatics divestiture** for **$12.2 million**, **Sartorius AG investment**, segment performance, restructuring, and debt obligations Revenue by Geographic Region (Six Months Ended June 30) | Region | 2020 (in millions) | 2019 (in millions) | | :--- | :--- | :--- | | Europe | $369.7 | $374.1 | | Asia | $240.4 | $233.7 | | United States | $434.9 | $448.2 | | Other | $63.5 | $70.6 | | **Total Net Sales** | **$1,108.5** | **$1,126.6** | - On April 1, 2020, the company acquired Celsee, Inc. for **$99.5 million**, including up to **$60.0 million** in contingent consideration, to complement Life Science product offerings[47](index=47&type=chunk)[48](index=48&type=chunk) - In April 2020, the company sold its Informatics division for **$12.2 million**, resulting in an **$11.7 million** gain recorded in Other (income) expense, net[58](index=58&type=chunk) - The company's investment in Sartorius AG, representing approximately **37%** of voting shares, generated unrealized gains on equity securities of **$1.18 billion** for Q2 2020 and **$2.01 billion** for the first six months of 2020[66](index=66&type=chunk)[67](index=67&type=chunk) Segment Net Sales (in millions) | Segment | Q2 2020 | Q2 2019 | YTD 2020 | YTD 2019 | | :--- | :--- | :--- | :--- | :--- | | Life Science | $252.1 | $212.4 | $479.2 | $428.1 | | Clinical Diagnostics | $283.2 | $357.1 | $623.4 | $691.1 | - In July 2020, the Board of Directors authorized an additional **$200.0 million** for the company's share repurchase program[131](index=131&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A)](index=44&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Q2 2020 financial performance, noting a **6.2% decrease** in net sales to **$536.9 million** due to COVID-19's impact on Clinical Diagnostics, offset by an **18.7% increase** in Life Science sales, and confirms sufficient liquidity to meet obligations including **$425.0 million** Senior Notes due December 2020 - The COVID-19 pandemic negatively impacted the Clinical Diagnostics segment but positively affected the Life Science segment due to increased demand for COVID-19 related products[138](index=138&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) Q2 2020 vs. Q2 2019 Performance Summary | Metric | Q2 2020 (in millions) | Q2 2019 (in millions) | Change | | :--- | :--- | :--- | :--- | | Net Sales | $536.9 | $572.6 | -6.2% | | Life Science Sales | $252.1 | $212.4 | +18.7% | | Clinical Diagnostics Sales | $283.2 | $357.1 | -20.7% | | Gross Margin | 54.6% | 53.7% | +0.9 ppt | - The company's liquidity, including **$1.03 billion** in cash and equivalents, is deemed adequate to meet obligations, including **$425.0 million** in Senior Notes due December 2020[173](index=173&type=chunk) - For the first six months of 2020, the company repurchased **291,941 shares** for **$100.0 million**, a significant increase from **$15.0 million** in the prior year period[182](index=182&type=chunk)[184](index=184&type=chunk) [Quantitative and Qualitative Disclosures about Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) No material changes to market risk disclosures were reported for the six months ended June 30, 2020, compared to the Annual Report on Form 10-K - No material changes in market risk disclosures were reported for the six months ended June 30, 2020[188](index=188&type=chunk) [Controls and Procedures](index=52&type=section&id=Item%204.%20Controls%20and%20Procedures) Management, including the CEO and CFO, concluded that disclosure controls and procedures were effective as of June 30, 2020, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of the end of the reporting period[190](index=190&type=chunk) - No material changes to internal control over financial reporting were identified during the second quarter of 2020[191](index=191&type=chunk) Part II – Other Information [Legal Proceedings](index=53&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in various legal claims, which management believes will not materially affect its financial position or liquidity, though resolution could impact specific period operating results - The company is party to various legal proceedings, but does not expect a material adverse effect on its overall financial condition, and a reasonable estimate of potential liability is currently unavailable[116](index=116&type=chunk)[192](index=192&type=chunk) [Risk Factors](index=53&type=section&id=Item%201A.%20Risk%20Factors) This section outlines key risks including the **COVID-19 pandemic's** impact on demand and supply chains, intense competition, cybersecurity threats, reliance on international operations (**61% of H1 2020 sales**), **Sartorius AG investment** volatility, ERP system implementation challenges, and government regulation - The COVID-19 pandemic poses a significant risk, leading to overall product demand drops, supply chain challenges, and transportation difficulties[193](index=193&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - The company faces cybersecurity risks, including a December 2019 cyberattack, with potential breaches leading to information misappropriation and operational disruptions[208](index=208&type=chunk)[210](index=210&type=chunk) - Financial results are materially affected by market value changes in the **Sartorius AG investment**, causing significant net income volatility unrelated to operational performance[216](index=216&type=chunk)[217](index=217&type=chunk) - The multi-year implementation of a new global ERP system has caused, and may continue to cause, business disruptions including manufacturing, logistics, and invoicing delays[221](index=221&type=chunk) - A significant majority of voting stock held by the Schwartz family allows them to control company matters and elect directors, potentially creating conflicts of interest[283](index=283&type=chunk)[284](index=284&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=68&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No shares were repurchased during Q2 2020, leaving **$73.1 million** available under the share repurchase program, with an additional **$200.0 million** authorized in July 2020 - No shares of common stock were repurchased during the three months ended June 30, 2020[286](index=286&type=chunk)[288](index=288&type=chunk) - In July 2020, the Board of Directors increased the authorization for the Share Repurchase Program by an additional **$200.0 million**[285](index=285&type=chunk) [Exhibits](index=70&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q report, including CEO and CFO certifications and Inline XBRL financial data files - The exhibits filed with this report include CEO/CFO certifications (**31.1, 31.2, 32.1, 32.2**) and Inline XBRL documents (**101 series**)[291](index=291&type=chunk)

[FORM 10-Q General Information](index=1&type=section&id=FORM%2010-Q%20General%20Information) Identifies Bio-Rad Laboratories, Inc. as the registrant for the Q1 2020 Form 10-Q, detailing its incorporation, ID, and executive offices [Registrant Information](index=1&type=section&id=Registrant%20Information) This section provides the basic identification details of Bio-Rad Laboratories, Inc. as a registrant filing a Quarterly Report on Form 10-Q for the period ended March 31, 2020, including its incorporation state, IRS Employer ID, and principal executive offices - Registrant: **BIO-RAD LABORATORIES, INC.**[1](index=1&type=chunk) - Incorporation Jurisdiction: **Delaware**[1](index=1&type=chunk) - Filing Type: **Quarterly Report (Form 10-Q)** for the period ended March 31, 2020[1](index=1&type=chunk) [Securities Registered](index=1&type=section&id=Securities%20Registered) Details the company's Class A and Class B Common Stock registration on the New York Stock Exchange with their respective trading symbols Securities Registered | Title of each class | Trading Symbol(s) | Name of each exchange on which registered | |:------------------------------------------|:------------------|:------------------------------------------| | Class A Common Stock, Par Value $0.0001 per share | BIO | New York Stock Exchange | | Class B Common Stock, Par Value $0.0001 per share | BIOb | New York Stock Exchange | [Filing Status](index=1&type=section&id=Filing%20Status) Confirms Bio-Rad's compliance with SEC filing requirements and its status as a large accelerated filer - Filed all required reports in the preceding 12 months: **Yes**[2](index=2&type=chunk) - Subject to filing requirements for the past 90 days: **Yes**[2](index=2&type=chunk) - Interactive Data File submitted electronically: **Yes**[3](index=3&type=chunk) - Filer Status: **Large accelerated filer**[3](index=3&type=chunk) - Not an emerging growth company or shell company[3](index=3&type=chunk)[4](index=4&type=chunk) [Common Shares Outstanding](index=1&type=section&id=Common%20Shares%20Outstanding) Reports the outstanding shares of Class A and Class B Common Stock as of April 29, 2020 Common Shares Outstanding | Class | Shares Outstanding at April 29, 2020 | |:------------|:-------------------------------------| | Class A | 24,567,292 | | Class B | 5,080,867 | [INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS](index=4&type=section&id=INFORMATION%20RELATING%20TO%20FORWARD-LOOKING%20STATEMENTS) Clarifies the report contains forward-looking statements subject to risks and uncertainties, with no obligation to update them [Forward-Looking Statements Disclaimer](index=4&type=section&id=Forward-Looking%20Statements%20Disclaimer) This section clarifies that the report contains forward-looking statements regarding future financial performance, operations, plans, and objectives, including the potential impact of the COVID-19 pandemic. These statements are subject to risks and uncertainties that could cause actual results to differ materially, and the company disclaims any obligation to update them - Report includes forward-looking statements on future financial performance, operating results, plans, and objectives[6](index=6&type=chunk) - Statements involve risks and uncertainties, which could cause actual results to vary materially[6](index=6&type=chunk) - Specific risk factors are identified under 'Part II, Item 1A, Risk Factors'[6](index=6&type=chunk) - Company undertakes no obligation to publicly update or revise forward-looking statements, except as required by law[6](index=6&type=chunk) [PART I – FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%93%20FINANCIAL%20INFORMATION) Presents Bio-Rad's unaudited condensed consolidated financial statements for Q1 2020, including balance sheets, income, comprehensive income, cash flows, and equity changes, with explanatory notes [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements for Bio-Rad Laboratories, Inc., including balance sheets, income statements, comprehensive income, cash flows, and changes in stockholders' equity, along with detailed notes explaining the basis of presentation, significant accounting policies, and specific financial line items [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Presents the company's financial position, detailing assets, liabilities, and stockholders' equity as of March 31, 2020, and December 31, 2019 Condensed Consolidated Balance Sheets (In thousands) | Item | March 31, 2020 (Unaudited) | December 31, 2019 | |:------------------------------------------|:---------------------------|:------------------| | **ASSETS** | | | | Cash and cash equivalents | $603,551 | $660,672 | | Short-term investments | $433,150 | $453,973 | | Total current assets | $2,082,587 | $2,180,155 | | Property, plant and equipment, net | $486,174 | $499,339 | | Other investments | $5,434,760 | $4,638,205 | | Total assets | $8,684,359 | $8,008,859 | | **LIABILITIES AND STOCKHOLDERS' EQUITY** | | | | Accounts payable | $118,221 | $107,014 | | Accrued payroll and employee benefits | $130,202 | $180,084 | | Current maturities of long-term debt | $426,308 | $426,172 | | Total current liabilities | $869,254 | $905,495 | | Total liabilities | $2,391,280 | $2,253,802 | | Total stockholders' equity | $6,293,079 | $5,755,057 | | Total liabilities and stockholders' equity| $8,684,359 | $8,008,859 | - Total assets increased by **$675.5 million (8.4%)** from December 31, 2019, to March 31, 2020, primarily driven by a significant increase in other investments[8](index=8&type=chunk) - Total liabilities increased by **$137.4 million (6.1%)** over the same period, mainly due to an increase in deferred income taxes[9](index=9&type=chunk) - Total stockholders' equity increased by **$538.0 million (9.4%)** from December 31, 2019, to March 31, 2020[9](index=9&type=chunk) [Condensed Consolidated Statements of Income](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) Details the company's revenues, expenses, and net income for the three months ended March 31, 2020, and 2019 Condensed Consolidated Statements of Income (In thousands, except per share data) (Unaudited) | Item | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |:-------------------------------------------|:----------------------------------|:----------------------------------| | Net sales | $571,644 | $553,979 | | Cost of goods sold | $254,276 | $242,217 | | Gross profit | $317,368 | $311,762 | | Selling, general and administrative expense| $193,692 | $207,581 | | Research and development expense | $49,303 | $47,575 | | Income from operations | $74,373 | $56,606 | | Change in fair market value of equity securities | $(827,671) | $(1,059,230) |\n| Net income | $685,912 | $865,195 | | Basic earnings per share | $22.97 | $29.03 | | Diluted earnings per share | $22.72 | $28.74 | - Net sales increased by **3.2%** year-over-year, from **$554.0 million** in Q1 2019 to **$571.6 million** in Q1 2020[11](index=11&type=chunk) - Gross profit increased by **1.8%** year-over-year, from **$311.8 million** in Q1 2019 to **$317.4 million** in Q1 2020[11](index=11&type=chunk) - Net income decreased by **20.8%** year-over-year, from **$865.2 million** in Q1 2019 to **$685.9 million** in Q1 2020, primarily due to a smaller gain from the change in fair market value of equity securities[11](index=11&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) Outlines net income and other comprehensive income (loss) components for the three months ended March 31, 2020, and 2019 Condensed Consolidated Statements of Comprehensive Income (In thousands) (Unaudited) | Item | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |:------------------------------------------------------------------|:----------------------------------|:----------------------------------| | Net income | $685,912 | $865,195 | | Other comprehensive income (loss): | | | | Foreign currency translation adjustments, net of income taxes | $(62,011) | $(36,402) | | Foreign other post-employment benefits adjustments, net of income taxes | $731 | $359 | | Net unrealized holding (loss) gain on AFS debt investments, net of income taxes | $(327) | $2,036 | | Other comprehensive loss, net of income taxes | $(61,607) | $(34,007) | | Comprehensive income | $624,305 | $831,188 | - Comprehensive income decreased by **24.9%** year-over-year, from **$831.2 million** in Q1 2019 to **$624.3 million** in Q1 2020, largely influenced by the decrease in net income and a larger foreign currency translation loss[13](index=13&type=chunk) - Foreign currency translation adjustments resulted in a loss of **$62.0 million** in Q1 2020, compared to a loss of **$36.4 million** in Q1 2019, indicating a stronger negative impact from currency fluctuations[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Summarizes cash inflows and outflows from operating, investing, and financing activities for the three months ended March 31, 2020, and 2019 Condensed Consolidated Statements of Cash Flows (In thousands, unaudited) | Item | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |:--------------------------------------------|:----------------------------------|:----------------------------------| | Net cash provided by operating activities | $62,808 | $42,943 | | Net cash used in investing activities | $(12,422) | $(22,713) | | Net cash (used in) provided by financing activities | $(98,617) | $2,161 | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(54,208) | $24,373 | | Cash, cash equivalents, and restricted cash at end of period | $608,443 | $458,537 | - Net cash provided by operating activities increased by **46.2%** to **$62.8 million** in Q1 2020 from **$42.9 million** in Q1 2019[15](index=15&type=chunk) - Net cash used in investing activities decreased by **45.3%** to **$12.4 million** in Q1 2020 from **$22.7 million** in Q1 2019[15](index=15&type=chunk) - Net cash from financing activities shifted from a **$2.2 million** inflow in Q1 2019 to a **$98.6 million** outflow in Q1 2020, primarily due to treasury stock repurchases[15](index=15&type=chunk) [Condensed Consolidated Statements of Changes in Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) Presents the changes in each component of stockholders' equity for the three months ended March 31, 2020 Condensed Consolidated Statements of Changes in Stockholders' Equity (In thousands) (Unaudited) | Item | Balance at Dec 31, 2019 | Net Income | Other Comprehensive Loss, net of tax | Issuance of Common Stock | Stock Compensation Expense | Purchase of Treasury Stock | Balance at Mar 31, 2020 | |:-------------------------------------------|:------------------------|:-----------|:-------------------------------------|:-------------------------|:---------------------------|:---------------------------|:------------------------| | Common Stock | $3 | — | — | — | — | — | $3 | | Additional Paid-in Capital | $410,020 | — | — | $4,068 | $9,654 | — | $423,742 | | Treasury Stock | $(38,397) | — | — | — | — | $(100,005) | $(138,402) | | Retained Earnings | $5,470,779 | $685,912 | — | — | — | — | $6,156,691 | | Accumulated Other Comprehensive Income (Loss) | $(87,348) | — | $(61,607) | — | — | — | $(148,955) | | Total Stockholders' Equity | $5,755,057 | $685,912 | $(61,607) | $4,068 | $9,654 | $(100,005) | $6,293,079 | - Total stockholders' equity increased by **$538.0 million** from December 31, 2019, to March 31, 2020, reaching **$6,293.1 million**[17](index=17&type=chunk) - The increase was primarily driven by net income of **$685.9 million** and stock compensation expense of **$9.7 million**, partially offset by a **$100.0 million** purchase of treasury stock and an accumulated other comprehensive loss of **$61.6 million**[17](index=17&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. BASIS OF PRESENTATION AND USE OF ESTIMATES](index=11&type=section&id=1.%20BASIS%20OF%20PRESENTATION%20AND%20USE%20OF%20ESTIMATES) Explains the accounting principles, estimates, and revenue recognition policies used in preparing the financial statements [Basis of Presentation](index=11&type=section&id=Basis%20of%20Presentation) Describes the preparation of unaudited condensed consolidated financial statements in accordance with GAAP - Unaudited condensed consolidated financial statements prepared in accordance with GAAP[20](index=20&type=chunk) - All adjustments are of a normal recurring nature and necessary for fair presentation[20](index=20&type=chunk) - Interim results are not necessarily indicative of full-year results[20](index=20&type=chunk) - Subsequent events are evaluated for recognition or disclosure up to the financial statement issuance date[21](index=21&type=chunk) [Use of Estimates](index=11&type=section&id=Use%20of%20Estimates) Highlights management's use of estimates and assumptions in financial statement preparation and their potential variability - Preparation of financial statements requires management to make estimates and assumptions affecting reported amounts of assets, liabilities, revenues, and expenses[22](index=22&type=chunk) - Estimates are based on historical experience and market-specific assumptions[22](index=22&type=chunk) - Actual results could differ materially from these estimates[22](index=22&type=chunk) [Revenue Recognition](index=11&type=section&id=Revenue%20Recognition) Details the company's policies for recognizing revenue from product sales, services, and instrument rentals - Revenue is recognized from sales of products, services, and instrument rentals[23](index=23&type=chunk) - Revenue from contracts with customers is recognized upon transfer of control of promised products or services[23](index=23&type=chunk) - Contracts often include multiple distinct performance obligations[25](index=25&type=chunk) - Revenue for equipment requiring factory installation is recognized upon completion of installation and customer acceptance[25](index=25&type=chunk) - A provision for estimated product returns is recognized at the time revenue is recognized[26](index=26&type=chunk) - Service revenues on extended warranty contracts are recognized ratably over the agreement life[27](index=27&type=chunk) [Reagent Rental Agreements](index=12&type=section&id=Reagent%20Rental%20Agreements) Explains the accounting treatment for reagent rental agreements, including lease classification and revenue allocation - Reagent rental agreements provide instrument use and consumables on a per-test basis, often including maintenance and training[30](index=30&type=chunk) - Agreements are evaluated for lease classification under ASC 842; most are classified as operating leases[30](index=30&type=chunk)[34](index=34&type=chunk) - Transaction prices are allocated between lease and non-lease elements based on standalone selling prices[32](index=32&type=chunk) - Maintenance services and reagents are allocated to non-lease elements and recognized under ASC 606[33](index=33&type=chunk) - Revenue from lease elements of reagent rental agreements was approximately **3%** of total revenue for both Q1 2020 and Q1 2019[35](index=35&type=chunk) [Disaggregation of Revenue](index=13&type=section&id=Disaggregation%20of%20Revenue) Presents net sales disaggregated by geographic region for the reported periods Revenues Disaggregated by Geographic Region (in millions, unaudited) | Region | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |:-------------------------------------|:----------------------------------|:----------------------------------| | Europe | $195.7 | $185.9 | | Asia | $111.4 | $106.4 | | United States | $229.5 | $226.1 | | Other (primarily Canada and Latin America) | $35.0 | $35.6 | | Total net sales | $571.6 | $554.0 | - Total net sales increased by **$17.6 million (3.2%)** year-over-year[37](index=37&type=chunk) - Europe showed the largest absolute increase in sales, up **$9.8 million (5.3%)**[37](index=37&type=chunk) [Deferred Revenues and Warranty Liabilities](index=14&type=section&id=Deferred%20Revenues%20and%20Warranty%20Liabilities) Discusses the accounting for deferred revenues and the provision for estimated product warranty costs - Deferred revenues, mostly for unrecognized fees from extended service arrangements, increased from **$45.8 million** at December 31, 2019, to **$50.9 million** at March 31, 2020[39](index=39&type=chunk) - Warranty liabilities are established for expected costs of equipment defects and reevaluated quarterly[40](index=40&type=chunk) Change in Warranty Liability (in millions) | Item | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |:-----------------------------|:----------------------------------|:----------------------------------| | Balance at beginning of period | $9.0 | $10.1 | | Provision for warranty | $1.9 | $1.4 | | Actual warranty costs | $(2.7) | $(2.2) | | Balance at end of period | $8.2 | $9.3 | [Allowance for Doubtful Accounts](index=14&type=section&id=Allowance%20for%20Doubtful%20Accounts) Outlines the methodology and components of the allowance for doubtful accounts - Allowance for doubtful accounts is based on past events, current conditions, and future forecasts, considering asset-specific risk characteristics[42](index=42&type=chunk) Components of Allowance for Doubtful Accounts (in millions) | Item | Amount | |:-----------------------------------|:-------| | December 31, 2019 | $20.2 | | Provision for expected credit losses | $(0.9) | | Write-offs charged against the allowance | $(0.5) | | Recoveries collected | $0.1 | | March 31, 2020 | $18.9 | - The allowance for doubtful accounts decreased from **$20.2 million** at December 31, 2019, to **$18.9 million** at March 31, 2020[43](index=43&type=chunk) [Implementation Costs for Cloud Computing Arrangements](index=15&type=section&id=Implementation%20Costs%20for%20Cloud%20Computing%20Arrangements) Reports on the capitalization and amortization of costs related to cloud computing arrangements - Capitalized implementation costs for cloud computing arrangements, net of amortization, were **$3.9 million** at March 31, 2020, up from **$3.1 million** at December 31, 2019[45](index=45&type=chunk) - These costs are primarily for business analytics software[45](index=45&type=chunk) [Recent Accounting Pronouncements Adopted](index=15&type=section&id=Recent%20Accounting%20Pronouncements%20Adopted) Summarizes the impact of recently adopted accounting standards on the financial statements - Adopted ASU No. 2020-04 (Reference Rate Reform) in March 2020, not expected to have a material impact[46](index=46&type=chunk) - Adopted ASU 2018-13 (Fair Value Measurement Disclosure Framework) effective January 1, 2020, with no material impact[47](index=47&type=chunk) - Adopted ASU 2016-13 (Measurement of Credit Losses on Financial Instruments) effective January 1, 2020, with an insignificant impact and no cumulative effect transition adjustment to retained earnings[48](index=48&type=chunk) [Recent Accounting Pronouncements to be Adopted](index=15&type=section&id=Recent%20Accounting%20Pronouncements%20to%20be%20Adopted) Outlines accounting pronouncements that will be adopted in future periods and their anticipated impact - Evaluating ASU 2020-01 (Clarifying Interactions between Topic 321, 323, and 815) effective for fiscal years beginning after December 15, 2020[49](index=49&type=chunk) - Evaluating ASU 2019-12 (Simplifying the Accounting for Income Taxes) effective for fiscal years beginning after December 15, 2020[51](index=51&type=chunk) - Evaluating ASU 2018-14 (Disclosure Framework - Defined Benefit Plans) effective for fiscal years ending after December 15, 2020, not expected to have a material impact on disclosures[52](index=52&type=chunk) [2. ACQUISITIONS](index=16&type=section&id=2.%20ACQUISITIONS) Details the acquisition of a foreign distributor in October 2019 and its financial allocation - In October 2019, Bio-Rad acquired a foreign distributor for approximately **$4.2 million**, including **$3.6 million** cash and **$0.6 million** in contingent consideration[53](index=53&type=chunk) - The acquisition was included in the Clinical Diagnostics segment and accounted for as a business combination[53](index=53&type=chunk) - The final allocation of payments included **$3.4 million** to customer relationships, **$0.2 million** to deferred tax asset, **$0.8 million** to deferred tax liability, and **$1.4 million** to acquired net assets[54](index=54&type=chunk) [3. FAIR VALUE MEASUREMENTS](index=16&type=section&id=3.%20FAIR%20VALUE%20MEASUREMENTS) Provides information on financial assets and liabilities measured at fair value, categorized by hierarchy levels [Fair Value Hierarchy](index=16&type=section&id=Fair%20Value%20Hierarchy) Explains the three-level hierarchy used for fair value measurements based on input observability - Fair value is determined based on market participant assumptions, prioritizing observable inputs[55](index=55&type=chunk) - Hierarchy levels: Level 1 (quoted prices in active markets), Level 2 (other significant observable inputs), Level 3 (significant unobservable inputs)[55](index=55&type=chunk) [Financial Assets and Liabilities at Fair Value (March 31, 2020)](index=17&type=section&id=Financial%20Assets%20and%20Liabilities%20at%20Fair%20Value%20(March%2031,%202020)) Presents a detailed breakdown of financial assets and liabilities measured at fair value as of March 31, 2020 Financial Assets and Liabilities Carried at Fair Value (in millions) - March 31, 2020 | Item | Level 1 | Level 2 | Level 3 | Total | |:------------------------------------------|:----------|:----------|:----------|:----------| | **Financial assets:** | | | | | | Total cash equivalents | $122.9 | $75.6 | — | $198.5 | | Restricted investment | $5.6 | — | — | $5.6 | | Equity securities | $5,448.4 | — | — | $5,448.4 | | Total available-for-sale investments | — | $393.2 | — | $393.2 | | Forward foreign exchange contracts | — | $0.7 | — | $0.7 | | **Total financial assets** | **$5,576.9**| **$469.5**| **—** | **$6,046.4**| | **Financial liabilities:** | | | | | | Forward foreign exchange contracts | — | $1.3 | — | $1.3 | | Contingent consideration | — | — | $3.5 | $3.5 | | **Total financial liabilities** | **—** | **$1.3** | **$3.5** | **$4.8** | - Total financial assets carried at fair value were **$6,046.4 million**, with equity securities (primarily Sartorius AG) being the largest component at **$5,448.4 million (Level 1)**[57](index=57&type=chunk) - Total financial liabilities carried at fair value were **$4.8 million**, including **$3.5 million** in Level 3 contingent consideration[57](index=57&type=chunk) [Financial Assets and Liabilities at Fair Value (December 31, 2019)](index=18&type=section&id=Financial%20Assets%20and%20Liabilities%20at%20Fair%20Value%20(December%2031,%202019)) Presents a detailed breakdown of financial assets and liabilities measured at fair value as of December 31, 2019 Financial Assets and Liabilities Carried at Fair Value (in millions) - December 31, 2019 | Item | Level 1 | Level 2 | Level 3 | Total | |:------------------------------------------|:----------|:----------|:----------|:----------| | **Financial assets:** | | | | | | Total cash equivalents | $101.1 | $53.0 | — | $154.1 | | Restricted investment | $5.6 | — | — | $5.6 | | Equity securities | $4,664.4 | — | — | $4,664.4 | | Total available-for-sale investments | — | $402.9 | — | $402.9 | | Forward foreign exchange contracts | — | $0.9 | — | $0.9 | | **Total financial assets** | **$4,771.1**| **$456.8**| **—** | **$5,227.9**| | **Financial liabilities:** | | | | | | Forward foreign exchange contracts | — | $1.0 | — | $1.0 | | Contingent consideration | — | — | $4.9 | $4.9 | | **Total financial liabilities** | **—** | **$1.0** | **$4.9** | **$5.9** | - Total financial assets at fair value increased by **$818.5 million** from December 31, 2019, to March 31, 2020, primarily due to an increase in equity securities[59](index=59&type=chunk) - Total financial liabilities at fair value decreased by **$1.1 million** over the same period[59](index=59&type=chunk) [Equity Securities](index=18&type=section&id=Equity%20Securities) Details the company's equity securities, primarily the investment in Sartorius AG, and related unrealized gains Equity Securities (in millions) | Account | March 31, 2020 | December 31, 2019 | |:-------------------------|:---------------|:------------------| | Short-term investments | $40.1 | $51.0 | | Other investments | $5,408.3 | $4,613.4 | | Total | $5,448.4 | $4,664.4 | - Year-to-date unrealized gains on equity securities were **$827.7 million** as of March 31, 2020, primarily from the investment in Sartorius AG[60](index=60&type=chunk) - Bio-Rad owns over **37%** of the outstanding voting shares of Sartorius AG but does not have significant influence over its operations[61](index=61&type=chunk) [Available-for-sale Investments](index=20&type=section&id=Available-for-sale%20Investments) Provides information on available-for-sale debt investments, including their fair value and contractual maturities Available-for-sale Investments (in millions) | Account | March 31, 2020 | December 31, 2019 | |:-------------------------|:---------------|:------------------| | Short-term investments | $393.1 | $402.8 | | Other investments | $0.1 | $0.1 | | Total | $393.2 | $402.9 | Available-for-sale Investments by Contractual Maturity (in millions) - March 31, 2020 | Maturity Period | Amortized Cost | Estimated Fair Value | |:---------------------------|:---------------|:---------------------| | Less than one year | $163.8 | $163.9 | | One to five years | $167.3 | $167.6 | | More than five years | $60.5 | $61.7 | | Total | $391.6 | $393.2 | - Unrealized losses on available-for-sale investments totaled **$2.4 million** as of March 31, 2020, primarily due to changes in interest rates and market conditions[73](index=73&type=chunk)[75](index=75&type=chunk) - No credit impairment losses are anticipated, as all payments are expected to be made in full and on time[79](index=79&type=chunk) [Forward Foreign Exchange Contracts](index=24&type=section&id=Forward%20Foreign%20Exchange%20Contracts) Describes the use of forward foreign exchange contracts to manage currency risk and their fair value - Bio-Rad uses forward foreign exchange contracts to manage foreign exchange risk on intercompany receivables and payables, not for speculative purposes[82](index=82&type=chunk) Summary of Forward Foreign Exchange Contracts (in millions) - March 31, 2020 | Contract Type | Notional Value | Unrealized Gain/(Loss) | |:--------------------------------------------|:---------------|:-----------------------| | Contracts to sell foreign currency | $58.6 | $0.2 | | Contracts to purchase foreign currency | $237.1 | $(0.9) | - These contracts are recorded at fair value, with gains or losses offsetting exchange gains or losses on related receivables and payables[82](index=82&type=chunk) [Contingent Consideration](index=20&type=section&id=Contingent%20Consideration) Reports on the contingent consideration liability, its changes, and related payments Contingent Consideration Liability (in millions) | Account | March 31, 2020 | December 31, 2019 | |:--------------------------|:---------------|:------------------| | Other current liabilities | $3.5 | $3.3 | | Other long-term liabilities | — | $1.6 | | Total | $3.5 | $4.9 | - Contingent consideration liability decreased from **$4.9 million** at December 31, 2019, to **$3.5 million** at March 31, 2020[64](index=64&type=chunk) - This decrease was primarily due to a **$1.3 million** payment for a sales milestone related to the analytical flow cytometer platform acquisition and a **$0.1 million** decrease in its estimated fair value[64](index=64&type=chunk)[67](index=67&type=chunk) [4. GOODWILL AND OTHER PURCHASED INTANGIBLE ASSETS](index=25&type=section&id=4.%20GOODWILL%20AND%20OTHER%20PURCHASED%20INTANGIBLE%20ASSETS) Details the company's goodwill by segment and identifiable purchased intangible assets, including amortization Goodwill by Segment (in millions) | Segment | December 31, 2019 | March 31, 2020 | |:-------------------|:------------------|:---------------| | Life Science | $208.3 | $208.3 | | Clinical Diagnostics | $55.8 | $55.8 | | Total Goodwill, net| $264.1 | $264.1 | - Net goodwill remained unchanged at **$264.1 million** from December 31, 2019, to March 31, 2020[86](index=86&type=chunk) Identifiable Purchased Intangible Assets (in millions) - March 31, 2020 | Intangible Asset | Purchase Price | Accumulated Amortization | Net Carrying Amount | Weighted Average Remaining Amortization Period (years) | |:-----------------------------|:---------------|:-------------------------|:--------------------|:-------------------------------------------------------| | Customer relationships/lists | $105.1 | $(74.5) | $30.6 | 6.26 | | Know how | $187.0 | $(162.4) | $24.6 | 5.48 | | Developed product technology | $142.1 | $(94.4) | $47.7 | 8.14 | | Licenses | $76.0 | $(45.2) | $30.8 | 8.51 | | Tradenames | $6.4 | $(3.7) | $2.7 | 8.34 | | Covenants not to compete | $3.1 | $(1.4) | $1.7 | 5.76 | | In-process R&D | $0.2 | — | $0.2 | — | | Total | $520.0 | $(381.7) | $138.3 | | - Amortization expense for purchased intangible assets was **$5.9 million** for Q1 2020, up from **$5.5 million** in Q1 2019[90](index=90&type=chunk) [5. SUPPLEMENTAL CASH FLOW INFORMATION](index=27&type=section&id=5.%20SUPPLEMENTAL%20CASH%20FLOW%20INFORMATION) Provides a reconciliation of net income to net cash provided by operating activities and other non-cash investing activities Reconciliation of Net Income to Net Cash Provided by Operating Activities (in millions) | Item | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |:------------------------------------------------------------------|:----------------------------------|:----------------------------------| | Net income | $685.9 | $865.2 | | Depreciation and amortization | $33.6 | $32.9 | | Share-based compensation | $9.7 | $8.5 | | Changes in fair market value of equity securities | $(827.7) | $(1,059.2) | | Increase in deferred income taxes | $171.8 | $238.5 | | Net cash provided by operating activities | $62.8 | $42.9 | - Net cash provided by operating activities increased by **$19.9 million (46.4%)** year-over-year, despite a decrease in net income[92](index=92&type=chunk) - Non-cash investing activities included **$6.0 million** for purchased property, plant and equipment and **$2.7 million** for purchased marketable securities and investments in Q1 2020[92](index=92&type=chunk) [6. LONG-TERM DEBT](index=28&type=section&id=6.%20LONG-TERM%20DEBT) Outlines the principal components of long-term debt, including Senior Notes and credit facilities, and compliance with covenants Principal Components of Long-Term Debt (in millions) | Item | March 31, 2020 | December 31, 2019 | |:------------------------------------------|:---------------|:------------------| | 4.875% Senior Notes due 2020 | $424.5 | $424.4 | | Finance leases and other debt | $14.0 | $15.4 | | Total | $438.5 | $439.8 | | Less current maturities | $(426.3) | $(426.2) | | Long-term debt | $12.2 | $13.6 | - The company has **$425.0 million** principal amount of **4.875% Senior Notes** due in December 2020[95](index=95&type=chunk) - Bio-Rad has a **$200 million** unsecured Credit Agreement, with no outstanding borrowings as of March 31, 2020, but **$0.2 million** utilized for standby letters of credit[96](index=96&type=chunk) - The company was in compliance with all debt covenants as of March 31, 2020[95](index=95&type=chunk)[97](index=97&type=chunk) [7. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)](index=29&type=section&id=7.%20ACCUMULATED%20OTHER%20COMPREHENSIVE%20INCOME%20(LOSS)) Details the components and changes in accumulated other comprehensive income (loss) for the period Accumulated Other Comprehensive Income (Loss) (in millions) | Component | Balance at Jan 1, 2020 | Other Comprehensive (Loss) Income, net of income taxes | Balance at Mar 31, 2020 | |:------------------------------------------|:-----------------------|:-------------------------------------------------------|:------------------------| | Foreign currency translation adjustments | $(72.4) | $(62.0) | $(134.4) | | Foreign other post-employment benefits adjustments | $(22.2) | $0.7 | $(21.5) | | Net unrealized gains on available-for-sale investments | $7.2 | $(0.3) | $6.9 | | Total | $(87.4) | $(61.6) | $(149.0) | - Accumulated other comprehensive loss increased from **$(87.4) million** at January 1, 2020, to **$(149.0) million** at March 31, 2020[99](index=99&type=chunk) - The primary driver of this change was a **$(62.0) million** foreign currency translation adjustment loss, net of income taxes[99](index=99&type=chunk) [8. EARNINGS PER SHARE](index=30&type=section&id=8.%20EARNINGS%20PER%20SHARE) Presents the calculation of basic and diluted earnings per share, including weighted average shares outstanding Weighted Average Common Shares Outstanding (in thousands) | Item | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |:-------------------------------------------|:----------------------------------|:----------------------------------| | Basic weighted average shares outstanding | 29,865 | 29,801 | | Effect of potentially dilutive stock options and restricted stock awards | 331 | 303 | | Diluted weighted average common shares | 30,196 | 30,104 | | Anti-dilutive shares | 62 | 226 | - Basic EPS was **$22.97** in Q1 2020 (**$29.03** in Q1 2019) and Diluted EPS was **$22.72** in Q1 2020 (**$28.74** in Q1 2019)[11](index=11&type=chunk) - The number of anti-dilutive shares decreased significantly from **226 thousand** in Q1 2019 to **62 thousand** in Q1 2020[102](index=102&type=chunk) [9. OTHER INCOME AND EXPENSE, NET](index=30&type=section&id=9.%20OTHER%20INCOME%20AND%20EXPENSE,%20NET) Details the components of other income and expense, net, and explains significant changes year-over-year Other (Income) Expense, Net (in millions) | Component | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |:-------------------------------------------|:----------------------------------|:----------------------------------| | Interest and investment income | $(2.8) | $(19.5) |\n| Net realized gain on investments | $(0.4) | — | | Other-than-temporary impairment loss on investment | — | $1.6 | | Other (income) expense | $(0.1) | $(0.8) | | Total Other (income) expense, net | $(3.3) | $(18.7) | - Other (income) expense, net decreased from **$18.7 million** income in Q1 2019 to **$3.3 million** income in Q1 2020[103](index=103&type=chunk) - This decrease was primarily due to a **$15.7 million** reduction in Sartorius AG dividends, as their annual meeting was delayed due to COVID-19[159](index=159&type=chunk) [10. INCOME TAXES](index=31&type=section&id=10.%20INCOME%20TAXES) Discusses the effective income tax rate, valuation allowances, and unrecognized tax benefits - The effective income tax rate increased to **23.7%** for Q1 2020 from **23.2%** for Q1 2019, partly due to reassessment of a prior year tax position[105](index=105&type=chunk) - A valuation allowance is maintained on California and certain foreign deferred tax assets due to uncertainty of realization[106](index=106&type=chunk) - Gross unrecognized tax benefits increased by **$12.5 million**, from **$39.2 million** at December 31, 2019, to **$51.7 million** at March 31, 2020[109](index=109&type=chunk) [11. SEGMENT INFORMATION](index=31&type=section&id=11.%20SEGMENT%20INFORMATION) Provides disaggregated financial information for the Life Science and Clinical Diagnostics segments Segment Net Sales (in millions) | Segment | 2020 | 2019 | |:-------------------|:-------|:-------| | Life Science | $227.2 | $215.7 | | Clinical Diagnostics | $340.3 | $334.1 | | Other Operations | $4.1 | $4.2 | Segment Net Profit (Loss) (in millions) | Segment | 2020 | 2019 | |:-------------------|:------|:-------| | Life Science | $25.4 | $22.8 | | Clinical Diagnostics | $46.2 | $30.9 | | Other Operations | $0.7 | $(0.1) | - Life Science segment sales increased by **5.3%** and net profit increased by **11.4%** year-over-year[110](index=110&type=chunk) - Clinical Diagnostics segment sales increased by **1.9%** and net profit increased by **49.5%** year-over-year[110](index=110&type=chunk) [12. LEGAL PROCEEDINGS](index=32&type=section&id=12.%20LEGAL%20PROCEEDINGS) Describes the company's involvement in various legal claims and actions in the ordinary course of business - The company is party to various claims and legal actions in the ordinary course of business[113](index=113&type=chunk) - Cannot reasonably estimate the range of potential liability, but does not believe any ultimate liability will have a material adverse effect on results, financial position, or liquidity[113](index=113&type=chunk) [13. RESTRUCTURING COSTS](index=32&type=section&id=13.%20RESTRUCTURING%20COSTS) Details the costs and liabilities associated with facility closures and organizational restructuring plans [Restructuring Costs for a Facility Closure](index=32&type=section&id=Restructuring%20Costs%20for%20a%20Facility%20Closure) Reports on the expenses and remaining liability for the closure of a manufacturing facility in France - Closure of a small manufacturing facility outside Paris, France, announced in December 2018[114](index=114&type=chunk) - Total expenses from December 2018 to March 31, 2020, were **$4.0 million**[114](index=114&type=chunk) - The liability for the facility closure was **$2.9 million** as of March 31, 2020[114](index=114&type=chunk) [Restructuring Costs for European and North American Reorganization](index=33&type=section&id=Restructuring%20Costs%20for%20European%20and%20North%20American%20Reorganization) Details the expenses and liability related to a strategy-driven workforce reduction in Europe, US, and Canada - Strategy-driven restructuring plan announced in November 2019, including workforce reduction in Europe, US, and Canada[117](index=117&type=chunk) - Total expenses from November 2019 to March 31, 2020, were **$22.9 million**[117](index=117&type=chunk) - The liability for this reorganization was **$14.0 million** as of March 31, 2020, recorded in Accrued payroll and employee benefits[117](index=117&type=chunk) [14. LEASES: FINANCE, AND OPERATING WHERE WE ACT AS LESSEE](index=33&type=section&id=14.%20LEASES%3A%20FINANCE,%20AND%20OPERATING%20WHERE%20WE%20ACT%20AS%20LESSEE) Provides information on the company's finance and operating leases, including lease expenses and balance sheet impacts - The company has operating and, to a lesser extent, finance leases for buildings, vehicles, and equipment, with remaining lease terms of **1 to 19 years**[119](index=119&type=chunk) Components of Lease Expense (in millions) | Item | Three Months Ended March 31, 2020 | Three Months Ended March 31, 2019 | |:--------------------------|:----------------------------------|:----------------------------------| | Operating lease cost | $12.6 | $12.4 | | Total finance lease cost | $0.3 | $0.3 | | Sublease income | $0.7 | $0.7 | Supplemental Balance Sheet Information Related to Leases (in millions) | Item | March 31, 2020 | December 31, 2019 | |:------------------------------------------|:---------------|:------------------| | Operating lease right-of-use assets | $200.5 | $201.9 | | Total operating lease liabilities | $209.9 | $211.4 | | Total finance lease liabilities | $11.5 | $11.7 | - Weighted average remaining lease term for operating leases is **9 years** (discount rate **4.1%**) and for finance leases is **18 years** (discount rate **6.5%**)[125](index=125&type=chunk) [15. Subsequent Events](index=36&type=section&id=15.%20Subsequent%20Events) Reports on significant events occurring after the balance sheet date, including acquisitions and divestitures - In April 2020, Bio-Rad acquired Celsee, Inc. for approximately **$100 million** plus up to **$60 million** in contingent consideration, to complement Life Science offerings[128](index=128&type=chunk) - In April 2020, the company received **$12.2 million** from the sale of its Informatics division, part of the Other Operations segment[129](index=129&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=36&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion and analysis of Bio-Rad's financial condition and results for Q1 2020, covering business overview, COVID-19, cyberattack, acquisitions, restructuring, and financial performance [Overview](index=36&type=section&id=Overview) Provides a general description of Bio-Rad's business as a multinational manufacturer and distributor of life science and clinical diagnostics products - Bio-Rad is a multinational manufacturer and distributor of life science research and clinical diagnostics products, organized into two segments: Life Science and Clinical Diagnostics[131](index=131&type=chunk) - The company sells over **9,000 products and services** globally, with approximately **60%** of year-to-date 2020 consolidated net sales derived from international locations[132](index=132&type=chunk)[134](index=134&type=chunk) - Foreign currency fluctuations, particularly the strengthening U.S. dollar, negatively impact consolidated net sales but can lower international operating expenses[134](index=134&type=chunk) [COVID-19 Impact](index=37&type=section&id=COVID-19%20Impact) Discusses the negative impact of the COVID-19 pandemic on business operations, financial conditions, and product demand - The COVID-19 pandemic has negatively impacted and is expected to continue disrupting business operations, financial conditions, and results[136](index=136&type=chunk) - Experienced an overall drop-off in product demand due to customer facility closures and reduced sales activity, despite increased demand for certain COVID-19 related products[136](index=136&type=chunk) - Evaluating the impact of governmental incentives intended to alleviate economic burdens[136](index=136&type=chunk) [Cyberattack](index=37&type=section&id=Cyberattack) Details the December 2019 cyberattack, its impact on systems, and anticipated ongoing expenses - A cyberattack was detected on December 5, 2019, affecting Windows-based systems, but not the global ERP system (SAP)[137](index=137&type=chunk) - Critical systems were back online within days, and no evidence of unauthorized transfer or misuse of personal data has been found[137](index=137&type=chunk) - Ongoing expenses related to the incident are anticipated into the first half of 2020, and losses are expected to exceed insurance coverage[137](index=137&type=chunk)[138](index=138&type=chunk) [Acquisitions](index=37&type=section&id=Acquisitions) Summarizes the October 2019 acquisition of a foreign distributor and its financial allocation - In October 2019, Bio-Rad acquired a foreign distributor for approximately **$4.2 million**, including cash payments and contingent consideration[139](index=139&type=chunk) - The acquisition was accounted for as a business combination within the Clinical Diagnostics segment[139](index=139&type=chunk) - The purchase price allocation included **$3.4 million** to customer relationships and **$1.4 million** to acquired net assets[140](index=140&type=chunk) [Restructuring Costs for European and North American Reorganization](index=38&type=section&id=Restructuring%20Costs%20for%20European%20and%20North%20American%20Reorganization) Explains the strategy-driven restructuring plan, workforce reductions, and associated expenses and liabilities - A strategy-driven restructuring plan, announced in November 2019, involves workforce reductions in Europe, the United States, and Canada, with significant savings expected to be repurposed[142](index=142&type=chunk) - Total expenses from November 2019 to March 31, 2020, were **$22.9 million**, with a liability of **$14.0 million** as of March 31, 2020[142](index=142&type=chunk) - Restructuring charges impacted Cost of goods sold, Selling, general and administrative expense, and Research and development expense in Q1 2020[142](index=142&type=chunk) [Restructuring Costs for a Facility Closure](index=38&type=section&id=Restructuring%20Costs%20for%20a%20Facility%20Closure) Reports on the expenses and remaining liability for the closure of a manufacturing facility in France - A small manufacturing facility closure outside Paris, France, announced in December 2018, incurred total expenses of **$4.0 million** through March 31, 2020[143](index=143&type=chunk) - Restructuring charges are included in the Clinical Diagnostics segment's results[143](index=143&type=chunk) - The remaining liability for the closure was **$2.9 million** as of March 31, 2020[143](index=143&type=chunk) [Results of Operations -- Sales, Margins and Expenses](index=38&type=section&id=Results%20of%20Operations%20--%20Sales,%20Margins%20and%20Expenses) Analyzes key financial metrics as a percentage of net sales, including gross profit and operating expenses Key Financial Metrics as a Percentage of Net Sales | Item | March 31, 2020 | March 31, 2019 | |:-------------------------------------------|:---------------|:---------------| | Net sales | 100.0% | 100.0% | | Cost of goods sold | 44.5% | 43.7% | | Gross profit | 55.5% | 56.3% | | Selling, general and administrative expense| 33.9% | 37.5% | | Research and development expense | 8.6% | 8.6% | | Change in fair market value of equity securities | 144.8% | 191.2% | | Net income | 120.0% | 156.2% | - Gross profit margin decreased from **56.3%** in Q1 2019 to **55.5%** in Q1 2020[146](index=146&type=chunk) - Selling, general and administrative expenses decreased as a percentage of sales from **37.5%** to **33.9%**[146](index=146&type=chunk) [Three Months Ended March 31, 2020 Compared to Three Months Ended March 31, 2019](index=39&type=section&id=Three%20Months%20Ended%20March%2031,%202020%20Compared%20to%20Three%20Months%20Ended%20March%2031,%202019) Compares net sales, segment performance, gross margins, and operating expenses for Q1 2020 versus Q1 2019 - Net sales increased by **3.2%** to **$571.6 million** in Q1 2020; on a currency-neutral basis, sales increased by **4.3%**[149](index=149&type=chunk) - Life Science segment sales increased by **5.3% (6.0% currency-neutral)**, driven by Droplet Digital PCR, Gene Expression, Food Science, and Antibody product lines[150](index=150&type=chunk) - Clinical Diagnostics segment sales increased by **1.9% (3.2% currency-neutral)**, with growth in Quality Controls and Blood Typing[151](index=151&type=chunk) - Consolidated gross margins decreased to **55.5%** from **56.3%**, primarily due to a **$7.4 million** cost of sales benefit in Q1 2019 from an escrow release[152](index=152&type=chunk) - SG&A expenses decreased by **$13.9 million**, mainly due to lower travel, marketing, and professional fees, and the strengthening U.S. dollar[153](index=153&type=chunk) - R&D expense increased to **$49.3 million**, driven by accelerated innovation in Life Science, partially offset by lower spending due to COVID-19 lab closures[155](index=155&type=chunk) [Results of Operations – Non-operating](index=40&type=section&id=Results%20of%20Operations%20%E2%80%93%20Non-operating) Analyzes non-operating items such as interest expense, foreign currency exchange, equity security fair value changes, and income taxes - Interest expense was **$5.7 million** in Q1 2020, down from **$6.0 million** in Q1 2019[156](index=156&type=chunk) - Foreign currency exchange net losses decreased to **$0.9 million** in Q1 2020 from **$1.3 million** in Q1 2019[157](index=157&type=chunk) - Change in fair market value of equity securities resulted in a gain of **$827.7 million** in Q1 2020, lower than the **$1,059.2 million** gain in Q1 2019, primarily from Sartorius AG investment[158](index=158&type=chunk) - Other (income) expense, net, decreased to **$3.3 million** income in Q1 2020 from **$18.7 million** income in Q1 2019, mainly due to delayed Sartorius AG dividends[159](index=159&type=chunk) - Effective income tax rate was **23.7%** in Q1 2020, up from **23.2%** in Q1 2019, due to reassessment of a prior year tax position[160](index=160&type=chunk) [Liquidity and Capital Resources](index=41&type=section&id=Liquidity%20and%20Capital%20Resources) Assesses the company's cash position, short-term investments, and ability to meet financial obligations, considering COVID-19 impacts - As of March 31, 2020, Bio-Rad had **$1,036.7 million** in cash, cash equivalents, and short-term investments, with approximately **22%** held in foreign subsidiaries[164](index=164&type=chunk) - Management believes current liquidity, along with cash flow from operations and access to a **$200.0 million** unsecured Credit Agreement, is adequate to meet current and long-term needs[163](index=163&type=chunk) - The company is assessing options to repay its **$425.0 million** Senior Notes due in December 2020[163](index=163&type=chunk) - Demand for products and services could change dramatically due to COVID-19, funding constraints, and international trade disputes[166](index=166&type=chunk) [Cash Flows from Operations](index=41&type=section&id=Cash%20Flows%20from%20Operations) Details the changes in net cash provided by operating activities and their primary drivers - Net cash provided by operations increased to **$62.8 million** in Q1 2020 from **$42.9 million** in Q1 2019[167](index=167&type=chunk) - The increase was primarily due to higher cash received from customers and higher net proceeds from forward foreign exchange contracts[167](index=167&type=chunk) - Partially offset by higher cash paid to suppliers and employees, including annual incentive bonuses[167](index=167&type=chunk) [Cash Flows from Investing Activities](index=42&type=section&id=Cash%20Flows%20from%20Investing%20Activities) Analyzes net cash used in investing activities, including capital expenditures and acquisitions - Net cash used in investing activities decreased to **$12.4 million** in Q1 2020 from **$22.7 million** in Q1 2019[169](index=169&type=chunk) - Capital expenditures were **$21.6 million** in Q1 2020, down from **$23.6 million** in Q1 2019[170](index=170&type=chunk) - No acquisitions occurred in Q1 2020, compared to **$16.0 million** paid for an acquisition in Q1 2019[171](index=171&type=chunk) - Subsequent events in April 2020 include the acquisition of Celsee, Inc. for **$100 million** and the sale of the Informatics division for **$12.2 million**[173](index=173&type=chunk) [Cash Flows from Financing Activities](index=42&type=section&id=Cash%20Flows%20from%20Financing%20Activities) Explains the net cash used in financing activities, primarily due to treasury stock repurchases - Net cash used in financing activities was **$98.6 million** in Q1 2020, a significant shift from **$2.2 million** provided in Q1 2019[174](index=174&type=chunk) - The primary driver for the outflow was the **$100.0 million** repurchase of **291,941 shares** of Class A treasury stock[174](index=174&type=chunk)[175](index=175&type=chunk) - Proceeds from common stock issuance for share-based compensation were **$4.1 million** in Q1 2020[174](index=174&type=chunk) [Treasury Shares](index=42&type=section&id=Treasury%20Shares) Reports on the repurchase and reissuance of treasury stock under the company's share repurchase program - During Q1 2020, Bio-Rad repurchased **291,941 shares** of Class A treasury stock for **$100.0 million** under its repurchase program[175](index=175&type=chunk) - In Q1 2019, **19,755 Class A treasury shares** were reissued for **$3.8 million** net proceeds, resulting in a **$1.6 million** loss due to reissuance at a lower price than average cost[176](index=176&type=chunk) [Recent Accounting Pronouncements Adopted and to be Adopted](index=43&type=section&id=Recent%20Accounting%20Pronouncements%20Adopted%20and%20to%20be%20Adopted) Refers to Note 1 for details on recently adopted and future accounting pronouncements - Refer to Note 1 of the condensed consolidated financial statements for details on recent accounting pronouncements[178](index=178&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=43&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) Reports no material changes in market risk disclosures compared to the prior year's Annual Report on Form 10-K - No material changes in market risk disclosures during the three months ended March 31, 2020, compared to the Annual Report on Form 10-K for 2019[179](index=179&type=chunk) [Item 4. Controls and Procedures](index=43&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and procedures and reports no material changes to internal control over financial reporting [Disclosure Controls and Procedures](index=43&type=section&id=Disclosure%20Controls%20and%20Procedures) Describes the design and effectiveness of disclosure controls and procedures as of March 31, 2020 - Disclosure controls and procedures are designed to ensure timely and accurate reporting of information required by the Exchange Act[180](index=180&type=chunk) - Management, with CEO and CFO participation, concluded that disclosure controls and procedures were effective as of March 31, 2020[181](index=181&type=chunk) - Controls provide reasonable, not absolute, assurance and involve management judgment in cost-benefit evaluation[180](index=180&type=chunk) [Changes to Internal Control Over Financial Reporting](index=43&type=section&id=Changes%20to%20Internal%20Control%20Over%20Financial%20Reporting) States that no material changes to internal control over financial reporting occurred during Q1 2020 - No changes in internal control over financial reporting occurred during Q1 2020 that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[182](index=182&type=chunk) [PART II – OTHER INFORMATION](index=43&type=section&id=PART%20II%20%E2%80%93%20OTHER%20INFORMATION) Presents additional information not included in the financial statements, covering legal proceedings, risk factors, equity sales, and exhibits [Item 1. Legal Proceedings](index=43&type=section&id=Item%201.%20Legal%20Proceedings) Refers to Note 12 for information on legal proceedings, indicating no new material developments - R

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 2019 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from ___________________________ to _________________________________ Commission file number 1-7928 BIO-RAD LABORATORIES, INC. (Exact name of registrant as specified in its ch ...

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Non-accelerated filer ☐ Smaller reporting company ☐ Emerging growth company ☐ FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2019 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from______________to __________ Commission file number 1-7928 BIO-RAD LABORATORIE ...