i s e x c e lli n g,
Business as Usual.
Bio-Rad Laboratories
Annual Report 2008
David Schwartz
Norman Schwartz
CHAiRmAN of tHe BoARD
PReSiDeNt
Let ter t o Sh ar eh oLderS
Dear Shareholders,
As we look back, 2008 was a turbulent year for some other companies
and for the financial markets, but was a fairly uneventful and rewarding
year for us. Sales grew 21% to reach $1.7 billion, led by the acquisition
of DiaMed in the fourth quarter of 2007. Underlying this acquired growth
and some currency tailwinds, is good solid organic growth.
This is the core of Bio-Rad and the focus of our attention. While the year was relatively calm for
us, it was another year of progress. Much of the effort has been centered around the successful
integration of DiaMed and its well respected line of products for blood typing. Management is in
place, progress is being made to bring their financial practices up to our standards and we are
working on integrating several of the key independent distributors into our direct sales model.
This work will continue into 2009, but we are pleased with what we have accomplished to date.
Both of our core business areas
coming years. Our growth and
While we are cautious about the
made progress, not only in sales
accomplishment brought us to
next 12 to 18 months, we are not
and profits, but in the introduction
an additional milestone this year
without optimism. The fundamentals
of new products. Notable among
as we moved to the New York
of the company are strong. We en-
them, the development of a new line
Stock Exchange.
joy a good reputation for quality and
of thermal cyclers to address the
important area of DNA amplifica-
tion, and the introduction of several
new assays for the BioPlex® 2200
clinical analyzer. In total, more than
40 new products were introduced
during the year. Operationally, we
completed expansions of two of
our European-based manufactur-
ing facilities and this year marked
the first anniversary of the opening
of our Singapore manufacturing
site, which is doing well. In the early
months of 2009, we will start up our
new Shanghai-based R&D facility.
While all of our geographic regions
contributed to growth in 2008,
the progress we are making in the
Eastern European, Asia Pacific, and
Latin American markets is outstand-
ing. The expectation is that these
will continue to drive growth in the
I am sure most messages to share-
holders this year from other com-
panies will make some reference to
the financial market meltdown that
erupted in September and caught
most of us by surprise. Through
the end of the year, this has had
relatively little effect on our busi-
ness. Our life science and clinical
diagnostics markets tend to be fairly
stable and predictable and have
continued to show promise. We
innovation in our markets, markets
that are fairly insulated from eco-
nomic perturbations. Our balance
sheet is healthy and we generate
good cash flow. Most important, we
have a good pipeline of new prod-
ucts. These should all help us to
navigate 2009 and beyond. Thank
you for your continued interest and
support of Bio-Rad.
are, nevertheless, moving forward
David Schwartz
with some caution. While there is
Chairman of the BoarD
an expectation that the stimulus
programs being put in place around
the world may provide funds to gov-
ernment sponsored research, the
net effects of this stimulus have yet
to be determined. Some segments
may also experience a moderation
in healthcare spending, which we
are closely monitoring.
norman Schwartz
PreSiDent
page : 1
Bio-Rad Laboratories | Annual Report 2008
If there’s one thing that companies
want never to change in their business
operations, it’s the steady march of
successful best practices. A march
fueled not only by innovation, creativity,
and vision, but also by the ongoing,
continuous behaviors that embody what
has always been best about the company.
In 2008, Bio-Rad extended its track
record of delivering ongoing improvement
in virtually every area of the company,
with another year of ...
Bio-Rad Laboratories | Annual Report 2008
Business as Usual.
Success
Business as Usual.
At the heArt of every
Bio-rAd trAnsAction,
there’s A customer
with A nAme.
the very “Best” of A B usiness’s
Best prActices is A simple one:
listening. At Bio-rAd, we pride
ourselves on getting to know
our customers, And on under-
stAnding whAt’s importAnt to
them. we then ensure thAt their
desires Are incorporAted into
our product development cycle.
4 : page
Pe rs on a li zi n g
Business as Usual.
Bio-Rad Laboratories | Annual Report 2008 6 : page
PerSonaLizing buSi neSS aS uSu aL
For over half a century, Bio-Rad’s commitment to developing
strong, long-lasting relationships with our customers has
been one of our defining characteristics.
For us, it’s always personal. From pre-sale introductions to post-sale customer support,
we place our focus on satisfying the needs of individual diagnosticians and researchers.
Sales are the result of establishing and nurturing these relationships, but there are other
rewards as well. Having direct, personal contact with our customers provides us with a
better understanding of their workflows and how they define success.
By combining a technical knowl-
Our current line of thermal cyclers
Our commitment to our customers
edge of our products with our
has also benefited from this cus-
extends beyond the lab to more
customers’ experiences, we are
tomer-centric approach to product
practical matters such as faster
better able to develop innovative
development. From our observation
product delivery time, lower prices,
products and make enhancements
of customers at their bench and
and technical support. Having a
to current ones. This continual
extensive usability testing on proto-
direct selling approach means
feedback model encourages our
types to real-time customer feed-
we must be as physically close
entire organization to do more than
back in online discussion groups,
to our customers and markets as
simply sell Bio-Rad products, it
we’ve developed a product line that
possible in order to serve them
helps us to learn as much as we
is defined by how it contributes to
well. Since we opened our first
can from our customers regarding
their success.
what works and what could use
some improvement.
This philosophy of customer
intimacy applies equally on our
This customer-centric approach
clinical diagnostics side. When we
requires more of an investment on
introduced a new test for MRSA
our part, but we believe it’s worth
(methicillin-resistant Staphylococ-
it. Our success over the years has
cus aureus), a customer suggested
proved that to be the case.
that reading test results at exactly
international office in Germany in
1966, Bio-Rad has continued to
establish operations around the
globe to ensure that we are not
only able to provide our customers
with the products they need, but
also offer them optimum conve-
nience, value, and customer care.
Our product training sites, situated
around the world, offer post-sale
technical support to ensure cus-
tomers are able to successfully
use their products in their labs.
24 hours after inoculation posed a
logistical challenge for microbiology
labs. Would it be possible to offer
more flexibility by providing a range
of time in which the test results
could be read? We conducted
Providing this level of customer
additional studies and were able
care throughout the sales cycle
to broaden that time to between
continues to produce relationships
18 and 28 hours. This extended
that have, in some cases, spanned
timeframe resulted in not only
three decades or more … and
enhanced flexibility for diagnosti-
counting. It’s because we’re not
cians, but even better, more rapid
satisfied until we have exceeded
identification of MRSA carriers so
our customers’ expectations, and
that hospitals could more quickly
this personal involvement to us is
implement appropriate infection
business as usual.
control as well as treatment.
page : 7
For example, our life science
protein interaction user group played
an integral role in the development
of our ProteOn™ XPR36 protein
interaction array system. In addition
to participating in the testing of early
prototypes, many of these users
were involved in determining the
product’s final specifications, and
they participated in the product’s
validation as well.
Bio-Rad Laboratories | Annual Report 2008 Business as Usual.
we stArt with whAt
is the Best. And then
figure out wAys to
mAke it Better.
innovAtion tAkes mAny forms
At Bio-rAd. whether it’s invent-
ing A new wAy to perform A
common process, discovering
new AnAlytics for cellulAr
reseArch, or simply improving
the wAy An instrument works,
we Are AlwAys looking to rAise
the BAr for whAt success
should look like.
8 : page
pushing boundaries,
Business as Usual.
Bio-Rad Laboratories | Annual Report 2008 10 : page
PuShi ng bou nda ri eS aS uSuaL
From product improvements and introducing next-generation
technologies to looking far into the future to imagine even
better solutions, Bio-Rad Research and Development
is about helping our customers achieve their goals.
Their success is our success.
Bio-Rad’s R&D teams are focused on delivering the highest-quality, most efficient,
and yet affordable products and processes in the industry. That means provid-
ing better testing methods for our clinical diagnostics customers, and making
innovative technologies for our life sciences customers. The result is a set of
powerful tools that may lead to new discoveries and improved healthcare.
A good example of how this all
Another way Bio-Rad serves its
In addition to understanding
comes together is the recent
customers is by helping labora-
our customers’ needs of today,
development of our in2it™ point-
tories offer more value to their
through careful observation of
of-care analyzer, a diabetes
customers. Because autoim-
market trends we look ahead
testing platform that delivers
mune diseases affect multiple
and envision what those cus-
a patient’s A1C results from a
body systems and often produce
tomers might need in three to
simple finger prick sample within
ambiguous symptoms, identify-
five years’ time. Even farther out,
minutes in a physician’s office.
ing the disease is challenging.
we look to the future and explore
A1C is a protein found in the
To assist in diagnosis, Bio-Rad
a variety of ongoing technology
blood that provides insight into
developed its Medical Decision
advancements, including those
the average blood sugar levels in
Support Software. With the help
in the fields of cellular analysis
diabetics over a several-month
of pattern-recognition algorithms
and process miniaturization.
period, and therefore helps a
to aid in disease characterization,
patient monitor and control this
the software offers another level of
disease. Additional customer
analysis of test results suggesting
feedback of the in2it system led
a diagnosis of both common and
to a number of improvements
uncommon autoimmune diseases.
that save time and reduce errors.
This results in faster diagnosis and
In addition to the convenience
earlier treatment.
In all cases, Bio-Rad’s empha-
sis on R&D is marked by the
constant encouragement of
our employees to do creative
work—as evidenced by the more
than doubling of the number of
patents we have been awarded
and timeliness of delivering
results in a matter of minutes,
studies have shown that when
a patient and physician discuss
test results face-to-face, this
leads a greater exchange of
information as well as feedback,
ultimately leading to improved
patient care.
In our Life Science Group, we
over the past several years.
continue to introduce new prod-
This investment back into our
ucts as well as improve current
business not only helps us push
ones with new and innovative
boundaries, it ensures the very
technologies used to “separate,
future of our company.
purify, analyze, and identify”
biological and chemical materi-
als. Our next-generation precast
gels improve the electrophoresis
technology that we ourselves
developed over 30 years ago.
page : 11
Bio-Rad Laboratories | Annual Report 2008 Business as Usual.
Bio-rAd Builds
instruments—And
confidence—thAt
stAnd the test
of time.
it’s not unusuAl to see severAl
generAtions of Bio-rAd prod-
ucts on the Bench. whether
it’s our Biologic duoflow™
chromAtogrAphy systems or
our lAtest AutomAted profiniA™
protein purificAtion system,
reseArchers know they cAn
depend on our products, from
stArt to finish.
Tried a n d tru e,
Business as Usual.
Bio-Rad Laboratories | Annual Report 2008 14 : page
tri ed and tr ue aS uSuaL
Science, it is said, is the expression of what can be
shown to work reliably and repeatedly. The same is true
of Bio-Rad products and technologies.
The things we take for granted in today’s complex, modern life are a testament
to how much we’ve come to rely on them. Whether it’s cell phones, computers,
TVs, or cars, our relationships to these products are built on a single, underlying
premise: that they work the way they’re supposed to. Plain and simple. When
they don’t, they lose our trust.
At Bio-Rad, this sense of reas-
Take our leadership in the field
that offers automation, expanded
surance is exactly what we build
of diabetes testing, for example.
volumes, and improved through-
into every one of our products
From our first manual, open-
put—all of which help researchers
and services, so scientists and
column chromatography test
more quickly and directly achieve
healthcare professionals can
introduced in 1978 and later the
their goals. Today, our new Profinia™
focus on their work—and not
VARIANT™ integrated, high-
line takes that notion a step further,
whether or not their instruments
performance liquid chromatog-
by being “pre-tuned” for specific
are working properly.
raphy (HPLC) system to our fully
applications, saving researchers
automated VARIANT™ II TURBO
even more effort and time.
Some of our product lines that
were introduced decades ago
still represent the state-of-the-art
today because, over the years,
we’ve continued to enhance
their capabilities and applied
and D-10™ systems today,
our products have continually
improved performance, thereby
helping clinicians do their work
more effectively and efficiently.
Such a total approach to ensur-
ing the peace of mind of our
customers also benefits us as a
company because we are able to
develop long-term relationships
innovative ways to improve their
Our Life Science Group has seen
with our customers based on
functionality and value. It’s an
a similar evolution in chromatog-
their confidence that Bio-Rad
approach that pays enormous
raphy technology for proteomics
always stands behind them. These
dividends for our customers,
research. In many separation
relationships not only generate
who know that they can have
applications, where not only
consistent revenue streams, but
confidence in the results of any
analytics but sample quantity is
also enhance Bio-Rad’s half-
Bio-Rad product, whether it’s a
important, our BioLogic DuoFlow™
century reputation as a strong,
clinician looking at the outcome
line of chromatography systems
solid company—“tried and true”—
of a test or a researcher examin-
have increasingly become more
positioning us well, for the future.
ing the results of an experiment.
powerful and easier to use. This
has been achieved by building on
our expertise in chromatography
page : 15
Bio-Rad Laboratories | Annual Report 2008 the right externAl
opportunities cAn
leAd to sustAined
internAl growth.
from A diABetes monitoring
technology in scotlAnd And
quAlity controls in cAliforniA
to the leAder in Blood typing
in switzerlAnd, Bio-rAd Builds
into our strAtegy An ongoing
seArch for outside Businesses
thAt complement our core
strengths. the result? even
greAter promise for our
customers.
Business as Usual.
ly
C o n t i n u a l
e v o l v i n g ,
Business as Usual.
Bio-Rad Laboratories | Annual Report 2008 18 : page
con t i nuaLLy evoL ving aS u SuaL
Most companies evolve through a balance of organic
growth and acquisitions. Bio-Rad has been particularly
adept in finding and integrating complementary businesses
that add to our strengths.
Continuous improvement is a hallmark of successful companies the world
over. Such organizations incorporate an ongoing, passion for positive,
incremental change into every aspect of their operations. In our case, that
means seeking to leverage our core competencies with organic growth as
well as identifying external opportunities, all of which contribute to continually
broadening our total product offerings and, in many cases, offering a
complete solution for our customers’ needs.
Over the years, we’ve been
Following our recent acquisition
offerings will be complementary
extremely sensitive to the needs
of DiaMed, a developer, manufac-
to ours by broadening our prod-
of our customers in deciding
turer, and marketer of a complete
uct line and expanding our reach
whether to develop a new prod-
line of reagents and instruments
into new and existing markets
uct or integrate a new technology
used in blood typing and screen-
and geographies.
or product line into our offerings.
ing, we applied our own expertise
At the same time, we ensure
to begin developing a new, fully
that the acquisitions we seek
automated instrument for blood
are those that will expand our
typing. DiaMed’s safe, easy-to-use,
existing product portfolio, taking
and reliable products are already
newly acquired products into new
responsible for over hundreds
geographic markets, and leverag-
of millions of blood typing tests
ing our distribution strength to
performed each year around the
improve the success of an ac-
world, and the company’s integra-
quired company or technology.
tion into Bio-Rad will allow us to
The result has been a strong
track record of integrating
expand the benefits of greater lab
efficiency into new markets.
complementary businesses that
While such acquisitions represent
have proven to be of tremendous
fairly large, complex integrations,
benefit to our clinical diagnostics
we also look for opportunities
and life science customers, as
with companies that have specific
well as to the company itself.
technologies when we feel their
Our attitude of continually looking
for ways to improve our products
and services extends inward as
well. From the integration of in-
novative upgrades to our informa-
tion technology to the application
of more cost effective methods
of manufacturing operations, we
are constantly looking for ways to
do things better. As an evolution-
ary process, it is, one might say,
simply in our nature.
page : 19
Bio-Rad Laboratories | Annual Report 2008 Business as Usual.
introducing
the scientists
of tomorrow.
from middle school And
college-level science projects
to high school scholArships
And science fAirs, Bio-rAd
extends its reAch to inspire the
next generAtion of scientists.
And why shouldn’t they? our
future is in the hAnds of our
youth, And we owe them nothing
less thAn the Best tools possiBle.
I n s p i ri n g
y o u n g m i n d s,
Business as Usual.
Bio-Rad Laboratories | Annual Report 2008 22 : page
inS Pir i ng Mi ndS aS uSuaL
The foundation of an informed society is the literacy
of its citizens. Bio-Rad’s outreach efforts focus on
exposing today’s students to the wonders of science
in a fun, hands-on way.
Kids are impressionable. When things are made fun and interesting for them,
the greater the chance that they will become interested, which is precisely
the idea behind our efforts to foster science education and inspire the
budding young scientists of tomorrow.
The centerpiece of this effort is our
This year, we launched the indus-
approach, the program has proved
Biotechnology Explorer™ program
try’s first multi-topic curriculum on
enormously successful in its initial
that began in the late 1990s with
cloning and sequencing in molecu-
rollout, being implemented at more
a curriculum designed for high
lar biology for entry-level college
than triple the number of institu-
school-level students. It was a time
students. This eight-module series
tions than originally anticipated.
when science teachers around the
teaches students how to isolate
world were discovering that their
plant DNA—whether from Arizona
existing curricula were not keeping
desert plants, a backyard daisy, or
up, as a number of scientific top-
a piece of cabbage in the refrig-
ics began cropping up in popular
erator—and then amplify critical
culture stirring the curiosities of
genes, engineer them into bacteria,
students with terms such as hu-
and then sequence the genes.
man genome, DNA, and cloning.
Students can then publish their
Bio-Rad worked closely with
results in “GenBank®,” the National
educators to develop a program
Center for Biotechnology Informa-
that provided instructors lesson
tion’s database, which houses a
materials that corresponded with
collection of publicly available
Bio-Rad equipment. Students
DNA sequences.
Bio-Rad has continued to seek
other avenues to reach out to even
younger potential future scientists,
which is often when an individual
first discovers they have an interest
in the sciences. Bio-Rad spon-
sors a variety of activities such
as science summer camp and
science fairs and competitions,
where we provide both equipment
and judges—Bio-Rad employees,
who seem to get as much out
of the interaction with the bright
were engrossed when working
with real-life instruments that were
actually used in today’s labs. They
could see how easy it was to cap-
ture (and see) their own DNA and
genetically engineer bacteria—
themselves. Since the program
was first launched, it has reached
hundreds of thousands students in
educational institutions worldwide.
The new college-level Biotech-
young students as do the students
nology Explorer series provides
themselves. How inspiring!
instructors the tools they need to
teach the entire six- to eight-week
course, giving students a full grasp
of the principles of biotechnol-
ogy and molecular biology. As
a result of this comprehensive
page : 23
Bio-Rad Laboratories | Annual Report 2008 Business as Usual.
welcome to A
mutuAl Benefit
society like
no other.
when you tAlk ABout return
on An investment, At Bio-rAd we
like to think thAt there is none
higher thAn the return we
receive from our employees. we
Are diligent in our Attention to
them, And yet their dedicAtion,
outlook, And work product
continuAlly surpAsses our
greAtest expectAtions. when
this rel Ationship works,
every thing works.
I n v e st i n g
i n u s
Business as Usual.
Bio-Rad Laboratories | Annual Report 2008 26 : page
inveSti ng i n uS aS uSuaL
Our people are key to our success. We provide them with
the opportunity to develop new ideas and the freedom
to explore different avenues in pursuit of their goals.
Since we first began, Bio-Rad has cultivated an entrepreneurial spirit,
encouraging the free flow of ideas, creativity, and independence at every
level of our organization. Employees are encouraged to fulfill their professional
aspirations within the company, which sometimes means switching gears
mid-career to head in an another direction.
It’s not uncommon, for example,
But a strong support team was
advancing scientific discovery;
to find someone who began
there for her, and she was thrilled
I just couldn’t ask for a better
at Bio-Rad in one area only to
to have the chance to learn on the
company to work for.”
discover an interest in another
job, an opportunity she describes
facet of our operation. Take Diane,
as simply “incredible.”
When one joins Bio-Rad, he or
she will quickly discover that the
After a couple of years, she tran-
burned the midnight oil learning
sitioned to a position as marketing
and just taking it all in.
who’s been with Bio-Rad for over
20 years. She had been working
in a hospital laboratory when the
Bio-Rad sales representative
walked in. She listened to him sell
a Bio-Rad product to her manager
and thought, I can do that! She
pursued a sales career at Bio-Rad
and soon landed a position as
sales representative.
product manager, then became
a regional sales manager. A few
years down the line she became a
national sales manager, then later
a division manager. Eventually
she was asked to manage one of
Bio-Rad’s manufacturing divisions—
a huge leap for her—she says,
since her background was in sales
and marketing and not operations.
She recalls learning—from the
only limits that may stand in the
ground up—about many new
way are those he or she places on
functions: regulatory, quality assur-
themselves. To us, the sky’s the
ance, quality control, manufactur-
limit. All one needs is the desire
ing, R&D, and finance. “I pulled my
and willingness to do what it takes
finance manager aside and said,
to make it happen.
‘teach me everything you know
about cost accounting,’” she says.
She rolled up her sleeves and dove
into the details. Some nights she
Investing in our employees is one of
the cornerstones of our company
because we know that not only
do personal satisfaction and new
ideas fuel growth, they also fuel a
powerful sense of involvement on
The long hours paid off. Today she
the part of individuals and teams.
heads a number of divisions and
says the people she works with
at Bio-Rad never cease to amaze
her with their level of commitment,
dedication, and creativity. While
she loves what she does, it’s also
the field that she’s in that she finds
so fulfilling. “It’s great to know that
we are helping change people’s
lives with better healthcare and
All of this adds up to being a
place where people can feel
the greatest sense of personal
satisfaction knowing that,
together and as individuals,
we are making a difference.
And we couldn’t ask for a much
better return on our investment.
page : 27
Bio-Rad Laboratories | Annual Report 2008 Bio-Rad Laboratories | Annual Report 2008
the buSineS S of bi o-ra d
Bio-Rad Laboratories has played a leading role in the
advance ment of scientific discovery for over 50 years by
providing a broad range of innovative tools and services to
the life science research and clinical diagnostics markets.
Founded in 1952, Bio-Rad has a global team of more than 6,500 employees and
serves more than 85,000 research and industry customers worldwide through its
global network of operations. Throughout its existence, Bio-Rad has built strong
customer relationships that advance scientific research and development efforts and
support the introduction of new technology used in the growing fields of genomics,
proteomics, drug discovery, food safety, medical diagnostics, and more.
L i f e S c i e n c eS
c Li n i c aL di a g n oSt i cS
Bio-Rad’s Life Science Group
Clinical Diagnostics develops,
develops, manu factures, and
manufactures, sells, and
markets a wide range of labora-
supports a large portfolio of
tory instruments, apparatus, and
products for medical screening
consumables used for research in
and diagnostics. Bio-Rad is the
functional genomics, pro teomics,
leading specialty diagnostics
and food safety. The group ranks
company in the world and its
among the top five life science
products are recognized as
companies world wide, and main-
the gold standard for diabetes
tains a solid reputation for quality,
monitoring and quality control
innovation, and commitment to its
(QC) systems. The company is
customers. Bio-Rad’s life science
also well known for its blood
products are based on technolo-
virus testing and detection,
gies used to separate, purify, iden-
blood typing, autoimmune and
tify, analyze, and amplify biological
genetic disorders testing, and
materials such as proteins and
internet-based soft ware products.
nucleic acids. These technologies
Bio-Rad’s clinical diagnostics
include electrophoresis, imaging,
products incorporate a broad
multiplex immunoassay, chroma-
range of technolo gies used to
tography, microbiology, bioinfor-
detect, identify, and quantify
matics, protein function analysis,
sub stances in bodily fluids and
transfection, amplification, and
tissues. The results are used as
real-time PCR. Bio-Rad products
aids to support medical diagno-
support researchers in laborato-
sis, detection, evaluation, and
ries throughout the world.
the monitoring and treatment
of diseases and other medical
28 : page
2008 FINANCI AL HIGHLIGHTS
fi v e -ye ar reCorD
( i n m i l l i o nS, e xCePt Pe r Sh a r e Data )
Net Sales
Gross Profit
Research Expenditures
Net Income
Return On Sales
2004
2005
2006
2007
2008
$ 1,090.0
$ 1,181.0
$ 1,273.9
$ 1,461.1
$ 1,764.4
$ 610.1
$ 108.31
68.2
$
$ 646.5
$ 115.1
$
81.6
$ 712.5
$ 123.41
$ 103.3
$ 791.4
$ 140.51
93.0
$
$ 962.5
$ 159.5
$
89.5
6.3%
6.9%
8.1%
6.4%
5.1%
Book Value Per Share
$ 23.10
$ 25.09
$ 30.92
$ 36.14
$ 38.09
Basic Earnings Per Share
$
2.65
$
3.13
$
3.92
$
3.49
$
3.32
Cash Flow From Operations
$ 123.1
$ 108.3
$ 118.2
$ 191.6
$ 191.4
1. exCluDeS $14.6, $4.1 anD $7.7 of PurChaSeD r&D in 2004, 2006 anD 2007, reSPeCtively
2008 SaleS By region
net SaleS
( i n m i l l i o nS)
CaSh flow
from oPerationS
( i n m i l l i o nS)
BaSiC earningS
Pe r S hare
4
.
4
6
7
1
1 $
.
1
6
4
1
$
9
.
3
7
2
1
$
0
.
1
8
1
1
$
0
.
0
9
0
1
$
6
.
1
9
1
$
4
.
1
9
1
$
1
.
3
2
1
$
2
.
8
1
1
$
3
.
8
0
1
$
2
9
.
3
$
9
4
.
3
$
2
3
.
3
$
3
1
.
3
5 $
6
.
2
$
49%
Europe
15%
Pacific
Rim
36%
Americas
04 05 06 07 08
04 05 06 07 08
04 05 06 07 08
StoCK Pe r for manCe gr aPh
The following graph compares the cumulative stockholder returns over the past five years for the Company’s Class A Common Stock,
the American Stock Exchange Value Index, the S&P 400 MidCap Index, and a selected peer group, assuming $100 invested on
December 31, 2003, and reinvestment of dividends if paid:
S
R
A
L
L
O
D
250
200
150
100
50
0
Bio-Rad
Peer Group 1
AMEX Market
Value Index
S&P MidCap 400 2
2003
2004
2005
2006
2007
2008
1. The Peer Group consists of the following public companies: Beckman Coulter, Becton Dickinson, Thermo Fisher Scientific, Meridian Bioscience, Millipore, PerkinElmer
and Life Technologies. This group differs from prior years as two of our former peers, Applera Corp. and Invitrogen, merged to form Life Technologies. Companies in our
peer group reflect our participation in two different markets: life science research products and clinical diagnostics. No single public or private company has a comparable
mix of products which serve the same markets. In many cases, only one division of a peer group company competes in the same market as we do. Collectively, however,
our peer group reflects products and markets similar to those of Bio-Rad.
2. Note that this year the Company has selected the S&P 400 MidCap Index as its new comparable index as the Company’s stock moved to the New York Stock Exchange
in October 2008. The Company’s stock is one element of this index.
This stock performance graph shall not be deemed incorporated by reference by any general statement incorporating by reference into any filing under the
Securities Act or the Exchange Act, and shall not otherwise be deemed filed under these Acts.
page : 29
Competitor
S&P
Year
Average
Bio-Rad AMEX
Midcap 400
2003
2004
2005
2006
100
130
153
174
100
99
113
143
100
122
150
175
100
115
128
140
Bio-Rad Laboratories | Annual Report 2008
SA LES HISTORY
Bio-rAd lABorAtories
plAys A leAding role
in the AdvAncement of
scientific discovery
By providing A BroAd rAnge of
innovAtive tools And services to
the life science reseArch And
clinicAl diAgnostics industries.
the compAny is world renowned
Among hospitAls, universities,
mAjor reseArch institutions,
Biotechnology compAnies And
1970
1959
1965
phArmAceuticAl firms for its
commitment to quAlity And cus-
tomer service.
30 : page
$1.7 billion
$1.6 billion
$1.5 billion
$1.4 billion
$1.3 billion
$1.2 billion
$1.1 billion
$1 billion
$900 million
$800 million
$700 million
$600 million
$500 million
$400 million
$300 million
$200 million
$100 million
1975
1980
1985
1990
1995
2000
2008
SummARy of opeRA tionS And SeLected finAnciAL dA tA
(in thousands, except per share data)
2008
2007 (2)
2006
2005
2004
Year Ended December 31,
Net sales
$ 1,764,365 $ 1,461,052 $ 1,273,930 $ 1,180,985 $ 1,090,012
Cost of goods sold
801,843
669,690
561,394
534,499
479,939
Gross profit
962,522
791,362
712,536
646,486
610,073
Selling, general and administrative expense 591,304
507,978
438,949
416,084
378,264
Product research and development expense 159,518
140,535
123,376
115,104
108,344
Purchased in-process research and
development expense
—
7,656
4,100
—
14,620
Impairment losses on goodwill and
long-lived assets
Interest expense
Foreign exchange (gains) losses
28,757
32,113
7,634
—
31,606
2,576
—
32,022
1,053
19,770
32,643
(1,528)
—
20,219
2,394
Other (income) expense, net (1)
353
(19,832)
(28,991)
(28,958)
(11,095)
Income from continuing operations before
taxes and minority interests
142,843
120,843
142,027
Provision for income taxes
(44,579)
(26,548)
(38,764)
93,371
(15,792)
97,327
(31,035)
Minority interests in earnings of
consolidated subsidiaries
(8,754)
(1,301)
—
—
—
Income from continuing operations
89,510
92,994
103,263
77,579
66,292
Discontinued operations
Loss from discontinued operations (net of tax)
Gain on divestiture (net of tax)
Total income from discontinued operations
—
—
—
—
—
—
—
—
—
—
3,974
3,974
(1,487)
3,437
1,950
Net income
$
89,510 $
92,994 $ 103,263 $
81,553 $
68,242
Basic earnings per share:
Continuing operations
Discontinued operations
Basic earnings per share
Diluted earnings per share:
Continuing operations
Discontinued operations
$
$
$
3.32 $
3.49 $
3.92 $
2.98 $
—
—
—
0.15
3.32 $
3.49 $
3.92 $
3.13 $
3.25 $
3.41 $
3.83 $
2.91 $
—
—
—
0.15
Diluted earnings per share
$
3.25 $
3.41 $
3.83 $
3.06 $
Cash dividends paid per common share
—
—
—
—
2.58
0.07
2.65
2.51
0.07
2.58
—
Total assets
$ 2,037,264 $ 1,971,594 $ 1,596,168 $ 1,426,582 $ 1,371,618
Long-term debt, net of current maturities
$ 445,979 $ 441,805 $ 425,625 $ 425,687 $ 425,979
(1) See Note 10 to the consolidated financial statements for components of Other income, net. Included in 2005 is interest and investment income of
$16.7 million, gains on sales of investments of $11.2 million and litigation expense of $1.2 million. Included in 2006 is interest and investment income
of $22.2 million and gains on sales of investments of $4.7 million. Included in 2007 is interest and investment income of $21.5 million offset by a $3.6
million write-down of investments. Included in 2008 is interest and investment income of $10.6 million offset by a $9.6 million other-than-temporary
impairment on investments.
(2) Included in 2007 are the fourth quarter operating results of an acquisition. See Note 2 to the consolidated financial statements.
Bio-Rad Laboratories | Annual Report 2008 : 31
conSoLidA ted BALAnce SheetS
(in thousands)
AS SETS
Current assets:
Cash and cash equivalents
Short-term investments
December 31,
2008
2007
$ 204,524
$ 161,764
38,950
61,977
Accounts receivable less allowance of $19,567 in 2008 and $21,410 in 2007
339,653
358,076
Inventories, net:
Raw materials
Work in process
Finished goods
Total inventories
Deferred tax assets
Prepaid expenses and other current assets
Total current assets
Property, plant and equipment:
Land and improvements
Buildings and leasehold improvements
Equipment
Total property, plant and equipment
Accumulated depreciation
Property, plant and equipment, net
Goodwill
Purchased intangibles, net
Long-term deferred tax assets
Other assets
69,549
105,007
61,555
88,375
201,060
171,085
375,616
321,015
41,408
36,450
93,790
89,692
1,093,941
1,028,974
16,567
11,929
193,318
181,772
466,024
420,628
675,909
614,329
(375,177)
(342,768)
300,732
271,561
321,820
328,439
228,590
210,304
12,361
20,429
79,820
111,887
TO TAL ASSET S
$ 2,037,264
$ 1,971,594
The accompanying notes are an integral part of these consolidated financial statements.
32 : Bio-Rad Laboratories | Annual Report 2008
(in thousands, except share data)
LIABILITIES AND STOCKHOLDERS’ EQ UITY
Current liabilities:
Accounts payable
Accrued payroll and employee benefits
Notes payable
Current maturities of long-term debt
Sales, income and other taxes payable
Accrued royalties
Current deferred taxes
Other current liabilities
Total current liabilities
Long-term debt, net of current maturities
Deferred tax liabilities
Other long-term liabilities
Total liabilities
Commitments and contingent liabilities
Minority interests
Stockholders’ equity:
Preferred stock, $0.0001 par value, 7,500,000 shares authorized;
none outstanding
Class A common stock, $0.0001 par value, 80,000,000 shares authorized;
outstanding—22,182,451 at 2008 and 21,877,695 at 2007
Class B common stock, $0.0001 par value, 20,000,000 shares authorized;
outstanding—5,137,357 at 2008 and 5,006,440 at 2007
Additional paid-in capital
Retained earnings
Accumulated other comprehensive income:
Currency translation and other
December 31,
2008
2007
$ 117,982
$
96,470
119,420
121,255
2,409
7,169
33,731
30,874
8,159
4,630
10,997
27,905
44,069
2,134
98,290
106,708
418,034
414,168
445,979
441,805
42,570
60,041
51,215
58,282
966,624
965,470
—
—
29,909
34,434
—
2
1
—
2
1
124,401
98,629
851,577
762,067
64,750
110,991
Total stockholders’ equity
1,040,731
971,690
TO TAL LIABILITIES, MINORITY IN TERESTS A ND
STOCKHOLDERS’ E QUITY
$ 2,037,264
$ 1,971,594
The accompanying notes are an integral part of these consolidated financial statements.
Bio-Rad Laboratories | Annual Report 2008 : 33
conSoLidA ted StAtementS of income
(in thousands, except per share data)
Net sales
Cost of goods sold
Gross profit
Selling, general and administrative expense
Product research and development expense
Purchased in-process research and development expense
Impairment losses on goodwill and long-lived assets
Income from operations
Interest expense
Foreign exchange losses
Other (income) expense, net
Income before taxes and minority interests
Provision for income taxes
Minority interests in earnings of consolidated subsidiaries
Net income
Basic earnings per share:
Net income
Weighted average common shares
Diluted earnings per share:
Net income
Weighted average common shares
The accompanying notes are an integral part of these consolidated financial statements.
Year Ended December 31,
2008
2007
2006
$ 1,764,365
$ 1,461,052
$ 1,273,930
801,843
669,690
561,394
962,522
791,362
712,536
591,304
507,978
438,949
159,518
140,535
123,376
—
28,757
7,656
—
4,100
—
182,943
135,193
146,111
32,113
7,634
353
31,606
2,576
(19,832)
32,022
1,053
(28,991)
142,843
120,843
142,027
(44,579)
(8,754)
(26,548)
(1,301)
(38,764)
—
$
89,510
$
92,994
$ 103,263
$
3.32
$
3.49
$
3.92
27,001
26,684
26,376
$
3.25
$
3.41
$
3.83
27,527
27,260
26,949
34 : Bio-Rad Laboratories | Annual Report 2008
conSoLidAted StAtementS of cASh fLowS
(in thousands)
Cash flows from operating activities:
Cash received from customers
Cash paid to suppliers and employees
Litigation settlement (See Note 13)
Interest paid
Income tax payments
Miscellaneous receipts
Excess tax benefits from share-based compensation
Year Ended December 31,
2008
2007
2006
$ 1,765,667
$ 1,467,626
$ 1,247,779
(1,495,669)
(1,225,968)
(1,058,977)
(4,493)
(30,792)
(49,159)
(4,228)
(30,588)
(38,253)
10,867
25,983
(5,050)
(2,992)
(46,981)
(31,049)
(16,072)
24,914
(1,385)
Net cash provided by operating activities
191,371
191,580
118,229
Cash flows from investing activities:
Capital expenditures, net
Payments for acquisitions, net of cash received,
and long-term investments
Proceeds from divestitures
Payments for purchase of intangible assets
(84,809)
(60,595)
(52,987)
(53,014)
(387,673)
—
—
(4,000)
(2,075)
(46,071)
12,772
—
Purchases of marketable securities and investments
(77,800)
(270,174)
(334,047)
Sales of marketable securities and investments
Foreign currency economic hedges, net
Receipt of restricted cash
Net cash used in investing activities
78,906
470,200
178,643
(5,390)
(4,112)
—
—
(2,196)
36,138
(146,107)
(254,429)
(207,748)
Cash flows from financing activities:
Net payments on notes payable
Long-term borrowings
Payments on long-term debt
Proceeds from issuance of common stock
Excess tax benefits from share-based compensation
Net cash provided by (used in) financing activities
(1,642)
1,600
(4,326)
24
(11,589)
(17,720)
12,912
11,580
5,050
6,331
2,992
(7,450)
(659)
—
(487)
9,923
1,385
10,162
Effect of exchange rate changes on cash
(8,835)
8,456
6,248
Net increase (decrease) in cash and cash equivalents
42,760
(61,843)
(73,109)
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
161,764
223,607
296,716
$ 204,524
$ 161,764
$ 223,607
Non-cash investing activities:
Tender of Accent stock
Receipt of Nanometrics stock
Capital lease obligation for facilities
Purchased intangible assets
The accompanying notes are an integral part of these consolidated financial statements.
$
$
$
$
—
—
9,768
11,357
$
$
$
$
—
—
—
—
$
$
$
$
(3,200)
5,354
—
—
Bio-Rad Laboratories | Annual Report 2008 : 35
conSoLidA ted StAtementS of chAngeS in StockhoLdeRS’ equity
(in thousands)
Common stock, $0.0001 par value:
Balance at beginning of year
Issuance of common stock
Balance at end of year
Additional paid-in capital:
Balance at beginning of year
Issuance of common stock
Stock compensation expense
Tax benefit from exercise of stock options
Balance at end of year
Retained earnings:
Balance at beginning of year
Net income
FIN 48 adjustment
Balance at end of year
Accumulated other comprehensive income:
Balance at beginning of year
Other comprehensive income (loss)
Balance at end of year
Year Ended December 31,
2008
2007
2006
$
3
$
3
$
—
3
—
3
3
—
3
98,629
12,912
7,328
5,532
78,230
11,580
5,506
3,313
60,112
9,923
5,363
2,832
124,401
98,629
78,230
762,067
674,070
570,807
89,510
92,994
103,263
—
(4,997)
—
851,577
762,067
674,070
110,991
(46,241)
67,235
43,756
64,750
110,991
27,052
40,183
67,235
Total stockholders’ equity
$ 1,040,731
$ 971,690
$ 819,538
Comprehensive income, net of tax:
Net income
Currency translation adjustments
$
89,510
$
92,994
$ 103,263
(18,671)
45,856
30,059
Other post-employment benefits adjustments net of tax of
($357) in 2008
1,848
—
—
Net unrealized holding gains (losses) net of tax of ($9,381)
in 2008, ($1,396) in 2007, and $5,767 in 2006
(19,162)
(2,433)
10,175
Reclassification adjustments for gains (losses) included in net income,
net of tax of $0 in 2008, ($193) in 2007, and $30 in 2006
(10,256)
333
(51)
Total comprehensive income, net of tax
$
43,269
$ 136,750
$ 143,446
The accompanying notes are an integral part of these consolidated financial statements.
36 : Bio-Rad Laboratories | Annual Report 2008
noteS to conSoLidA ted finAnciAL St AtementS
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of Bio-Rad Laboratories, Inc. and all subsidiaries
(referred to in this report as “Bio-Rad,” “we,” “us” and “our”) after elimination of intercompany balances and
transactions. The preparation of financial statements in conformity with accounting principles generally accepted
in the United States of America requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid investments with original maturities of three months or
less which are readily convertible into cash. Cash equivalents are stated at cost, which approximates fair market value.
Available-for-Sale Investments
Available-for-sale investments consist of corporate obligations, municipal securities, asset backed securities,
U.S. agencies and marketable equity securities. Management classifies investments at the time of purchase and
reevaluates such classification at each balance sheet date. Investments with maturities beyond one year may
be classified as short-term based on their liquid nature and because such marketable securities represent the
investment of cash that is available for current operations. Available-for-sale investments are reported at fair value
based on quoted market prices and other observable market data. Unrealized gains and losses are reported as a
component of other comprehensive income, net of any related tax effect. Unrealized losses are charged against
income when a decline in the fair market value of an individual security is determined to be other than temporary.
We review our available-for-sale investments for other-than-temporary losses on a quarterly basis. Realized gains
and losses and other than temporary impairments on investments are included in Other income, net (see Note 10).
Concentration of Credit Risk
Financial instruments that potentially subject us to concentration of credit risk consist primarily of cash and cash
equivalents, short-term investments and trade accounts receivable. Cash and cash equivalents and short-term
investments are placed with highly rated major financial institutions. We perform credit evaluation procedures
related to our trade receivables and with the exception of certain developing countries, generally do not require
collateral. As a result of increased risk in these developing countries, some Bio-Rad sales are subject to collateral
letters of credit. Credit risk is generally limited due to the large number of customers and their dispersion across
many geographic areas. However, a significant amount of trade receivables are with national healthcare systems
in countries within the European Economic Community. We do not currently anticipate a credit risk associated with
these receivables.
Allowance for Doubtful Accounts
We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers
to make required payments. The amount of the allowance is determined by analyzing known uncollectible accounts,
aged receivables, economic conditions in the customers’ country or industry, historical losses and our customers’
credit-worthiness. Amounts later determined and specifically identified to be uncollectible are charged or written off
against this reserve. This valuation allowance is reviewed quarterly to determine whether a change is warranted.
Bio-Rad Laboratories | Annual Report 2008 : 37
noteS to conSoLidA ted finAnciAL St AtementS (continued)
Inventory Valuation
Inventories are valued at the lower of actual cost or market and include material, labor and overhead costs.
Management reviews the need for an inventory obsolescence reserve on a quarterly basis or, if warranted by
circumstances, more frequently. In evaluating this reserve, technology changes, competition, customer demand
and manufacturing quality are considered.
Property, Plant and Equipment
Property, plant and equipment are carried at historical cost. Included in property, plant and equipment is reagent
rental equipment. We provide these instruments to our customers for use with our reagents. Property, plant and
equipment are assessed for impairment annually or whenever events or changes in circumstances indicate that
the carrying amount may not be recoverable.
Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. Buildings and
leasehold improvements are amortized over 15-30 years or the lives of the leases or improvements, whichever
is shorter. With the exception of reagent rental equipment, which is amortized over a 1-5 year period, equipment
is depreciated over 3-12 years.
Capital expenditures are net of proceeds from the sale of property, plant and equipment of $0.9 million,
$0.2 million and $0.3 million for 2008, 2007, and 2006, respectively.
Goodwill and Other Purchased Intangible Assets
Goodwill represents the excess of the cost over the fair value of net tangible and identifiable intangible assets of
acquired businesses. Goodwill and intangible assets are assessed for impairment by applying fair-value based
tests annually or whenever events or changes in circumstances indicate that the carrying amount may not be
recoverable. Impairment expense is calculated as the excess of the carrying value of the asset over its fair value.
The fair value is estimated based on its discounted future cash flows. Impairment losses of $28.8 million were
recorded in 2008. No impairment was recorded for 2007 or 2006 (see Note 5).
Income Taxes
We account for income taxes under the asset and liability method, which requires the recognition of deferred
tax assets and liabilities for the expected future tax consequences of events that have been included in the financial
statements. Under this method, deferred tax assets and liabilities are determined based on the differences between
the financial statements and tax basis of assets and liabilities using enacted tax rates in effect for the year in which
the differences are expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is
recognized in income in the period that includes the enactment date.
We record net deferred tax assets to the extent we believe these assets will more likely than not be realized. In
making such determination, we consider all available positive and negative evidence, including scheduled reversals
of deferred tax liabilities, projected future taxable income, tax planning strategies and recent financial operations.
To the extent we determine that we are able to realize our deferred income tax assets in the future in excess of
their net recorded amount, we make an adjustment to the valuation allowance which may reduce the provision
for income taxes.
38 : Bio-Rad Laboratories | Annual Report 2008
Revenue Recognition
Revenue is recognized when pervasive evidence of an arrangement exists, the price to the buyer is fixed or deter-
minable, collectibility is reasonably assured and title has passed to the customer or product has been delivered
absent specific contractual specifications. Equipment that requires factory installation is not recorded until installation
is complete and customer acceptance, if required contractually, has occurred. At the time the related revenue is
recognized, a provision is recognized for estimated product returns. Reagent agreements are a diagnostic industry
sales method that provides use of an instrument if the customer exclusively purchases the company’s reagents
to use on that instrument. We have evaluated the reagent agreements and account for the contracts under the
terms of the guidance set forth in EITF 00-21, Accounting for Revenue Arrangements with Multiple Deliverables.
All revenues that we earn under our reagent agreements are recognized when the reagent has been delivered to
the customer. Service revenues on extended warranty contracts are recognized ratably over the life of the service
agreement or as services are performed, if not under contract.
Shipping and Handling
We classify all freight billed to customers as net sales. Related freight costs are included in cost of goods sold.
Warranty
We warrant certain equipment against defects in design, materials and workmanship, generally for a period of one
year. Upon delivery of that equipment, we establish, as part of cost of goods sold, a provision for the expected
costs of such warranty based on historical experience, specific warranty terms and customer feedback. A review
is performed on a quarterly basis to assess the adequacy of our warranty reserve.
Components of the warranty accrual, included in Other current liabilities and Other long-term liabilities, were as
follows (in millions):
January 1
Provision for warranty
Actual warranty costs
DiaMed acquisition
December 31
Research and Development
2008
2007
$ 15.3
$
18.5
(18.0)
—
12.9
14.9
(13.3)
0.8
$ 15.8
$
15.3
Internal research and development costs are expensed as incurred. Third-party research and development costs
are expensed when the contracted work has been performed. Purchased in-process research and development
costs are expensed at the time of purchase.
Foreign Currency
Balance sheet accounts of international subsidiaries are translated at the current exchange rate as of the end of the
accounting period. Income statement items are translated at average exchange rates for the period. The resulting
translation adjustment is recorded as a separate component of stockholders’ equity.
Foreign currency transaction gains and losses are included in Foreign exchange (gains) losses in the Consolidated
Statements of Income. Transaction gains and losses result primarily from fluctuations in exchange rates when
intercompany receivables and payables are denominated in currencies other than the functional currency of our
subsidiary that recorded the transaction.
Bio-Rad Laboratories | Annual Report 2008 : 39
noteS to conSoLidA ted finAnciAL St AtementS (continued)
Forward Exchange Contracts
As part of distributing our products, we regularly enter into intercompany transactions. We enter into forward foreign
currency exchange contracts to manage foreign exchange risk of future movements in foreign exchange rates that affect
foreign currency denominated intercompany receivables and payables. We do not use derivative financial instruments
for speculative or trading purposes. In accordance with Statement of Financial Accounting Standards (SFAS) 133,
Accounting for Derivative Instruments and Hedging Activities, we do not seek hedge accounting treatment for these
contracts. As a result, these contracts, generally with maturity dates of 90 days or less and related primarily to
currencies of industrial countries, are recorded at their fair value at each balance sheet date. The resulting gains
or losses offset exchange gains or losses on the related receivables and payables, both of which are recorded as
Foreign exchange (gains) losses in the Consolidated Statements of Income. The cash flows related to these
contracts are classified as cash flows from investing activities in the Consolidated Statements of Cash Flows.
Minority Interests
We do not own 100% of the voting stock of some of our consolidated subsidiaries. The remaining shares held
by third parties represent a minority (or noncontrolling) interest in these subsidiaries. Our consolidated statements
present the full amount of assets, liabilities, income and expenses of all of our consolidated subsidiaries, with
offsetting amounts shown in Minority Interests for the portion of these items that do not belong to us.
Employee Share-Based Compensation Plans
We maintain stock option and stock award plans for officers and certain other key employees. We also have an
employee stock purchase plan that provides that eligible employees may contribute toward the purchase of our
Class A common stock. These plans are described more fully in Note 9.
Earnings per Share
Basic earnings per share is computed by dividing net income by the weighted average number of common shares
outstanding for that period less the weighted average number of unvested restricted shares outstanding for that
period. Diluted earnings per share takes into account the effect of dilutive instruments, such as stock options,
restricted stock and restricted stock units, and uses the average share price for the period in determining the
number of common stock equivalents that are to be added to the weighted average number of shares outstanding.
Common stock equivalents are excluded from the diluted earnings per share calculation if the effect would be anti-
dilutive. The following table summarizes the basic and diluted weighted average common shares (in thousands).
Weighted average shares outstanding
Weighted average unvested restricted shares
Basic shares
Effect of potentially dilutive securities:
Stock-based compensation awards
Diluted weighted average common shares
Anti-dilutive shares
Year Ended December 31,
2008
2007
2006
27,112
(111)
27,001
26,716
26,376
(32)
—
26,684
26,376
526
576
27,527
27,260
105
279
573
26,949
253
40 : Bio-Rad Laboratories | Annual Report 2008
Fair Value of Financial Instruments
For certain financial instruments, including cash and cash equivalents, short-term investments, accounts receivable,
marketable securities, notes payable, and accounts payable, the carrying amounts approximate fair value.
The estimated fair value of financial instruments in the table below has been determined using available market
information or other appropriate valuation methodologies. Estimates are not necessarily indicative of the amounts
that could be realized in a current market exchange as considerable judgment is required in interpreting market
data used to develop estimates of fair value. The use of different market assumptions or estimation techniques
could have a material effect on the estimated fair value. Other assets includes some financial instruments that have
fair values based on market quotations. The decline in Other assets is mainly related to our investment in Sartorius.
Long-term debt has an estimated fair value based on quoted market prices for the same or similar issues.
The estimated fair value of our financial instruments is as follows (in millions):
Year Ended December 31,
2008
2007
Carrying
Amount
Fair
Value
Carrying
Amount
Fair
Value
Other assets
Total long-term debt
$
79.8
$ 425.0
$
78.2
$ 381.0
$ 111.9
$ 452.8
$ 173.2
$ 446.0
We determine the fair value of an asset or liability based on the assumptions that market participants would use in
pricing the asset or liability, not assumptions made by the reporting entity. The identification of market participant
assumptions provides a basis for determining what inputs are to be used for pricing each asset or liability. Statement
of Financial Accounting Standards (SFAS) 157 establishes a fair value hierarchy which gives precedence to fair value
measurements calculated using observable inputs to those using unobservable inputs. This hierarchy prioritizes the
inputs into three broad levels as follows:
• Level 1 Quoted prices in active markets for identical securities
• Level 2 Other significant observable inputs (including quoted prices in active markets for similar securities)
• Level 3 Significant unobservable inputs (including our assumptions in determining the fair value of investments)
Financial assets carried at fair value as of December 31, 2008 are classified in the hierarchy as follows (in millions):
Short-term investments
Corporate obligations
Municipal obligations
Asset backed securities
U.S. Agencies
Marketable equity securities
Long-term marketable equity securities
Total
Level 1
Level 2
Total
$
6.0
$
—
—
—
7.0
13.0
20.3
$
1.0
5.0
12.5
7.3
0.2
26.0
—
$
33.3
$
26.0
$
7.0
5.0
12.5
7.3
7.2
39.0
20.3
59.3
Bio-Rad Laboratories | Annual Report 2008 : 41
noteS to conSoLidA ted finAnciAL St AtementS (continued)
Recent Financial Accounting Standards
In June 2008, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) No. Emerging
Issues Task Force (EITF) 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions
Are Participating Securities. FSP No. EITF 03-6-1 concluded that unvested share-based payment awards that
contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities
and shall be included in the computation of basic earnings per share (EPS) pursuant to the two-class method.
This FSP becomes effective for us on January 1, 2009. Early adoption of the FSP is not permitted; however, it will
apply retrospectively to EPS data for all periods presented in the financial statements or in financial data. We do
not currently expect that this FSP will have a material impact on our EPS data in fiscal year 2009 or on EPS for
any prior periods.
In May 2008, the FASB issued SFAS 162, The Hierarchy of Generally Accepted Accounting Principles. SFAS 162
identifies the sources of accounting principles and the framework for selecting principles to be used in the preparation
and presentation of financial statements in accordance with generally accepted accounting principles in the United
States of America. The adoption of SFAS 162 will not have an effect on our consolidated financial statements.
In March 2008, the FASB issued SFAS 161, Disclosures about Derivative Instruments and Hedging Activities—an
amendment of SFAS 133. SFAS 161 seeks to improve financial reporting for derivative instruments and hedging
activities by requiring enhanced disclosures regarding the impact on financial position, financial performance, and
cash flows. SFAS 161 is effective for us on January 1, 2009. Since SFAS 161 requires only additional disclosures
concerning derivatives and hedging activities, the adoption of SFAS 161 will not affect our financial condition,
results of operations or cash flows.
As amended in February 2008 by FSP No. FAS 157-2, Effective Date of FASB Statement No. 157, SFAS 157, Fair
Value Measurements, defines fair value, establishes a framework for measuring fair value and expands disclosures
about fair value measurements. FSP FAS 157-2 defers the effective date of SFAS 157 for all nonfinancial assets
and liabilities, except those items recognized or disclosed at fair value on an annual or more frequently recurring
basis, until January 1, 2009. As such, we partially adopted the provisions of SFAS 157 effective January 1, 2008.
We expect to adopt the remaining provisions of SFAS 157 beginning in 2009. We expect the adoption of SFAS 157
to impact the way in which we calculate fair value for our annual impairment review of goodwill and non-amortizable
intangible assets, and when conditions exist that require us to calculate the fair value of long-lived assets; however,
we do not expect this adoption to have a material impact on our consolidated financial statements.
In December 2007, the FASB issued SFAS 141R, Business Combinations. SFAS 141R continues to require the
purchase method of accounting to be applied to all business combinations, but it significantly changes the
accounting for certain aspects of business combinations. Under SFAS 141R, an acquiring entity will be required
to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with
limited exceptions. SFAS 141R will change the accounting treatment for certain specific acquisition related items
including: (1) expensing acquisition related costs as incurred; (2) valuing noncontrolling interests at fair value at
the acquisition date; and (3) expensing restructuring costs associated with an acquired business. SFAS 141R
also includes a substantial number of new disclosure requirements. SFAS 141R is to be applied prospectively to
business combinations for which the acquisition date is on or after January 1, 2009. We expect SFAS 141R will
have an impact on our accounting for future business combinations once adopted but the effect is dependent
upon the acquisitions that are made in the future.
42 : Bio-Rad Laboratories | Annual Report 2008
In December 2007, SFAS 160, Noncontrolling Interests in Consolidated Financial Statements, was issued. SFAS 160
establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary and for the decon-
solidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary (minority interest) is an ownership
interest in the consolidated entity that should be reported as equity in the consolidated financial statements and
separate from the parent company’s equity. Among other requirements, this statement requires consolidated net
income to be reported at amounts that include the amounts attributable to both the parent and the noncontrolling
interest. It also requires disclosure, on the face of the consolidated statement of income, of the amounts of consolidated
net income attributable to the parent and to the noncontrolling income interest. This statement is effective for us on
January 1, 2009. When implemented, prior periods will be recast for the changes required by SFAS 160. The adoption
of this standard will not have a material impact on our consolidated financial statements.
2. ACQUISITIONS
DiaMed Holding AG (“DiaMed”) develops manufactures and markets worldwide a complete line of reagents used
in blood typing and screening as well as instruments and instrument systems that use its proprietary reagents. Its
products are used by hospitals, clinical laboratories and blood banks to identify certain properties of the cell and
serum components of human blood prior to a blood transfusion. On October 1, 2007, we acquired approximately
85.96% of the outstanding shares of DiaMed for approximately $399.3 million. In March 2008, we acquired an
additional 556 shares of DiaMed for approximately $14 million, with a second payment to be paid when the final
tender offer is made to the remaining minority shareholders. In December 2008 we acquired an additional 600
shares of DiaMed for approximately $19.6 million. As of December 31, 2008, our total ownership of the outstanding
shares of DiaMed amounted to 93.46%. The total purchase to date of approximately $432.9 million includes
$38.1 million of net tangible assets, $202.0 million of goodwill, and $192.8 million of intangible assets. The goodwill
is not deductible for tax purposes. The allocation of the total purchase price to net tangible assets, goodwill and
other intangible assets has been recorded at their fair market value based upon management estimates except for
the minority interest share in such assets and liabilities which was recorded at historical cost. The results of this
acquisition are included in our consolidated financial statements beginning with the fourth quarter of 2007,
in our Clinical Diagnostics segment. In connection with the original acquisition of DiaMed we recorded acquisition
liabilities related to the termination of a small number of DiaMed employees of $4.9 million. During the year ended
December 31, 2008, we paid approximately $3.1 million related to these termination liabilities. There were no payments
made during the year ending December 31, 2007.
The remaining 1,000 outstanding shares of DiaMed are held by multiple minority shareholders. Their interest is
recorded as Minority Interests on the consolidated balance sheet. We are obligated to submit a cash tender offer to
acquire the remaining 6.54% of shares from the minority shareholders for 92.25% of the price paid to the majority
shareholders. Based on December 31, 2008 foreign exchange rates, we estimate the offer would require approximately
$38 million if fully accepted. The minority shareholders are under no obligation to accept our tender offer. The acquisition
of the minority shares will be accounted for as a step acquisition if, and when, such shares are acquired.
In December 2008, we acquired 100% of the shares of DiaMed Fennica Oy (Fennica) and 100% of the shares of
DiaMed (G.B.) Limited. These companies were independent distributors of DiaMed products and will be included
in our Clinical Diagnostics segment. The total cash purchase price of these acquisitions was approximately
$17.0 million. We acquired $3.3 million of net tangible liabilities, $7.4 million of goodwill and $12.9 million of intangible
assets. The goodwill will not be deductible for tax purposes. We are in the process of finalizing the allocation of the
purchase price to the individual assets acquired and liabilities assumed. The preliminary allocation of the purchase
Bio-Rad Laboratories | Annual Report 2008 : 43
noteS to conSoLidA ted finAnciAL St AtementS (continued)
price included in the current period balance sheet is based on the best estimates of management. The completion
of the purchase price allocation is pending the finalization of certain analyses of inventory, taxes and liabilities. The
final allocation may result in adjustments to the carrying value of the recorded assets and liabilities, revisions of the
useful lives of intangible assets and the determination of any residual amount that will be allocated to goodwill. The
related depreciation and amortization from the acquired assets is also subject to revision based on the final allocation.
In November 2006, we acquired Ciphergen Biosystems, Inc.’s (Ciphergen) ProteinChip Systems business and
worldwide rights to its Surface Enhanced Laser Desorption/Ionization (SELDI) technology for approximately
$20 million in cash. The acquisition includes certain product lines, manufacturing capability, and intellectual property
as well as access to Ciphergen’s life science customer base. Under the terms of the agreement, Ciphergen will
retain rights to the diagnostics market. Through a separate supply agreement, Bio-Rad supplies instruments and
reagents to Ciphergen to support their diagnostics business. The total purchase of $20.0 million included
$5.4 million of net tangible assets, $3.0 million of goodwill and $11.6 million of intangible assets. The goodwill will
be deductible for tax purposes. An initial amount of $18.0 million was paid in 2006. An additional $2.0 million was
paid in 2007 after the SELDI patent was granted. This $2.0 million is shown as additional goodwill in 2007. Purchased
in-process research and development of $3.8 million was charged to expense in the fourth quarter of 2006. The
allocation of the total purchase price to net tangible assets, goodwill and other intangible assets has been recorded
at their fair market value based upon management estimates. The results of this acquisition are included in our
consolidated financial statements from the acquisition date, in our Life Science segment.
3. AVAILABLE-FOR-SALE INVESTMENTS
Available-for-sale investments consist of the following (in millions):
Current:
Corporate obligations
Municipal obligations
Asset backed securities (including mortgage-backed)
U.S. Agencies
Marketable equity securities
Long-term:
Marketable equity securities
Total
December 31,
2008
2007
$
7.0
5.0
12.5
7.3
7.2
39.0
20.3
$
10.3
—
—
34.5
17.2
62.0
47.7
$
59.3
$ 109.7
At December 31, 2008 we had total accumulated unrealized losses of $13.2 million and no accumulated unrealized
gains. At December 31, 2007 we had accumulated unrealized losses of $1.1 million and accumulated unrealized
gains of $26.7 million. The fair value of our available-for-sale investments has declined due to a number of factors,
including changes in interest rates, changes in economic conditions and changes in market outlook for various
industries, among others. Because Bio-Rad has the ability to hold these investments until a recovery of fair value,
or for a reasonable period of time sufficient for a forecasted recovery of fair value, which may be maturity, we do
not consider these investments to be other-than-temporarily impaired at December 31, 2008.
44 : Bio-Rad Laboratories | Annual Report 2008
In 2008, we recognized $9.6 million of other-than-temporary impairment losses on available-for-sale investments.
In light of continuing declines in their market price, we no longer believe that these investments will recover in the
foreseeable future. No securities were considered other-than-temporarily impaired in 2007 or 2006.
4. INVESTMENTS
We own shares of ordinary voting stock of Sartorius AG, of Goettingen, Germany, a process technology supplier to
the biotechnology, pharmaceutical, chemical and food and beverage industries. We purchased shares for approximately
$1 million in both 2008 and 2007, bringing our total investment to approximately 28% of the outstanding voting
shares of Sartorius at December 31, 2008. The Sartorius family trust and Sartorius family members hold a controlling
interest of the outstanding voting shares. We do not have any representative or designee on Sartorius’ board of
directors, nor do we have any other influence over the operating and financial policies of Sartorius. Therefore, we
account for this investment using the cost method. This investment is reported in Other assets.
During July 2006, Accent Semiconductor Technology Inc. (Accent), a private company, was acquired by Nanometrics
Inc. (Nanometrics), a publicly held company. In preparation for the merger, Accent repaid the $11.8 million note receivable
and accrued interest owed to Bio-Rad as part of Accent’s 2000 purchase of the assets and certain liabilities of our
former semiconductor and optoelectronic metrology business. As part of the merger agreement, we tendered our
ownership interest in Accent in exchange for approximately 600,000 shares of Nanometrics stock valued at $5.4 million
on conversion. We also received a $2.5 million facilitation fee for aiding in the merger. These transactions resulted in a
gain of $4.7 million included in Other income, net (see Note 10) in 2006. Our current ownership interest in Nanometrics
is less than 5%, is marked to market and is included in Other assets. At December 31, 2008 we recognized $4.5 million
of impairment expense related to Nanometrics.
5. GOODWILL AND OTHER PURCHASED INTANGIBLE ASSETS
Goodwill balances have been included in Corporate for segment reporting purposes in Note 14. Changes to Goodwill
were as follows (in millions):
January 1
DiaMed acquisition/additional share purchase
DiaMed purchase accounting true-ups
Distributor acquisitions
Impairment
Ciphergen acquisition
Currency fluctuations/other
December 31
2008
2007
$ 328.4
$ 119.5
12.2
201.4
(11.6)
7.4
(27.2)
—
12.6
—
—
—
2.0
5.5
$ 321.8
$ 328.4
As part of the acquisition of DiaMed in October 2007 and the purchase of additional shares in March and December
2008, (see Note 2), we added net $202.0 million of goodwill and $192.8 million of intangible assets: $72.6 million of
customer relationships, $81.1 million of know how, $17.0 million of tradenames, $18.7 million of developed product
technology and $3.4 million of licenses.
Bio-Rad Laboratories | Annual Report 2008 : 45
noteS to conSoLidA ted finAnciAL St AtementS (continued)
In 2008, the purchase price allocation related to the DiaMed acquisition was finalized. The completion of the
purchase price allocation involved certain analyses of inventory, taxes and external valuations for certain fixed
assets and property. The final revisions included adjustments to the carrying value of DiaMed’s recorded assets
and liabilities and related depreciation and amortization, with the residual amount being allocated to goodwill.
Some estimated acquisition liabilities were settled without requiring payment, additional collections were made
on opening balance receivables, and an increase in work in process inventory was recorded.
As part of the acquisition of two distributors in December 2008 (see Note 2), we added $7.4 million of goodwill
and $12.9 million of intangible assets: $2.9 million of tradenames, $2.3 million of covenants not to compete and
$7.7 million of customer relationships.
During the fourth quarter of 2008, a $27.2 million impairment loss related to goodwill was recorded in the Life Science
segment. The goodwill was originally recorded as part of an acquisition in 1999. The impairment was caused primarily
by the continuing decline in sales of the BSE (bovine spongiform encephalopathy) product line.
Other than goodwill, we have no intangible assets with indefinite lives. Information regarding our identifiable purchased
intangible assets is as follows (in millions):
Average
Remaining
Life (years)
2-15
1-8
1-13
3-11
4-13
3-10
2
3
December 31, 2008
Carrying
Amount
Accumulated
Amortization
Net
$
83.4
$
7.6
$
75.8
90.8
44.7
37.5
21.1
4.9
1.0
0.1
18.9
12.6
8.8
4.2
2.1
0.6
0.1
71.9
32.1
28.7
16.9
2.8
0.4
—
$ 283.5
$
54.9
$ 228.6
December 31, 2007
Average
Remaining
Life (years)
Carrying
Amount
Accumulated
Amortization
1-16
1-9
1-14
1-12
5-14
1-4
3
4
$
71.0
$
81.4
44.3
20.4
16.2
2.4
1.0
0.1
2.0
9.7
7.6
4.3
0.8
1.6
0.4
0.1
Net
$
69.0
71.7
36.7
16.1
15.4
0.8
0.6
—
$ 236.8
$
26.5
$ 210.3
Customer relationships/lists
Know how
Developed product technology
Licenses
Tradenames
Covenants not to compete
Patents
Other
Customer relationships/lists
Know how
Developed product technology
Licenses
Tradenames
Covenants not to compete
Patents
Other
46 : Bio-Rad Laboratories | Annual Report 2008
During the fourth quarter of 2008, $1.6 million of impairment losses related to intangible assets were recorded in
During the fourth quarter of 2008, $1.6 million of impairment losses related to intangible assets were recorded in
of certain product lines that were acquired in 2006.
the Life Science segment. The intangible asset impairment related to the developed technology intangible assets
of certain product lines that were acquired in 2006.
Recorded purchased intangible asset amortization expense for the years ended December 31, 2008, 2007, and
2006 was $29.8 million, $12.8 million, and $5.3 million, respectively. Estimated purchased intangible asset amortization
Recorded purchased intangible asset amortization expense for the years ended December 31, 2008, 2007, and
expense (based on existing intangible assets) for the years ended December 31, 2009, 2010, 2011, 2012 and 2013
2006 was $29.8 million, $12.8 million, and $5.3 million, respectively. Estimated purchased intangible asset amortization
is $32.1 million, $30.6 million, $29.3 million, $27.4 million and $24.7 million, respectively.
expense (based on existing intangible assets) for the years ended December 31, 2009, 2010, 2011, 2012 and 2013
is $32.1 million, $30.6 million, $29.3 million, $27.4 million and $24.7 million, respectively.
6. NOTES PAYABLE AND LONG-TERM DEBT
6. NOTES PAYABLE AND LONG-TERM DEBT
Notes payable include local credit lines maintained by our subsidiaries aggregating approximately $27.5 million,
Notes payable include local credit lines maintained by our subsidiaries aggregating approximately $27.5 million,
of which $20.3 million was unused at December 31, 2008. At December 31, 2007, these lines aggregated approximately
of which $20.3 million was unused at December 31, 2008. At December 31, 2007, these lines aggregated approximately
$52.0 million, of which $42.1 million was unused. The weighted average interest rate on these lines was 4.1%
$52.0 million, of which $42.1 million was unused. The weighted average interest rate on these lines was 4.1%
and 3.9% at December 31, 2008 and 2007, respectively. Bio-Rad guarantees most of these credit lines.
and 3.9% at December 31, 2008 and 2007, respectively. Bio-Rad guarantees most of these credit lines.
The principal components of Long-term debt are as follows (in millions):
The principal components of Long-term debt are as follows (in millions):
December 31,
2008
December 31,
2007
7.5% Senior Subordinated Notes
7.5% Senior Subordinated Notes
6.125% Senior Subordinated Notes
6.125% Senior Subordinated Notes
Other debt
Other debt
Capitalized leases
Capitalized leases
Less current maturities
Less current maturities
Long-term debt
Long-term debt
2008
$ 225.0
$ 225.0
200.0
200.0
0.4
0.4
27.8
27.8
453.2
453.2
(7.2)
(7.2)
$ 446.0
$ 446.0
2007
$ 225.0
$ 225.0
200.0
200.0
0.4
0.4
27.4
27.4
452.8
452.8
(11.0)
(11.0)
$ 441.8
$ 441.8
In September 2007, Bio-Rad entered into Amendment No. 2 to the Amended and Restated Credit Agreement
In September 2007, Bio-Rad entered into Amendment No. 2 to the Amended and Restated Credit Agreement
(the “Credit Agreement”). Amendment No. 2 amends certain provisions of the Credit Agreement including increasing
(the “Credit Agreement”). Amendment No. 2 amends certain provisions of the Credit Agreement including increasing
the amount of borrowings permissible under the Credit Agreement to $200 million from $150 million, which may be
the amount of borrowings permissible under the Credit Agreement to $200 million from $150 million, which may be
increased up to an additional $50 million under certain conditions, and amending certain covenants to permit the
increased up to an additional $50 million under certain conditions, and amending certain covenants to permit the
acquisition by Bio-Rad of DiaMed including, but not limited to, the incurrence of certain indebtedness and liens in
acquisition by Bio-Rad of DiaMed including, but not limited to, the incurrence of certain indebtedness and liens in
connection with such acquisition.
connection with such acquisition.
Borrowings under the Credit Agreement are on a revolving basis and can be used to make acquisitions, for working
Borrowings under the Credit Agreement are on a revolving basis and can be used to make acquisitions, for working
capital and other general corporate purposes. Borrowings under the Credit Agreement are payable on June 21, 2010.
capital and other general corporate purposes. Borrowings under the Credit Agreement are payable on June 21, 2010.
We had no outstanding balance as of December 31, 2008.
We had no outstanding balance as of December 31, 2008.
In December 2004, Bio-Rad sold $200.0 million principal amount of Senior Subordinated Notes due 2014
In December 2004, Bio-Rad sold $200.0 million principal amount of Senior Subordinated Notes due 2014
(6.125% Notes). The notes pay a fixed rate of interest of 6.125% per year. We have the option to redeem any or all of
(6.125% Notes). The notes pay a fixed rate of interest of 6.125% per year. We have the option to redeem any or all of
the 6.125% Notes at various declining redemption prices or at 100% of the principal amount plus the “applicable
the 6.125% Notes at various declining redemption prices or at 100% of the principal amount plus the “applicable
premium” (as defined by the indenture) along with accrued and unpaid interest and certain other charges depending
premium” (as defined by the indenture) along with accrued and unpaid interest and certain other charges depending
on the date redeemed. Bio-Rad’s obligations under the 6.125% Notes are not secured, rank equal to other senior
on the date redeemed. Bio-Rad’s obligations under the 6.125% Notes are not secured, rank equal to other senior
subordinated notes and rank junior to all of Bio-Rad’s existing and future senior debt.
subordinated notes and rank junior to all of Bio-Rad’s existing and future senior debt.
Bio-Rad Laboratories | Annual Report 2008 : 47
noteS to conSoLidA ted finAnciAL St AtementS (continued)
In August 2003, Bio-Rad sold $225.0 million principal amount of Senior Subordinated Notes due 2013 (7.5% Notes).
The notes pay a fixed rate of interest of 7.5% per year. We have the option to redeem any or all of the 7.5% Notes at
various declining redemption prices or at 100% of the principal amount plus the “applicable premium” (as defined
by the indenture) along with accrued and unpaid interest and certain other charges depending on the date redeemed.
Bio-Rad’s obligations under the 7.5% Notes are not secured, rank equal to other senior subordinated notes and
rank junior to all Bio-Rad’s existing and future senior debt.
The Credit Agreement is secured by substantially all of our personal property assets, the assets of our domestic
subsidiaries and 65% of the capital stock of certain foreign subsidiaries. It is guaranteed by all of our existing and
future material domestic subsidiaries. The Credit Agreement, the 6.125% Notes, and the 7.5% Notes require Bio-Rad
to comply with certain financial ratios and covenants, among other things. The covenants include a leverage ratio
test, an interest coverage test and a consolidated net worth test. There are also restrictions on our ability to declare
or pay dividends, incur debt, guarantee debt, enter into transactions with affiliates, merge or consolidate, sell
assets, make investments, create liens and prepay subordinated debt. We were in compliance with all financial
ratios as of December 31, 2008 and 2007.
Maturities of long-term debt at December 31, 2008 are as follows: 2009 – $7.2 million; 2010 – $4.1 million;
2011 – $6.8 million; 2012 – $0.2 million; 2013 – $225.0 million; thereafter – $209.8 million.
7. INCOME TAXES
The U.S. and international components of income before taxes and minority interests are as follows (in millions):
Year Ended December 31,
2008
2007
2006
$ 52.7
$ 75.5
$
66.8
90.1
45.3
75.2
$ 142.8
$ 120.8
$ 142.0
Year Ended December 31,
2008
2007
2006
$ 28.3
$ 13.9
$
12.0
4.0
15.2
47.5
1.1
12.6
27.6
2.6
(5.9)
(3.3)
0.4
(1.3)
(4.6)
(5.9)
4.8
1.2
24.6
37.8
0.8
0.2
1.0
—
$ 44.6
$ 26.5
$
38.8
U.S.
International
Income before taxes and minority interests
The provision for income taxes consists of the following (in millions):
Current tax expense
U.S. Federal
State
International
Current tax expense
Deferred tax expense (benefit)
U.S. and State
International
Deferred tax expense (benefit)
Non-current tax expense
Provision for income taxes
48 : Bio-Rad Laboratories | Annual Report 2008
The reconciliation between Bio-Rad’s effective tax rate on income before taxes and minority interests and the
statutory tax rate is as follows:
U. S. statutory tax rate
Foreign income at other than U.S. tax rates
Foreign losses not benefited
Non-taxable dividend income
Export sales benefit
Research and development tax credits
Increase in tax reserves
Change in valuation allowance
Examination settlements
Foreign tax credit claims
In-process research and development
Goodwill impairment
Other
Provision for income taxes
Year Ended December 31,
2008
35%
2007
35%
2006
35%
(4)
2
(4)
—
(9)
1
3
—
—
—
7
—
(2)
3
(5)
—
(8)
3
(3)
(2)
(3)
2
—
2
31%
22%
(1)
1
(3)
(2)
(2)
1
1
(1)
—
—
—
(2)
27%
Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets
and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components
of deferred tax assets and liabilities are as follows (in millions):
Year Ended December 31,
2008
2007
Deferred tax assets
Receivable allowances
Inventory reserve
Warranty reserve
Vacation pay reserve
Net operating loss
Impaired investments
Unrealized holding losses
Retirement reserve
Depreciation
Goodwill and intangibles
State tax credit carryforward
Other
Valuation allowance
Deferred tax liabilities
Unrealized holding gains
Deferred gain
Foreign exchange gain/loss
Depreciation
Goodwill and intangibles
Other
$
6.0
$
15.3
8.1
7.9
20.8
7.6
4.9
5.4
5.0
16.4
8.1
18.1
(40.7)
82.9
—
5.1
2.4
7.4
52.1
12.9
79.9
Net deferred taxes
$
3.0
$
5.4
14.6
7.3
7.4
20.9
3.5
—
5.8
5.9
16.9
7.5
16.7
(31. 1)
80.8
9.4
5.2
2.4
4.1
49.1
7.1
77.3
3.5
Bio-Rad Laboratories | Annual Report 2008 : 49
noteS to conSoLidA ted finAnciAL St AtementS (continued)
At December 31, 2008, Bio-Rad’s international subsidiaries had combined net operating loss carryforwards of
$74.1 million. The amount of carryforwards subject to expiration includes $6.0 million, $8.9 million and $4.8 million
in 2013, 2014 and 2015, respectively. The remaining loss carryforwards have no expiration date. The utilization
of these carryforwards is limited to the separate taxable income of each individual subsidiary. We believe that it
is more likely than not that the benefit from certain of these net operating loss carryforwards will not be realized.
We have provided a valuation allowance of $17.6 million on the deferred tax assets relating to these net operating
loss carryforwards. If or when recognized, the tax benefits relating to any reversal of the valuation allowance on
deferred tax assets at December 31, 2008 will be recognized as a reduction of income tax expense.
At December 31, 2008, Bio-Rad had U.S. Federal net operating loss carryforwards of $8.6 million as a result of
an acquisition. The utilization of these net operating loss carryforwards is subject to annual limitations. The loss
carryforward will expire in the year 2018.
At December 31, 2008, Bio-Rad had a California research and experimental tax credit carryforward of $8.1 million
which has no expiration date. Based on our judgment and consistent with prior years, we believe that it is more
likely than not that the benefit from these tax credit carryforwards will not be realized. Therefore, we have provided
a full valuation allowance against the deferred tax asset. The tax benefits relating to any reversal of the valuation
allowance will be recognized as a reduction of income tax expense if and when it becomes realizable.
The change in the total valuation allowance against our deferred tax assets was a net increase of $9.6 million
primarily due to our inability to generate capital gains to offset our investment impairments and unrealized holding
losses on available for sale securities.
During 2008, the IRS has continued the audit of our Federal tax returns for 2004 and 2005. The examination will,
however, cover tax years 2001 through 2005 as we have filed amended U.S. tax returns for these years and have
credits generated in prior years which are being utilized in the years subject to examination by the IRS. We believe
appropriate provisions for all outstanding issues have been made for all jurisdictions and all open years. We do not
expect that the results of this examination will have a ma terial effect on our financial condition or results of operations.
We are subject to tax audits on various tax matters around the world.
The following table summarizes the open tax years by major tax jurisdiction that are subject to examination by tax
authorities as of December 31, 2008:
U.S.
France
Germany
Italy
Japan
Switzerland
2001-2008
2006-2008
2004-2008
2002-2008
2004-2008
2007-2008
50 : Bio-Rad Laboratories | Annual Report 2008
The following is a tabular reconciliation of the total amounts of unrecognized tax benefits for the year (in millions):
Unrecognized tax benefit—January 1
Additions to tax positions related to prior years
Reductions to tax positions related to prior years
Additions/(Reductions) to tax positions related to the current year
Settlements
Lapse of statute of limitations
Acquisitions
Currency translation
2008
2007
$ 22.3
$
13.3
1.9
(0.7)
2.4
(4.3)
(2.6)
—
(0.9)
1.1
(2.4)
11.0
(2.5)
(1.4)
2.9
0.3
Unrecognized tax benefit—December 31
$ 18.1
$
22.3
Included in the balance of unrecognized tax benefits at December 31, 2008 and 2007 respectively, are $17.1 million
and $19.1 million of tax benefits that, if recognized, would affect the effective tax rate. Also included in the balance
of unrecognized tax benefits at December 31, 2008 and 2007 respectively, are $1.1 million and $0.3 million of tax
benefits that, if recognized, would result in adjustments to other tax accounts, primarily deferred taxes.
Bio-Rad recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.
Related to the unrecognized tax benefits noted above, Bio-Rad accrued interest of $2.4 million during 2008. During
2007, Bio-Rad accrued interest of $2.8 million.
We believe that it is reasonably possible that approximately $1.9 million of our currently remaining unrecognized tax
benefits, each of which are individually insignificant, may be recognized by the end of 2009 as a result of the lapse
of the statute of limitations. These benefits are related to uncertainty regarding sustainability of certain deductions
and credits for tax years that remain subject to examination by the relevant tax authorities. As of December 31, 2007,
we believed that it was reasonably possible that $6.4 million of our unrecognized tax benefits may be recognized
by the end of 2008 as a result of the lapse of the statute of limitations.
In general, it is our practice and intention to reinvest the earnings of our non-U.S. subsidiaries in their operations.
As of December 31, 2008, Bio-Rad has not made a provision for U.S. or additional foreign withholding taxes on
approximately $434 million of the excess of the amount for financial reporting over the tax basis of investments in
foreign subsidiaries that are essentially permanent in duration. Generally, such amounts become subject to U.S.
taxation upon remittance of dividends and under certain other circumstance. If these earnings were repatriated to
the U.S., they would generate foreign tax credits that would reduce the U.S. federal tax liability associated with
the distribution. The potential deferred tax liability for these earnings would be approximately $73 million.
8. STOCKHOLDERS’ EQUITY
Bio-Rad’s outstanding stock consists of Class A Common Stock (Class A) and Class B Common Stock (Class B).
Each share of Class A and Class B participates equally in the earnings of Bio-Rad, and is identical in most respects
except that Class A has limited voting rights. Each share of Class A is entitled to one-tenth of a vote on most
matters, and each share of Class B is entitled to one vote. Additionally, Class A stockholders are entitled to elect
25% of the Board of Directors and Class B stockholders are entitled to elect the balance of the directors. Cash
dividends may be paid on Class A shares without paying a cash dividend on Class B shares but no cash dividend
Bio-Rad Laboratories | Annual Report 2008 : 51
noteS to conSoLidA ted finAnciAL St AtementS (continued)
may be paid on Class B shares unless at least an equal cash dividend is paid on Class A shares. Class B shares
are convertible at any time into Class A shares on a one-for-one basis at the option of the stockholder. The
Schwartz family collectively holds a majority of Bio-Rad’s voting stock. As a result, the Schwartz family is able
to exercise significant influence over Bio-Rad.
9. SHARE-BASED COMPENSATION/STOCK OPTION AND PURCHASE PLANS
Description of Share-Based Compensation Plans
Stock Option and Award Plans
We have three stock option plans for officers and certain other employees: the Amended 1994 Stock Option Plan
(the “1994 Plan”); the 2003 Stock Option Plan (the “2003 Plan”); and the 2007 Incentive Award Plan (the “2007
Plan”). The 1994 Plan and 2003 Plan authorize the grant of incentive stock options and non-qualified stock options
to employees. The 2007 Plan authorizes the grant of stock options, restricted stock awards, stock appreciation
rights and other types of equity awards to employees. We no longer make stock option grants under the 1994 Plan
or 2003 Plan. A total of 1,650,360 shares have been reserved for issuance of equity awards and may be of either
Class A or Class B common stock. At December 31, 2008 there were 1,318,579 shares available to be granted.
Under these plans, Class A and Class B options have been granted at prices not less than fair market value on
the date of grant. Generally, options granted have a term of 10 years and vest in increments of 20% per year over
a five-year period on the yearly anniversary date of the grant. For options granted before January 1, 2001, options
vested in increments of 25% over a four-year period on the yearly anniversary date of the grant. Stock awards
issued under the 2007 Plan generally vest in increments of 20% per year over a five-year period on the yearly
anniversary date of the grant.
Employee Stock Purchase Plan (ESPP)
We have an employee stock purchase plan which provides that eligible employees may contribute up to 10%
of their compensation up to $25,000 annually toward the quarterly purchase of our Class A common stock.
The employees’ purchase price is 85% of the lesser of the fair market value of the stock on the first business
day or the last business day of each calendar quarter. We have authorized the sale of 2,390,000 shares of common
stock under the ESPP.
Share-Based Compensation Expense
Included in our share-based compensation expense in 2008, 2007 and 2006 is the cost related to stock option
grants and ESPP stock purchases. In 2008 and 2007, share-based compensation also includes the cost related
to restricted stock and restricted stock unit awards issued in 2008 and 2007.
For 2008, 2007 and 2006, we recognized pre-tax share-based compensation expense of $7.3 million, $5.5 million
and $5.4 million, respectively. We did not capitalize any share-based compensation expense. In accordance with
SFAS 123(R), we recognize share-based compensation net of estimated forfeitures.
For options granted before January 1, 2006, we amortized the fair value on an accelerated basis. For options and
awards granted after January 1, 2006, we amortized the fair value on a straight-line basis. All stock compensation
awards are amortized over the requisite service periods of the awards, which are generally the vesting periods.
52 : Bio-Rad Laboratories | Annual Report 2008
Stock Options
The following table summarizes stock option activity.
Outstanding, January 1, 2006
Granted
Exercised
Forfeited/Expired
Outstanding, December 31, 2006
Granted
Exercised
Forfeited/Expired
Outstanding, December 31, 2007
Granted
Exercised
Forfeited/Expired
Shares
1,589,206
313,233
(177,867)
(56,803)
1,667,769
59,000
(222,808)
(15,686)
1,488,275
59,000
(269,731)
(23,417)
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term (years)
Aggregate
Intrinsic
Value
(in millions)
$ 34.43
$ 62.68
$ 25.81
$ 51.79
$ 40.06
$ 75.09
$ 28.16
$ 56.70
$ 43.06
$ 88.35
$ 25.09
$ 53.99
Outstanding, December 31, 2008
1,254,127
$ 48.84
5.28
$
34.0
Vested and expected to vest,
December 31, 2008
Exercisable, December 31, 2008
1,229,977
828,458
$ 48.40
$ 40.36
5.23
4.40
$
$
34.0
29.0
The following summarizes information about stock options outstanding at December 31, 2008:
Options Outstanding
Options Exercisable
Number
Outstanding
at 12/31/08
Weighted-Average
Remaining
Contractual Life
(in years)
Weighted-
Average
Exercise Price
Number
Exercisable
at 12/31/08
Weighted-
Average
Exercise Price
373,702
352,171
322,354
205,900
2.76
5.13
6.52
8.18
$ 23.45
$ 50.80
$ 60.22
$ 73.79
373,702
274,982
133,174
46,600
$ 23.45
$ 49.67
$ 59.69
$ 65.90
Range of Exercise Prices
$10.75 – $35.50
$36.00 – $56.40
$57.49 – $62.47
$63.00 – $88.48
Intrinsic value for stock options is defined as the difference between the current market value and the grant price.
The total intrinsic value on the date of exercise of stock options exercised during 2008, 2007 and 2006 was approximately
$17 million, $13 million and $8 million, respectively.
Bio-Rad Laboratories | Annual Report 2008 : 53
noteS to conSoLidA ted finAnciAL St AtementS (continued)
Cash received from stock options exercised during the years 2008, 2007 and 2006 was $6.8 million, $6.3 million and
Cash received from stock options exercised during the years 2008, 2007 and 2006 was $6.8 million, $6.3 million and
$4.6 million, respectively. The actual tax benefit realized for the tax deductions from stock options exercised totaled
$4.6 million, respectively. The actual tax benefit realized for the tax deductions from stock options exercised totaled
$6.3 million, $3.6 million and $1.8 million in 2008, 2007 and 2006, respectively.
$6.3 million, $3.6 million and $1.8 million in 2008, 2007 and 2006, respectively.
As of December 31, 2008, there was $7.4 million of total unrecognized compensation cost from stock options. That
As of December 31, 2008, there was $7.4 million of total unrecognized compensation cost from stock options. That
cost is expected to be recognized over a weighted-average period of approximately 2 years.
cost is expected to be recognized over a weighted-average period of approximately 2 years.
The weighted-average fair value for stock options granted was estimated using a Black-Scholes option-pricing
The weighted-average fair value for stock options granted was estimated using a Black-Scholes option-pricing
model with the following weighted-average assumptions:
model with the following weighted-average assumptions:
Expected volatility
Expected volatility
Risk-free interest rate
Risk-free interest rate
Expected life (in years)
Expected life (in years)
Expected dividend
Expected dividend
Year Ended December 31,
Year Ended December 31,
2008
2008
2007
2007
2006
2006
34%
34%
3.92%
3.92%
8.5
8.5
—
—
34%
34%
4.72%
4.72%
8.5
8.5
—
—
36%
36%
4.62%
4.62%
7.4
7.4
—
—
Weighted-average fair value of options granted
Weighted-average fair value of options granted
$ 42.21
$ 42.21
$
$
37.05
37.05
$ 29.85
$ 29.85
Volatility was based on the historical volatilities of our common stock for a period equal to the stock option’s
Volatility was based on the historical volatilities of our common stock for a period equal to the stock option’s
expected life. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant.
expected life. The risk-free interest rate is based on the U.S. Treasury yield curve in effect at the time of the grant.
In 2008 and 2007 the expected life represents the number of years that we estimate, based primarily on historical
In 2008 and 2007 the expected life represents the number of years that we estimate, based primarily on historical
experience, that the options will be outstanding prior to exercise. In 2006, we estimated the expected life using the
experience, that the options will be outstanding prior to exercise. In 2006, we estimated the expected life using the
simplified method described in the SEC’s Staff Accounting Bulletin No. 107. We do not anticipate paying any cash
simplified method described in the SEC’s Staff Accounting Bulletin No. 107. We do not anticipate paying any cash
dividends in the future and therefore use an expected dividend yield of zero.
dividends in the future and therefore use an expected dividend yield of zero.
Restricted Stock
Restricted Stock
Restricted stock was granted in 2008 and 2007 under the 2007 Plan. The fair value of each share of restricted stock
Restricted stock was granted in 2008 and 2007 under the 2007 Plan. The fair value of each share of restricted stock
is the market value as determined by the closing price of the stock on the day of grant.
is the market value as determined by the closing price of the stock on the day of grant.
The following table summarizes restricted stock activity:
The following table summarizes restricted stock activity:
Nonvested shares, at beginning of year
Nonvested shares, at beginning of year
Granted
Granted
Vested
Vested
Cancelled/Forfeited
Cancelled/Forfeited
Nonvested shares, at end of year
Nonvested shares, at end of year
Year Ended December 31,
Year Ended December 31,
2008
2008
2007
2007
Restricted
Restricted
Stock
Stock
Shares
Shares
75,720
75,720
78,485
78,485
(14,625)
(14,625)
(3,666)
(3,666)
135,914
135,914
Weighted-Average
Weighted-Average
Grant-Date
Grant-Date
Fair Value
Fair Value
Restricted Weighted-Average
Restricted Weighted-Average
Grant-Date
Grant-Date
Fair Value
Fair Value
Stock
Stock
Shares
Shares
$ 75.33 —
$ 75.33
—
—
—
$ 88.09
$ 88.09
$ 75.33
$ 75.33
$ 77.24
$ 77.24
$ 82.64
$ 82.64
75,970
75,970
$ 75.33
$ 75.33
—
—
(250)
(250)
75,720
75,720
—
—
$ 75.32
$ 75.32
$ 75.33
$ 75.33
As of December 31, 2008, there was approximately $8.4 million of total unrecognized compensation cost related
As of December 31, 2008, there was approximately $8.4 million of total unrecognized compensation cost related
to restricted stock granted under the 2007 Plan. The cost is expected to be recognized over a weighted-average
to restricted stock granted under the 2007 Plan. The cost is expected to be recognized over a weighted-average
period of approximately 4 years.
period of approximately 4 years.
54 : Bio-Rad Laboratories | Annual Report 2008
Restricted Stock Units
Restricted stock units, which are rights to receive shares of company stock, were granted during 2008 and 2007
under the 2007 Plan. The fair value of each restricted stock unit is the market value as determined by the closing
price of the stock on the day of grant.
The following table summarizes restricted stock unit activity:
Outstanding, January 1, 2007
Granted
Vested
Cancelled/Forfeited
Outstanding, December 31, 2007
Granted
Vested
Cancelled/Forfeited
Outstanding, December 31, 2008
Expected to vest, December 31, 2008
Weighted-Average
Grant-Date
Fair Value
—
$ 75.32
—
$ 75.32
$ 75.32
$ 88.00
$ 75.32
$ 79.58
Restricted
Stock
Units
—
28,010
—
(1,260)
26,750
37,445
(2,593)
(953)
60,649
54,306
Weighted-Average
Remaining
Aggregate
Intrinsic Value
Contractual Term as of December 31,
2008 (in millions)
(in years)
2.29
2.20
$ 4.6
$ 4.1
As of December 31, 2008 there was approximately $3.5 million of total unrecognized compensation cost related to
restricted stock units granted under the 2007 Plan. That cost is expected to be recognized over a weighted-average
period of approximately 4 years.
Employee Stock Purchase Plan
The fair value of the employees’ purchase rights was estimated using a Black-Scholes model with the following
weighted-average assumptions:
Expected volatility
Risk-free interest rate
Expected life (in years)
Expected dividend
Year Ended December 31,
2008
37%
1.87%
.25
—
2007
29%
4.79%
.25
—
2006
28%
4.66%
.25
—
Weighted-average fair value of purchase rights
$ 20.79
$ 17.05
$ 13.68
The major assumptions are primarily based on historical data. Volatility was based on the historical volatilities of
our common stock for a period equal to the expected life of the purchase rights. The risk-free interest rate is based
on the U.S. Treasury yield curve in effect at the time of the grant. We do not anticipate paying any cash dividends
in the future and therefore use an expected dividend yield of zero.
We sold 88,533 shares for $6.1 million, 81,388 shares for $5.3 million, and 99,888 shares for $5.3 million under the
ESPP to employees in 2008, 2007 and 2006, respectively. At December 31, 2008, 337,629 shares remain authorized
under the ESPP.
We currently issue new shares to satisfy stock option exercises, restricted stock issuances and ESPP stock purchases.
Bio-Rad Laboratories | Annual Report 2008 : 55
noteS to conSoLidA ted finAnciAL St AtementS (continued)
10. OTHER INCOME AND EXPENSE
Other income, net includes the following income (expense) components (in millions):
Interest and investment income
Net realized gains (losses) on investments
Other-than-temporary impairment on investments
Write-down of investments
Gain on sale of investment (Note 4)
Miscellaneous other items
Other income (expense), net
11. SUPPLEMENTAL CASH FLOW INFORMATION
Year Ended December 31,
2008
2007
2006
$ 10.6
$ 21.5
$
22.2
(0.7)
(9.6)
(1.3)
0.5
—
(3.6)
—
—
0.6
1.4
0.1
—
—
4.7
2.0
$
(0.4)
$ 19.8
$
29.0
The reconciliation of net income to net cash provided by operating activities is as follows (in millions):
Net Income
Adjustments to reconcile net income to net cash
provided by operating activities (net of effects of acquisitions):
Depreciation
Amortization
Minority interests
Excess tax benefits from share-based compensation
Share-based compensation
Foreign currency economic hedge transactions, net
Losses (gains) on dispositions of securities
Decrease (increase) in accounts receivable, net
Decrease (increase) in inventories, net
Decrease (increase) in other current assets
Decrease (increase) in accounts payable and other current liabilities
Increase (decrease) in income taxes payable
Increase (decrease) in deferred taxes
Litigation settlement related to MJ acquisition
Goodwill and purchased intangible asset impairments
Other
Year Ended December 31,
2008
2007
2006
$ 89.5
$ 93.0
$ 103.3
66.3
30.8
53.5
13.8
8.8
(5.1)
7.3
5.4
10.6
11.1
(51.9)
(0.6)
(3.6)
(1.6)
(3.2)
—
28.8
(1.2)
1.3
(3.0)
5.5
4.1
(0.5)
9.0
4.4
(2.8)
10.6
(10.1)
(5.9)
—
—
18.7
48.7
6.7
—
(1.4)
5.4
2.2
(0.1)
(25.5)
(22.8)
16.9
17.3
3.8
1.2
(47.0)
—
9.5
Net cash provided by operating activities
$
191.4
$
191.6
$
118.2
56 : Bio-Rad Laboratories | Annual Report 2008
12. COMMITMENTS AND CONTINGENT LIABILITIES
Rents and Leases
Net rental expense under operating leases was $38.8 million in 2008, $32.8 million in 2007 and $26.7 million in
2006. Leases are principally for facilities and automobiles.
Annual future minimum lease payments at December 31, 2008 under operating leases are as follows: 2009 – $31.7 million;
2010 – $28.8 million; 2011 – $20.1 million; 2012 – $13.1 million; 2013 – $6.4 million; subsequent to 2013 – $8.0 million.
Deferred Profit Sharing Retirement Plan
We have a profit sharing plan covering substantially all U.S. employees. Contributions are made at the discretion of
the Board of Directors. Bio-Rad has no liability other than for the current year’s contribution. Contributions charged
to income were $10.5 million, $9.4 million, and $7.8 million in 2008, 2007, and 2006, respectively.
Other Post-Employment Benefits
In several foreign locations we are statutorily required to provide a lump sum severance or termination indemnity
to our employees. Under these plans, the vested benefit obligation at December 31, 2008 and 2007 was $19.0 million
and $19.4 million, respectively and has been included in Other long-term liabilities in the consolidated balance
sheets. These plans are not required to be funded, and as such, there is no trust or other device used to accumulate
assets to settle these obligations.
Foreign Exchange Contracts
We enter into forward foreign exchange contracts as an economic hedge against foreign currency denominated
intercompany receivables and payables. At December 31, 2008, we had contracts maturing in January through
March 2009 to sell foreign currency with a nominal value of $163.7 million and an unrealized loss of $0.1 million.
Contracts to purchase foreign currency had a nominal value of $22.0 million with an unrealized gain of $0.1 million.
Insurance
We carry a deductible for workers’ compensation and a portion of our group health insurance cost. Accruals for
losses are based on our claims experience and actuarial assumptions followed in the insurance industry. Should
a greater amount of claims occur compared to our estimates or cost of medical care increase beyond what has
been anticipated, reserves recorded may not be sufficient and additional charges to income may be required.
Letters of Credit
In the ordinary course of business, we are at times required to post letters of credit. The letters of credit are issued
by our banks to guarantee our obligations to various parties including insurance companies. We were contingently
liable for $12.5 million of standby letters of credit with banks as of December 31, 2008.
Bio-Rad Laboratories | Annual Report 2008 : 57
noteS to conSoLidA ted finAnciAL St AtementS (continued)
13. LEGAL PROCEEDINGS
On February 9, 2006, Bio-Rad completed negotiations with Applera Corporation (Applera) and Roche Molecular
Systems, Inc. to settle the patent infringement litigation against MJ Research, Inc. (MJ Research) which Bio-Rad
acquired in 2004. The total net settlement amount, including amounts related to previously accrued back royalties,
was approximately $62 million. We recognized $1.2 million of additional expense in the fourth quarter of 2005 to
adjust our estimated liability as a result of the settlements. In connection with the settlements, we entered into a
royalty-bearing license agreement with Applera relating to our real-time instrument business in the United States
and a term limited license in the rest of the world.
We are party to various claims, legal actions and complaints arising in the ordinary course of business. We do
not believe that any ultimate liability resulting from any of these lawsuits will have a material adverse effect on our
results of operations, financial position or liquidity. However, we cannot give any assurance regarding the ultimate
outcome of these lawsuits and their resolution could be material to our operating results for any particular period,
depending upon the level of income for the period.
14. SEGMENT INFORMATION
Bio-Rad is a multinational manufacturer and worldwide distributor of its own life science research products and
clinical diagnostics products. We have two reportable segments: Life Science and Clinical Diagnostics. These
reportable segments are strategic business lines that offer different products and services and require different
marketing strategies.
The Life Science segment develops, manufactures, sells and services reagents, apparatus and instruments used
for biological research. These products are sold to university and medical school laboratories, pharmaceutical and
biotechnology companies, food testing laboratories and government and industrial research facilities.
The Clinical Diagnostics segment develops, manufactures, sells and services automated test systems, informatics
systems, test kits and specialized quality controls for the healthcare market. These products are sold to reference
laboratories, hospital laboratories, state newborn screening facilities, physicians’ office laboratories, transfusion
laboratories, and insurance and forensic testing laboratories.
Other Operations include the remainder of our former Analytical Instruments segment.
The accounting policies of the segments are the same as those described in Significant Accounting Policies (see
Note 1). Segment profit or loss used for corporate management purposes includes an allocation of corporate
expense based upon sales and an allocation of interest expense based upon accounts receivable and inventories.
Segments are expected to manage only assets completely under their control. Accordingly, segment assets
include primarily accounts receivable, inventories and gross machinery and equipment. Goodwill balances have
been included in corporate for segment reporting purposes.
58 : Bio-Rad Laboratories | Annual Report 2008
Information regarding industry segments at December 31, 2008, 2007, and 2006 and for the years then ended
Information regarding industry segments at December 31, 2008, 2007, and 2006 and for the years then ended
is as follows (in millions):
is as follows (in millions):
Segment net sales
Segment net sales
Allocated interest expense
Allocated interest expense
Depreciation and amortization
Depreciation and amortization
Segment profit
Segment profit
Segment assets
Segment assets
Capital expenditures
Capital expenditures
Life
Life
Science
Science
Clinical
Clinical
Diagnostics
Diagnostics
Other
Other
Operations
Operations
$ 643.5
$ 643.5
$ 615.1
$ 615.1
575.6
$ 575.6
$ 1,106.4
$ 1,106.4
$ 832.2
$ 832.2
684.9
$ 684.9
$
$
$
$
$
$
$
$
$
$
10.5
10.5
12.2
12.2
13.0
13.0
17.5
17.5
19.1
19.1
18.0
18.0
$
$
$
$
$
$
$
$
$
$
21.4
21.4
19.2
19.2
18.8
18.8
74.9
74.9
44.8
44.8
33.8
33.8
$ 13.3 (1)
$ 13.3 (1)
$ 139.8
$ 139.8
$
$
24.7
24.7
$ 80.7 (2)
$ 80.7 (2)
25.7 (3)
$ 25.7 (3)
$
89.6
89.6
$ 343.1
$ 343.1
$ 321.3
$ 321.3
318.5
$ 318.5
$
$
$
$
$
10.6
10.6
8.9
8.9
10.3
10.3
$ 675.2
$ 675.2
$ 677.1
$ 677.1
458.8
$ 458.8
$
$
$
$
$
56.6
56.6
40.3
40.3
34.7
34.7
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
14.5
14.5
13.8
13.8
13.4
13.4
0.2
0.2
0.2
0.2
0.2
0.2
0.1
0.1
0.1
0.1
0.3
0.3
0.6
0.6
0.6
0.6
0.6
0.6
6.9
6.9
8.3
8.3
7.8
7.8
0.1
0.1
0.1
0.1
0.3
0.3
2008
2008
2007
2007
2006
2006
2008
2008
2007
2007
2006
2006
2008
2008
2007
2007
2006
2006
2008
2008
2007
2007
2006
2006
2008
2008
2007
2007
2006
2006
2008
2008
2007
2007
2006
2006
(1) The Life Science segment profit for 2008 includes $28.8 million of goodwill and purchased intangibles impairment expense (see Note 5).
(1) The Life Science segment profit for 2008 includes $28.8 million of goodwill and purchased intangibles impairment expense (see Note 5).
(2) The Clinical Diagnostics segment profit for 2007 includes $7.7 million of in-process research and development expense purchased in the DiaMed
(2) The Clinical Diagnostics segment profit for 2007 includes $7.7 million of in-process research and development expense purchased in the DiaMed
acquisition (see Note 2).
acquisition (see Note 2).
(3) The Life Science segment profit for 2006 includes $3.8 million of in-process research and development expense purchased in the Ciphergen acquisition
(3) The Life Science segment profit for 2006 includes $3.8 million of in-process research and development expense purchased in the Ciphergen acquisition
(see Note 2).
(see Note 2).
Bio-Rad Laboratories | Annual Report 2008 : 59
noteS to conSoLidA ted finAnciAL St AtementS (continued)
The difference between total segment allocated interest expense, depreciation and amortization, and capital
expenditures and the corresponding consolidated amounts is attributable to our corporate headquarters. The
following reconciles total segment profit to consolidated income before taxes and minority interests (in millions):
Total segment profit
Other income (expense), net
Foreign exchange losses
Net corporate operating, interest and other
Year Ended December 31,
2008
2007
2006
$ 153.7
$ 106.0
$ 115.9
(0.4)
(7.6)
19.8
(2.6)
29.0
(1.1)
income (expense) not allocated to segments
(2.9)
(2.4)
(1.8)
Consolidated income before taxes
and minority interests
$ 142.8
$ 120.8
$ 142.0
The following reconciles total segment assets to consolidated total assets (in millions):
Total segment assets
Cash and other current assets
Net property, plant and equipment excluding
segment specific gross machinery and equipment
Goodwill
Other long-term assets
Total assets
December 31,
2008
2007
$ 1,025.1
$ 1,006.7
388.5
363.3
(6.6)
321.8
308.5
(49.0)
328.4
322.2
$ 2,037.3
$ 1,971.6
The following presents sales to external customers by geographic area based primarily on the location of the use
of the product or service (in millions):
Europe
Pacific Rim
United States
Other (primarily Canada and Latin America)
Total sales
Year Ended December 31,
2008
2007
2006
$ 872.1
$ 671.2
$ 559.4
253.3
525.3
113.7
209.9
498.1
81.9
200.7
443.7
70.1
$ 1,764.4
$ 1,461.1
$ 1,273.9
60 : Bio-Rad Laboratories | Annual Report 2008
The following presents long-lived assets by geographic area based upon the location of the asset (in millions):
Europe
Pacific Rim
United States
Other (primarily Canada and Latin America)
Total long-lived assets
15. QUARTERLY FINANCIAL DATA (UNAUDITED)
Year Ended December 31,
2008
2007
2006
$ 543.4
$ 523.4
$
88.1
14.9
12.9
9.2
382.0
402.3
366.0
3.0
4.0
3.1
$ 943.3
$ 942.6
$ 466.4
Summarized quarterly financial data for 2008 and 2007 are as follows (in millions, except per share data):
2008
Net sales
Gross profit
Net income (loss)
Basic earnings (loss) per share
Diluted earnings (loss) per share
2007
Net sales
Gross profit
Net income
Basic earnings per share
Diluted earnings per share
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$ 422.2
$ 452.4
$ 441.8
$ 448.0
226.9
248.4
240.5
246.7
26.5
0.99
0.96
$
$
43.4
1.61
1.58
$
$
27.8
1.03
1.01
$
$
(8.2)
(0.30)
(0.30)
$
$
$ 322.5
$ 339.1
$ 339.7
$ 459.7
179.4
190.0
188.4
233.6
27.0
1.02
0.99
$
$
25.7
0.96
0.95
$
$
28.0
1.05
1.03
$
$
12.4
0.46
0.45
$
$
Bio-Rad Laboratories | Annual Report 2008 : 61
RepoR t of independent RegiSteRed puBLic Accounting fiRm
Board of Directors and Stockholders
Bio-Rad Laboratories, Inc.
Hercules, California
We have audited the accompanying consolidated balance sheets of Bio-Rad Laboratories, Inc. and subsidiaries
(the “Company”) as of December 31, 2008 and 2007, and the related consolidated statements of income, stockholders’
equity, and cash flows for each of the three years in the period ended December 31, 2008. We also have audited
the Company’s internal control over financial reporting as of December 31, 2008, based on criteria established in
Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission. The Company’s management is responsible for these financial statements, for maintaining effective
internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial
reporting, included in the accompanying Management’s Report on Internal Control over Financial Reporting. Our
responsibility is to express an opinion on these financial statements and an opinion on the Company’s internal
control over financial reporting based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement and whether effective internal control over
financial reporting was maintained in all material respects. Our audits of the financial statements included examining,
on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and evaluating the overall financial
statement presentation. Our audit of internal control over financial reporting included obtaining an understanding
of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and
evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also
included performing such other procedures as we considered necessary in the circumstances. We believe that
our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed by, or under the supervision of, the
company’s principal executive and principal financial officers, or persons performing similar functions, and
effected by the company’s board of directors, management, and other personnel to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
62 : Bio-Rad Laboratories | Annual Report 2008
Because of the inherent limitations of internal control over financial reporting, including the possibility of collusion
or improper management override of controls, material misstatements due to error or fraud may not be prevented
or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over
financial reporting to future periods are subject to the risk that the controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the
financial position of Bio-Rad Laboratories, Inc. and subsidiaries as of December 31, 2008 and 2007, and the
results of their operations and their cash flows for each of the three years in the period ended December 31, 2008,
in conformity with accounting principles generally accepted in the United States of America. Also, in our opinion,
the Company maintained, in all material respects, effective internal control over financial reporting as of
December 31, 2008, based on the criteria established in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission.
As discussed in Note 7 of the Notes to the Consolidated Financial Statements, in 2007 the Company adopted a
new interpretation of accounting standards for uncertainty in income taxes.
San Francisco, California
February 25, 2009
Bio-Rad Laboratories | Annual Report 2008 : 63
mAnAgement’S diScuSSion And AnAL ySiS
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion should be read in conjunction with the information contained in our consolidated financial statements
and the accompanying notes which are an integral part of the statements.
Other than statements of historical fact, statements made in this Annual Report include forward-looking statements,
such as statements with respect to our future financial performance, operating results, plans and objectives that
involve risk and uncertainties. Forward-looking statements generally can be identified by the use of forward-looking
terminology such as, “believe”, “expect,” “may,” “will,” “intend,” “estimate,” “continue,” or similar expressions or
the negative of those terms or expressions. Such statements involve risks and uncertainties, which could cause
actual results to vary materially from those expressed in or indicated by the forward-looking statements. We have
based these forward-looking statements on our current expectations and projections about future events. However,
actual results may differ materially from those currently anticipated depending on a variety of risk factors including
among other things: changes in general domestic and worldwide economic conditions; our ability to successfully
develop and market new products; our reliance on and access to necessary intellectual property; our ability to
successfully integrate any acquired business; our substantial leverage and ability to service our debt; competition
in and government regulation of the industries in which we operate; and the monetary policies of various countries.
We caution you not to place undue reliance on forward-looking statements, which reflect an analysis only and speak
only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements,
whether as a result of new information, future events, or otherwise except as required by Federal Securities law.
Overview
Bio-Rad is a multinational manufacturer and worldwide distributor of our own life science research and clinical
diagnostics products. Our business is organized into two primary segments, Life Science and Clinical Diagnostics,
with the mission to provide scientists with specialized tools needed for biological research and clinical diagnostics.
We sell more than 8,000 products and services to a diverse client base comprised of scientific research, healthcare,
education and government customers worldwide. We manufacture and supply our customers with a range of
reagents, apparatus and equipment to separate complex chemical and biological materials and to identify, analyze
and purify components. Because our customers require replication of results in manufacturing processes, research
experiments and diagnostic tests, much of our revenues are recurring. Approximately 30% of our 2008 consolidated
net sales are from the United States and approximately 70% are international sales, largely denominated in local
currency with the majority of these sales in Euros, Yen and British Sterling. As a result, our consolidated net sales
expressed in dollars benefit when the U.S. dollar weakens and suffer when the U.S. dollar strengthens in relation
to other currencies. Currency fluctuations benefited our consolidated net sales expressed in U.S. dollars in 2008,
2007 and 2006. The market for reagents and apparatus remains good while growth rates have slowed due to both
public and private grant funding being more measured. The market for large capital equipment has slowed, as
many pharmaceutical and biotechnology customers delayed or reduced their capital spending. Bio-Rad is generally
less impacted by trends in capital spending as lower priced reagents and apparatus comprise more than 70% of
product sales.
64 : Bio-Rad Laboratories | Annual Report 2008
The following shows gross profit and expense items as a percentage of net sales:
Net sales
Cost of goods sold
Gross profit
Selling, general and administrative expense
Product research and development expense,
excluding in-process research and development
Net income
Year Ended December 31,
2008
100.0%
45.4
54.6
33.5
9.0
5.1
2007
100.0%
45.8
54.2
34.8
9.6
6.4
2006
100.0%
44.1
55.9
34.5
9.7
8.1
We intend that the discussions of critical accounting policies and estimates and recent accounting pronouncements
that follow will assist you in understanding how such principles, estimates and pronouncements affect our financial
condition and results of operations as well as significant factors that caused changes in our financial condition and
results of operations for the years ended December 31, 2008 and 2007.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The accompanying discussion and analysis of our financial condition and results of operations are based upon our
consolidated financial statements, which have been prepared in accordance with generally accepted accounting
principles in the United States of America (GAAP). The preparation of financial statements in conformity with GAAP
requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and
contingencies as of the date of the financial statements and reported amounts of revenues and expenses during the
reporting periods. We evaluate our estimates on an on-going basis. We base our estimates on historical experience
and on other assumptions that are believed to be reasonable under the circumstances, the results of which form
the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from
other sources. However, future events may cause us to change our assumptions and estimates which may require
routine adjustment. Actual results could differ from these estimates. We have determined that for the periods
reported in this Annual Report the following accounting policies and estimates are critical in understanding our financial
condition and results of operations.
Accounting for Income Taxes
As part of the process of preparing consolidated financial statements, management is required to estimate our
income taxes in each of the jurisdictions in which we operate. This process involves estimating our current tax
exposure together with assessing temporary differences resulting from differing treatment of items for tax and
accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our
consolidated balance sheet. Management then assesses the likelihood that the deferred tax assets will be recovered
from future taxable income and to the extent management believes that recovery is not likely, a valuation allowance
must be established. To the extent management establishes a valuation allowance or increases this allowance in
a period, an increase to expense within the provision for income taxes in the statement of income may result.
Bio-Rad Laboratories | Annual Report 2008 : 65
mAnAgement’S diScuSSion And AnAL ySiS (continued)
Significant management judgment is required in determining the provision for income taxes, deferred tax assets and
liabilities and any valuation allowance recorded in connection with the deferred tax assets. We have recorded a valuation
allowance of $40.7 million and $31.1 million as of December 31, 2008 and 2007 respectively, due to uncertainties
related to our ability to utilize some of the deferred tax assets, primarily consisting of certain foreign net operating
losses carried forward, before they expire. The valuation allowance is based on management’s current estimates of
taxable income for the jurisdictions in which we operate and the period over which the deferred tax assets will be
recoverable. In the event that actual results differ from these estimates, or these estimates are adjusted in future periods,
an additional valuation allowance may need to be established which would increase the tax provision, lowering
income and impacting our financial position. Should realization of these deferred assets previously reserved occur,
the provision for income tax would decrease, raising income and positively impacting Bio-Rad’s financial position.
Valuation of Long-lived and Intangible Assets and Goodwill
We assess the impairment of identifiable intangibles, long-lived assets and goodwill annually in the fourth quarter
or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Projected
future operating results and cash flows of the reporting units’ asset or asset group are used to establish the fair
value used in evaluating the carrying value of long-lived and intangible assets and goodwill. Factors that we consider
important that could trigger an impairment review include the following:
• significant under-performance relative to expected, historical or projected future operating results;
• significant changes in the manner of use of the long-lived assets, intangible assets or the strategy for
our overall business; and
• significant negative industry or economic trends.
When management determines that the carrying value of intangibles or long-lived assets may not be recoverable
based upon the existence of one or more of the above indicators of impairment, we test for any impairment based
on a projected undiscounted cash flow method. Goodwill is tested for impairment based on a projected discounted
cash flow method. Projections are inherently uncertain and accordingly, actual future cash flows may differ materially
from projected cash flows. The discounted cash value projected for goodwill may be different from the fair value
that would result from an actual transaction between a willing buyer and a willing seller. Such analyses are particularly
sensitive to changes in discount rates. Changes to these rates might result in material changes in the valuation and
determination of the recoverability of goodwill. For example, an increase in the interest rate used to discount cash
flows will decrease the discounted cash value.
In 2008, our review indicated a $28.8 million impairment loss: $1.6 million related to the developed technology
intangible assets of certain product lines that were acquired in 2006 and $27.2 million related to goodwill from
a 1999 acquisition. The goodwill impairment was caused primarily by the continuing decline in the BSE (bovine
spongiform encephalopathy) product line. There were no impairments taken in 2007 and 2006.
Valuation of Inventories
We value inventory at the lower of the actual cost to purchase and/or manufacture the inventory, or the current
estimated market value of the inventory. We review inventory quantities on hand and record a provision for excess
and obsolete inventory based primarily on an estimated forecast of product demand and production requirements
for the next twelve months on a quarterly basis or, if warranted by the circumstances, more frequently. In addition,
our industry is characterized by technological change, frequent new product development and product obsolescence
that could result in an increase in the amount of obsolete inventory quantities on hand. Our estimates of future
product demand may prove to be inaccurate, in which case we may have understated or overstated the valuation
66 : Bio-Rad Laboratories | Annual Report 2008
allowance required for excess and obsolete inventory. In the future, if inventory is determined to be overvalued, we
would be required to recognize such costs in our cost of goods sold at the time of such determination by initiating
or increasing our inventory valuation allowance. Likewise, if the inventory valuation allowance is determined to be no
longer required, we may have over-reported cost of goods sold in previous periods and would be required to recognize
such additional operating income at the time of sale until the inventory allowance is depleted. In no case is
inventory valued at an amount greater than cost. Therefore, although we make efforts to ensure the accuracy of
our forecasts of future product demand, any significant unanticipated changes in demand, technological developments
or regulations could have a significant impact on the value of our inventory and reported results of operations.
Valuation of Investments
We regularly review our investments for factors that may indicate that a decline in the fair value of an investment
below its cost is other than temporary. Some factors considered in evaluating whether or not a decline in fair value
is other-than-temporary include our ability and intent to retain the investment for a period of time sufficient to allow
for a recovery in value, the duration and extent to which the fair value has been less than cost and the financial
condition and prospects of the issuer. Such reviews are inherently uncertain in that the value of the investment may
not fully recover or may decline further in future periods resulting in realized losses.
Warranty Reserves
We warrant certain equipment against defects in design, materials and workmanship, generally for a period of one
year. Upon delivery and on acceptance of that equipment, we establish, as part of cost of goods sold, a provision
for the expected costs of such warranty based on historical experience, specific warranty terms and customer
feedback. A review is performed on a quarterly basis to assess the adequacy of our warranty reserve and it is
adjusted if necessary. The warranty percentage and accrual are based on actual experience and expected future
costs to be incurred. Should realized costs be higher than expected costs, cost of goods sold would be lower in
the period of estimation and higher when realized.
Allowance for Doubtful Accounts
We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to
make required payments. The amount of the allowance is determined by analyzing known uncollectible accounts,
the age of our receivables, economic conditions in the customers’ country or industry, historical losses and our
customers’ general credit-worthiness. Amounts later determined and specifically identified to be uncollectible are
charged or written off against this reserve. This valuation allowance is reviewed on a quarterly basis to determine
whether an increase or decrease is warranted. Uncertainty in the current economic environment, if prolonged,
could result in greater amounts becoming uncollectible in the future. Should the estimates of losses be higher than
the actual uncollectible accounts, we would report lower profitability when the estimates are made and higher
profitability when the receivable is collected.
Litigation Reserves
We estimate amounts for claims that are probable and can be reasonably estimated are recorded as liabilities in
our consolidated balance sheets. The likelihood of a material change in these estimated reserves is dependent on
the possible outcome of settlement negotiations, regulatory or judicial review and the development of facts and
circumstances in extended litigation which could change claims or assessments when both the amount and range
of loss on some outstanding litigation is uncertain. We disclose in the footnotes of the financial statements when
we are unable to make a reasonable estimate of the liability that could result from unfavorable outcomes in litigation.
As events occur, we will assess the potential liability related to our pending litigation and revise our estimates.
Such revisions could materially impact our results of operations.
Bio-Rad Laboratories | Annual Report 2008 : 67
mAnAgement’S diScuSSion And AnAL ySiS (continued)
CORPORATE RESULTS—SALES, MARGINS AND EXPENSES
Our net sales increased by 20.8% in 2008 to $1,764.4 million as compared to 2007. This includes sales related to
the fourth quarter 2007 acquisition of DiaMed Holding AG (DiaMed). The impact of foreign exchange translation
aided sales growth by approximately 3%. The incremental sales from the additional nine months in 2008 attributable
to DiaMed accounted for approximately 13% of our annual growth.
The Life Science segment achieved sales growth of 4.6% in 2008 as compared to 2007 aided by the impact of
foreign exchange translation of 3.2%. The decline in sales of BSE (bovine spongiform encephalopathy) products
continued in 2008, as both product prices eroded among multiple suppliers and government mandated tests
declined. Excluding the impact of the BSE product line, this segment grew by 6.6%. Increased sales were the
result of growth in multianalyte detection, protein interaction, DNA amplification and laboratory chromatography
product lines. Sales in the United States, emerging markets and Asia Pacific (excluding Japan), were the drivers
of increased sales growth.
The Clinical Diagnostics segment achieved sales growth of 33.0% in 2008 as compared to 2007 which includes
sales growth from our acquisition of DiaMed. The incremental sales from the additional nine months of DiaMed
operations provided 22.8% of our Clinical Diagnostics sales growth. The impact of foreign exchange on Clinical
Diagnostics segment sales growth added approximately 2.9% to total segment sales. The Clinical Diagnostics
segment experienced growth across a wide range of its product offerings with the BioPlex 2200 system, quality
controls and clinical microbiology having the strongest growth. Geographically, the drivers of sales growth excluding
the DiaMed acquisition were in the United States, Europe and Asia Pacific (excluding Japan).
Our net sales increased by 14.7% in 2007 to $1,461.0 million as compared to 2006. This includes $62.0 million
of sales in the fourth quarter related to the acquisition of DiaMed completed on October 1, 2007. Excluding these
sales, sales growth was 9.8%. The impact of foreign exchange translation aided sales growth by approximately 4.6%.
The Life Science segment achieved sales growth of 6.9% in 2007 as compared to 2006 aided by the impact of
foreign exchange translation of 4.2%. Excluding the impact of the food science product line, this segment grew
by 11.0%. Increased sales were the result of growth in multianalyte detection, protein interaction and process
chromatography product lines. Sales in the United States, emerging markets and Asia Pacific (excluding Japan),
were the drivers of increased sales growth. The decline in sales of BSE products continued in 2007, as multiple
test providers lowered product prices and government mandated tests declined.
The Clinical Diagnostics segment achieved sales growth of 21.5% in 2007 as compared to 2006 which includes
sales growth that resulted from our acquisition of DiaMed. We include DiaMed’s results in this reporting segment
because DiaMed’s customers, technology, distribution channels and economics (post integration) are all similar
to our Clinical Diagnostics segment. DiaMed’s sales provided 9.1% of our Clinical Diagnostics sales growth. The
impact of foreign exchange on Clinical Diagnostics segment sales growth added approximately 5.1% to total
segment sales. The Clinical Diagnostics segment experienced growth across a wide range of its product offerings.
Geographically, the drivers of sales growth excluding the DiaMed acquisition were in the United States and Asia
Pacific (excluding Japan).
68 : Bio-Rad Laboratories | Annual Report 2008
The 2008 consolidated gross margin of 54.6% represents an increase of 0.4% from 2007. Life Science segment
gross margins increased by 2.0% to 54.1% as a result of decreasing factory costs in some overhead areas,
improved production planning, reduced quality defects and improved sales mix. The Clinical Diagnostics segment
gross margins decreased by 0.8% in 2008 as compared to 2007 as a result of including an additional nine months
of DiaMed operations. The DiaMed gross margins include the amortization of manufacturing related purchased
intangibles and the effect of higher inventory values after work-in-process inventory values were increased in
compliance with purchase accounting requirements.
The 2007 consolidated gross margin of 54.2% represents a decline of 1.7% from 2006. Life Science segment
gross margins declined by less than 1% from the underabsorption of factory costs due to lower than planned
activity in the first half of 2007, rising costs throughout the year and an unfavorable sales mix. The Clinical Diagnostics
segment gross margins declined by 2.4% from 2006, as the result of the DiaMed acquisition and the inclusion of
$11.7 million in 2006 of back royalties with no related costs.
Consolidated selling, general and administrative expense (SG&A) for 2008 was 33.5% of net sales compared
to 34.8% in 2007. The decline from the prior year is mainly attributable to the inclusion of DiaMed which has an
overall lower SG&A margin compared to its total sales. Growth in absolute SG&A spending was proportional to
sales with Life Science segment’s SG&A growing just faster than sales growth while Clinical Diagnostics grew at a
slightly lower rate, excluding the impact of DiaMed. Approximately half of the increase in SG&A is related to personnel
costs including compensation and travel. The remaining increases are attributable to agent commissions, technology
infrastructure cost, professional services and provision for bad debts.
Consolidated SG&A was 34.8% of net sales for 2007 compared to 34.5% in 2006. Increased spending on a currency
neutral basis represents approximately $32 million of SG&A growth for Bio-Rad in 2007, excluding DiaMed.
Two-thirds of the increased spending is related to the Clinical Diagnostics segment with the remainder associated
with the Life Science segment. Personnel and related costs account for approximately 60% of total SG&A expense.
Other increasing areas of costs are travel, marketing and technology costs.
Product research and development expense in 2008 declined to 9.0% of net sales as compared to 9.6% of net
sales in 2006. Areas of development for the Life Science segment were amplification, proteomics, protein function,
food safety and process chromatography. Clinical Diagnostics segment research and development were focused
on additional assays for the BioPlex 2200 testing platform as well as investments in automation for the DiaMed line
of blood typing instruments and reagents, product line extensions in diabetes, infectious disease, quality control and
software offerings. In absolute dollars, the increase in R&D was almost exclusively in the Clinical Diagnostics segment.
Product research and development expense in 2007 declined to 9.6% of net sales compared to 9.7% of net sales
in 2006 excluding the purchased in-process research and development associated with acquisitions made in
2007 and 2006. Areas of development for the Life Science segment were amplification, proteomics and process
chromatography. Clinical Diagnostics segment research and development were focused on additional assays for
the BioPlex 2200 testing platform as well as enhancements to existing clinical microbiology, autoimmune, diabetes
monitoring, blood virus and quality control products. In absolute dollars, the increased spending was proportionately
much higher in the Clinical Diagnostics segment than in the Life Science segment.
Bio-Rad Laboratories | Annual Report 2008 : 69
mAnAgement’S diScuSSion And AnAL ySiS (continued)
CORPORATE RESULTS—NON-OPERATING
Interest expense increased by approximately $0.5 million in 2008 as compared to 2007. The increase reflects higher
average borrowings on local lines of credit and increased interest on capital leases. Our principal debt obligations
are the 2003 and 2004 Senior Subordinated Notes totaling $425.0 million which carry fixed rates of interest of
7.5% and 6.125%, and are not due until August 2013 and December 2014.
Interest expense declined by approximately $0.4 million in 2007 compared to 2006. The decline reflects lower
average borrowings on local lines of credit. The majority of interest costs are associated with the $425.0 million
in Senior Subordinated Notes.
Foreign exchange losses for 2008, 2007 and 2006 were $7.6 million, $2.6 million and $1.1 million, respectively. The
largest component in the current year loss is a fourth quarter loss of approximately $5.2 million. The loss reflects
a number of unhedged European based intercompany loans denominated in Euros, GBP and Swiss Francs which
arose as part of our acquisitions in December 2008. The significant volatility in December resulted in an approximate
$3.0 million non-cash loss on these accounts. Additionally, we recorded a loss of $1.6 million on unhedged inter-
company payables for our Brazilian subsidiaries, which we have not historically hedged due to the high cost. In the
fourth quarter of 2007 there was a loss of approximately $2.5 million on the exchange of Euros for Swiss Francs
related to our purchase of DiaMed. All years are affected by the economic hedging program we employ to hedge
our intercompany receivables and payables.
Other income and expense for 2008 is comprised of interest and investment income of $10.6 million on cash and
short-term investments. We expect interest and investment income to decline in 2009 as returns on short-term
fixed income investment have declined significantly in the current economic environment. During the year we
impaired $9.6 million of marketable equity securities, marketable fixed income securities and long-term investees.
In each case, the market value of these securities had declined so significantly at December 31, 2008 that their
recovery in the foreseeable future could not be anticipated. Additional write downs could be possible should
markets continue to function with only limited liquidity and some regulatory forbearance is not offered.
Other income and expense for the year 2007 is principally comprised of $21.5 million of investment income for
interest on cash, cash equivalents and short-term investments. Our investment income declined faster as the
amount invested declined in the fourth quarter when we used approximately $400 million to purchase DiaMed.
Other factors affecting comparability between years is the 2007 impairment of two investments totaling $3.6 million.
Conversely in 2006, we had other income of $4.7 million relating to a facilitation fee received and a gain on the
tendering of our shares in the merger between Accent Semiconductor Technology Inc. and Nanometrics Inc.
Bio-Rad’s consolidated effective tax rate was 31%, 22%, and 27% in 2008, 2007, and 2006, respectively. The
2008, 2007, and 2006 effective tax rates reflect tax rate benefits of 4%, 5% and 3%, respectively for non-taxable
dividend income, and 9%, 8%, and 2%, respectively for tax credits. The 2008, 2007, and 2006 effective tax rates
also reflect benefits in the difference between U.S. and foreign taxes of 4%, 2%, and 1%, respectively. The 2008
tax rate reflects a rate detriment of 7% with respect to goodwill impairments. The 2007 tax rate reflects a rate
benefit of 3% for the removal of a valuation allowance related to Canadian deferred tax assets.
Our effective tax rate may be impacted in the future, either favorably or unfavorably, by many factors including
but not limited to fluctuations in statutory tax rates and changes in tax laws or regulations, which could cause our
estimate of taxes to change.
70 : Bio-Rad Laboratories | Annual Report 2008
LIQUIDITY AND CAPITAL RESOURCES
Bio-Rad operates and conducts business globally, primarily through subsidiary companies established in the
markets in which we trade. Goods are manufactured in a small number of locations, and intermediate or finished
products are then shipped for completion and/or distribution to facilities around the globe. Our product mix is
diversified, and certain products compete largely on product efficacy, while others compete on price. Gross
margins are generally sufficient to exceed normal operating costs. Funding for research and development of
new products as well as routine outflows of capital expenditure, and tax expense are covered by cash flow from
operations. We currently operate with an adequate level of interest coverage and our current market capitalization
is high relative to our current level of debt. In addition to the positive cash flow from operating activities, additional
liquidity is readily available via the sale of short-term investments and our revolving credit facility.
Recent financial and economic developments may adversely affect our future results of operations. Demand for our
products and services could change more dramatically than in previous years based on activity and support levels
from government, universities, hospitals and private industry including diagnostic laboratories. A slowdown in the
global economy including the United States has caused many governments to announce stimulus packages that
often promote support for healthcare and research. These efforts, should they materialize, could offset other declines
to our business. To date we are unable to conclude how dramatically the global economic recession will impact us.
At December 31, 2008, we had available $243.5 million in cash, cash equivalents and short-term investments,
and $20.3 million under international lines of credit. Under the $200.0 million restated and amended Revolving
Credit Facility, we have $192.3 million available with $7.7 million reserved for standby letters of credit issued by
our banks to guarantee our obligations to certain insurance companies. Management believes that this availability,
together with cash flow from operations, will be adequate to meet our current objectives for operations, research
and development, capital additions for plant, equipment and systems and to make the tender offer to the minority
shareholders of DiaMed Holding as outlined in the DiaMed purchase and sale agreement.
Recent deteriorations in credit markets along with the financial service industry experiencing upheavals characterized
by bankruptcy, foreclosures, collapse and government intervention could impact both our ability and our customer’s
ability to access the necessary capital for acquisition, equipment and technology modernization and the financing
of inventory and receivables. Without this crucial intermediary function manufacturers and end users may have to
renegotiate sharing additional costs, reduce activity levels or seek other business partners.
Cash Flow from Operations
Net cash provided by operations was $191.4 million, $191.6 million, and $118.2 million in 2008, 2007, and 2006,
respectively. The small net change between 2008 and 2007 is the result of an increase in net cash collections
reduced by supplier and employee payments, offset by income tax payments and lower investment income and
other miscellaneous operating receipts.
During 2008 the increase in inventory compared to 2007 is concentrated in the Life Science segment and the
quality control product line of the Clinical Diagnostics segment. Quality control products are characterized by long
lead times and market opportunities going forward appear stable. Life Science segment inventories grew to meet
anticipated sales that were delayed or cancelled as economic activities declined in the fourth quarter. First quarter
2009 cash flows are historically the lowest as annual payments for royalties and bonuses are due in this period.
Bio-Rad Laboratories | Annual Report 2008 : 71
mAnAgement’S diScuSSion And AnAL ySiS (continued)
During 2007, the moderation of growth in inventory and accounts receivable compared to 2006 contributed to the overall
improvement in cash flow from operations. Additional cash flows were also generated by the acquisition of DiaMed.
Management regularly reviews the allowance for uncollectible receivables and believes net accounts receivable
are fully realizable. Management routinely reviews inventory for the impact of obsolescence and changes in market
prices caused by the introduction of new products, technologies and in government reimbursement policies.
Cash Flow from Investing Activities
Net cash used in investing activities, including capital expenditures, was $146.1 million for the year 2008. During
the year we paid cash for the acquisition of additional DiaMed minority shares and two distributors. In 2009, we
intend to offer to buy the outstanding shares of the minority shareholders of DiaMed Holding. We estimate this
offer will use approximately another $38 million in cash. We may also purchase some additional distributors.
Capital expenditures in 2008 totaled $84.8 million, compared to $60.6 million and $53.0 million in 2007 and 2006,
respectively. Net capital expenditures for 2008 reflect investment in improvements to new information technology
systems, new e-commerce and content management technology for our website and the expansion of manufacturing
capabilities as well as refurbishing some administrative space. Spending on reagent rental instruments was
$24.9 million. We place reagent rental instruments with our Clinical Diagnostics customers for use with our clinical
reagents. We continued in 2008 to invest in business systems to modernize and standardize distribution capabilities
and enhance data communication. Other ongoing expenditures are for the replacement and improvement of
production equipment and facilities to meet the necessary Good Manufacturing Practices (GMP) mandated by the
Food and Drug Administration (FDA) for the Clinical Diagnostics segment and to meet the requirements of European
and other regulatory bodies as well as many customers in our Life Science segment.
Cash Flow from Financing Activities
Net cash flow provided by financing activities was $6.3 million for 2008 and principally reflects the cash flow for
the exercise of stock options and receipts from the Employee Stock Purchase Plan transactions. Payments on
long-term debt represent the reduction of acquired DiaMed debt. We have previously borrowed $200 million at
6.125% due 2014 and $225 million at 7.5% due 2013. This has provided us with capital at a fixed rate for the next
five and four years, respectively. We routinely meet and discuss potential acquisitions with specific companies,
principals or their agents. Should we identify any significant potential acquisitions it could require an increase in
our total indebtedness.
Our $200.0 million revolving credit facility is secured by substantially all of our personal property assets and the
assets of our domestic subsidiaries and 65% of the capital stock of certain foreign subsidiaries, and is guaranteed
by all of our existing and future domestic subsidiaries (other than immaterial domestic subsidiaries as defined for
purposes of the new credit facility).
The Board of Directors has authorized us to repurchase up to $18 million of Bio-Rad’s common stock over an
indefinite period of time of which $3.3 million is remaining. Our credit agreements restrict our ability to repurchase
our own stock. There were no share repurchases made during 2008 or 2007.
72 : Bio-Rad Laboratories | Annual Report 2008
CONTRACTUAL OBLIGATIONS
The following summarizes certain of our contractual obligations as of December 31, 2008 and the effect such
obligations are expected to have on our cash flows in future periods (in millions):
Contractual Obligations
Long-term debt, including
current portion (1)
Interest payments
Operating lease obligations (2)
Purchase obligations (3)
Long-term liabilities (4)
Total
Less than
One Year
1-3
Years
3-5
Years
More than
5 Years
453.1
152.3
108.1
22.7
40.7
7.2
29.1
31.7
20.9
—
10.9
58.3
48.9
1.8
9.0
225.2
209.8
52.6
19.5
—
7.9
12.3
8.0
—
23.8
(1) These amounts represent expected cash payments, include capital lease obligations and are included in our Consolidated Balance Sheets. See Note 6 of
the Consolidated Financial Statements for additional information about our debt.
(2) Operating lease obligations are described in Note 12 of the Consolidated Financial Statements.
(3) Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding to Bio-Rad and that specify all significant
terms. Purchase obligations exclude agreements that are cancelable without penalty.
(4) Excluded from this table is our liability for income tax payable, including uncertain tax positions, in the amount of $19.4 million. We are not able to reason-
ably estimate the timing of future cash flows of these tax liabilities, therefore, our income tax obligations are excluded from the table above. See Note 7 of
the Consolidated Financial Statements.
FINANCIAL RISK MANAGEMENT
The main goal of Bio-Rad’s financial risk management program is to reduce the variance in expected cash flows
arising from unexpected foreign exchange rate and interest rate changes. Financial exposures are managed through
operational means and by using various financial instruments, including cash and liquid resources, borrowings,
spot foreign exchange contracts and derivatives. The derivative instruments used are principally comprised of
forward foreign exchange contracts. No derivative financial instruments are entered into for the purpose of trading
or speculation. Company policy requires that all derivative positions are undertaken to manage the risks arising
from underlying business activities. These derivative transactions do not qualify for hedge accounting treatment
under SFAS 133, Accounting for Derivative Instruments and Hedging Activities. Derivative instruments used in
these transactions are valued at fair value and changes in fair value are included in reported earnings.
Foreign Exchange Risk
We operate and conduct business in many countries and are exposed to movements in foreign currency exchange
rates. We face transactional currency exposures that arise when we enter into transactions denominated in currencies
other than U.S. dollars. Additionally, our consolidated net equity is impacted by the conversion of the net assets of
our international subsidiaries for which the functional currency is not the U.S. dollar.
Foreign currency exposures are managed on a centralized basis. This allows for the netting of natural offsets and
lowers transaction costs and net exposures. Where possible, we seek to manage our foreign exchange risk in part
through operational means, including matching same-currency revenues to same currency costs, and same-currency
assets to same-currency liabilities. Moreover, weakening in one currency can often be offset by strengthening in
another currency. Foreign exchange risk is also managed through the use of forward foreign exchange contracts.
Bio-Rad Laboratories | Annual Report 2008 : 73
mAnAgement’S diScuSSion And AnAL ySiS (continued)
Positions are primarily in Euro, Swiss Franc, British Sterling and Japanese Yen. The majority of forward contracts
are for periods of 90 days or less. We record the change in value of our foreign currency receivables
and payables as a foreign exchange (gain) loss on our Consolidated Statements of Income along with the change
in fair market value of the forward exchange contract used as an economic hedge of those assets or liabilities.
Our forward contract holdings at year-end were analyzed to determine their sensitivity to fluctuations in foreign
currency exchange rates. All other variables were held constant. Market risk associated with derivative holdings
is the potential change in fair value of derivative positions arising from an adverse movement in foreign exchange
rates. A decline of 10% on quoted foreign exchange rates would result in an approximate net-present-value loss
of $18 million on our derivative position. This impact of a change in exchange rates excludes the offset derived
from the change in value of the underlying assets and liabilities, which could reduce the adverse effect significantly.
Interest Rate Risk of Debt Instruments
Bio-Rad centrally manages the short-term cash surpluses and shortfalls of its subsidiaries. Our holdings of variable
rate debt instruments at year-end were analyzed to determine their sensitivity to movements in interest rates. Due
to the relatively small amount of short-term variable rate debt we have outstanding, there would not be a material
impact to earnings or cash flows if interest rates moved adversely by 10%. Our long-term debt consists primarily
of fixed-rate instruments, and is thus insulated from interest rate changes. As of December 31, 2008 the overall
interest rate risk associated with our debt was not significant.
RECENT FINANCIAL ACCOUNTING STANDARDS
In June 2008, the Financial Accounting Standards Board (FASB) issued FASB Staff Position (FSP) No. Emerging
Issues Task Force (EITF) 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions
Are Participating Securities. FSP No. EITF 03-6-1 concluded that unvested share-based payment awards that
contain nonforfeitable rights to dividends or dividend equivalents (whether paid or unpaid) are participating securities
and shall be included in the computation of basic earnings per share (EPS) pursuant to the two-class method. This
FSP becomes effective for us on January 1, 2009. Early adoption of the FSP is not permitted; however, it will apply
retrospectively to EPS data for all periods presented in the financial statements or in financial data. We do not currently
expect that this FSP will have a material impact on our EPS data in fiscal year 2009 or on EPS for any prior periods.
In May 2008, the FASB issued SFAS 162, The Hierarchy of Generally Accepted Accounting Principles.
SFAS 162 identifies the sources of accounting principles and the framework for selecting principles to be used
in the preparation and presentation of financial statements in accordance with generally accepted accounting
principles in the United States of America. The adoption of SFAS 162 will not have an effect on our consolidated
financial statements.
In March 2008, the FASB issued SFAS 161, Disclosures about Derivative Instruments and Hedging Activities—
an amendment of SFAS 133. SFAS 161 seeks to improve financial reporting for derivative instruments and hedging
activities by requiring enhanced disclosures regarding the impact on financial position, financial performance, and
cash flows. SFAS 161 is effective for us on January 1, 2009. Since SFAS 161 requires only additional disclosures
concerning derivatives and hedging activities, the adoption of SFAS 161 will not affect our financial condition,
results of operations or cash flows.
74 : Bio-Rad Laboratories | Annual Report 2008
As amended in February 2008 by FSP No. FAS 157-2, Effective Date of FASB Statement No. 157, SFAS 157, Fair
Value Measurements, defines fair value, establishes a framework for measuring fair value and expands disclosures
about fair value measurements. FSP FAS 157-2 defers the effective date of SFAS 157 for all nonfinancial assets
and liabilities, except those items recognized or disclosed at fair value on an annual or more frequently recurring
basis, until January 1, 2009. As such, we partially adopted the provisions of SFAS 157 effective January 1, 2008.
We expect to adopt the remaining provisions of SFAS 157 beginning in 2009. We expect the adoption of SFAS 157
to impact the way in which we calculate fair value for our annual impairment review of goodwill and non-amortizable
intangible assets, and when conditions exist that require us to calculate the fair value of long-lived assets; however,
we do not expect this adoption to have a material impact on our consolidated financial statements.
In December 2007, the FASB issued SFAS 141R, Business Combinations. SFAS 141R continues to require the
purchase method of accounting to be applied to all business combinations, but it significantly changes the
accounting for certain aspects of business combinations. Under SFAS 141R, an acquiring entity will be required
to recognize all the assets acquired and liabilities assumed in a transaction at the acquisition-date fair value with
limited exceptions. SFAS 141R will change the accounting treatment for certain specific acquisition related items
including: (1) expensing acquisition related costs as incurred; (2) valuing noncontrolling interests at fair value at
the acquisition date; and (3) expensing restructuring costs associated with an acquired business. SFAS 141R also
includes a substantial number of new disclosure requirements. SFAS 141R is to be applied prospectively to business
combinations for which the acquisition date is on or after January 1, 2009. We expect SFAS 141R will have an
impact on our accounting for future business combinations once adopted but the effect is dependent upon the
acquisitions that are made in the future.
In December 2007, SFAS 160, Noncontrolling Interests in Consolidated Financial Statements, was issued.
SFAS 160 establishes new accounting and reporting standards for the noncontrolling interest in a subsidiary
and for the deconsolidation of a subsidiary. It clarifies that a noncontrolling interest in a subsidiary (minority interest)
is an ownership interest in the consolidated entity that should be reported as equity in the consolidated financial
statements and separate from the parent company’s equity. Among other requirements, this statement requires
consolidated net income to be reported at amounts that include the amounts attributable to both the parent
and the noncontrolling interest. It also requires disclosure, on the face of the consolidated statement of income,
of the amounts of consolidated net income attributable to the parent and to the noncontrolling income interest.
This statement is effective for us on January 1, 2009. When implemented, prior periods will be recast for
the changes required by SFAS 160. The adoption of this standard will not have a material impact on our
consolidated financial statements.
Bio-Rad Laboratories | Annual Report 2008 : 75
coRpoRA te infoRmA tion
DIR EC TORS
David Schwartz
chairman of the Board
James J. Bennett
director
Louis Drapeau
director
Albert J. Hillman
director
Sanford S. Wadler
Vice president,
general counsel
and Secretary
Ronald W. Hutton
treasurer
James R. Stark
corporate controller
Ruediger Naumann-Etienne
director
Alice N. Schwartz
director
Norman Schwartz
director
OTH ER ExECU TIV ES
Steve Binder
director,
technology development,
clinical diagnostics
Patrick Bugeon
group operations manager,
france clinical diagnostics
OF FIC ERS
David Schwartz
chairman of the Board
Norman Schwartz
president and
chief executive officer
Brad Crutchfield
Vice president and
group manager,
Life Science
John Goetz
Vice president and
group manager,
clinical diagnostics
Giovanni Magni
Vice president and
international Sales manager
Christine A. Tsingos
Vice president and
chief financial officer
John Bussell
manager,
immunohematology
Francois Capit
Regional manager,
Asia pacific
Patrick Carroll
manager,
north America Sales,
Life Science
Jean-Marc Chermette
manager, food Science
Colleen Corey
director, corporate
human Resources
Michael Crowley
manager,
north America Sales,
clinical diagnostics
Diane Dahowski
u.S. group operations
manager,
clinical diagnostics
Patrice Deletoille
manager, Blood Virus
David Dutton
manager, clinical Systems
David Forrester
Regional manager, europe
Shannon Hall
manager,
Laboratory Separations
John Hertia
group operations manager,
Life Science
Michael Jackson
manager, Bioplex 2200
Scott Jenest
manager, manufacturing,
Life Science
Leo Kaabi
manager, quality Systems
Bill Kuhlman
manager,
process chromatography
Ann Madden
manager,
clinical microbiology
Daniel Merle
manager,
Business development,
clinical diagnostics
Todd Morrill
manager,
Business development,
Life Science
John Senaldi
manager, protein function
Sanjiv Suri
Regional manager,
emerging markets
Sadashi Suzuki
Regional manager, Japan
Annette Tumolo
manager, gene expression
ANNUAL MEETING
the Annual meeting of
Stockholders will be held
on tuesday, April 28, 2009
at 4 pm, pacific time, at
the corporate offices of
the company in hercules,
california.
Bio-Rad will provide without
charge to each stockholder,
upon written request to
the Secretary, a copy of its
2008 Annual Report filed
with the Securities and
exchange commission on
form 10-k.
TRANSFER AGE NT
Computershare Investor
Services LLC
250 Royall Street
canton, mA 02021
tel: 800-962-4284
fax: 312-601-2312
www.computershare.com
AUDITORS
Deloitte & Touche LLP
San francisco, california
COMMON STOCK
traded on the new york
Stock exchange
class A common Stock
Symbol BIO
class B common Stock
Symbol BIOb
76 : Bio-Rad Laboratories | Annual Report 2008
Bio-Rad Laboratories
1000 Alfred Nobel Drive
Hercules, CA 94547
510-724-7000
www.bio-rad.com