Bio-Rad Laboratories Annual Report 2021

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FY2021 Annual Report · Bio-Rad Laboratories

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Bio-Rad
a
atories

220
2021

1 ANNUAL REPORT

LETTER TO STOCKHOLDERS

ooking back, the year turned out largely

as predicted. The pandemic continued

to rage in those parts of the country and

world with lower vaccination rates, while

high levels of vaccination and adherence to

safeguards have proven useful.

Managing through the pandemic and especially the safety of our

employees was at the top of our list. All the efforts we deployed,

including working remotely where possible, monitoring access

to our facilities, following local guidelines, closely managing

potential hot spots and mandating vaccination where possible,

really paid off. In an employee base of nearly 8000 people around

the world, we have only lost one to COVID.

By the time the year started, we had well adapted to our new

environment. That environment proved to be a dynamic one as

the year progressed. We saw our customers gradually returning

to the lab over the last twelve months, as they too adapted to a

changed environment. At this point, we are close to reaching a

normal run rate for the base business, although regional COVID

upswings still persist and can effect order ﬂow. While our base

business was tracking back to normal, our COVID-related

business began to taper off, making for a fairly smooth transition.

Remember that our biggest contribution to the Pandemic was

instrumentation to perform tests.

In the midst of all of this, we reported sales of $2.9 billion, an

increase of 14.8% over last year and we achieved operating

income of $489 million. While the year was somewhat

2021 PRODUCT SPOTLIGHT

DROPLET
DIGITAL PCR

EXPANDING OUR INNOVATION IN DIGITAL PCR

Bio-Rad’s Droplet DiDigigittal PCR Systems provide ultrasenensisititive and

CR Systems provide u r

absolutee nnuucleic acid quantiﬁcation. The appppliliccations for this

n iﬁcation. The a plic ti

tetechchnology continue to expand acroossss aacademic research, applied

cademic reseaea

xpxpand ac

markets, the biopharmaa i
markets, the biopharma indndususttry, and beyond. Increasingly, ddPdPCRCR
®®

y, and beyond. Increasinngly

isi
s emerging as aa vvaluable technology for advancingng ddiiscovery.
overy.
ery

able technology for advancing d

merging as aa v
erging as a

In th

hhe ongoing efforts to combat thehe CCOVID-19 pandemic, our

o c combat the COVID-19 panand

Dropop

plet Digital PCR technonolology is proving to offer great beneﬁt

o ogy is proving to offer

inin de

etecting verryy lolow levels of the SARS-CoV-2 virus in some

s of the SARS-CoV-2 vi

diag

gnooststicics lab settings and increasingly is becoming helpful in

anand increasingly is becominn

pinppin

npointing areas of outbreaks through wastewater surveillance. To

utbbreaks through wastewater survrvei

thattht
hat end, Bio-Rad launched the PREvalence

nd, Bio Rad
end Bio-Rad la

CoV 2
™e ddPCR® SARS-CoV-2
-CoV-2
S

WasWaW

astewater Quantiﬁcation Kit in June 2021 as a sensitive, accurate,

atioon Kit in June 2021 as a sensittive

and cos

ost-effective tool used to detect SARS-CoV-2 in a community’s

eded to detect SARS-CoV-2 inn

wastewat

ater. This kit includes all reagents needed to detect the virus

s all re ents needed o

in wastewa

s ddPC
ater on Bio-Rad’s ddPCR

® systems along with software

s along

for automated

t jt joins the company’s expanan
ed analysis. It joins the company’s expanding menu of

CO
COVID-19 prod

oducts that are being used in the global ﬁght against the

used in the lobal gght a

thatt are bei

demic, inclu
pandemic, inclu
mic inclu
p

duding
uding molecular qPCR and ddPCR

ents and
® instruments and
ts and

re
reagents, antibo

stss, quality controls, and ddPCRCR
ody tests, quality controls, and ddPCR

®®

assays
ys

to dto detect SARS-C

CoV-2 variants of concern.

araria

Adding to our su

ite of offerings in digital PCR, Bio-Rad acquired

r ngs in digital PCR, B o

Dropworks – a p

pre-commercial droplet digital PCR platform – in

mmercial droplet digital PCR R

Oc
October 2021. D

Dropworks’ development promises to provide an

wororks’ development promises too p

y-level produ
entry-level produ
level produ
e

orkﬂow
uct that could streamline the digital PCR workﬂow
orkﬂow
ucuct

t could streamline the digital PC

for
for life science

research and diagnostic applications. This platform

rchh and diagnostic applications. TTh

accelerates ou

ur entry into the lower-end segment of digital PCR and

o to the lower-end segment ofof

allows for exp

al-time PCR segm nt
xpansion in the real-time PCR segment. With an initial

launch antic

, Dropworks should expaan
icipated in 2023, Dropworks should expand the opportunity

for our dd

ddPCR

® platforms.msms

2021 PRODUCT SPOTLIGHT

PROCESS
CHROMATOGRAPHY

A CORNERSTONE OF OUR BIOPHARMA STRATEGY

Bio-Rad provides pprorotein puriﬁcation solutions for drug developmpmenene tt frfrom

drug developm tt

on solutio

n p

discovery to man
discovery to manufacturingg. OnOne of Bio-Rad’s ﬁrst successful and enduriningg

successful and e

ng. One of

RRaa

prododucucts, “analytical grade” (AG) ion n exexchc ange resins have decades of

s have dec

ducts “an

(AG) ion

longevity afteterr bebeing introduced in the 1950s. WWitith h their ability to separate

1950s. With th

beb ing introduc

s,
a mixture based on dififfefererences in chemical charges of ththeieirr components,

sed on differerences in chemical charges of th
ased on
emical charges of t

CHT CERAM
HYDROXYAP

MIC
PATITE

E XT MEDIA

t d
ththese e resins continue to be useded ttododay as a method of puriﬁcatioionn, ww
th

th d f
day as a method of

s continue to be us

iﬁ ti

t b

withwith

applicattioionsns in both clinical diagnostics anndd lilife science research.

n both clinical

fe scien

cs a

nd mixed-mode
Today, our ion-exchange anandd mixed-mode chromatographhy y reresis ns p

our ion-exchang

omatogra

ree

play

thcare applications
an important role in healthcare appplplicications for the puriﬁcation an

mportant role in hea

for the puriﬁcation

ndd

tion of biomolecules such as proteins peptide
characterization of biomolecules such as prooteteinins, peptides, and nu
lecules such as pr

acterization of biom

teins, peptides, and

ucleicc

ography med
acids. Our process chromatography media are used notot oonly in life

Our process ch

used not only

sciennce

but also by the
research and diagnostics, but also by the pharmaceutical indusstrtry y

h and diagnos

rmaceutical in

y as

rocess at various s
part of the puriﬁcation process at various stages in the manufacture

of the puriﬁcation p

ages in the manuf

e oof

nd vaccines to trea
biological therapeutics and vaccines to treat a variety of diseases.

t a variety of diseas

gical therapeutics

Recently, we introduced two new chromatography media:

we intro

new chr

hy medi

CHT Ceramic Hydroxyapatite XT media and Nuvia HP-Q Anion Exchhange

uvia HP-Q Anion

ite XT media and

eramic Hydroxya

puriﬁcation of bio h
resin for process protein puriﬁcation of biotherapeutics. CHT Cerammic

erapeutics. CHT Ce

for process protein

offers high resolut
Hydroxyapatite XT media offers high resolution and efﬁcient singlee-step

n and efﬁcient sing

oxyapatite XT medi

clearance of aggregates and other impurities. Nuvia HP-Q resin adddresses

ce of aggrega

d other impur

uvia HP-Q re

custome

tomers’ need for a high-performance resin compatible with thee high-

-performance r

ers’ need for a

compatible wit

throughput puriﬁca

puriﬁcation of biotherapeutics such as plasma proteins.s.

o
f biotherapeutics su

ch as plasma prote

industry continu
As the biopharmaceutical industry continues to advance, biomolecu

tinues to advance bio

e biopharmaceuti

t
to advance, biom

cules

Our inn
are becoming more complex. Our innovative resins combine multiple e

ns comb

g
ing mo

help overcome a
puriﬁcation modalities to help overcome any puriﬁcation challenge.

cation modalities

puriﬁcation chal

LETTER TO STOCKHOLDERS (CONTINUED)

anomalous for expenses, given reduced travel and related

expense, we have taken this opportunity to rethink some of

our business practices and expect to continue to operate at

an improved level.

While it is our expectation that COVID-related revenue will

recede, we have continued to invest in a few areas where we

feel there will be a sustaining need. One of the advantages

of our ddPCR technology is its ability to capture rare events.

This makes it an ideal platform for monitoring pathogens in

wastewater. During the year, we developed and introduced the

PREvalence wastewater kit to help municipalities in this regard.

It has proven to be valuable, and it has the potential to become

a standard monitoring tool.

Building on our molecular biology franchise, our Life Science Group

acquired a new platform in development in the last half of the year.

This will address a new area within digital biology. In concept,

the price and performance characteristics will help to broaden

adoption of droplet digital PCR into new areas of application.

We have been gratiﬁed by the acceptance and value ddPCR

has found in research and biopharma applications as measured

by its use in over 3000 peer reviewed publications, to date.

As you might imagine, we have created and invested in a

signiﬁcant portfolio of intellectual property around ddPCR over

the last several years and have found ourselves in a position to

defend the innovation covered by those rights. The end of the

year brought with it favorable resolution of outstanding litigation

with several infringers, and reinforces the strength of

our patented technology in this area.

B I O - R A D L A B O R ATO R I ES | 2 0 21 A N N UA L R EP O R T : 3

LETTER TO STOCKHOLDERS (C ON TIN UED)

In a closely allied area, you may recall that we acquired single

cell analysis technology, just as the pandemic began to take hold

in early 2020. We continue to move through the development

process, with the goal of introducing the ﬁrst in a line of products

later this year. There is a lot of interest in single cell analysis as

researchers look to isolate, analyze and interpret cell behavior. In

addition, there is also a growing interest to apply the technology

to monitoring disease progression and immune response.

During the year, we also established an alliance with Seegene

to bring their line of unique molecular diagnostic assays to the

U.S. market. Having partnered with them in other parts of the

world, we have come to understand the value of their assay

design and multiplex capabilities which allow clinicians to detect

multiple infectious disease targets, simultaneously, in syndromic

panels. We are currently pursuing FDA approvals to allow

introduction into the U.S. market.

We continue our journey to optimize our organizational and

operational footprint and to gain the resulting efﬁciencies

afforded us. A major project this past year was consolidation of

our customer service and ﬁnance organizations across Europe

into a central site in Budapest. We expect this to result in a

more efﬁcient and effective operating model for the region.

We also re-thought our global manufacturing footprint and

decided to relocate and consolidate some of our Europe-based

instrument operations to Singapore. It will take a while for the

results of these changes to be reﬂected in our ﬁnancial results,

but they will help us to reach our longer-term goals. In addition,

we restructured our diagnostic sales channel in Europe to

better reﬂect our customer proﬁle and create a more efﬁcient

4 : B I O - R A D L A B O R ATO R I ES | 2 0 21 A N N UA L R EP O R T

2021 PRODUCT SPOTLIGHT

SEEGENE
PARTNERSHIP

LEVERAGING OUR INSTALL BASE OF
CFX REAL-TIME PCR INSTRUMENTS

In June 2021

21, Bio-Rad entered into a partntnerersship with Seegene, Inc.,

d into a p

ip w

a globbalal leader in

in multiplex molececulular diagnostics, for the clinical

ar diagnostics,

development and co

commmmeercialization of infectious disease momolelecular

zat
ation of infectious

diagnostic products.s. SS

agno

eegene
Seegene’s unique assay desisigngn, chemistries

aa
and high-levevelel multiplex

exing are optimizeedd toto work with Bio-Rad’s CFX

real-timmee PPCR systems to

o dettecectt multiple infectious disease targets

sisimmultaneously, making the

e assays well-suited for syndromic testing.

Under the terms of the agre
Under the terms ofof the agree

ement, Korea-based Seegene will supply

ostic tests for us
diagnostticic ttests for use on B

Bio-Rad’s Real-Time PCR platforms

anndd BiBio-Rad will exclusively

market the tests in the U.S. – pending

clinical development a

opment and regreg

o
gulatory c
gulatory clearance from the Food &

Drug Administration (F(FDAD ).

(FD

CFX OPUS
REAL-TIME

96
E PC

CR SYSTEM

2021 PRODUCT SPOTLIGHT

INTELIQ
QUALITY
CONTROLS

EXTENDING OUR LEADERSHIP IN
INDEPENDENT QUALITY CONTROLS

Bio-Rad offers enhanced value toto ttthehe gglobal clinical lababororatory testine ing g

community to ensure the best possible teeststinininggg acaccuracy for pattieientnts. n

We hhavave e been expanding our portfolio and recentltlyy inini trtrodo uced a a

complete mennuu ofof independent Quality Control ready-to-use e rereagagagenents:

InteliQ, designed to increreasase workﬂow efﬁciency for high-volume labss.a

BiB o-Rad also offers a companion QCQC data management software: Unity,

that impmproroves overall laboratory analytical peperfrformance and enablesb

labs to comparee ththeie r results in real-time with overr 225,5,000 other

laboratories around the woworlrld.d

InteeliliQQ reagents are provided in barcodedd tutubes which are pre-

INTELI
LIQ Q
Q
QUA
QUALI
ALITY T
CONTROLS
CO
R

formulated andnd rready-to-load onto high throughpuutt clclinical analyzers

cli

with no manual data enentrtry y or reagent manipulation requiredd. ThThey

ed.

tion

are universally compatible with h momost automated chemistry and

mat

istr

immunoassay platforms. Innovations suchh asas InteliQ allow clinical

ons su

eliQ

nic

diagnostic labs to provide hig
diagnostic labs to provide high-quality and consistetentnt test reporting

con

st r

each time, and over time.

LETTER TO STOCKHOLDERS (CONTINUED)

and effective sales and support organization. In general, the

investments made over the past few years in systems and

organization continue to bear fruit, allowing us to better manage

a diverse, global enterprise and to improve alignment around

our stated goals and initiatives. While there is much more to be

accomplished, we are making good progress.

As the year draws to a close, so does the career of Annette

Tumolo, who is retiring after over 30 years of service to the

company. We wish her well and welcome the promotion of

Simon May to lead our Life Science Group.

While the last few years have been anything but normal, the

Bio-Rad team has demonstrated a real ability to continue to

make progress on many fronts. As we transition into 2022, I think

we have a lot to look forward to. Our core markets are recovering,

the world has adjusted to a pandemic environment, and the

funding outlook for life science and diagnostics is robust.

Thank you all, employees and investors, for being a valued

part of this adventure.

Norman Schwartz
CHAIRMAN OF THE BOARD, PRESIDENT AND CEO

B I O - R A D L A B O R ATO R I ES | 2 0 21 A N N UA L R EP O R T : 7

2021 AT A GLANCE

FINANCIAL HIGHLIGHTS

FIVE-YEAR RECORD

(IN MILLIONS)

2017

2018

2019

2020

2021

Net Sales

Gross Proﬁt

Operating Income (Loss)

2,160.2

1,187.7

119.3

Cash Flow from Operations

104.1

2,289.4

1,223.2

(103.3)

285.5

2,311.7

1,257.0

229.7

457.9

2,545.6

1,437.8

411.0

575.3

2,922.5

1,640.7

489.4

656.5

2021 SALES BY GROUP

(IN MILLIONS)

2021 SALES BY REGION

51.9%
Clinical
Diagnostics
$1,515.9

47.9%
Life Science
$1,400.8

42%
Americas

0.2%
Other

25%
Asia Pacific

33%
Europe

NET SALES

(IN MILLIONS)

CASH FLOW FROM OPERATIONS

(IN MILLIONS)

2017

2018

2019

2020

2021

$ 2,160.2

$ 2,289.4

$ 2,311.7

$ 2,545.6

$ 2,922.5

2017

2018

2019

2020

2021

$ 104.1

$ 285.5

$ 457.9

$ 575.3

$ 656.5

8 : B I O - R A D L A B O R ATO R I ES | 2 0 21 A N N UA L R EP O R T

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
☒

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the year ended December 31, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________________________ to _________________________________

Commission file number 1-7928

BIO-RAD LABORATORIES, INC.

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of incorporation or organization)

94-1381833
(I.R.S. Employer Identification No.)

1000 Alfred Nobel Drive,

Hercules,
(Address of principal executive offices)

California

94547
(Zip Code)

Registrant's telephone number, including area code

(510) 724-7000

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class
Class A Common Stock Par Value $0.0001 per share
Class B Common Stock Par Value $0.0001 per share

Securities registered pursuant to Section 12(g) of the Act: NONE

Trading
Symbols
BIO
BIOb

Name of Each Exchange on Which Registered
New York Stock Exchange
New York Stock Exchange

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

☒ Yes

☐ No

☐ Yes

☒ No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange

Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been

subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to

Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

☒ Yes

¨ No

☒ Yes

¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging
growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2
of the Exchange Act.

Large accelerated filer
Non-accelerated file

☒
☐

Accelerated filer
Smaller reporting company
Emerging growth company

☐
☐
☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for
complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐

☒

☐

Yes ☒ No

As of June 30, 2021, the last business day of the registrant's most recently completed second fiscal quarter, the aggregate market value of the Registrant's Class A
Common Stock held by non-affiliates was approximately $13,641,153,999 and the aggregate market value of the registrant's Class B Common Stock held by non-
affiliates was approximately $106,611,955.

As of February 9, 2022, there were 24,860,701 shares of Class A Common Stock and 5,071,736 shares of Class B Common Stock outstanding.

(1)

Definitive Proxy Statement to be mailed to stockholders in connection with the

registrant's 2022 Annual Meeting of Stockholders (specified portions)

Documents Incorporated by Reference

Document

Form 10-K Parts

III

BIO-RAD LABORATORIES, INC.

FORM 10-K DECEMBER 31, 2021

TABLE OF CONTENTS

Part I.

Item 1. Business

Item 1A. Risk Factors

Item 1B. Unresolved Staff Comments

Item 2. Properties

Item 3. Legal Proceedings

Item 4. Mine Safety Disclosures

Part II.

Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of
Equity Securities

Item 6. Reserved

Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Item 8. Financial Statements and Supplementary Data

Item 9. Changes and Disagreements with Accountants on Accounting and Financial Disclosure

Item 9A. Controls and Procedures

Item 9B. Other Information

Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Part III.

Item 10. Directors, Executive Officers and Corporate Governance

Item 11. Executive Compensation

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters

Item 13. Certain Relationships and Related Transactions, and Director Independence

Item 14. Principal Accountant Fees and Services

Part IV.

Item 15. Exhibits and Financial Statement Schedules

Item 16. Form 10-K Summary

Signatures

INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

Other than statements of historical fact, statements made in this report include forward-looking statements, within
the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include,
without limitation, statements we make regarding our future financial performance, operating results, plans and
objectives, impact of the COVID-19 pandemic on Bio-Rad’s results and operations, and steps governments,
universities, hospitals and private industry, including diagnostic laboratories, are taking or may take as a result of
the pandemic. Forward-looking statements generally can be identified by the use of forward-looking terminology,
such as “believe,” “expect,” “anticipate,” “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,
but not limited to, the duration, severity and impact of the COVID-19 pandemic, global economic conditions,
supply chain issues, our ability to develop and market new or improved products, our ability to compete effectively,
foreign currency exchange fluctuations, reductions in government funding or capital spending of our customers,
international legal and regulatory risks, product quality and liability issues, our ability to integrate acquired
companies, products or technologies into our company successfully, changes in the healthcare industry, natural
disasters and other catastrophic events beyond our control, and other risks and uncertainties identified under “Item
1A, Risk Factors” of this Annual Report. 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 law.

PART I.

ITEM 1. BUSINESS

General

Bio-Rad Laboratories, Inc. (referred to in this report as “Bio-Rad,” “we,” “us,” and “our”) is a multinational
manufacturer and worldwide distributor of our own life science research and clinical diagnostics products. Bio-Rad
manufactures and supplies the life science research, healthcare, analytical chemistry and other markets with a broad
range of products and systems used to separate complex chemical and biological materials and to identify, analyze
and purify their components.

We have direct distribution channels in over 35 countries outside the United States through subsidiaries whose focus
is sales, customer service and product distribution. In some locations outside and inside these 35 countries, sales
efforts are supplemented by distributors and agents.

Description of Business

Business Segments

Bio-Rad operates in two industry segments designated as Life Science and Clinical Diagnostics. Both segments
operate worldwide. Our Life Science segment and our Clinical Diagnostics segment generated 48% and 52%,
respectively, of our net sales for the year ended December 31, 2021. We generated approximately 39% of our
consolidated net sales for the year ended December 31, 2021 from the U.S. and approximately 61% from our
remaining worldwide markets.

Life Science Segment
Our Life Science segment is at the forefront of discovery, creating advanced tools to answer complex biological
questions. These tools are typically used to separate, purify, characterize, or quantitate biological materials such as
cells, proteins, and nucleic acids in the research laboratory or the biopharmaceutical manufacturing and quality
control process, for food safety and science education and literacy. Many of our products are used in established
research techniques, biopharmaceutical production processes and food testing regimes. We are focused on the
translational research market segment where our products help accelerate the timelines from discovery in the lab to
the clinic and the patient. We are a leader in the life sciences market and develop, manufacture and market
approximately 9,000 reagents, apparatus and laboratory instruments that serve a global customer base. These
techniques are typically used to separate, purify and identify biological materials such as proteins, nucleic acids and
bacteria within a laboratory or production setting. We focus on selected segments of the life sciences market in
proteomics (the study of proteins), genomics (the study of genes), biopharmaceutical production, cellular biology
and food safety. We estimate that the worldwide market that our portfolios can address for products in these
selected segments of our addressable markets is approximately $19 billion. Our principal life science customers
include universities and medical schools, industrial research organizations, government agencies, pharmaceutical
manufacturers, biotechnology researchers, food producers and food testing laboratories.

Clinical Diagnostics Segment

Our Clinical Diagnostics segment designs, manufactures, sells and supports test systems, informatics systems, test
kits and specialized quality controls that serve clinical laboratories in the global diagnostics market. Our products
currently address specific niches within the in vitro diagnostics (IVD) test market, and we seek to focus on the
higher margin, higher growth segments of this market.

We supply more than 3,000 different products that cover more than 300 clinical diagnostic tests to the IVD test
market. We estimate that the worldwide sales for products in the markets we serve is approximately $16 billion.
IVD tests are conducted outside the human body and are used to identify and measure substances in a patient’s
tissue, blood or urine. Our products consist of reagents, instruments and software, typically provided to our
customers as an integrated package to allow them to generate reproducible test results. Revenue in this business is
highly recurring, as laboratories typically standardize test methodologies, which are dependent on a particular
supplier’s equipment, reagents and consumable products. An installed base of diagnostic test systems therefore
typically creates an ongoing source of revenue through the sale of test kits for each sample analyzed on an installed
system. Our principal clinical diagnostic customers include hospital laboratories, diagnostic reference laboratories,
transfusion laboratories and physician office laboratories.

Raw Materials and Components

We utilize a wide variety of chemicals, biological materials, electronic components, machined metal parts, optical
parts, computing and peripheral devices. Most of these materials and components are available from numerous
sources, and while we have historically not experienced difficulty in securing adequate supplies, the impact of
COVID-19 on our suppliers' operations has created on-going challenges in procuring materials. For more
discussion relating to the impacts of the COVID-19 pandemic and the difficulty of securing adequate supplies,
please see “Item 1A, Risk Factors” to this Annual Report. In certain instances, we acquire components and
materials from a sole supplier. Due to the regulatory environment in which we operate, we may be unable to
quickly establish additional or replacement sources for some components or materials.

Patents, Trademarks and Licenses

We own over 2,200 U.S. and international patents and numerous trademarks. We also hold licenses under U.S. and
foreign patents owned by third parties and pay royalties on the sales of certain products under these licenses. In
addition, we also receive royalties for licenses of our intellectual property. We view these patents, trademarks and
license agreements as valuable assets; however, we believe that our ability to develop and manufacture our products
depends primarily on our knowledge, technology and special skills rather than our patent, trademark and licensing
positions.

Seasonal Operations

Our business is not inherently seasonal. However, the European custom of concentrating vacation during the
summer months usually tempers third quarter sales volume and operating income.

Sales and Marketing

We conduct our worldwide operations through an extensive direct sales force, employing approximately 820 direct
sales and sales management personnel around the world. Our sales force typically consists of experienced industry
professionals with scientific training, and we maintain a separate specialized sales force for each of our segments.
We believe that this direct sales approach allows us to sell a broader range of our products that creates more brand
awareness and long-term relationships with our customers.

We also use a range of sales and marketing intermediaries (SMIs) in our international markets. The types of SMIs
we utilize are distributors, agents, brokers and resellers. We have programs and policies in place with our SMIs to
ensure their compliance with all applicable laws, including adhering to our anti-corruption standards to ensure a
transparent sale to our customers.

Our customer base is broad and diversified. Our worldwide customer base includes (1) prominent university and
research institutions; (2) hospital, public health and commercial laboratories; (3) other leading diagnostic
manufacturers; and (4) leading companies in the biotechnology, pharmaceutical, chemical and food industries.

Our sales are affected by a number of external factors. For example, a number of our customers, particularly in the
Life Science segment, are substantially dependent on government grants and research contracts for their funding.

Most of our international sales are generated by our wholly-owned international subsidiaries and their branch
offices. Certain of these subsidiaries also have manufacturing operations. Bio-Rad’s international operations are
subject to certain risks common to foreign operations in general, such as changes in governmental regulations,
import restrictions and foreign exchange fluctuations.

Competition

The markets served by our product groups are highly competitive. Our competitors range in size from start-ups to
large multinational corporations with significant resources and reach. We seek to compete primarily in market
segments where the technology and efficacy of our products offer customers specific advantages over the
competition.

Our Life Science segment does not face the same competitors for all of its products due to the breadth of its product
lines. Major competitors in this market include Becton Dickinson, GE Biosciences, Merck Millipore and Thermo
Fisher Scientific. We compete primarily based on meeting performance specifications and offering comprehensive
solutions.

Major competitors for our products in the Clinical Diagnostics segment include Roche, Abbott Laboratories,
Siemens, Danaher, Thermo Fisher Scientific, Becton Dickinson, bioMérieux, Ortho Clinical Diagnostics, Tosoh,
Immucor and DiaSorin. We compete across a variety of attributes including quality, service and product portfolio.

Research and Development

We conduct extensive research and development activities in all areas of our business. Research and development
has played a major role in Bio-Rad’s growth and is expected to continue to do so in the future. Our research teams
are continuously developing new products and new applications for existing products. In our development of new
products and applications, we interact with scientific and medical professionals at pharma and bio-pharma
companies, universities, hospitals and medical schools, and within our industry. In addition, we regularly invest in
companies that are engaged in the development of new technologies that either complement or expand our existing
portfolio of products. We have approximately 950 employees worldwide focused on research and development,
including degreed scientists, engineers, software developers and other technical support staff.

Regulatory Matters

The development, testing, manufacturing, marketing, post-market surveillance, distribution, advertising and labeling
of certain of our products (primarily diagnostic and donor screening products) are subject to regulation in the United
States by the Center for Devices and Radiological Health (CDRH) and/or the Center for Biologics Evaluation and
Research (CBER) of the U.S. Food and Drug Administration (FDA) and in other jurisdictions by state and foreign
government authorities. FDA regulations require that some new products have pre-marketing notification
(“510(k)”) or approval (“PMA” or Biologics License Application – “BLA”) by the FDA and require certain
products to be manufactured in accordance with FDA’s “good manufacturing practice” regulations, to be
extensively tested and to be properly labeled to disclose test results and performance claims and limitations. The
FDA’s 510(k) clearance process requires regulatory competence to execute and usually takes four to nine months,
but it can last longer. The FDA’s PMA and BLA processes require extensive regulatory competence to execute and
may take one to two years.

A clinical trial is generally required to support a PMA or BLA application and is sometimes required for a 510(k)
clearance or a de novo authorization. Conducting clinical trials is a complex and costly activity and frequently
requires the use of outsourced resources that specialize in planning and conducting the clinical trial for the medical
device manufacturer.

The European Union (“EU”) has adopted the EU in-vitro Diagnostics Regulation (the “EU IVDR”), which imposes
stricter requirements for the marketing and sale of in-vitro diagnostics products (as compared to the predecessor in-
vitro Diagnostics Directive (IVDD)), including in the areas of clinical evaluation requirements, quality systems,
economic operators and post-market surveillance. Manufacturers of currently marketed in-vitro diagnostics
products will have until May 2022 to meet the requirements of the EU IVDR, though the EU Council and
Parliament recently signed an amendment that delays certain previously mandated deadlines to allow more time for
Notified Body to manage the entire portfolio of IVD products on the European market.

Our manufacturing facilities, as well as those of certain suppliers, are subject to periodic routine and for-cause
inspections by the FDA and other regulatory bodies to verify compliance with regulatory requirements. Similar
inspections are performed by Notified Bodies to verify compliance to applicable ISO standards (e.g. ISO
13485:2016), requirements under the Medical Device Single Audit Program ("MDSAP") applicable to regulatory
requirements of Australia, Brazil, Canada, Japan and the U.S. and/or medical device regulations and requirements
from the countries in which we distribute product and other specified audits by regulatory authorities. If a regulatory
body were to find that we or certain suppliers have failed to comply with applicable regulations (e.g. recordkeeping,
reporting of adverse events), it could institute a wide variety of enforcement actions, ranging from issuance of a
warning or untitled letter to more severe sanctions, such as product recalls or seizures, civil penalties, consent
decrees, injunctions, criminal prosecution, operating restrictions, partial suspension or shutdown of production,
refusal to permit importation or exportation, refusal to grant, or delays in granting, clearances or approvals or
withdrawal or suspension of existing clearances or approvals. Any of these actions could have an adverse effect on
our business.

We are also subject to additional regulation and enforcement by the federal government and by authorities in the
states and foreign jurisdictions in which we conduct our business. Such laws include, without limitation, state and
federal anti-kickback, fraud and abuse, false claims, privacy and security and physician sunshine laws and
regulations. If our operations are found to be in violation of any of such laws or any other governmental regulations
that apply to us, we may be subject to penalties, including, without limitation, civil and criminal penalties, damages,
fines, the curtailment or restructuring of our operations, exclusion from participation in federal and state healthcare
programs and imprisonment.

Sales of our products will depend, in part, on the extent to which our products or diagnostic tests using our products
will be covered by third-party payors, such as government health care programs, commercial insurance and
managed healthcare organizations. These third-party payors are increasingly reducing reimbursements for certain
medical products and services. In addition, the U.S. government, state legislatures and foreign governments have
continued implementing cost containment programs, including price controls and restrictions on reimbursement.
Adoption of price controls and cost-containment measures, and adoption of more restrictive policies in jurisdictions
with existing controls and measures, could further limit our net revenue and results. Decreases in third-party
reimbursement for our products or diagnostic tests using our products, or a decision by a third-party payor to not
cover our products could reduce or eliminate utilization of our products and have a material adverse effect on our
sales, results of operations and financial condition. In addition, healthcare reform measures have been and will be
adopted in the future, any of which could limit the amounts that governments will pay for healthcare products and
services, which could result in reduced demand for our products or additional pricing pressures.

As a multinational manufacturer and distributor of sophisticated instrumentation, we must meet a wide array of
electromagnetic compatibility and safety compliance requirements to satisfy regulations in the United States, the
European Union and other jurisdictions.

Our operations are subject to federal, state, local and foreign environmental laws and regulations that govern
activities such as transportation of goods, emissions to air and discharges to water, as well as handling and disposal
practices for solid, hazardous and medical wastes. In addition to environmental laws that regulate our operations,
we are also subject to environmental laws and regulations that create liabilities and clean-up responsibility for spills,
disposals or other releases of hazardous substances into the environment as a result of our operations or otherwise
impacting real property that we own or operate. The environmental laws and regulations could also subject us to
claims by third parties for damages resulting from any spills, disposals or releases resulting from our operations or
at any of our properties.

These regulatory requirements vary widely among countries.

Human Capital Resources

At Bio-Rad, we consider our employees to be our most valuable asset, and critical to the effective development,
manufacture, sale, distribution and servicing of our vast array of products and services. Our employees are essential
to satisfying our customers’ needs for products to advance science and healthcare. At December 31, 2021, we had
approximately 7,900 employees, the overwhelming majority of which are full-time employees. Our employees are
located throughout the world with roughly 46% in the Americas, 39% in Europe, the Middle-East and Africa, and
15% in Asia Pacific. Our employees work in over 140 locations in 36 different countries around the world.

Diversity, Equity and Inclusion

At Bio-Rad, we recognize that diversity is a strength. Our differences offer new and unique ideas and perspectives
to our organization. We foster a work culture that embraces the diverse experience and knowledge of every
employee, creating an inclusive culture regardless of race, gender, age, sexual orientation, disability, or nationality.
We have been purposeful in our efforts to hire, develop and retain diverse talent as well as in our efforts to create an
inclusive culture. We actively encourage employee engagement and regularly solicit feedback regarding job
satisfaction, career growth and development, collaboration, empowerment, ethics, and manager effectiveness. We
use employee input to help our managers make focused and strategic commitments to improve and sustain
engagement in their teams. Bio-Rad requires that all management and employees participate in ongoing training
intended to increase awareness of the importance of a diverse and inclusive culture.

Compensation and Benefits

We provide a competitive total rewards program consisting of broad-based salary and bonus plans as well as annual
stock grants to management level employees. These programs combine to recognize and reward performance based
on individual, group, and overall company performance. We provide competitive health and welfare programs
which include medical, dental, vision and life insurance, a 401(k) plan, an employee stock purchase program, local
pension plans, profit sharing, employee assistance, child and elder care programs, employee recognition and a host
of other localized programs tied to the unique needs of our employees. Pay equity is an integral part of our
compensation strategy. We have established ongoing processes and protocols to help us pay each individual
employee appropriately based on the employee's skills, performance, experience, location, market practices, etc.,
regardless of race, gender and other non-performance related attributes.

Health, Wellness and Safety

The health and welfare of our employees is of the highest importance to Bio-Rad. We prioritize, manage, and
carefully track safety performance at all locations globally and integrate sound safety practices in every aspect of
our operations. We offer work site hazard evaluations, workplace safety surveys, safety equipment selection, safety
program reviews, chemical and radiation exposure monitoring, safety training, and disposal of hazardous chemical,
radioactive and infectious waste. In response to the COVID-19 pandemic and related mitigation measures, in
March 2020 we began to implement certain changes in an effort to protect our employees and customers from
COVID-related exposures. For example, we implemented social distancing in the workplace, extensive cleaning
and sanitation processes for both production and office spaces, and broad work-from-home initiatives for employees
in our administrative functions. While Bio-Rad’s essential workers continued to work at our facilities and provide
vital service to our customers, most employees in our administrative functions effectively worked remotely starting
in March 2020. Many employees in our administrative functions continue to work remotely, and we anticipate they
will continue to do so until pandemic conditions improve. In 2021, we also instituted a COVID-19 vaccine
requirement in the United States to help contribute to a safer workplace. We also require employees to isolate and
quarantine when appropriate to protect their fellow workers and deploy rapid COVID-19 testing when appropriate.

Training and Talent Development

We provide training programs for managers and employees to support their growth and development. Our
management series of courses cover essential management and leadership learning to provide our managers with the
necessary skills and experience needed to more effectively lead and develop their teams. In addition, available
courses for employees help them to be more effective at work, enhance interpersonal effectiveness, and help them
achieve their full potential. We also support employees’ professional development by providing an educational
reimbursement program for qualified educational expenses. We have moved our learning and development efforts
to a virtual platform in response to the global pandemic.

Available Information

Bio-Rad files annual, quarterly, and current reports, proxy statements, and other documents with the Securities and
Exchange Commission (SEC) under the Securities Exchange Act of 1934, as amended. The SEC maintains an
Internet website that contains reports, proxy and information statements, and other information regarding issuers,
including Bio-Rad, that file electronically with the SEC. The public can obtain any documents that we file with the
SEC at http://www.sec.gov.

Bio-Rad’s website address is www.bio-rad.com. We make available, free of charge through our website, our Form
10-Ks, 10-Qs and 8-Ks, and any amendments to these forms, as soon as reasonably practicable after filing with the
SEC. The information on our website is not part of this Annual Report on Form 10-K.

ITEM 1A. RISK FACTORS

In evaluating our business and whether to invest in any of our securities, you should carefully read the following
risk factors in addition to the other information contained in this report. We believe that any of the following risks
could have a material effect on our business, results of operations or financial condition, our industry or the trading
price of our common stock. We operate in a continually changing business environment, and new risks and
uncertainties emerge from time to time. We cannot predict these new risks and uncertainties, nor can we assess the
extent to which any such new risks and uncertainties or the extent to which the risks and uncertainties set forth
below may adversely affect our business, results of operations, financial condition, our industry, the value of our
equity holdings, or the trading price of our common stock. Please carefully consider the following discussion of
significant factors, events and uncertainties that make an investment in our securities risky and provide important
information for the understanding of the “forward-looking” statements discussed this report. In addition to the
effects of the COVID-19 pandemic and resulting global disruptions on our business and operations discussed in this
report, additional or unforeseen effects from the COVID-19 pandemic and the global economic climate may give
rise to or amplify many of these risks discussed below.

Business, Economic, Legal and Industry Risks

Pandemics or disease outbreaks, such as the COVID-19 pandemic, have affected and could materially adversely
affect our business, operations, financial condition, and results of operations.

Although we expect that vaccinations for COVID-19 will continue to improve conditions, the COVID-19 pandemic
has had and if conditions deteriorate again, could continue to have an adverse effect on the United States and global
economies, as well as on aspects of our operations and those of third parties on whom we rely. The COVID-19
pandemic has impacted and, we expect, to some extent, will continue to impact parts of our business, operations,
financial condition and results of operations in a variety of ways.

Although we have experienced increased demand for certain of our products being used in fighting the COVID-19
pandemic, we previously experienced some decreases in product demand in certain of our other businesses. Many
of our customers reduced or modified operations to various extents, resulting in labs, universities and other
customers' facilities being opened at reduced capacity, hospital visits declined as people delayed elective surgeries
and avoided non-essential trips to the hospital, and routine diagnostic testing slowed. If conditions related to the
pandemic were to deteriorate, we expect that parts of our business could again suffer negative impacts from the
pandemic. We expect that an improvement in the COVID-19 pandemic conditions will result in a decrease in
demand for our products being used in fighting the COVID-19 pandemic which could have a negative impact on
our financial results if the negative impact is not offset by the recovery of other parts of our businesses as a result of
improved conditions related to the pandemic.

On the supply side, we are experiencing increased challenges with the supply of raw materials and components used
in the production of our products, with some suppliers operating at reduced or modified capacity and otherwise
unable to meet our demand for raw materials and inputs to manufacture our products. There are currently industry
wide supply shortages of plastic materials, raw material resins, and certain electronic components as well.
Shortages of raw materials have caused backorders, some of which we consider to be significant, and some delays
in certain new product development activities, and we expect backorders and delays to continue in 2022. In
addition, we continue to experience transportation challenges in moving goods across regions, including reduced
freight availability as some airlines have scaled back flight operations, increased freight surcharges due to reduced
freight capacity, and ocean freight capacity has been constrained by delays at ports on the West Coast of the U.S.
and globally. Some countries continue to impose travel restrictions and may continue to impose measures that
restrict the movement of our goods. We have experienced raw material cost increases as a result of the COVID-19
pandemic, which may continue. The invocation by the U.S. federal government of the Defense Production Act of
1950 with respect to our manufacturing operations, or the enforcement of comparable laws by other governmental
entities, could disrupt our manufacturing and distribution operations.

With respect to our personnel, as a critical health care supplier, we have continued to keep essential production,
distribution and service teams onsite working in manufacturing and supply chain facilities throughout the world.
Many employees in our administrative functions continue to work remotely, and we anticipate they will continue to
do so until pandemic conditions improve. Although we are adhering to government mandated and Environmental,
Health and Safety protocols, an outbreak of COVID-19 at one or more of our facilities could nonetheless cause
shutdowns of facilities and a reduction in our workforce, which could dramatically affect our ability to operate our
business and our financial results.

The duration of the COVID-19 pandemic is unknown, even with the distribution of a vaccine and boosters, and it is
difficult to predict the full extent of potential impacts the pandemic will have in the future on our business,
operations, and financial results, or on our customers, suppliers, logistics providers, or on the global economy as a
whole.

A reduction or interruption in the supply of components and raw materials could adversely affect our
manufacturing operations and related product sales.

The manufacture of our products requires the timely delivery of sufficient amounts of quality components and
materials. We manufacture our products in numerous manufacturing facilities around the world. We acquire our
components and materials from many suppliers in various countries. We work closely with our suppliers to ensure
the continuity of supply, but we cannot guarantee these efforts will always be successful. Further, while we seek to
diversify our sources of components and materials, in certain instances we acquire components and materials from a
sole supplier. The COVID-19 pandemic has created delays and shortages in the supply of components and raw
materials. In addition, due to the regulatory environment in which we operate, we may be unable to quickly
establish additional or replacement sources for some components or materials. If our supply is reduced or
interrupted or of poor quality, and we are unable to develop alternative sources for such supply, our ability to
manufacture our products in a timely or cost-effective manner could be adversely affected, which would adversely
affect our ability to sell our products. See also our risk factor regarding the COVID-19 pandemic above.

Our international operations expose us to additional costs and legal and regulatory risks, which could have a
material adverse effect on our business, results of operations and financial condition.

We have significant international operations. We have direct distribution channels in over 35 countries outside the
United States, and during the twelve months ended December 31, 2021 our foreign entities generated 61% of our
net sales. Compliance with complex foreign and U.S. laws and regulations that apply to our international operations
increases our cost of doing business. These numerous and sometimes conflicting laws and regulations include,
among others, data privacy requirements, labor relations laws, tax laws, anti-competition regulations, import and
trade restrictions, tariffs, duties, quotas and other trade barriers, export requirements, U.S. laws such as the Foreign
Corrupt Practices Act ("FCPA") and other U.S. federal laws and regulations established by the office of Foreign
Asset Control, foreign laws such as the UK Bribery Act 2010 or other foreign laws which prohibit corrupt payments
to governmental officials or certain payments or remunerations to customers. In addition, changes in laws or
regulations potentially could be disruptive to our operations and business relationships in the affected regions. For
example, the United Kingdom's withdrawal from the European Union (commonly referred to as “Brexit”) has
caused some disruption to the free movement of goods, services and people between the United Kingdom and the
European Union and has resulted in increased regulatory complexities.

Given the high level of complexity of the foreign and U.S. laws and regulations that apply to our international
operations, there is a risk that we may inadvertently breach some provisions, for example, through fraudulent or
negligent behavior of individual employees, our failure to comply with certain formal documentation requirements,
or otherwise. Our success depends, in part, on our ability to anticipate these risks and manage these challenges
through policies, procedures and internal controls. However, we have a dispersed international sales organization,
and we use distributors and agents in many of our international operations. This structure makes it more difficult
for us to ensure that our international selling operations comply with laws and regulations, and our global policies
and procedures.

Violations of these laws and regulations could result in fines, criminal sanctions against us, our officers or our
employees, requirements to obtain export licenses, cessation of business activities in sanctioned countries,
implementation of compliance programs, and prohibitions on the conduct of our business. Violations of laws and
regulations also could result in prohibitions on our ability to offer our products in one or more countries and could
materially damage our reputation, our brand, our international expansion efforts, our ability to attract and retain
employees, or our business, results of operations and financial condition. See also our risk factors regarding the
COVID-19 pandemic above and regarding government regulations and global economic conditions below.

The industries and market segments in which we operate are highly competitive, and we may not be able to
compete effectively.

The life science and clinical diagnostics markets are each highly competitive. Some of our competitors have greater
financial resources than we do, making them better equipped to license technologies and intellectual property from
third parties or to fund research and development, manufacturing and marketing efforts. Moreover, competitive and
regulatory conditions in many markets in which we operate restrict our ability to fully recover, through price
increases, higher costs of acquired goods and services resulting from inflation and other drivers of cost increases.
Many public tenders have become more competitive due to governments lengthening the commitments of their
public tenders to multiple years, which reduce the number of tenders in which we can participate annually. Because
the value of these multiple-year tenders is so high, our competitors have been more aggressive with their pricing.
Our failure to compete effectively and/or pricing pressures resulting from competition could adversely affect our
business, results of operations and financial condition.

We may not be able to grow our business because of our failure to develop new or improved products.

Our future growth depends in part on our ability to continue to improve our product offerings and develop and
introduce new product lines and extensions that integrate technological advances. In particular, we may not be able
to keep up with changes in the clinical diagnostics industry, such as the trend toward molecular diagnostics or point-
of-care tests. If we are unable to integrate technological advances into our product offerings or to design, develop,
manufacture and market new product lines and extensions successfully and in a timely manner, our business, results
of operations and financial condition will be adversely affected. The COVID-19 pandemic has caused some delays
to our ability to develop and introduce new products. We have experienced product launch delays in the past and
may do so in the future. We cannot assure you that our product and process development efforts will be successful
or that new products we introduce will achieve market acceptance. Failure to launch successful new products or
improvements to existing products may cause our products to become obsolete, which could harm our business,
results of operations and financial condition.

Breaches of our information systems could have a material adverse effect on our business and results of
operations.

We have experienced and expect to continue to experience attempts by computer programmers and hackers to attack
and penetrate our layered security controls, like the December 2019 Cyberattack that was previously discussed in
Item 7 of our Annual Report for the period ended December 31, 2019. Through our sales and eCommerce channels,
we collect and store confidential information that customers provide to, among other things, purchase products or
services, enroll in promotional programs and register on our web site. We also acquire and retain information about
suppliers and employees in the normal course of business. Such information on our systems includes personally
identifiable information and, in limited instances, protected health information. We also create and maintain
proprietary information that is critical to our business, such as our product designs and manufacturing processes.
Despite recent initiatives to improve our technology systems, such as our enterprise resource planning
implementation and the centralization of our global information technology organization, we could experience a
significant data security breach. Increased use of remote work arrangements and rapidly evolving work scenarios in
response to the COVID-19 pandemic expose us to additional risk of cyberattack and disruption. Because the
techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently
and often are not recognized until launched against a target, we may not be able to anticipate all of these techniques
or to implement adequate preventive measures. Computer hackers have attempted to penetrate and will likely
continue to attempt to penetrate our and our vendors’ information systems and, if successful, could misappropriate
confidential customer, supplier, employee or other business information, such as our intellectual property. Third
parties could also gain control of our systems and use them for criminal purposes while appearing to be us. As a
result, we could lose existing customers, have difficulty attracting new customers, be exposed to claims from
customers, financial institutions, payment card associations, employees and other persons, have regulatory sanctions
or penalties imposed, incur additional expenses or lose revenues as a result of a data privacy breach, or suffer other
adverse consequences. Our operations and ability to process sales orders, particularly through our eCommerce
channels, could also be disrupted, as they were in the December 2019 Cyberattack. Any significant breakdown,
intrusion, interruption, corruption, or destruction of our systems, as well as any data breaches, could have a material
adverse effect on our business and results of operations. See also our risk factors regarding our information
technology systems and our enterprise resource planning system (ERP) implementation below.

If our information technology systems are disrupted, or if we fail to successfully implement, manage and
integrate our information technology and reporting systems, our business, results of operations and financial
condition could be harmed.

Our information technology (IT) systems are an integral part of our business, and a serious disruption of our IT
systems (which increasingly include cloud-based systems provided by third party vendors) could have a material
adverse effect on our business, results of operations and financial condition. We depend on our IT systems to
process orders, manage inventory and collect accounts receivable. Our IT systems also allow us to efficiently
purchase products from our suppliers and ship products to our customers on a timely basis, maintain cost-effective
operations and provide customer service. We may experience disruption of our IT systems due to redundancy
issues with our network servers. We cannot assure you that our contingency plans will allow us to operate at our
current level of efficiency.

Our ability to implement our business plan in a rapidly evolving market requires effective planning, reporting and
analytical processes. We expect that we will need to continue to improve and further integrate our IT systems,
reporting systems and operating procedures by training and educating our employees with respect to these
improvements and integrations on an ongoing basis in order to effectively run our business. We may suffer
interruptions in service, loss of data or reduced functionality when we upgrade or change systems or migrate to
cloud-based systems. If we fail to successfully manage and integrate our IT systems, reporting systems and
operating procedures, it could adversely affect our business, results of operations and financial condition. See also
our risk factors regarding our data security above and ERP implementation and events beyond our control below.

We are subject to foreign currency exchange fluctuations, which could have a material adverse effect on our
results of operations and financial condition.

As stated above, a significant portion of our operations and sales are outside of the United States. When we make
purchases and sales in currencies other than the U.S. dollars, we are exposed to fluctuations in foreign currencies
relative to the U.S. dollar that may adversely affect our results of operations and financial condition. Our
international sales are largely denominated in local currencies. As a result, the strengthening of the U.S. dollar
negatively impacts our consolidated net sales expressed in U.S. dollars. Conversely, when the U.S. dollar weakens,
our expenses at our international sites increase. In addition, the volatility of other currencies may negatively impact
our operations outside of the United States and increase our costs to hedge against currency fluctuations. In
addition, we hold investments and a loan receivable that are subject to foreign exchange fluctuations. We cannot
assure you that future shifts in currency exchange rates will not have a material adverse effect on our results of
operations and financial condition.

Changes in the market value of our position in Sartorius AG materially impact our financial results and the
value of our investments might cause us to be deemed an investment company.

Changes in the market value of our position in Sartorius AG will continue to materially impact our consolidated
statements of income and other financial statements. A decline in the market value of our position in Sartorius AG
will result in losses due to write-downs in the value of the equity securities. An increase in the market value of our
position in Sartorius AG will result in a favorable impact to net income independent of the actual operating
performance of our business. Depending on the extent of the decline or of the increase in the market value of our
position in Sartorius AG, these negative or positive impacts on us could be significant and material. As a result of
the market value of our position in Sartorius AG, we might be deemed to be an “investment company” under
Section 3(a)(1)(C) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), even
though we are primarily engaged in a business other than that of investing, reinvesting, owning, holding or trading
in securities. The Company does not believe it is an investment company and intends to continue to conduct our
operations so that we will not be deemed an investment company. If the Company were deemed to be an
investment company such determination could have a material adverse effect on our business.

Our share price may change significantly based upon changes in the market valuation of Sartorius AG, and such
change are unrelated to the actual performance of our business. Non-operating income for a period may be
significantly impacted by the timing of dividends paid by Sartorius AG, particularly in comparison to prior year
periods.

We may incur losses in future periods due to write-downs in the value of financial instruments.

We have positions in a variety of financial instruments including asset backed securities and other similar
instruments. Financial markets are volatile, particularly in light of the COVID-19 pandemic, and the markets for
these securities can be illiquid. The value of these securities will continue to be impacted by external market factors
including default rates, changes in the value of the underlying property, such as residential or commercial real
estate, rating agency actions, the prices at which observable market transactions occur and the financial strength of
various entities, such as financial guarantors who provide insurance for the securities. Should we need to convert
these positions to cash, we may not be able to sell these instruments without significant losses due to current debtor
financial conditions, low trading volume of the securities, or other market considerations.

As discussed further in Part 1, Item 7 of this Annual Report under the heading “Loan”, we made a loan of 400
million Euros to Sartorius-Herbst Beteiligungen II GmbH in November 2021 that is secured by the pledge of certain
trust interests which upon termination of the trust represent the right to receive Sartorius ordinary shares. Prior to a
termination of the trust, the trust interests, which are provided as collateral for the Loan, are not tradable on the
capital markets and may, in case of an enforcement, have to be sold with a significant discount to the value of the
underlying shares.

We also have positions in equity securities, including our position in Sartorius AG. Financial markets are volatile
and the markets for these equity securities can be illiquid as well. A decline in the market value of our investments
in equity securities that we own could result in significant losses due to write-downs in the value of the equity
securities. Also, if we need to convert these positions to cash, we may not be able to sell these equity securities
without significant losses. In addition, a significant decline in the value of the Sartorius ordinary shares would
reduce the value of the collateral for the Loan discussed in the previous paragraph, and in such circumstances the
value of the collateral may be insufficient to cover the repayment of the Loan, and Sartorius-Herbst Beteiligungen II
GmbH will likely have no other assets from which to repay the loan. Furthermore, the change in the market value
of Sartorius ordinary shares will have an impact on the value appreciation rights acquired in connection with the
Loan discussed in the previous paragraph.

We may experience difficulties implementing our new global enterprise resource planning system.

We are engaged in a multi-year implementation of a new global enterprise resource planning system (ERP). The
ERP is designed to efficiently maintain our books and records and provide information important to the operation of
our business to our management team. The ERP will continue to require significant investment of human and
financial resources. In implementing the ERP, we may experience significant delays, increased costs and other
difficulties, as we already have with some of our earlier deployments. Any significant disruption or deficiency in
the design and implementation of the ERP could adversely affect our ability to process orders, ship product, send
invoices and track payments, fulfill contractual obligations or otherwise operate our business. We expect to
implement the remaining smaller phases of the ERP platform over the next few years. In addition, our efforts to
centralize various business processes and functions within our organization in connection with our ERP
implementation may continue to disrupt our operations and negatively impact our business, results of operations and
financial condition.

Recent and planned changes to our organizational structure could negatively impact our business.

We made significant changes to our organizational structure over the past few years. At the beginning of 2020, we
restructured the Clinical Diagnostics segment based on functional groups rather than product line divisions. We
have continued to reorganize aspects of our European operations, including the reorganization announced in
February 2021. These changes may have unintended consequences, such as distraction of our management and
employees, labor unrest, business disruption, disruption of supply, attrition of our workforce, inability to attract or
retain key employees, and reduced employee morale or productivity.

Risks relating to intellectual property rights may negatively impact our business.

We rely on a combination of copyright, trade secret, patent and trademark laws and third-party nondisclosure
agreements to protect our intellectual property rights and products. However, we cannot assure you that our
intellectual property rights will not be challenged, invalidated, circumvented or rendered unenforceable, or that
meaningful protection or adequate remedies will be available to us. For instance, unauthorized third parties have
attempted to copy our intellectual property, reverse engineer or obtain and use information that we regard as
proprietary, or have developed equivalent technologies independently, and may do so in the future. Additionally,
third parties have asserted patent, copyright and other intellectual property rights to technologies that are important
to us and may do so in the future. If we are unable to license or otherwise access protected technology used in our
products, or if we lose our rights under any existing licenses, we could be prohibited from manufacturing and
marketing such products. From time to time, we also must enforce our patents or other intellectual property rights
or defend ourselves against claimed infringement of the rights of others through litigation. As a result, we could
incur substantial costs, be forced to redesign our products, or be required to pay damages or royalties to an infringed
party. Any of the foregoing matters could adversely impact our business, results of operations and financial
condition.

Global economic and geopolitical conditions could adversely affect our operations.

In recent years, we have been faced with very challenging global economic conditions. The COVID-19 pandemic,
as discussed above, is currently causing disruptions to global economic conditions. It is unknown how long such
disruptions will continue and whether such disruptions will become more severe. A deterioration in the global
economic environment may result in a decrease in demand for our products, increased competition, downward
pressure on the prices for our products and longer sales cycles. A weakening of macroeconomic conditions may,
and currently is, also adversely affecting our suppliers, which could continue to result in interruptions in the supply
of the components and raw materials necessary for our products. Additionally, the United States and other
countries, such as China and India, recently have imposed tariffs on certain goods. While tariffs imposed by other
countries on U.S. goods have not yet had a significant impact on our business, further escalation of tariffs or other
trade barriers could adversely impact our profitability and/or our competitiveness. See also our risk factors
regarding the COVID-19 pandemic and our international operations above and regarding government regulations
below.

Reductions in government funding and the capital spending programs of our customers could have a material
adverse effect on our business, results of operations or financial condition.

Our customers include universities, clinical diagnostics laboratories, government agencies, hospitals and
pharmaceutical, biotechnology and chemical companies. The capital spending programs of these institutions and
companies have a significant effect on the demand for our products. Such programs are based on a wide variety of
factors, including the resources available to make such purchases, the availability of funding from grants by
governments or government agencies, the spending priorities for various types of equipment and the policies
regarding capital expenditures during industry downturns or recessionary periods. If government funding to our
customers were to decrease, or if our customers were to decrease or reallocate their budgets in a manner adverse to
us, our business, results of operations or financial condition could be materially and adversely affected.

Changes in the healthcare industry could have an adverse effect on our business, results of operations and
financial condition.

There have been, and will continue to be, significant changes in the healthcare industry in an effort to reduce costs.
These changes include:

•

The trend towards managed care, together with healthcare reform of the delivery system in the United
States and efforts to reform in Europe, has resulted in increased pressure on healthcare providers and other
participants in the healthcare industry to reduce selling prices. Consolidation among healthcare providers
and consolidation among other participants in the healthcare industry has resulted in fewer, more powerful
groups, whose purchasing power gives them cost containment leverage. In particular, there has been a
consolidation of laboratories and a consolidation of blood transfusion centers. These industry trends and
competitive forces place constraints on the levels of overall pricing, and thus could have a material adverse
effect on our gross margins for products we sell in clinical diagnostic markets.

Third party payors, such as Medicare and Medicaid in the United States, have reduced their reimbursements
for certain medical products and services. Our Clinical Diagnostics business is impacted by the level of
reimbursement available for clinical tests from third party payors. In the United States payment for many
diagnostic tests furnished to Medicare fee-for-service beneficiaries is made based on the Medicare Clinical
Laboratory Fee Schedule (CLFS), a fee schedule established and adjusted from time to time by the Centers
for Medicare and Medicaid Services (CMS). Some commercial payors are guided by the CLFS in
establishing their reimbursement rates. Laboratories and clinicians may decide not to order or perform
certain clinical diagnostic tests if third party payments are inadequate, and we cannot predict whether third
party payors will offer adequate reimbursement for tests utilizing our products to make them commercially
attractive. Legislation, such as the Patient Protection and Affordable Care Act, as amended by the Health
Care and Education Reconciliation Act (PPACA) and the Middle Class Tax Relief and Job Creation Act of
2012, has reduced the payments for clinical laboratory services paid under the CLFS. In addition, the
Protecting Access to Medicare Act of 2014 (PAMA) has made significant changes to the way Medicare will
pay for clinical laboratory services, which has further reduced reimbursement rates.

To the extent that the healthcare industry seeks to address the need to contain costs stemming from reform measures
such as those contained in the PPACA and the PAMA, or in future legislation, by limiting the number of clinical
tests being performed or the amount of reimbursement available for such tests, our business, results of operations
and financial condition could be adversely affected. If these changes in the healthcare markets in the United States
and Europe continue, we could be forced to alter our approach in selling, marketing, distributing and servicing our
products.

We are subject to substantial government regulation, and any changes in regulation or violations of regulations
by us could adversely affect our business, prospects, results of operations or financial condition.

Some of our products (primarily our Clinical Diagnostic products), production processes and marketing are subject
to U.S. federal, state and local, and foreign regulation, including by the FDA in the United States and its foreign
counterparts. The FDA regulates our Clinical Diagnostic products as medical devices, and we are subject to
significant regulatory clearances or approvals to market our Clinical Diagnostic products and other requirements
including, for example, recordkeeping and reporting requirements, such as the FDA’s medical device reporting
regulations and reporting of corrections and removals. The FDA has broad regulatory and enforcement powers. If
the FDA determines that we have failed to comply with applicable regulatory requirements, it can impose a variety
of enforcement actions ranging from public warning letters, fines, injunctions, consent decrees and civil penalties to
suspension or delayed issuance of approvals, seizure or recall of our products, total or partial shutdown of
production, withdrawal of approvals or clearances already granted, and criminal prosecution.

The FDA can also require us to repair, replace or refund the cost of devices that we manufactured or distributed. In
addition, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing
regulations, or take other actions, which may prevent or delay approval or clearance of our products or impact our
ability to modify our currently approved or cleared products on a timely basis. Changes in the FDA’s review of
certain clinical diagnostic products referred to as laboratory developed tests, which are tests developed by a single
laboratory for use only in that laboratory, could affect some of our customers who use our Life Science instruments
for laboratory developed tests. In the past, the FDA has chosen to not enforce applicable regulations and has not
reviewed such tests for approval. However, the FDA has issued draft guidance that it may begin enforcing its
medical device requirements, including premarket submission requirements, to such tests. Any delay in, or failure
to receive or maintain, clearance or approval for our products could prevent us from generating revenue from these
products and adversely affect our business operations and financial results. Additionally, the FDA and other
regulatory authorities have broad enforcement powers. Regulatory enforcement or inquiries, or other increased
scrutiny on us, could affect the perceived safety and efficacy of our products and dissuade our customers from using
our products.

Many foreign governments have similar rules and regulations regarding the importation, registration, labeling, sale
and use of our products. Such agencies may also impose new requirements that may require us to modify or re-
register products already on the market or otherwise impact our ability to market our products in those countries.
For example, the EU adopted the EU in-vitro Diagnostics Regulation (the “EU IVDR”) which includes broad
changes regarding in vitro diagnostic devices and medical devices. The implementation date for the EU IVDR is
May 2022, though the EU Council and Parliament recently signed an amendment that delays certain previously
mandated deadlines to allow more time for Notified Body to manage the entire portfolio of IVD products on the
European market. The EU IVDR will require us to modify or re-register some products and will result in additional
costs. Failure to meet these requirements could adversely impact our business in the EU and other regions that tie
their product registrations to the EU requirements. In addition, Russia has enacted more stringent medical product
registration and labeling regulations, China has enacted stricter labeling requirements, and we expect other
countries, such as Brazil and India, to impose more regulations that impact our product registrations. Brexit is
resulting in additional regulatory requirements associated with goods manufactured and sold in the United Kingdom
and additional complexities and delays with respect to goods, raw materials and personnel moving between the
United Kingdom and the European Union. In addition, new government administrations may interpret existing
regulations or practices differently. Due to these evolving and diverse requirements, we face uncertain product
approval timelines, additional time and effort to comply, as well as the potential for reduced sales and/or fines for
noncompliance. Increasing protectionism in such countries also impedes our ability to compete with local
companies. For example, we may not be able to participate in certain public tenders in Russia because of increasing
measures to restrict access to such tenders for companies without local manufacturing capabilities. Certain tenders
in China and India also are including local manufacturing preferences or requirements. Such regulations could
adversely affect our business, results of operations and financial condition. See also our risk factors regarding our
international operations and regarding global economic and geopolitical conditions above.

We are also subject to government regulation of the use and handling of a number of materials and controlled
substances. The U.S. Drug Enforcement Administration establishes registration, security, recordkeeping, reporting,
storage, distribution and other requirements for controlled substances pursuant to the Controlled Substances Act of
1970. Failure to comply with present or future laws and regulations could result in substantial liability to us,
suspension or cessation of our operations, restrictions on our ability to expand at our present locations or require us
to make significant capital expenditures or incur other significant expenses.

We cannot assure you that we will be able to integrate acquired companies, products or technologies into our
company successfully, or we may not be able to realize the anticipated benefits from the acquisitions.

As part of our overall business strategy, we pursue acquisitions of and investments in complementary companies,
products and technologies. The benefits of any acquisition may prove to be less than anticipated and may not
outweigh the costs reported in our financial statements. Completing any potential future acquisitions could cause
significant diversion of our management’s time and resources. If we acquire new companies, products or
technologies, we may be required to assume contingent liabilities or record impairment charges for goodwill and
other intangible assets over time. Goodwill and non-amortizable intangible assets are subject to impairment testing,
and potential periodic goodwill impairment charges, amortization expenses related to certain intangible assets, and
other write-offs could harm our operating results. Impairment tests are highly sensitive to changes in assumptions
and minor changes to assumptions could result in impairment losses. If the results forecast in our impairment tests
are not achieved, or business trends vary from the assumptions used in forecasts, or external factors change
detrimentally, future impairment losses may occur, as they have occurred in the past. Increased antitrust
enforcement and greater government scrutiny of mergers in the healthcare sector may impact our ability to
consummate acquisitions. We cannot assure you that we will successfully overcome these risks or any other
problems we encounter in connection with any acquisitions, and any such acquisitions could adversely affect our
business, results of operations and financial condition.

Product quality and liability issues could harm our reputation and negatively impact our business, results of
operations and financial condition.

We must adequately address quality issues associated with our products, including defects in our engineering,
design and manufacturing processes, as well as defects in third-party components included in our products. Our
instruments, reagents and consumables are complex, and identifying the root cause of quality issues, especially
those affecting reagents or third-party components, is difficult. We may incur significant costs and expend
substantial time in researching and remediating such issues. Quality issues could also delay our launching or
manufacturing of new products. In addition, quality issues, unapproved uses of our products, or inadequate
disclosure of risks related to our products, could result in product recalls or product liability or other claims being
brought against us. These issues could harm our reputation, impair our relationship with existing customers and
harm our ability to attract new customers, which could negatively impact our business, results of operations and
financial condition.

Lack of key personnel could hurt our business.

Our products are very technical in nature, and we operate in a complex and competitive business environment. In
general, only highly qualified and well-trained scientists have the necessary skills to develop, market and sell our
products, and many of our manufacturing positions require very specialized knowledge and skills. In addition, the
global nature of our business also requires that we have sophisticated and experienced staff to comply with
increasingly complex international laws and regulations. We face intense competition for these professionals from
our competitors, customers, marketing partners and other companies throughout our industry. In particular, the job
market in Northern California, where many of our employees are located, is very competitive. If we do not offer
competitive compensation and benefits, we may fail to retain or attract a sufficient number of qualified personnel,
which could impair our ability to properly run our business. We have experienced increased turnover since the start
of the COVID-19 pandemic. As conditions improve from the pandemic and more employees return to the
workplace from working remotely, we anticipate further increases to turnover. In addition, our recently mandated
COVID-19 vaccine policy in the Unites States has resulted in a loss of personnel.

We may have higher than anticipated tax liabilities.

We are subject to income taxes in the United States and many foreign jurisdictions. We report our results of
operations based on our determination of the amount of taxes owed in various tax jurisdictions in which we operate.
The determination of our worldwide provision for income taxes and other tax liabilities requires estimation,
judgment and calculations where the ultimate tax determination may not be certain. Our determination of our tax
liabilities is subject to review or examination by tax authorities in various tax jurisdictions. Tax authorities have
disagreed with our judgment in the past and may disagree with positions we take in the future resulting in
assessments of additional taxes. Any adverse outcome of such review or examination could have a negative impact
on our operating results and financial condition.

Economic and political pressures to increase tax revenues in various jurisdictions may make resolving tax disputes
more difficult. For example, in recent years, the tax authorities in Europe have disagreed with our tax positions
related to hybrid debt, research and development credits, transfer pricing and indirect taxes, among others. We
regularly assess the likelihood of the outcome resulting from these examinations to determine the adequacy of our
provision for income taxes. Although we believe our tax estimates are reasonable, the final determination of tax
audits and any related litigation could be materially different from our historical income tax provisions and accruals.

Changes in tax laws or rates, changes in the interpretation of tax laws or changes in the jurisdictional mix of our
earnings could adversely affect our financial position and results of operations.

On December 22, 2017, the U.S. enacted comprehensive tax legislation commonly referred to as the Tax Cuts and
Jobs Act (the “Tax Act”) which made a number of substantial changes to how the United States imposes income tax
on multinational corporations. The U.S Treasury, Internal Revenue Service and other standard setting bodies
continue to issue guidance and interpretation relating to the Tax Act. As future guidance is issued, we may make
adjustments to amounts previously reported that could materially impact our financial statements.

On March 31, 2021, the current U.S. presidential administration proposed the “American Jobs Plan” to create
domestic jobs, rebuild national infrastructure and increase American competitiveness. To fund its cost, the
administration also proposed the “Made in America Tax Plan”. Furthermore, in third quarter of 2021, the House of
Representatives proposed the “Build Back Better Act” and Senators Wyden, Brown and Warner unveiled draft
international tax overhaul legislation. If any of the provisions are enacted, our effective tax rate and cash tax
liability will increase, which could materially impact our financial statements.

The tax effect of our position in Sartorius AG and the jurisdictional mix of our earnings could continue to materially
affect our financial results and cash flow. In addition, the adoption of some or all of the recommendations set forth
in the Organization for Economic Co-operation and Development’s project on “Base Erosion and Profit
Shifting” (BEPS) by tax authorities in the countries in which we operate, could negatively impact our effective tax
rate. These recommendations focus on payments from affiliates in high tax jurisdictions to affiliates in lower tax
jurisdictions and the activities that give rise to a taxable presence in a particular country.

Environmental, health and safety regulations and enforcement proceedings may negatively impact our business,
results of operations and financial condition.

Our operations are subject to federal, state, local and foreign environmental laws and regulations that govern such
activities as transportation of goods, emissions to air and discharges to water, as well as handling and disposal
practices for solid, hazardous and medical wastes. In addition to environmental laws that regulate our operations,
we are also subject to environmental laws and regulations that create liability and clean-up responsibility for spills,
disposals or other releases of hazardous substances into the environment as a result of our operations or otherwise
impacting real property that we own or operate. The environmental laws and regulations also subject us to claims
by third parties for damages resulting from any spills, disposals or releases resulting from our operations or at any of
our properties. We must also comply with various health and safety regulations in the United States and abroad in
connection with our operations.

We may in the future incur capital and operating costs to comply with currently existing laws and regulations, and
possible new statutory enactments, and these expenditures may be significant. We have incurred, and may in the
future incur, fines related to environmental matters and/or liability for costs or damages related to spills or other
releases of hazardous substances into the environment at sites where we have operated, or at off-site locations where
we have sent hazardous substances for disposal. We cannot assure you, however, that such matters or any future
obligations to comply with environmental or health and safety laws and regulations will not adversely affect our
business, results of operations or financial condition.

Our current and future debt and related covenants may restrict our future operations.

We have a revolving credit facility that provides for up to $200.0 million in borrowing capacity, $0.2 million of
which has been utilized for domestic standby letters of credit as of December 31, 2021. Our existing credit facility
and agreements we may enter in the future, contain or may contain covenants imposing restrictions on our business.
These restrictions may affect our ability to operate our business and may limit our ability to take advantage of
potential business opportunities as they arise. Existing covenants place restrictions on our ability to, among other
things: incur additional debt; acquire other businesses or assets through merger or purchase; create liens; make
investments; enter into transactions with affiliates; sell assets; in the case of some of our subsidiaries, guarantee
debt; and declare or pay dividends, redeem stock or make other distributions to stockholders. Our existing credit
facility also requires that we comply with certain financial ratios, including a maximum consolidated leverage ratio
test and a minimum consolidated interest coverage ratio test. Our ability to comply with these covenants may be
affected by events beyond our control, including prevailing economic, financial and industry conditions. The
breach of any of these restrictions could result in a default. An event of default under our debt agreements would
permit some of our lenders to declare all amounts borrowed from them to be due and payable, together with accrued
and unpaid interest.

We are subject to healthcare laws and regulations and could face substantial penalties if we are unable to fully
comply with such laws.

We are subject to healthcare regulation and enforcement by both the U.S. federal government and the U.S. states
and foreign governments in which we conduct our business. These healthcare laws and regulations include, for
example:

•

the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from
soliciting, receiving, offering or providing remuneration, directly or indirectly, in return for or to induce
either the referral of an individual for, or the purchase order or recommendation of, any item or services for
which payment may be made under a federal healthcare program such as the Medicare and Medicaid
programs;

• U.S. federal false claims laws, which prohibit, among other things, individuals or entities from knowingly
presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party
payors that are false or fraudulent. In addition, the U.S. federal government may assert that a claim
including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false
or fraudulent claim for purposes of the false claims statutes;

•

the U.S. Physician Payment Sunshine Act, which requires certain manufacturers of drugs, biologics, devices
and medical supplies to record any transfers of value to U.S. physicians and U.S. teaching hospitals;

the Health Insurance Portability and Accountability Act ("HIPAA"), as amended by the Health Information
Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic
healthcare transactions and protects the security and privacy of protected health information; and

state or foreign law equivalents of each of the U.S. federal laws above, such as anti-kickback and false
claims laws, which may apply to items or services reimbursed by any third-party payor, including
commercial insurers.

These laws will continue to impose administrative, cost and compliance burdens on us. The shifting compliance
environment and the need to build and maintain robust systems to comply with multiple jurisdictions with different
compliance and/or reporting requirements increases the possibility that a healthcare company may violate one or
more of these requirements. In addition, any action against us for violation of these laws, even if we successfully
defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the
operation of our business. If our operations are found to be in violation of any of the laws described above or any
other governmental regulations that apply to us, we may be subject to penalties, including civil and criminal
penalties, damages, fines, exclusion from the Medicare and Medicaid programs, and the curtailment or restructuring
of our operations, any of which could adversely affect our ability to operate our business, results of operations and
financial condition.

Risks Related to Being a Public Company

Our failure to establish and maintain effective internal control over financial reporting could result in material
misstatements in our financial statements, our failure to meet our reporting obligations and cause investors to
lose confidence in our reported financial information, which in turn could cause the trading price of our
common stock to decline.

Maintaining effective disclosure controls and procedures and internal controls over financial reporting are necessary
for us to produce reliable financial statements. Material weaknesses in our internal control over financial reporting
have adversely affected us in the past and could affect us in the future, and the results of our periodic management
evaluations and annual auditor attestation reports regarding the effectiveness of our internal control over financial
reporting required by Section 404 of the Sarbanes-Oxley Act of 2002. Any failure to maintain or implement new or
improved internal controls, or any difficulties that we may encounter in their maintenance or implementation, could
result in additional material weaknesses, result in material misstatements in our consolidated financial statements
and cause us to fail to meet our reporting obligations. This could cause us to lose public confidence and could cause
the trading price of our common stock to decline.

General Business Risks

Natural disasters, terrorist attacks, acts of war or other events beyond our control may cause damage or
disruption to us and our employees, facilities, information systems, security systems, vendors and customers,
which could significantly impact our business, results of operations and financial condition.

We have significant manufacturing and distribution facilities, including in the western United States, France,
Switzerland, Germany and Singapore. In particular, the western United States has experienced a number of
earthquakes, wildfires, floods, landslides and other natural disasters in recent years, some of which may be
associated with climate change. These occurrences could damage or destroy our facilities which may result in
interruptions to our business and losses that exceed our insurance coverage. In addition, electricity outages, strikes
or other labor unrest at any of our sites or surrounding areas could cause disruption to our business. Acts of
terrorism, bioterrorism, violence or war, or public health issues such as the outbreak of a contagious disease like
COVID-19 could also affect the markets in which we operate, our business operations and strategic plans. Political
unrest may affect our sales in certain regions, such as in Southeast Asia, the Middle East and Eastern Europe. Any
of these events could adversely affect our business, results of operations and financial condition.

Risks Related to Our Common Stock

A significant majority of our voting stock is held by the Schwartz family, which could lead to conflicts of interest.

We have two classes of voting stock: Class A Common Stock and Class B Common Stock. With a few exceptions,
holders of Class A and Class B Common Stock vote as a single class. When voting as a single class, each share of
Class A Common Stock is entitled to one-tenth of a vote, while each share of Class B Common Stock has one vote.
In the election or removal of directors, the classes vote separately and the holders of Class A Common Stock are
entitled to elect 25% of the Board of Directors, with holders of Class B Common Stock electing the remaining
directors. As a result of the Schwartz family's ownership of our Class A and Class B Common Stock, they are able
to elect a majority of our directors, effect fundamental changes in our direction and control matters affecting us,
including the determination of business opportunities that may be suitable for our company. The Schwartz family
may exercise its control over us according to interests that are different from other investors’ or debtors’ interests.
In particular, this concentration of ownership and voting power may have the effect of delaying or preventing a
change in control of our company.

The forum selection provision in our bylaws could increase costs to bring a claim, discourage claims or limit the
ability of the Company’s stockholders to bring a claim in a judicial forum viewed by the stockholders as more
favorable for disputes with the Company or the Company’s directors, officers or other employees.

Our bylaws provide that unless we consent in writing to the selection of an alternative forum, the Court of Chancery
of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another state court located within
the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal district
court for the District of Delaware) shall be the sole and exclusive forum for (i) any derivative action or proceeding
brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any
director, officer or other employee of the Company to the Company or the Company’s stockholders, (iii) any action
arising pursuant to any provision of the General Corporation Law of the State of Delaware, the Certificate of
Incorporation or the Bylaws (in each case, as may be amended from time to time) or (iv) any action asserting a
claim against the Company or any of its directors, officers or other employees governed by the internal affairs
doctrine of the State of Delaware. This choice of forum provision may increase costs to bring a claim, discourage
claims or limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the
Company or the Company’s directors, officers or other employees, which may discourage such lawsuits against the
Company or the Company’s directors, officers and other employees. Alternatively, if a court were to find the choice
of forum provision contained in the Company’s bylaws to be inapplicable or unenforceable in an action, the
Company may incur additional costs associated with resolving such action in other jurisdictions.

Application of the choice of forum provision may be limited in some instances by applicable law. Section 27 of the
Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by
the Exchange Act or the rules and regulations thereunder. As a result, the choice of forum provision will not apply
to actions arising under the Exchange Act or the rules and regulations thereunder. Section 22 of the Securities Act
creates concurrent jurisdiction for federal and state courts over suits brought to enforce any duty or liability created
by the Securities Act or the rules and regulations thereunder, subject to a limited exception for certain “covered
class actions.” There is uncertainty, particularly in light of current litigation, as to whether a court would enforce the
choice of forum provision with respect to claims under the Securities Act. Our stockholders will not be deemed, by
operation of the Company’s choice of forum provision, to have waived claims arising under the federal securities
laws and the rules and regulations thereunder.

ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

ITEM 2. PROPERTIES

We own our corporate headquarters located in Hercules, California. The principal manufacturing and research
locations for each segment are as follows:

Segment

Location

Owned/Leased

Life Science

Singapore
Oxford, England

Clinical Diagnostics

Irvine, California
Greater Seattle Area, Washington
Lille, France
Cressier, Switzerland
Dreieich, Germany

Leased
Leased

Leased
Leased
Owned
Owned/Leased
Owned/Leased

Shared

Greater San Francisco Bay Area, California
Greater Paris Area, France
Leipzig, Germany

Owned/Leased
Leased
Leased

Most manufacturing and research facilities also house administration, sales and distribution activities. In addition,
we lease office and warehouse facilities in a variety of locations around the world. The facilities are used principally
for sales, service, distribution and administration for both segments.

ITEM 3. LEGAL PROCEEDINGS

We are a party to various claims, legal actions and complaints arising in the ordinary course of business. While we
do not believe, at this time, that any ultimate liability resulting from any of these matters will have a material
adverse effect on our results of operations, financial position or liquidity, we cannot give any assurance regarding
the ultimate outcome of these matters and their resolution could be material to our operating results for any
particular period, depending on the level of income for the period.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

PART II.

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER

MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Information Concerning Common Stock

Bio-Rad’s Class A and Class B Common Stock are listed on the New York Stock Exchange with the ticker symbols
BIO and BIOb, respectively.

On February 9, 2022, we had 163 holders of record of Class A Common Stock and 92 holders of record of Class B
Common Stock. Bio-Rad has never paid a cash dividend and has no present plans to pay cash dividends.

In November 2017, the Board of Directors authorized a new share repurchase program, granting Bio-Rad authority
to repurchase, on a discretionary basis, up to $250.0 million of outstanding shares of our common stock (“Share
Repurchase Program”). In July 2020, the Board of Directors authorized increasing the share repurchase program to
allow the Company to repurchase up to an additional $200.0 million of stock. During the three months ended
December 31, 2021, we did not purchase or otherwise acquire any shares of common stock. As of December 31,
2021, $223.1 million remained under the share repurchase program.

See Item 12 of Part III of this report for the security ownership of certain beneficial owners and management and for
securities authorized for issuance under equity compensation plans.

Stock Performance Graph

The following graph compares the cumulative stockholder returns over the past five years for our Class A Common
Stock, the S&P 500 and the S&P 400 MidCap Indices and a selected peer group, assuming $100 invested on
December 31, 2016, and reinvestment of dividends if paid:

S
R
A
L
L
O
D

450

400

350

300

250

200

150

100

2016

2017

2018

2019

2020

2021

Bio-Rad

Peer Group (1)

S&P 500 (2)

S&P MidCap 400 (2)

(1) The Peer Group consists of the following public companies: Danaher, Becton Dickinson, Thermo Fisher
Scientific, Meridian Bioscience and PerkinElmer. 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) As a result of our addition to the S&P 500 stock market index, we are presenting both the S&P MidCap 400 and
S&P 500 stock market indices for this year of transition.

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.

ITEM 6. RESERVED

ITEM 7. 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.

Overview. We are a multinational manufacturer and worldwide distributor of our own life science research and
clinical diagnostics products. Our business is organized into two reportable segments, Life Science and Clinical
Diagnostics, with the mission to provide scientists with specialized tools needed for biological research and health
care specialists with products needed for clinical diagnostics.

We sell more than 12,000 products and services to a diverse customer base comprised of scientific research,
healthcare, education and government organizations worldwide. We do not disclose quantitative information about
our different products and services as it is impractical to do so based primarily on the numerous products and
services that we sell and the global markets that we serve.

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. As our customers require
standardization for their experiments and test results, much of our revenues are recurring in nature.

We are impacted by the support of many governments for both research and healthcare. The current global
economic outlook is still uncertain as the need to control government social spending by many governments limits
opportunities for growth. Approximately 39% of our 2021 consolidated net sales are derived from the United States
and approximately 61% are derived from international locations, with Europe being our largest international region.
The international sales are largely denominated in local currencies such as the Euro, Swiss Franc, Japanese Yen,
Chinese Yuan and British Sterling. As a result, our consolidated net sales expressed in dollars benefit when the
U.S. dollar weakens and suffer when the dollar strengthens. When the U.S. dollar strengthens, we benefit from
lower cost of sales from our international manufacturing sites, and from lower international operating expenses. We
regularly discuss our changes in revenue and expense categories in terms of both changing foreign exchange rates
and in terms of a currency neutral basis, if notable, to explain the impact currency fluctuation has on our results.

COVID-19

The full impact of the COVID-19 pandemic continues to be inherently uncertain at the time of this report. The
COVID-19 pandemic has impacted and, we expect to some extent, will continue to impact parts of our business,
operations, financial condition and results of operations in a variety of ways. During 2021, we saw continued but
moderating demand for products associated with COVID-19 testing and related research. The COVID-19 pandemic
has created delays and shortages in the supply of components and raw materials. Shortages of raw materials have
caused backorders, some of which we consider to be significant, and some delays in certain new product
development activities, and we expect backorders and delays to continue in 2022. For more discussion relating to
the impacts of the COVID-19 pandemic, please see "Item 1A, Risk Factors" to this Annual Report.

Acquisition

On October 15, 2021 (the "Acquisition Date"), we acquired all equity interests of Dropworks, Inc. ("Dropworks")
for a total consideration of $125.5 million.

Dropworks is a development stage company focused on developing a digital PCR product. The strategic rationale
for the transaction was to address additional opportunities in the PCR market. We believe this acquisition will
complement our Life Science product offerings. The acquisition was included in our Life Science segment's results
of operations from the Acquisition Date.

Restructuring

In February 2021, we announced our strategy-driven restructuring plan in furtherance of our ongoing program to
improve operating performance. The restructuring plan primarily impacts our operations in Europe and includes the
elimination of certain positions, the consolidation of certain functions, and the relocation of certain manufacturing
operations from Europe to Asia. The restructuring plan is being implemented in phases and is expected to be
substantially complete by the end of 2022. The amounts reflected in Cost of goods sold, Selling, general and
administrative expense and Research and development expense were $25.0 million, $26.1 million and $13.3
million, respectively, in the consolidated statements of income for the year ended December 31, 2021. As of
December 31, 2021, we have a restructuring accrual of $47.1 million. The amounts are estimates based on the
information currently available to management.

Loan

In November 2021, we extended a collateralized loan to Sartorius-Herbst Beteiligungen II GmbH ("SHB"), a
private limited company incorporated under the laws of Germany, with a principal amount of €400 million due at
the latest on January 31, 2029, subject to certain events which could trigger payment prior to maturity (the “Loan”).
The Loan proceeds will be used by SHB to partially finance the acquisition of interests under the Sartorius family
trust (“Trust”) from a beneficiary of the Trust. The Loan is collateralized by the pledge of certain of the Trust
interests, which upon termination of the Trust in mid-2028 represent the right to receive Sartorius ordinary shares.
Interest on the loan is payable annually in arrears at 1.5% per annum, and the entire principal amount is due at
maturity. In addition to contractual interest, we are entitled to certain value appreciation rights associated with the
acquired Trust interests that are due upon repayment of the Loan.

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 U.S. generally accepted accounting
principles (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 adjustment.
Actual results could differ from these estimates. We have determined that for the periods reported in this Annual
Report on Form 10-K the following accounting policies and estimates are critical in understanding our financial
condition and results of operations.

Accounting for Income Taxes
We operate in multiple jurisdictions and our profits are taxed pursuant to the tax laws of these jurisdictions. Our
effective income tax rate may be affected by the changes in or interpretations of tax laws and tax agreements in any
given jurisdiction, utilization of net operating loss and tax credit carryforwards, changes in geographical mix of
income and expense, and changes in our assessment of matters such as the ability to realize deferred tax assets. As
a result of these considerations, we must estimate income taxes in each of the jurisdictions in which we operate.
This process involves estimating current tax exposure together with assessing temporary differences resulting from
the different treatment of items for tax and accounting purposes. These differences result in deferred tax assets and
liabilities, which are included in the consolidated balance sheet.

We assess the likelihood that our deferred tax assets will be recovered from future taxable income, considering all
available evidence such as historical levels of income, expectations and risks associated with estimates of future
taxable income and ongoing prudent and feasible tax strategies. When we determine that it is not more likely than
not that we will realize all or part of our deferred tax assets, an adjustment is charged to earnings in the period when
such determination is made. Likewise, if we later determine that it is more likely than not that all or a part of our
deferred tax assets would be realized, the previously provided valuation allowance would be reversed.

We make certain estimates and judgments about the application of tax laws, the expected resolution of uncertain tax
positions and other matters surrounding the recognition and measurement of uncertain tax benefits. In the event that
uncertain tax positions are resolved for amounts different than our estimates, or the related statutes of limitations
expire without the assessment of additional income taxes, we will be required to adjust the amounts of the related
assets and liabilities in the period in which such events occur. Such adjustments may have a material impact on our
income tax provision and our results of operations.

Business Acquisitions
Accounting for business acquisitions requires us to make significant estimates and assumptions, especially at the
acquisition date with respect to tangible and intangible assets acquired and liabilities assumed and pre-acquisition
contingencies. In a business combination, we allocate the purchase price to the acquired business’ identifiable
assets and liabilities at their acquisition date fair values. The excess of the purchase price over the amount allocated
to the identifiable assets and liabilities, if any, is recorded as goodwill.

The assets acquired and liabilities assumed in our business combinations consist of acquired working capital and
finite-lived and indefinite-lived intangible assets. The carrying value of acquired working capital approximates its
fair value, given the short-term nature of these assets and liabilities. We estimate the fair value of finite-lived and
indefinite-lived intangible assets acquired using a discounted cash flow approach, which includes an analysis of the
future cash flows expected to be generated by such assets and the risk associated with achieving such cash flows.
The key assumptions used in the discounted cash flow model include the discount rate that is applied to the
discretely forecasted future cash flows to calculate the present value of those cash flows and the estimate of future
cash flows attributable to the acquired intangible assets, which include revenue, operating expenses and taxes. Our
estimates are inherently uncertain and subject to refinement. As a result, during the measurement period, which
may be up to one year from the acquisition date, we may record adjustments to the fair value of assets acquired and
liabilities assumed, with the corresponding offset to goodwill.

Goodwill and Intangible Assets

Goodwill represents the excess of (a) the aggregate of the fair value of consideration transferred in a business
combination over (b) the fair value of assets acquired, net of liabilities assumed. Goodwill is not amortized, but is
subject to annual impairment tests as described in the section "Impairment of Goodwill".

We acquired intangible assets in connection with certain of our business acquisitions. These assets were recorded at
their estimated fair values at the acquisition date and are amortized over their respective estimated useful lives using
a method of amortization that reflects the pattern in which the economic benefits of the intangible assets are used.
Estimated useful lives are determined based on our historical use of similar assets and the expectation of future
realization of cash flows attributable to the intangible assets. Changes in circumstances, such as technological
advances or changes to our business model, could result in the actual useful lives differing from our current
estimates. In those cases where we determine that the useful life of an intangible asset should be shortened, we
amortize the net book value in excess of the estimated salvage value over its revised remaining useful life. We did
not revise our previously assigned useful life estimates attributed to any of our intangible assets during the years
ended December 31, 2021, 2020 and 2019.

Impairment of Goodwill

We conduct a goodwill impairment analysis annually in the fourth quarter or more frequently if indicators of
impairment exist or if a decision is made to sell or exit a business. We test goodwill at the reporting unit level.
Significant judgments are involved in determining if an indicator of impairment has occurred. Such indicators may
include deterioration in general economic conditions, negative developments in equity and credit markets, adverse
changes in the markets in which an entity operates, increases in input costs that have a negative effect on earnings
and cash flows, a trend of negative or declining cash flows, a decline in actual or planned revenue or earnings
compared with actual and projected results of relevant prior periods, or other relevant entity-specific events such as
changes in management, key personnel, strategy or customers, contemplation of bankruptcy, or litigation. The fair
value that could be realized in an actual transaction may differ from that used to evaluate the impairment of
goodwill.

We first may assess qualitative factors to determine if it is more likely than not that the fair value of a reporting unit
is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative
goodwill impairment test included in U.S. GAAP. To the extent our assessment identifies adverse conditions, or if
we elect to bypass the qualitative assessment, goodwill is tested at the reporting unit level using a quantitative
impairment test. There were no impairments for the years ended December 31, 2021 and 2020.

Impairment of Long-Lived Assets
We review long-lived assets, such as property and equipment and finite-lived intangible assets, for impairment
whenever events indicate that the carrying amounts might not be recoverable. Typical indicators that an asset may
be impaired include, but are not limited to:

•

a significant adverse change in the extent or manner in which a long-lived asset is being used or in its
physical condition;
a current-period operating or cash flow loss combined with a history of operating or cash flow losses or a
projection or forecast that demonstrates continuing losses associated with the use of a long-lived asset; or
a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of
significantly before the end of its previously estimated useful life.

Recoverability of property, plant and equipment, and other finite-lived intangible asset is measured by comparing
the projected undiscounted net cash flows associated with those assets to their carrying values. If an asset is
considered impaired, it is written down to its fair value, which is determined based on the asset's projected
discounted cash flows or appraised value, depending on the nature of the asset. For purposes of recognition of
impairment for assets held for use, we group assets and liabilities at the lowest level for which cash flows are
separately identifiable. There were no triggering events to cause us to record an impairment charge for the years
ended December 31, 2021, 2020 and 2019.

Revenue Recognition
We recognize revenue from operations through the sale of products, services, license of intellectual property and
rental of instruments. Revenue from contracts with customers is recognized upon transfer of control of promised
products or services to customers in an amount that reflects the consideration we expect to receive in exchange for
those products or services. We enter into contracts that can include various combinations of products and services,
which are generally accounted for as distinct performance obligations. Revenue is recognized net of any taxes
collected from customers (sales tax, value added tax, etc.), which are subsequently remitted to government
authorities.

Our contracts from customers often include promises to transfer multiple products and services to a customer.
Determining whether products and services are considered distinct performance obligations that should be
accounted for separately versus together may require significant judgment, and may or may not impact the timing of
revenue recognition. Revenue associated with equipment that requires factory installation is not recognized until
installation is complete and customer acceptance, if required, has occurred. Certain equipment requires installation
due to the fact that the instruments are being operated in a clinical/laboratory environment, and the installation
services could result in modification of the equipment in order to ensure that the instruments are working according
to customer specifications, which are subject to validation tests upon completion of the installation. In these
arrangements, which require factory installation, the delivery of the equipment and the installation are separate
performance obligations. We will recognize the transaction price allocated to the equipment only upon customer
acceptance, as the transfer of control in relation to the equipment has occurred at that point as the customer has the
ability to direct the use of and obtain substantially all of the remaining benefits from the asset. The transaction price
allocated to the installation services is also recognized upon customer acceptance because without the completion of
the installation services and related customer acceptance the customer cannot receive any of the benefits of the
service.

At the time revenue is recognized, a provision is recorded for estimated product returns as this right is considered
variable consideration. Accordingly, when product revenues are recognized, the transaction price is reduced by the
estimated amount of product returns.

Service revenues on extended warranty contracts are recognized ratably over the life of the service agreement as a
stand-ready performance obligation. For arrangements that include a combination of products and services, the
transaction price is allocated to each performance obligation based on stand-alone selling prices. The method used
to determine the stand-alone selling prices for product and service revenues is based on the observable prices when
the product or services have been sold separately.

We recognize revenues for a functional license of intellectual property at a point in time when the control of the
license and technology transfers to the customer. For license agreements that include sales or usage-based royalty
payments to us, we recognize revenue at the later of (i) when the related sale of the product occurs, or (ii) when the
performance obligation to which some or all of the royalty has been allocated has been satisfied, or partially
satisfied.

The primary purpose of our invoicing terms is to provide customers with simple and predictable methods of
purchasing our products and services, not to either provide or receive financing to or from our customers. We
record contract liabilities when cash payments are received or due in advance of our performance.

We do not disclose the value of unsatisfied performance obligations for contracts with an original expected length
of one year or less. Our payment terms vary by the type and location of our customer, and the products and services
offered. The term between invoicing and when payment is due is not significant.

Reagent rental agreements are primarily a diagnostic industry sales method that provides use of an instrument and
consumables (reagents) to a customer on a per test basis. These agreements may also include maintenance of the
instruments placed at customer locations as well as initial training. We initially determine if a reagent rental
arrangement contains a lease at contract commencement. Where we have determined that such an arrangement
contains a lease, we next must ascertain its lease classification for purposes of applying appropriate accounting
treatment as an operating, sales-type or direct financing lease. For purposes of determining the lease term used in
performing the lease classification test, we include the noncancellable period of the lease together with those
periods covered by the option to extend the lease if the customer is reasonably certain to exercise that option, the
periods covered by an option to terminate the lease if the customer is reasonably certain not to exercise that option,
and the periods covered by the option to extend (or not to terminate) the lease in which exercise of the option is
controlled by the Company. The assessment of the lease term for reagent rental agreements, including the impact
from any associated contractual termination penalties, are subject to an estimation process. While most of our
reagent rental arrangements contain either the option for a lessee to extend and/or cancel, the period in which the
contract is enforceable is a very short period and therefore the lease term has been limited to the noncancellable
period. Generally, these arrangements do not contain an option for the lessee to purchase the underlying asset.

Valuation of Inventories
We value inventory at the lower of the actual cost to purchase and/or manufacture the inventory, or the current
estimated net realizable value of the inventory. We review inventory quantities on hand and reduce the cost basis of
excess and obsolete inventory based primarily on an estimated forecast of product demand, production requirements
and the quality and efficacy of raw materials. This review is done at the end of each fiscal quarter. 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, and if too high, we may have overstated the carrying value of our inventory. In
the future, if inventory is determined to be overvalued, we would be required to write down the value of inventory
to market and recognize such costs in our cost of goods sold at the time of such determination. Therefore, although
we make efforts to ensure the accuracy of our forecasts of future product demand and perform procedures to
safeguard overall inventory quality, any significant unanticipated changes in demand, technological developments,
regulations, storage conditions, or other economic or environmental factors affecting biological materials, could
have a significant impact on the value of our inventory and reported results of operations.

Fair Value Measurements
U.S. GAAP establishes three levels of inputs that may be used to measure fair value. Each level of input has
different levels of subjectivity and difficulty involved in determining fair value. Valuation of Level 1 and 2
instruments generally do not require significant management judgment and the estimation is not difficult. Level 3
instruments include unobservable inputs that are supported by little or no market activity and that are significant to
the fair value of the assets or liabilities. The determination of fair value for Level 3 instruments requires the most
management judgment and subjectivity.

We elected the fair value option under ASC 825, Financial Instruments for accounting of the Loan to Sartorius-
Herbst Beteiligungen II GmbH. The Loan includes certain value appreciation rights that are due upon repayment of
the Loan. The fair value of the Loan and value appreciation right is estimated under the income approach using a
discounted cash flow, and option pricing model, respectively, which results in a fair value measurement categorized
in Level 3. The significant assumptions used to estimate fair value of the Loan include an estimate of the discount
rate and cash flows of the Loan and the significant assumptions used to estimate the fair value of the value
appreciation right include volatility, the risk-free interest rate, expected life (in years) and expected dividend. The
inputs are subject to estimation uncertainty and actual amounts realized may materially differ. An increase in the
expected volatility may result in a significantly higher fair value, whereas a decrease in expected life may result in a
significantly lower fair value. All subsequent changes in fair value of the Loan and value appreciation right,
including accrued interest are recognized in change in fair value of equity and debt securities in our consolidated
statements of income.

Results of Operations - Sales, Gross Margins and Expenses - Incorporating by Reference the Results of
Operations - Sales, Gross Margins and Expenses from our Annual Report on Form 10-K for the fiscal year
ended December 31, 2020.

The following shows cost of goods sold, gross profit, expense items and net income as a percentage of net sales:

Net sales
Cost of goods sold
Gross profit
Selling, general and administrative expense
Research and development expense
Net income

Net sales

2021

2020

100.0 %
43.9
56.1
30.1
9.3
145.3

100.0 %
43.5
56.5
31.4
8.9
149.5

Percentage sales growth in currency neutral amounts are calculated by translating prior period sales in each local
currency using the current period monthly average foreign exchange rates for that currency and comparing that to
current period sales.

Net sales (sales) for the year ended December 31, 2021 were $2.92 billion, compared to $2.55 billion for the year
ended December 31, 2020, an increase of 14.8%. Excluding the impact of foreign currency, for the year ended
December 31, 2021 sales increased by approximately 12.7% compared to the year ended December 31, 2020.
Currency neutral sales increased in all regions, led by growth in Asia Pacific and Europe. Excluding the impact of
COVID related sales, currency neutral sales increased by 17% compared to the year ended December 31, 2020.

The Life Science segment sales for the year ended December 31, 2021 were $1.40 billion, an increase of 13.7%
compared to the year ended December 31, 2020. On a currency neutral basis, sales increased 12.0% compared to
the year ended December 31, 2020. Currency neutral sales were up in nearly all product lines but were primarily
driven by growth in our Western Blotting, Digital PCR, and Process Media products. A significant portion of the
Life Science segment growth came from products used to support COVID-19 research and testing. All regions
experienced double digit currency neutral sales growth compared to the year ended December 31, 2020.

The Clinical Diagnostics segment sales for the year ended December 31, 2021 were $1.52 billion, an increase of
16.1% compared to the year ended December 31, 2020. On a currency neutral basis, sales increased 13.6%
compared to the year ended December 31, 2020. Currency neutral sales increased across all product lines and
regions as the overall diagnostics market continues to recover from the COVID-19 pandemic, including an increase
in utilization in lab operations.

Gross margin

Consolidated gross margins were 56.1% for the year ended December 31, 2021 compared to 56.5% for the year
ended December 31, 2020. Life Science segment gross margins for the year ended December 31, 2021 increased by
approximately 0.6 percentage points compared to the year ended December 31, 2020, primarily related to increased
sales volume, favorable product mix related to higher sales of Digital PCR and Process Media products, and lower
production costs. Clinical Diagnostics segment gross margins for the year ended December 31, 2021 decreased by
approximately 1.1 percentage points compared to the year ended December 31, 2020. The decrease in the Clinical
Diagnostics segment gross margins for the year ended December 31, 2021 was primarily related to the costs
associated with the restructuring plan announced in February 2021, partially offset by increased sales for the year
ended December 31, 2021.

Selling, general and administrative expense

Consolidated selling, general and administrative expenses (SG&A) increased to $879.6 million or 30.1% of sales for
the year ended December 31, 2021 compared to $800.3 million or 31.4% of sales for the year ended December 31,
2020. The increase to SG&A was primarily related to the restructuring plan announced in February 2021, as well as
increased employee related expenses.

Research and development expense

Research and development (R&D) expense increased to $271.7 million or 9.3% of sales for the year ended
December 31, 2021 compared to $226.6 million or 8.9% of sales for the year ended December 31, 2020. R&D
expense increased for the year ended December 31, 2021 compared to the year ended December 31, 2020, in both
the Life Science and Clinical Diagnostics segment. The increase was primarily from increases in investment in
strategic projects and research initiatives, costs related to the restructuring plan announced in February 2021, and
higher employee related expenses.

Results of Operations – Non-operating

Interest expense

Interest expense for the years ended December 31, 2021 and 2020 was $1.6 million and $21.9 million, respectively,
a decrease of $20.3 million primarily due to the repayment of the $425.0 million principal amount of Senior Notes
in December 2020.

Foreign currency exchange gains and losses

Foreign currency exchange gains and losses consist primarily of foreign currency transaction gains and losses on
intercompany net receivables and payables and the change in fair value of our forward foreign exchange contracts
used to manage our foreign currency exchange risk. Foreign currency exchange net losses for the years ended
December 31, 2021 and 2020 were $2.8 million and $1.8 million, respectively. Gains and losses are primarily due
to the estimating process inherent in the timing of product shipments and intercompany debt payments, market
volatility, and the change in the fair value of our foreign exchange contracts.

Change in fair market value of equity and debt securities

Change in fair market value of equity and debt securities were gains of $4.93 billion for the year ended
December 31, 2021 compared to $4.50 billion for the year ended December 31, 2020, primarily resulting from the
recognition of holding gains on our position in Sartorius AG of $4.92 billion in 2021 and $4.48 billion in 2020,
partially offset by a decrease in fair value of a loan to Sartorius-Herbst Beteiligungen II GmbH of $10.8 million.

Other income, net

Other income, net includes investment and dividend income, interest income on our cash and cash equivalents,
short-term investments and long-term marketable securities. Other income, net for the year ended December 31,
2021 increased to $26.8 million compared to $24.5 million for the year ended December 31, 2020. Other income,
net increased primarily due to a $10.1 million increase in the Sartorius AG dividends declared in 2021, and an
increase in investment and other income of $3.9 million, partially offset by a gain of $11.7 million on the sale of our
Informatics division in 2020.

Effective tax rate

Our effective tax rates were 21.9% and 22.4% for the years ended December 31, 2021 and 2020, respectively. The
effective tax rates for the years ended December 31, 2021 and 2020 were driven by the unrealized gain in equity
securities that is taxed at approximately 22% as well as the geographic mix of earnings and the taxation of our
foreign earnings. Our effective tax rate may be impacted in the future, either favorably or unfavorably, by many
factors including, but not limited to, changes in the geographic mix of earnings, changes to statutory tax rates,
changes in tax laws or regulations, tax audits and settlements, and generation of tax credits.

Our income tax returns are routinely audited by U.S. federal, state and foreign tax authorities. We are currently
under examination by many of these tax authorities. There are differing interpretations of tax laws and regulations,
and as a result, significant disputes may arise with these tax authorities involving issues of the timing and amount of
deductions and allocations of income among various tax jurisdictions. We do not believe any currently pending
uncertain tax positions will have a material adverse effect on our consolidated financial statements, although an
adverse resolution of one or more of these uncertain tax positions in any period may have a material impact on the
results of operations for that period.

We record liabilities for unrecognized tax benefits related to uncertain tax positions. We do not believe the
resolution of our uncertain tax positions will have a material adverse effect on our consolidated financial statements,
although an adverse resolution of one or more of these uncertain tax positions in any period may have a material
impact on the results of operations for that period.

As of December 31, 2021, based on the expected outcome of certain examinations or as a result of the expiration of
statutes of limitation for certain jurisdictions, we believe that within the next twelve months it is reasonably possible
that our previously unrecognized tax benefits could decrease by approximately $20.8 million. Substantially all such
amounts will impact our effective income tax rate.

Comparison of the Year Ended December 31, 2020 to the Year Ended December 31, 2019

Refer to Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations located
in our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed on February 16, 2021, for
the discussion of the comparison of the fiscal year ended December 31, 2020 to the fiscal year ended December 31,
2019, the earliest of the three fiscal years presented in the Consolidated Statements of Operations.

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 are then shipped to local
distribution facilities around the world. 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, and funding for research and development of new products, as well as routine outflows for capital
expenditures, interest and taxes. In addition to the annual positive cash flow from operating activities, additional
liquidity is readily available via the sale of short-term investments and access to our $200.0 million unsecured
revolving credit facility (Credit Agreement) that we entered into in April 2019 and amended in November 2021 (see
Note 5, "Notes Payable and Long-Term Debt," to the consolidated financial statements), and to a lesser extent
international lines of credit. Borrowings under the Credit Agreement are available on a revolving basis and can be
used to make permitted acquisitions, for working capital and for other general corporate purposes. We had no
outstanding borrowings under the 2019 Credit Agreement as of December 31, 2021; however, $0.2 million was
utilized for domestic standby letters of credit that reduced our borrowing availability. 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 manufacturing and distribution, plant and equipment,
information technology systems and acquisitions of reasonable proportion to our existing total available capital.

At December 31, 2021, we had available $869.9 million in cash, cash equivalents and short-term investments, of
which approximately 23% was held in our foreign subsidiaries. The amount of funds held in the United States can
fluctuate due to the timing of receipts and payments in the ordinary course of business and due to other reasons,
such as acquisitions. As part of our ongoing liquidity assessments, we regularly monitor the mix of domestic and
foreign cash flows (both inflows and outflows).

Demand for our products and services could change more dramatically in the short-term than in previous years due
to the impacts of the COVID-19 pandemic, as well as due to funding, reimbursement constraints and support levels
from government, universities, hospitals and private industry, including diagnostic laboratories. The need for
certain sovereign nations with large annual deficits to curtail spending, international trade disputes and increased
regulation, could lead to slower growth of, or even a decline in, our business. Sovereign nations either delaying
payment for goods and services or renegotiating their debts could impact our liquidity.

Cash Flows from Operations

Net cash provided by operations was $656.5 million and $575.3 million for the years ended December 31, 2021 and
2020, respectively. The net increase between the year ended December 31, 2021 and the year ended December 31,
2020 of $81.2 million was primarily due to higher cash received from customers as a result of the growth in sales,
higher Sartorius AG dividends in 2021 compared to 2020, lower interest paid as a result of the repayment of the
$425.0 million principal amount of Senior Notes in December 2020, proceeds from forward foreign exchange
contracts in 2021 compared to payments for forward foreign exchange contracts in 2020, and higher investment
income received in 2021 than in 2020. These increases were partially offset by higher cash paid to suppliers
primarily for materials to support the increase in sales, cash paid for employee related expenses such as salaries,
bonuses and benefits, and to a lesser extent for employee restructuring programs. The increases were also partially
offset by higher income taxes paid.

Cash flows from operations during the first quarter have historically had larger payments for royalties, fourth
quarter sales commissions and annual employee bonuses, and we expect this pattern to recur in the first quarter of
2022.

Cash Flows from Investing Activities

Our investing activities consisted primarily of cash used for extending a collateralized loan, activity related to the
purchases, sales and maturities of marketable securities, acquisitions and capital expenditures.

Net cash used in investing activities was $784.4 million and $60.3 million for the years ended December 31, 2021
and 2020, respectively. The increase of $724.2 million was primarily attributable to a $453.4 million funding for a
collateralized loan to Sartorius-Herbst Beteiligungen II GmbH, an increase of $204.3 million for net cash outflows
from purchases, sales and maturities of marketable securities and investments, higher net cash outflows of $28.9
million for the acquisition of Dropworks, Inc. in 2021 compared to the acquisition of Celsee, Inc. in 2020, net
payments of $21.9 million for higher capital expenditures, and proceeds of $12.2 million from a divestiture of a
division that was received in 2020 compared to none in 2021.

Cash Flows from Financing Activities

Our financing activities have consisted primarily of cash used for repayment of debt, purchases of treasury stock,
payments for contingent consideration, and cash proceeds from the issuance of common stock for share-based
compensation.

Net cash used in financing activities was $55.4 million compared to $523.0 million for the years ended
December 31, 2021 and 2020, respectively. This decrease was primarily attributable to the repayment of the $425
million principal amount of Senior Notes in 2020, and lower purchases of treasury stock in 2021 compared to 2020
of $50.0 million.

Treasury Shares

During the year ended December 31, 2021, 114,711 shares of Class A treasury stock with an aggregate total cost of
$43.6 million were reissued to fulfill grants to employees under our restricted stock program. Upon reissuing the
Class A treasury stock, a loss of $6.7 million was incurred as they were reissued at a lower price than their average
cost, which reduced Retained earnings, while $37.0 million reduced Additional paid-in capital.

During the year ended December 31, 2020, 117,423 shares of Class A treasury stock with an aggregate total cost of
$38.5 million were reissued to fulfill grants to employees under our restricted stock program. Upon reissuing the
Class A treasury stock, a loss of $9.0 million was incurred as they were reissued at a lower price than their average
cost, which reduced Retained earnings, while $29.5 million reduced Additional paid-in capital.

The re-issuance of the treasury stock for the years ended December 31, 2021 and 2020 did not require cash
payments or receipts and therefore did not affect liquidity.

In November 2017, the Board of Directors authorized a new share repurchase program, granting Bio-Rad authority
to repurchase, on a discretionary basis, up to $250.0 million of outstanding shares of our common stock (“Share
Repurchase Program”). In July 2020, the Board of Directors authorized increasing the Share Repurchase Program
to allow the Company to repurchase up to an additional $200.0 million of stock. As of December 31, 2021, $223.1
million remained under the Share Repurchase Program.

During the year ended December 31, 2021, we repurchased 89,506 shares of Class A common stock for $50.0
million under our Share Repurchase Program, compared to the repurchase of 291,941 shares of our common stock
for $100.0 million during the year ended December 31, 2020. We designated these repurchased shares as treasury
stock.

Contractual Obligations

The following summarizes certain of our contractual obligations as of December 31, 2021 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 (1)
Operating lease obligations (2)
Purchase obligations (3)
Long-term liabilities (4)

$
$
$
$
$

Payments Due by Period

Less
Than
One Year

Total

1-3
Years

3-5
Years

More
than
5 Years

11.0 $
7.8 $
246.8 $
16.7 $
124.8 $

0.5 $
0.7 $
42.5 $
12.2 $
10.6 $

0.9 $
1.5 $
71.7 $
4.3 $
21.8 $

0.9 $
1.3 $
53.1 $
0.2 $
9.1 $

8.7
4.3
79.5
—
83.3

(1) These amounts represent expected cash payments, primarily from finance lease obligations, which are included in our December 31, 2021
consolidated balance sheet. See Note 5 of the consolidated financial statements for additional information about our debt.

(2) Operating lease obligations are described in Note 16 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. Recognition of purchase obligations occurs
when products or services are delivered to Bio-Rad.

(4) These amounts primarily represent recognized long-term obligations for other post-employment benefits mostly due in more than 5 years,
and long-term deferred revenue. Excluded from this table are tax liabilities for uncertain tax positions and contingencies in the amount of $66.6
million. We are not able to reasonably estimate the timing of future cash flows of these tax liabilities, therefore, our income tax obligations are
excluded from the table above. See Note 6 of the consolidated financial statements for additional information about our income taxes.

Recent Accounting Pronouncements Adopted and to be Adopted

See Note 1 to the consolidated financial statements for recent accounting pronouncements adopted and to be
adopted.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

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, and
forward and spot 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. 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.
Positions are primarily in Euro, Swiss Franc, British Pound, Japanese Yen and Korean Won. 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 10% depreciation / appreciation on quoted foreign exchange rates related to the Company’s contracts
would result in an approximate net-present-value loss / gain of $32.8 million on our derivative position as of
December 31, 2021. The gains or losses on forward currency-exchange contracts resulting from changes in
currency exchange rates are expected to approximately offset losses or gains on the exposures being hedged. 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
instruments we have outstanding, there would not be a material impact to earnings or cash flows if interest rates
moved adversely by 10%. Our holdings of long-term debt instruments consist primarily of fixed-rate instruments
and are thus insulated from interest rate changes. As of December 31, 2021, the overall interest rate risk associated
with our debt instruments was not significant.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Consolidated Financial Statements

Reports of Independent Registered Public Accounting Firm

Consolidated Balance Sheets at December 31, 2021 and 2020
Consolidated Statements of Income for each of the three years in the period ended

December 31, 2021

Consolidated Statements of Comprehensive Income for each of the three years in the period

December 31, 2021

Consolidated Statements of Cash Flows for each of the three years in the period ended

December 31, 2021

Consolidated Statements of Changes in Stockholders’ Equity for each of the three years

in the period ended December 31, 2021
Notes to Consolidated Financial Statements

Page

39-42

43-44

48
49-89

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Bio-Rad Laboratories, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Bio-Rad Laboratories, Inc. and subsidiaries (the
Company) as of December 31, 2021 and 2020, the related consolidated statements of income, comprehensive
income, changes in stockholders’ equity, and cash flows for each of the years in the three‑year period ended
December 31, 2021, and the related notes (collectively, the consolidated financial statements). In our opinion, the
consolidated financial statements present fairly, in all material respects, the financial position of the Company as of
December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-
year period ended December 31, 2021, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board
(United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2021, based
on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission, and our report dated February 11, 2022 expressed an unqualified
opinion on the effectiveness of the Company's internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these consolidated financial statements based on our audits. We are a public accounting
firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with
the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission
and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of
material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks
of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the
amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting
principles used and significant estimates made by management, as well as evaluating the overall presentation of the
consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that: (1)
relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by
communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the
accounts or disclosures to which they relate.

Assessment of Lease Term for Reagent Rental Arrangements

As discussed in Note 1 to the consolidated financial statements, the Company earns revenue from reagent rental
agreements with its customers. Each agreement generally includes lease elements subject to the lease accounting
standards and non-lease elements subject to the revenue accounting standards. The classification of the lease
component as an operating or sales-type lease can impact the timing of revenue recognition and cost attributable to
the underlying lease elements. While most reagent rental arrangements contain an option for a lessee to extend and

the option for the lessee to cancel or both, the period in which the contract is enforceable is generally short, and the
lease term has been determined to generally be the noncancelable period. The revenue allocated to the reagent rental
lease elements was approximately 2% of total revenue for the year ended December 31, 2021 and it is included as
part of Net Sales in the Consolidated Statement of Income.

We identified the assessment of the lease term for reagent rental agreements, including the impact from any
associated contractual termination penalties, as a critical audit matter. The Company’s determination of lease
classification as operating, or sales-type lease is primarily dependent on the initial determination of the lease term.
The Company’s process is based on the manual examination of a high volume of agreements that are negotiated
individually across the world with diverse terms. Testing the determination of the lease term, including
consideration of contractual termination penalties, required a high degree of auditor judgment to design and execute
the audit procedures.

The following are the primary procedures we performed to address this critical audit matter. We evaluated the
design and tested the operating effectiveness of certain internal controls related to the Company’s lease
classification process. This included controls related to the Company’s process for determining the lease term
including consideration of contractual termination penalties. We assessed the Company’s policy for determining
that the lease term of its reagent rental arrangements was in accordance with U.S generally accepted accounting
principles. Additionally, for a selection of reagent rental agreements, we read the underlying contract, and compared
relevant terms within the contract to the Company’s determination of lease term analysis and evaluated
management’s judgment on the determination of the length of the lease term. We evaluated the sufficiency of the
evidence obtained by assessing the results of procedures performed, including the appropriateness of the nature and
extent of such evidence.

Accounting for the Investment in Sartorius AG

As discussed in Notes 1 and 3 to the consolidated financial statements, the Company owns 37% of the outstanding
ordinary shares (excluding treasury shares) and 28% of the preference shares of Sartorius AG (Sartorius) as of
December 31, 2021. The Sartorius family trust (the “Trust”) (Sartorius family members are beneficiaries of the
trust) holds a majority interest of the outstanding ordinary shares of Sartorius. The Company does not have the
ability to exercise significant influence over the operating and financial policies of Sartorius primarily because it
does not have any representative or designee on Sartorius' board of directors and has tried and failed to obtain
access to operating or financial information necessary to apply the equity method of accounting. Management
monitors its relationships with Sartorius for changes that could affect whether it has the ability to exercise
significant influence.

We identified the evaluation of whether the Company has the ability to exercise significant influence over the
operating and financial policies of Sartorius as a critical audit matter. The Company’s determination of significant
influence is based on management’s judgments used in their assessment of the investment and impact of changes
that could affect that conclusion. The evaluation of management’s judgments required a high degree of challenging
auditor judgment.

We evaluated management’s significant judgments by:

•

assessing the Company’s policy of determining whether they have significant influence over an investee for
compliance with U.S. generally accepted accounting policies
evaluating the Company’s accounting analysis including consideration of the €400 million loan to
Sartorius-Herbst Beteiligungen II GmbH and the criteria used to determine whether the Company has the
ability to exercise significant influence over Sartorius AG

•

•
•

inspecting legal documents, the minutes of meetings of the board of directors, and other correspondence
used by management as the basis for its accounting analysis
confirming legal determinations through inquiries of the Company’s legal counsel
analyzing whether additional events or transactions that could impact its relationships with investees had
occurred that had not been identified by the Company.

/s/ KPMG LLP

We have served as the Company's auditor since 2013.

Santa Clara, California
February 11, 2022

Report of Independent Registered Public Accounting Firm

To the Stockholders and Board of Directors
Bio‑Rad Laboratories, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Bio-Rad Laboratories, Inc. and subsidiaries' (the Company) internal control over financial reporting as of
December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control –
Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2021 and 2020, the related consolidated
statements of income, comprehensive income, changes in stockholders' equity, and cash flows for each of the years in the three-
year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements), and our report
dated February 11, 2022 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

The Company’s management is responsible 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 the Company’s internal control
over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects. 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 audit also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed 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.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ KPMG LLP

Santa Clara, California
February 11, 2022

BIO-RAD LABORATORIES, INC.
Consolidated Balance Sheets
(In thousands, except share data)

ASSETS
Current assets:

Cash and cash equivalents
Short-term investments
Restricted investments
Accounts receivable, less allowance for doubtful accounts of $15,142 and $19,807

as of December 31, 2021 and 2020, respectively

470,783
399,135
5,560

662,205
328,913
5,560

423,537

419,424

December 31,

2021

2020

Inventories:
Raw materials
Work in process
Finished goods

Total inventories

Prepaid expenses
Other current assets
Total current assets

Property, plant and equipment:

Land and improvements
Buildings and leasehold improvements
Equipment
Total property, plant and equipment

Less: accumulated depreciation and amortization

Property, plant and equipment, net

Operating lease right-of-use assets
Goodwill, net
Purchased intangibles, net
Other investments
Other assets

Total assets

116,880
142,742
312,617
572,239

126,911
151,931
343,411
622,253

107,745
10,089
1,989,088

90,621
10,859
2,139,835

27,940
385,798
1,074,830
1,488,568
(997,616)
490,952

25,739
363,048
1,063,974
1,452,761
(961,390)
491,371

204,798
347,343
253,939
14,387,006
102,669
$ 17,775,795

202,136
291,916
199,497
9,561,140
86,723
$ 12,972,618

The accompanying notes are an integral part of these consolidated financial statements.

BIO-RAD LABORATORIES, INC.
Consolidated Balance Sheets
(continued)
(In thousands, except share data)

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable
Accrued payroll and employee benefits
Current maturities of long-term debt
Income taxes payable
Other taxes payable
Current operating lease liabilities
Deferred revenue
Other current liabilities

Total current liabilities

Long-term debt, net of current maturities
Deferred income taxes
Operating lease liabilities
Other long-term liabilities
Total liabilities

Commitments and contingent liabilities

Stockholders’ equity:

December 31,

2021

2020

141,941
276,986
489
10,319
35,980
36,435
50,852
127,936
680,938

10,514
3,059,080
175,938
182,191
4,108,661

139,451
222,875
1,798
23,282
34,053
36,507
42,468
131,102
631,536

12,258
2,076,785
175,128
196,971
3,092,678

Preferred stock, $0.0001 par value, 7,500,000 shares authorized; issued and

outstanding - none

Class A common stock, $0.0001 par value; 80,000,000 shares authorized; shares
issued - 25,133,530 and 25,072,619 at 2021 and 2020, respectively; shares
outstanding - 24,853,986 and 24,767,870 at 2021 and 2020, respectively

Class B common stock, $0.0001 par value; 20,000,000 shares authorized; shares
issued and outstanding - 5,078,452 and 5,076,186 at 2021 and 2020, respectively
Additional paid-in capital
Class A treasury stock at cost, 279,544 shares at 2021 and 304,749 shares at 2020
Retained earnings
Accumulated other comprehensive income (loss)

Total stockholders’ equity
Total liabilities and stockholders’ equity

—

1
441,733
(106,290)
13,507,241
(175,553)
13,667,134
$ 17,775,795

1
429,376
(99,907)
9,268,012
282,456
9,879,940
$ 12,972,618

The accompanying notes are an integral part of these consolidated financial statements.

BIO-RAD LABORATORIES, INC.
Consolidated Statements of Income
(In thousands, except per share data)

Net sales

Cost of goods sold

Gross profit

Selling, general and administrative expense
Research and development expense

Income from operations

Interest expense
Foreign currency exchange losses, net
Change in fair market value of equity and debt securities
Other income, net

Income before income taxes
Provision for income taxes

Net income

Basic earnings per share:

Net income per basic share
Weighted average common shares - basic

Diluted earnings per share:

Net income per diluted share
Weighted average common shares - diluted

Year Ended December 31,

2021

2020

2019

2,922,545 $
1,281,884
1,640,661
879,574
271,657
489,430
1,551
2,753
(4,926,248)
(26,775)
5,438,149
(1,192,247)
4,245,902 $

2,545,626 $
1,107,804
1,437,822
800,267
226,598
410,957
21,861
1,771
(4,495,825)
(24,488)
4,907,638
(1,101,371)
3,806,267 $

2,311,659
1,054,663
1,256,996
824,625
202,710
229,661
23,416
2,245
(2,030,987)
(26,094)
2,261,081
(502,406)
1,758,675

142.33 $
29,831

127.86 $
29,768

58.93
29,843

140.56 $
30,208

126.20 $
30,160

58.27
30,184

The accompanying notes are an integral part of these consolidated financial statements.

BIO-RAD LABORATORIES, INC.
Consolidated Statements of Comprehensive Income
(In thousands)

Net income
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments
Foreign other post-employment benefits adjustments
Net unrealized holding gains (losses) on available-for-sale (AFS)
investments

Other comprehensive income (loss), net of tax
Comprehensive income

Year Ended December 31,
2020

2019

$ 3,806,267 $ 1,758,675

2021
$ 4,245,902

(469,088)
15,099

371,057
(3,806)

(36,953)
(7,363)

(4,020)
(458,009)
$ 3,787,893

2,553
369,804

3,926
(40,390)
$ 4,176,071 $ 1,718,285

The accompanying notes are an integral part of these consolidated financial statements.

BIO-RAD LABORATORIES, INC.
Consolidated Statements of Cash Flows
(In thousands)

Cash flows from operating activities:
Cash received from customers
Cash paid to suppliers and employees
Interest paid, net
Income tax payments, net
Dividend proceeds and miscellaneous receipts, net
Proceeds from (payments for) forward foreign exchange contracts, net
Net cash provided by operating activities

Cash flows from investing activities:

Payments for purchases of property, plant and equipment
Proceeds from dispositions of property, plant and equipment
Proceeds from divestiture of a division
Payments for acquisitions, net of cash received
Recovery of purchases of intangible assets
Payments for purchases of marketable securities and investments
Payments for investment in loan instrument
Proceeds from sales of marketable securities and investments
Proceeds from maturities of marketable securities and investments
Net cash used in investing activities

Cash flows from financing activities:
Payments on long-term borrowings
Payments for credit agreement renewal fees
Proceeds from issuances of common stock for share-based compensation
Tax payments from net share settlement
Proceeds from reissuances of treasury stock for shared-based compensation,
net
Payments for purchases of treasury stock
Payments of contingent consideration
Net cash used in financing activities

Effect of foreign exchange rate changes on cash
Net (decrease) increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at beginning of year
Cash, cash equivalents and restricted cash at end of year

Year Ended December 31,
2020

2019

2021

$ 2,886,489
(2,140,882)
(2,251)
(134,683)
35,282
12,566
656,521

$ 2,531,135
(1,886,988)
(21,639)
(65,244)
21,488
(3,424)
575,328

$ 2,311,925
(1,818,575)
(22,330)
(45,081)
31,673
285
457,897

(120,803)
52
—
(125,516)
—
(851,627)
(453,440)
425,537
341,359
(784,438)

(3,020)
—
20,632
(22,482)

—
(49,998)
(561)
(55,429)
(12,636)
(195,982)
667,115
471,133

(98,920)
70
12,240
(96,655)
3,414
(248,457)
—
89,734
278,324
(60,250)

(426,938)
—
20,198
(12,930)

—
(100,004)
(3,367)
(523,041)
12,427
4,464
662,651
667,115

(98,532)
129
—
(79,386)
8,818
(371,450)
—
104,632
226,900
(208,889)

(643)
(486)
13,113
(8,096)

3,831
(28,000)
(2,477)
(22,758)
2,237
228,487
434,164
662,651

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated
balance sheets that agrees to the same amounts shown in the consolidated statements of cash flows (in thousands):

Cash and cash equivalents
Restricted cash included in Other current assets
Restricted cash included in Other assets
Total cash, cash equivalents and restricted cash shown in the consolidated
statements of cash flows

Year Ended December 31,

2021
470,783
14
336

2020
662,205
3,994
916

2019
660,672
93
1,886

471,133

667,115

662,651

These restricted cash items are primarily related to performance guarantees and other restricted deposits.
The accompanying notes are an integral part of these consolidated financial statements.

BIO-RAD LABORATORIES, INC.
Consolidated Statements of Changes in Stockholders’ Equity
(In thousands)

Common
Stock

Additional Paid-
in Capital

Treasury Stock

Retained
Earnings

Accumulated
Other
Comprehensive
Income

Total
Stockholders'
Equity

Balance at December 31, 2018
Net income

Other comprehensive loss, net of tax
Issuance of common stock
Stock compensation expense
Purchase of treasury stock
Reissuance of treasury stock
Balance at December 31, 2019
Net income
Other comprehensive income, net of
tax
Issuance of common stock
Stock compensation expense
Purchase of treasury stock

Reissuance of treasury stock
Balance at December 31, 2020
Net income
Other comprehensive loss, net of tax
Issuance of common stock
Stock compensation expense
Purchase of treasury stock
Reissuance of treasury stock

3
—

—
—
—
—
—
3
—

—
—
—
—

—
3
—
—
—
—
—
—

394,342
—

—
5,017
35,593
—
(24,932)
410,020
—

—
7,268
41,556
—

(29,468)
429,376
—
—
(1,850)
51,160
—
(36,953)

(49,129) $ 3,722,073
— 1,758,675

(46,958) $ 4,020,331
— 1,758,675

—
—
—
(28,000)
38,732
(38,397)

—
—
—
—
(9,969)
5,470,779
— 3,806,267

(40,390)
—
—
—
0
(87,348)

(40,390)
5,017
35,593
(28,000)
3,831
5,755,057
— 3,806,267

—
—
—
(100,004)

—
—
—
—

369,804
—
—
—

369,804
7,268
41,556
(100,004)

38,494
(99,907)

(9,034)
9,268,012
— 4,245,902
—
—
—
—
—
—
—
(49,998)
(6,673)
43,615

—
282,456

(8)
9,879,940
— 4,245,902
(458,009)
(1,850)
51,160
(49,998)
(11)

(458,009)
—
—
—
—

Balance at December 31, 2021

441,733

$ (106,290) $13,507,241 $ (175,553) $13,667,134

The accompanying notes are an integral part of these consolidated financial statements.

BIO-RAD LABORATORIES, INC.
Notes to Consolidated Financial Statements

SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements include the accounts of Bio-Rad Laboratories, Inc. and all of our wholly and
majority owned 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 U.S. generally
accepted accounting principles 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.

Variable Interest Entities

We enter into relationships with or make investments in other entities that may be variable interest entities ("VIE").
A VIE is consolidated in the financial statements if we are the primary beneficiary. The primary beneficiary has the
power to direct activities that most significantly impact the economic performance of the VIE and has the obligation
to absorb losses or the right to receive benefits from the VIE that could potentially be significant to the VIE.

In 2021, we extended a loan to a VIE, Sartorius-Herbst Beteiligungen II GmbH ("SHB"), a private limited company
incorporated under the laws of Germany (See Note 3). We have not consolidated this entity because we do not have
the power to direct the activities that most significantly impact the VIE’s economic performance related to
repayment of the loan or cash management of the SHB and, thus, we are not considered the primary beneficiary of
the VIE. We believe that our maximum exposure to loss as a result of our involvement with the VIE is limited to
the receivable due to us from the VIE under the terms of the loan.

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.

Short-term Restricted Investments

Short-term restricted investments of $5.6 million at both December 31, 2021 and 2020 represent a money market
fund that is provided as collateral to secure worker's compensation and general liability insurance.

Available-for-Sale Investments

Available-for-sale investments consist of corporate obligations, municipal securities, asset backed securities and
U.S. government sponsored agencies. 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. On January 1, 2020, we adopted Accounting Standards Update
(ASU) 2016-13, "Measurement of Credit Losses on Financial Instruments." In accordance with the adopted
guidance, we replaced the incurred loss approach with an expected loss model for instruments measured at
amortized cost and record allowances for available-for-sale debt securities rather than to reduce the carrying amount
for other-than-temporary impairment as was followed under the other-than-temporary impairment model prior to
January 1, 2020. Realized gains and losses and other-than-temporary impairments on investments are included in
Other income and expense, 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, investments, foreign exchange contracts, trade accounts receivable and loans receivable. Cash and cash
equivalents and investments are placed with various highly rated major financial institutions located in different
geographic regions.

The forward contracts used in managing our foreign currency exposures have an element of risk in that the
counterparties may be unable to meet the terms of the agreements. We attempt to minimize this risk by limiting the
counterparties to a diverse group of highly-rated domestic and international financial institutions. In the event of
non-performance by these counterparties, the carrying values of our financial instruments represent the maximum
amount of loss we would have incurred as of our fiscal year-end.

Credit risk for trade accounts receivable is generally limited due to the large number of customers and their
dispersion across many geographic areas. We manage our accounts receivable credit risk through ongoing credit
evaluation of our customers' financial conditions. We generally do not require collateral from our customers.

Loans receivable represent the Loan extended to SHB and is collateralized by the pledge of certain trust interests
under the Sartorius family trust ("Trust"), which upon termination of the Trust represent the right to receive
Sartorius ordinary shares. The collateral is subject to market volatility based on fluctuation in value of the Sartorius
ordinary shares.

Accounts Receivable and Allowance for Doubtful Accounts

We record trade accounts receivable at the net invoice value and such receivables are non-interest bearing. We
consider receivables past due based on the contractual payment terms. Amounts later determined and specifically
identified to be uncollectible are charged or written off against the allowance for doubtful accounts.

Any adjustments made to our historical loss experience reflect current differences in asset-specific risk
characteristics, including, for example, accounts receivable by customer type (public or government entity versus
private entity) and by geographic location of the customer.

Changes in our allowance for doubtful accounts were as follows (in millions):
December 31,

2020

2021

Beginning balance

Provision for expected credit losses (2021,
2020), bad debt (reversal) (2019)
Write-offs charged against the allowance
Recoveries collected

Ending balance

Inventory

19.8 $

20.2 $

1.4
(6.4)

0.3
15.1 $

1.2
(1.6)

—
19.8 $

2019

26.7

(1.2)
(6.6)

1.3
20.2

Inventories are valued at the lower of cost and net realizable value and include material, labor and overhead costs.
Cost is determined using standard costs, which approximate actual costs, and are relieved from inventory on a first-
in, first-out or average cost basis. We classify our inventories based on our historical and anticipated levels of sales;
any inventory in excess of its normal operating cycle (1 – 3 years depending on our product line) is classified as
long-term on our consolidated balance sheets. The long-term inventory was immaterial as of December 31, 2021
and 2020.

Property, Plant and Equipment

Property, plant and equipment are stated at cost, less accumulated depreciation and amortization. Additions and
improvements are capitalized, and maintenance and repairs are expensed as incurred. Included in property, plant
and equipment are buildings and equipment acquired under capital lease arrangements, reagent rental equipment
and capitalized software, including costs for software developed or obtained for internal use.

Depreciation is computed on a straight-line basis over the estimated useful lives of the assets. The estimated useful
lives of property, plant and equipment are generally as follows: buildings, 10-50 years; leasehold improvements, the
life of the improvements or the term of the lease, whichever is shorter; reagent rental equipment, 1-5 years;
equipment, 3-12 years; and computer software, 3-5 years.

When property and equipment is retired or otherwise disposed of, the cost and accumulated depreciation are
relieved from the accounts and the net gain or loss is included in operating expenses.

Leases

We determine if an arrangement is a lease at inception. Operating leases are included in Operating lease right-of-
use (“ROU”) assets, Current operating lease liabilities, and Operating lease liabilities in our Consolidated Balance
Sheets. Finance leases are included in Property, plant and equipment, Current maturities of long-term debt, and
Long-term debt, net of current maturities in our Consolidated Balance Sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our
obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized
at the commencement date based on the present value of lease payments over the lease term. As our leases do not
provide an implicit rate, we use our incremental borrowing rate based on the information available at the
commencement date in determining the present value of lease payments. Operating lease ROU assets also include
any lease payments made and excludes lease incentives. Our lease terms may include options to extend or terminate
the lease. For purposes of determining the lease term used in the measurement of operating lease ROU assets and
operating lease liabilities, we include the noncancellable period of the lease together with those periods covered by
the option to extend the lease if we are reasonably certain to exercise that option, the periods covered by an option
to terminate the lease if we are reasonably certain not to exercise that option, and the periods covered by the option
to extend (or to not terminate) the lease in which exercise of the option is controlled by the lessor. Lease expense is
recognized on a straight-line basis over the lease term. Where we act as lessee, we elected not to separate lease and
non-lease components.

For our reagent rental contracts, which are classified as operating leases and we act as a lessor, are more fully
described below under the caption "Reagent Rental Agreements."

Intangible Assets

Our intangible assets principally include goodwill, acquired technology / know how, license, tradenames, customer
relationships, and in-process research and development. Intangible assets with finite lives, which include acquired
technology / know how, tradenames, licenses and customer relationships, are carried at cost and amortized using the
straight-line method over their estimated useful lives.

The estimated useful lives used in computing amortization of intangible assets are as follows:

Customer relationships/lists
Know how
Developed product technology
Licenses
Tradenames
Covenants not to compete

4 – 16 years
14 years
2 – 20 years
12 – 13 years
6 – 15 years

3 – 10 years

Intangible assets with indefinite lives, which include only goodwill and in-process research and development assets,
are recorded at cost and evaluated at least annually for impairment.

Impairment of Long-Lived Assets

We review long-lived assets, such as property, plant and equipment and finite-lived intangible assets, for
impairment whenever events indicate that the carrying amounts might not be recoverable. Recoverability of
property, plant and equipment, and other finite-lived intangible asset is measured by comparing the projected
undiscounted net cash flows associated with those assets to their carrying values. If an asset is considered impaired,
it is written down to its fair value, which is determined based on the asset's projected discounted cash flows or
appraised value, depending on the nature of the asset. For purposes of recognition of impairment for assets held for
use, we group assets and liabilities at the lowest level for which cash flows are separately identifiable.

There were no impairments of finite-lived intangible assets for the years ended December 31, 2021, 2020 and 2019.

Impairment of Goodwill

Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiable
intangible assets acquired in each business combination. We conduct an impairment analysis for goodwill annually
in the fourth quarter or more frequently if indicators of impairment exist or if a decision is made to sell or exit a
business. Significant judgments are involved in determining if an indicator of impairment has occurred. Such
indicators may include deterioration in general economic conditions, negative developments in equity and credit
markets, adverse changes in the markets in which an entity operates, increases in input costs that have a negative
effect on earnings and cash flows, or a trend of negative or declining cash flows over multiple periods, among
others. The fair value that could be realized in an actual transaction may differ from that used to evaluate the
impairment of goodwill.

In conjunction with our annual impairment assessment for 2021, we reassessed the reporting units based on changes
resulting from internal reorganization and alignment, restructuring activities and changes in reporting structures.
After our evaluation, we concluded on two reporting units, which are the operating segments, Life Science and
Clinical Diagnostics. We elected to perform a qualitative assessment of goodwill and determined that it is not more
likely than not that the fair values of our reporting units are less than their carrying amounts and that goodwill is not
impaired for any of our reporting units.

Impairment of Indefinite-Lived Intangible Assets

For indefinite-lived intangible assets such as in-process research and development, we conduct an impairment
analysis annually in the fourth quarter or more frequently if indicators of impairment exist. We first perform a
qualitative assessment to determine if it is more likely than not that the carrying amount of each of the in-process
research and development assets exceeds its fair value. The qualitative assessment requires the consideration of
factors such as recent market transactions, macroeconomic conditions, and changes in projected future cash flows.
If we determine it is more likely than not that the fair value is less than its carrying amount of the in-process
research and development assets, a quantitative assessment is performed. The quantitative assessment compares the
fair value of the in-process research and development assets to its carrying amount. If the carrying amount exceeds
its fair value, an impairment loss is recognized for the excess. We elected to perform a qualitative assessment of
indefinite-lived intangible assets and determined that it is not more likely than not that the fair value is less than its
carrying amount and that in-process research and development are not impaired.

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 reflect the tax effects of net operating losses, tax
credits, and temporary differences between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. They are determined using enacted tax rates in effect for
the year in which such temporary 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 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.
When we establish or reduce the valuation allowance against our deferred tax assets, our provision for income taxes
will increase or decrease, respectively, in the period that determination to change the valuation allowance is made.

We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position
will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax
benefits recognized in the financial statements on a particular tax position are measured based on the largest benefit
that has a greater than a 50% likelihood of being realized upon settlement. The amount of unrecognized tax benefits
is adjusted as appropriate for changes in facts and circumstances, such as significant amendments to existing tax
law, new regulations or interpretations by the taxing authorities, new information obtained during a tax examination,
or resolution of an examination. We recognize both accrued interest and penalties, where appropriate, related to
unrecognized tax benefits in the provision for income taxes.

Revenue Recognition

We recognize revenue from operations through the sale of products, services, license of intellectual property and
rental of instruments. Revenue from contracts with customers is recognized upon transfer of control of promised
products or services to customers in an amount that reflects the consideration we expect to receive in exchange for
those products or services. We enter into contracts that can include various combinations of products and services,
which are generally accounted for as distinct performance obligations. Revenue is recognized net of any taxes
collected from customers (sales tax, value added tax, etc.), which are subsequently remitted to government
authorities.

In the third quarter of fiscal year 2021, we received approximately $32.5 million related to a settlement of an
intellectual property litigation for sales of products infringing on our patents during the period from November 2018
through July 2021. Of the total amount, we recognized $31.6 million as revenue, based on the estimated stand-
alone royalty rate associated with the infringed patents and is included as part of Net sales in our consolidated
statements of income.

In the fourth quarter of fiscal year 2020, we received $35.3 million in court awarded damages related to an
intellectual property litigation for sales of products infringing on our patents during 2015 to 2018. Of the total
amount, we recognized $32.3 million as revenue upon receipt of the damages based on the estimated stand-alone
royalty rate associated with the infringed patents and is included as part of Net sales in our consolidated statements
of income.

Reagent Rental Agreements
Reagent rental agreements are primarily a diagnostic industry sales method that provides use of an instrument and
consumables (reagents) to a customer on a per test basis. These agreements may also include maintenance of the
instruments placed at customer locations as well as initial training. We initially determine if a reagent rental
arrangement contains a lease at contract commencement. Where we have determined that such an arrangement
contains a lease, we next must ascertain its lease classification for purposes of applying appropriate accounting
treatment as an operating, sales-type or direct financing lease. For purposes of determining the lease term used in
performing the lease classification test, we include the noncancellable period of the lease together with those
periods covered by the option to extend the lease if the customer is reasonably certain to exercise that option, the
periods covered by an option to terminate the lease if the customer is reasonably certain not to exercise that option,
and the periods covered by the option to extend (or not to terminate) the lease in which exercise of the option is
controlled by the Company. The assessment of the lease term for reagent rental agreements, including the impact
from any associated contractual termination penalties, are subject to an estimation process. While most of our
reagent rental arrangements contain either the option for a lessee to extend and/or cancel, the period in which the
contract is enforceable is a very short period and therefore the lease term has been limited to the noncancellable
period. Generally, these arrangements do not contain an option for the lessee to purchase the underlying asset.

We concluded that the use of the instrument (referred to as “lease elements”) is not within the guidance of ASC 606
but rather ASC 842. Accordingly, we first allocate the transaction price between the lease elements and the non-
lease elements based on relative standalone selling prices. The determination of the transaction price requires
judgment and consideration of any fixed/minimum payments as well as estimates of variable consideration. After
allocation, the amount of variable payments allocated to lease components will be recognized as income under ASC
842, while the amount of variable payments allocated to non-lease components will be recognized as income in
accordance with ASC 606.

Maintenance services, along with the reagents, are allocated to the non-lease elements and are recognized as
income. Generally, the terms of the arrangements result in the transfer of control for reagents upon either (i) when
the consumables are delivered or (ii) when the consumables are consumed by the customer.

Our reagent rental arrangements are predominantly comprised of variable lease payments that fluctuate depending
on the volume of reagents purchased, as very few of such arrangements contain any fixed/minimum lease payments.
Further, our reagent rental arrangements are predominantly classified as operating leases, and any sales-type leases
represent in aggregate an immaterial amount of lease income. Our reported lease income is primarily variable in
nature and is recognized upon delivery or as the reagents are consumed by the customer.

Revenue allocated to the lease elements of these reagent rental arrangements represented approximately 2% of total
revenue at December 31, 2021, and 3% at both December 31, 2020 and 2019, respectively and are included as part
of the Net sales in our consolidated statements of income.

Contract costs:

As a practical expedient, we expense as incurred costs to obtain contracts as the amortization period would have
been one year or less. These costs include our internal sales force and certain partner sales incentive programs and
are recorded within Selling, general and administrative expense in our consolidated statements of income.

Disaggregation of Revenue:

The disaggregation of our revenue by geographic region is based primarily on the location of the use of the product
or service, and by industry segment sources. The disaggregation of our revenues by industry segment sources are
presented in our Segment Information footnote (see Note 14).

Deferred revenues primarily represent unrecognized fees billed or collected for extended service arrangements. The
deferred revenue balance at December 31, 2021 and December 31, 2020 was $71.0 million and $60.0 million,
respectively. The short-term deferred revenue balance at December 31, 2021 and December 31, 2020 was $50.9
million and $42.5 million, respectively.

We warrant certain equipment against defects in design, materials and workmanship, generally for a period of one
year. We estimate the cost of warranties at the time the related revenue is recognized based on historical
experience, specific warranty terms and customer feedback. These costs are recorded within Cost of goods sold in
our consolidated statements of income.

Warranty liabilities are included in Other current liabilities and Other long-term liabilities in the consolidated
balance sheets. Change in our warranty liability were as follows (in millions):

January 1

Provision for warranty
Actual warranty costs

December 31

Shipping and Handling

2021

2020

2019

9.8 $
14.8
(11.9)
12.7 $

9.0
9.4
(8.6)
9.8

10.1
9.9
(11.0)
9.0

We classify all freight costs billed to customers as Net sales. Related freight costs are recognized upon transfer of
control of the promised products to customers as a fulfillment cost and included in Cost of goods sold.

Research and Development

All research and development costs are expensed as incurred. Types of expense incurred in research and
development include materials and supplies, employee compensation, consulting and third-party services,
depreciation, facility costs and information technology.

Foreign Currency

Balance sheet accounts of international subsidiaries are translated at the current exchange rates as of the end of each
accounting period. Income statement items are translated at average exchange rates for the period. The resulting
translation adjustments are recorded as a separate component of stockholders’ equity.

Foreign currency transaction gains and losses are included in Foreign exchange losses, net 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.

Forward Foreign Exchange Contracts

As part of distributing our products, we regularly enter into intercompany transactions. We enter into forward
foreign exchange contracts to manage foreign exchange risk of future movements in exchange rates that affect
foreign currency denominated intercompany receivables and payables. We do not use derivative financial
instruments for speculative or trading purposes, nor do we seek hedge accounting treatment for any of our contracts.
As a result, these contracts, generally with maturity dates of 90 days or less and denominated primarily in currencies
of industrial countries, are recorded as an asset or liability measured 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, all of which
are recorded in Foreign exchange losses, net in the consolidated statements of income. We classify the proceeds
from (payments for) forward foreign exchange contracts as cash flows from operating activities in our consolidated
statements of cash flows.

Share-Based Compensation Plans

Share-based compensation expense for all share-based payment awards granted is determined based on the grant-
date fair value. We recognize these compensation costs over the requisite service period of the award, which is
generally the vesting term of the share-based payment awards. Forfeitures are recognized as they occur. These
plans are described more fully in Note 9.

Earnings Per Share

Basic earnings per share is computed by dividing net income attributable to Bio-Rad by the weighted average
number of common shares outstanding for that period. Diluted earnings per share takes into account the effect of
dilutive instruments, such as stock options and restricted stock, and uses the average share price for the period in
determining the number of potential common shares that are to be added to the weighted average number of shares
outstanding. Potential common shares are excluded from the diluted earnings per share calculation if the effect of
including such securities would be anti-dilutive.

The weighted average number of common shares outstanding used to calculate basic and diluted earnings per share,
and the anti-dilutive shares that are excluded from the diluted earnings per share calculation are as follows (in
thousands):

Basic weighted average shares outstanding
Effect of potentially dilutive stock options

and restricted stock awards

Diluted weighted average common shares

Anti-dilutive stock options and restricted stock awards

excluded from the computation of diluted EPS

Fair Value of Financial Instruments

Year Ended December 31,
2020

2021

2019

29,831

29,768

29,843

377
30,208

392
30,160

341
30,184

For certain financial instruments, including cash and cash equivalents, short-term investments, accounts receivable,
marketable securities, notes payable, accounts payable and foreign exchange contracts, the carrying amounts
approximate fair value.

The estimated fair value of financial instruments is based on the exchange price that would be received for an asset
or paid to transfer a liability (an exit price) using available market information or other appropriate valuation
methodologies in the principal or most advantageous market for the asset or liability in an orderly transaction
between market participants. 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 (see Note 3).

Equity Investments

Investments in publicly traded companies in which we do not have the ability to exercise significant influence are
reported at fair value, with unrealized gains and losses reported as a component of change in fair market value of
equity and debt securities in our consolidated statements of income. Companies in which we do not have a
controlling financial interest, but over which we have significant influence, are accounted for using the equity
method. Our share of the after-tax earnings of equity method investees is included in other income, net in our
consolidated statements of income. Investments in privately held companies in which we do not have the ability to
exercise significant influence are accounted for using the cost method with adjustments for observable changes in
price or impairments (see Note 3). We monitor our relationships with investees when changes occur that could
affect whether we have the ability to exercise significant influence.

Recent Accounting Pronouncements Adopted

In March 2020, the FASB issued ASU No. 2020-04, "Facilitation of the Effects of Reference Rate Reform on
Financial Reporting." The ASU provides optional expedients and exceptions for applying GAAP to transactions
affected by reference rate (e.g., LIBOR) reform if certain criteria are met, for a limited period of time to ease the
potential burden in accounting for (or recognizing the effects of) reference rate reform on financial reporting. The
ASU is effective as of March 12, 2020 through December 31, 2022. We will evaluate transactions or contract
modifications occurring as a result of reference rate reform and determine whether to apply the optional guidance on
an ongoing basis. The ASU has not and is currently not expected to have a material impact on our consolidated
financial statements.

In January 2020, the FASB issued ASU 2020-01, "Clarifying the Interactions between Topic 321 Investments—
Equity Securities, Topic 323 Investments—Equity Method and Joint Ventures, and Topic 815 Derivatives and
Hedging." ASU 2020-01 clarifies that a company should consider observable transactions that require a company
to either apply or discontinue the equity method of accounting under Topic 323 for the purposes of applying the
measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the
equity method. ASU 2020-01 also clarifies that, when determining the accounting for certain forward contracts and
purchased options a company should not consider, whether upon settlement or exercise, if the underlying securities
would be accounted for under the equity method or fair value option. ASU 2020-01 was effective for fiscal years
beginning after December 15, 2020. The adoption of ASU 2020-01 did not have a material impact on our
consolidated financial statements.

In December 2019, the FASB issued ASU 2019-12, "Simplifying the Accounting for Income Taxes," which
eliminates certain exceptions within ASC 740, Income Taxes, and clarifies other aspects of the current guidance to
promote consistency among reporting entities. ASU 2019-12 was effective for fiscal years beginning after
December 15, 2020, with any adjustments reflected as of January 1, 2021. The adoption of ASU 2019-12 did not
have a material impact on our consolidated financial statements.

Recent Accounting Pronouncements to be Adopted

In November 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)
No. 2021-10, "Government Assistance." The ASU includes tax credits but not within Topic 740, "Income Taxes,"
cash grants, grants of other assets and project grants. The ASU excludes transactions in which a government is a
customer within Topic 606, "Revenue from Contracts with Customers." The ASU will be effective for fiscal years
beginning after December 15, 2021, with early adoption permitted. We will not early adopt this ASU. We are
currently evaluating the effect of adopting this pronouncement on our financial statements and disclosures.

In October 2021, the FASB issued ASU 2021-08, "Accounting for Contract Assets and Contract Liabilities from
Contracts with Customers." ASU 2021-08 requires an acquirer in a business combination to recognize and measure
contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition
guidance in Topic 606. Under this approach, the acquirer applies the revenue model as if it had originated the
contracts. This is a departure from the current requirement to measure contract assets and contract liabilities at fair
value. ASU 2021-08 is applied to business combinations occurring on or after January 1, 2023. We early adopted
ASU 2021-08 on January 1, 2022.

ACQUISITIONS AND DIVESTITURES

ACQUISITIONS

Dropworks Acquisition:

On October 15, 2021 (the "Acquisition Date"), we acquired all equity interests of Dropworks, Inc. ("Dropworks")
for a total consideration of $125.5 million.

Dropworks met the definition of a business, and therefore is accounted for as a business combination.

The following table summarizes the final fair values of the assets acquired and liabilities assumed at the Acquisition
Date (in millions):

Intangible assets
Deferred tax assets
Deferred tax liabilities
Other identifiable assets acquired, net

Net identifiable assets acquired

Goodwill

Net assets acquired

Fair Value

83.6
5.6
(19.5)
0.4
70.1
55.4
125.5

Goodwill related to the acquisition is primarily attributable to the opportunities in the digital PCR market from
combining the know-how and technologies of Bio-Rad and Dropworks, and is not deductible for tax purposes.

The following table summarizes the final fair values and estimated useful life of the components of identifiable
intangible assets acquired as of the Acquisition Date (in millions):

Covenants not to compete
In-process research and development

Total identifiable intangible assets acquired

Fair Value

1.9
81.7
83.6

Estimated Useful Life (years)
4.7

The acquired covenants not to compete are being amortized over its estimated useful life using the straight-line
method of amortization, which is the term based on the legal rights associated with the covenants not to compete
asset. Amortization of the acquired covenants not to compete of $0.1 million, during the year ended December 31,
2021, is included in Selling, general and administrative expense in the consolidated statements of income.

In-process research and development (IPR&D) is accounted for as an indefinite-lived asset. Once the project is
completed, the carrying value of the IPR&D will be amortized over the estimated useful life of the asset. IPR&D is
assessed for impairment on an annual basis until the project is completed.

We believe the values of acquired intangible assets reported above represent their fair values and approximate the
amounts a market participant would pay for these intangible assets as of the Acquisition Date.

We included Dropworks' estimated fair value of assets acquired and liabilities assumed in our consolidated balance
sheets beginning on the Acquisition Date. The results of operations for Dropworks subsequent to the Acquisition
Date have been included in, but are immaterial to, our consolidated statements of income for the year ended
December 31, 2021. Pro forma results of operations for the Dropworks acquisition have not been presented because
they are not material to the consolidated statements of income.

Celsee Acquisition:

On April 1, 2020 (the "Acquisition Date"), we acquired all equity interests of Celsee, Inc. ("Celsee") for total
consideration of $99.3 million (as described in the table below), including the estimated fair value of contingent
consideration. The contingent consideration of up to $60.0 million is payable in cash, upon the achievement of
certain net revenues for the period beginning on January 1, 2021 and ending on December 31, 2022.

Celsee is a manufacturer of instruments and consumables for the isolation, detection, and analysis of single cells.
We believe this acquisition will complement our Life Science product offerings. The acquisition was included in
our Life Science segment's results of operations from the Acquisition Date. The amount of acquisition-related costs
was minimal as Bio-Rad primarily represented itself during the acquisition process.

Celsee met the definition of a business, and therefore is accounted for as a business combination.

The fair value of consideration transferred for the Celsee acquisition consists of the following (in millions):

Purchase price (cash)
Fair value of contingent consideration (earn-out)

Fair value of total consideration transferred

99.2
0.1
99.3

The following table summarizes the final fair values of the assets acquired and liabilities assumed at the Acquisition
Date (in millions):

Cash and cash equivalents
Intangible assets
Deferred tax assets
Deferred tax liabilities
Other identifiable assets acquired, net

Net identifiable assets acquired

Goodwill

Net assets acquired

Fair Value

0.6
79.9
8.4
(19.7)
0.3
69.5
29.8
99.3

Goodwill related to the acquisition is primarily attributable to opportunities and economies of scale from combining
the operations and technologies of Bio-Rad and Celsee, and is not deductible for tax purposes.

The following table summarizes the final fair values and estimated useful lives of the components of identifiable
intangible assets acquired as of the Acquisition Date (in millions):

Fair Value

Estimated Useful
Life (years)

Developed product technology
Customer relationships
Covenants not to compete
In-process research and development

Total identifiable intangible assets acquired

70.3
3.6
1.4
4.6
79.9

18.9
4.0
3.0

Intangible assets acquired as a result of the Celsee acquisition are being amortized over their estimated useful lives
using the straight-line method of amortization, which materially approximates the distribution of the economic
value of the identified intangible assets. Amortization of acquired developed technology of $3.7 million and
$2.8 million for the years ended December 31, 2021 and December 31, 2020, respectively, are included in Cost of
goods sold in the consolidated statements of income. Amortization of the acquired customer relationships of
$0.9 million and $0.7 million and covenants not to compete of $0.5 million and $0.4 million for the years ended
December 31, 2021 and December 31, 2020, respectively, are included in Selling, general and administrative
expense in the consolidated statements of income.

We included Celsee's fair value of assets acquired and liabilities assumed in our consolidated balance sheets
beginning on the Acquisition Date. The results of operations for Celsee subsequent to the Acquisition Date have
been included in, but are immaterial to, our consolidated statements of income for the years ended. Pro forma
results of operations for the Celsee acquisition have not been presented because they are not material to the
consolidated statements of income.

DIVESTITURE

Informatics Divestiture:

In April 2020, we received $12.2 million for the sale of our Informatics division, which focused on providing and
developing comprehensive, high-quality spectral databases and associated software. The division was part of our
Other Operations segment. In connection with this sale, we recorded an $11.7 million gain in Other income, net, in
the consolidated statements of income for the year ended December 31, 2020.

FAIR VALUE MEASUREMENTS AND INVESTMENTS

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 in an orderly transaction between market participants at the measurement date. The
identification of market participant assumptions provides a basis for determining what inputs are to be used for
pricing each asset or liability. A fair value hierarchy has been established which gives precedence to fair value
measurements calculated using observable inputs over those using unobservable inputs. This hierarchy prioritizes
the inputs into three broad levels as follows:

•
•

•

Level 1: Quoted prices in active markets for identical instruments
Level 2: Other significant observable inputs (including quoted prices in active markets for similar
instruments)
Level 3: Significant unobservable inputs (including assumptions in determining the fair value of certain
investments)

Financial assets and liabilities carried at fair value and measured on a recurring basis as of December 31, 2021 are
classified in the hierarchy as follows (in millions):

Level 1

Level 2

Level 3

Total

Financial assets carried at fair value:
Cash equivalents:

Commercial paper
Time deposits
Asset-backed securities
Foreign Govt Obligations
Municipals obligations
U.S. government sponsored agencies
Money market funds

Total cash equivalents (a)

Restricted investments (b)
Equity Securities (c)
Loan under the fair value option (d)
Available-for-sale investments:
Corporate debt securities
U.S. government sponsored agencies
Foreign government obligations
Other foreign obligations
Municipal obligations
Asset-backed securities

Total available-for-sale investments (e)

Forward foreign exchange contracts (f)

— $
7.2
—
—
—
—
50.7
57.9
6.9
13,977.5
—

—
—
—
—
—
—
—
—

Total financial assets carried at fair value

$ 14,042.3 $

39.8 $
10.1
0.1
0.8
0.3
33.6
—
84.7

—
—
—

182.3
44.3
1.0
3.8
9.0
87.3
327.7
1.7
414.1 $

— $
—
—
—
—
—
—
—

—

443.1

39.8
17.3
0.1
0.8
0.3
33.6
50.7
142.6
6.9
13,977.5
443.1

—
—
—
—
—
—
—
—

182.3
44.3
1.0
3.8
9.0
87.3
327.7
1.7
443.1 $ 14,899.5

Financial liabilities carried at fair value:

Forward foreign exchange contracts (g)

— $

2.8 $

— $

2.8

Financial assets and liabilities carried at fair value and measured on a recurring basis as of December 31, 2020 are
classified in the hierarchy as follows (in millions):

Financial assets carried at fair value:
Cash equivalents:

Commercial paper
Time deposits
Asset-backed securities
U.S. government sponsored agencies
Money market funds

Total cash equivalents (a)

Restricted investments (b)
Equity securities (c)
Available-for-sale investments:
Corporate debt securities
U.S. government sponsored agencies
Foreign government obligations
Other foreign obligations
Municipal obligations
Asset-backed securities

Total available-for-sale investments (e)

Forward foreign exchange contracts (f)

Total financial assets carried at fair value

Financial liabilities carried at fair value:
Forward foreign exchange contracts (g)
Contingent consideration (h)
Total financial liabilities carried at fair value

Level 1

Level 2

Level 3

Total

— $

17.6

—
— $

60.1
77.7
6.7
9,582.4

—
—
—
—
—
—
—
—
9,666.8 $

41.7 $
10.0
0.9
2.5
—
55.1
—
—

133.2
76.9
4.0
2.1
15.2
36.2
267.6
1.0
323.7 $

— $
—
— $

1.0 $
—
1.0 $

— $
—

—
—
—
—

—
—

—
—
—

—
—
—
—
—
— $

— $
0.7
0.7 $

41.7
27.6
0.9
2.5
60.1
132.8
6.7
9,582.4

133.2
76.9
4.0
2.1
15.2
36.2
267.6
1.0
9,990.5

1.0
0.7
1.7

(a) Cash equivalents are included in Cash and cash equivalents in the consolidated balance sheets.

(b) Restricted investments are included in the following accounts in the consolidated balance sheets (in

millions):

Restricted investments
Other investments

Total

December 31,
2021

December 31,
2020

5.6
1.3
6.9

5.6
1.1
6.7

Short-term investments
Other investments

Total

December 31,
2021

December 31,
2020

71.4
13,906.1
13,977.5

61.4
9,521.0
9,582.4

(d) The Loan under the fair value option is included in Other investments in the consolidated balance sheets.

(e) Available-for-sale investments are included in the following accounts in the consolidated balance sheets (in

millions):

Short-term investments
Other investments

Total

December 31,
2021

December 31,
2020

327.7
—
327.7

267.5
0.1
267.6

(f) Forward foreign exchange contracts in an asset position are included in other current assets in the

consolidated balance sheets.

(g) Forward foreign exchange contracts in a liability position are included in other current liabilities in the

consolidated balance sheets.

(h) Contingent consideration liabilities in a liability position are included in the other long-term liabilities in the

consolidated balance sheets.

Level 1 Fair Value Measurements

As of December 31, 2021, we own 12,987,900 ordinary voting shares and 9,588,908 preference shares of Sartorius
AG (Sartorius), of Goettingen, Germany, a process technology supplier to the biotechnology, pharmaceutical,
chemical and food and beverage industries. We did not purchase any incremental shares for the years ended
December 31, 2021 and 2020. We own approximately 37% of the outstanding ordinary shares (excluding treasury
shares) and 28% of the preference shares of Sartorius as of December 31, 2021. The Sartorius family trust
(Sartorius family members are beneficiaries of the trust) holds a majority interest of the outstanding ordinary shares
of Sartorius. We do not have the ability to exercise significant influence over the operating and financial policies of
Sartorius primarily because we do not have any representative or designee on Sartorius' board of directors and have
tried and failed to obtain access to operating or financial information necessary to apply the equity method of
accounting.

The change in fair market value on our investment in Sartorius AG for the year ended December 31, 2021 was
$4.92 billion gain and is recorded in our consolidated statements of income.

Level 2 Fair Value Measurements

To estimate the fair value of Level 2 debt securities as of December 31, 2021 and 2020, we used Refinitiv as the
primary pricing source. Our pricing process allows us to select a hierarchy of pricing sources for securities held. If
Refinitiv does not price a Level 2 security that we hold, then the pricing provider will utilize our custodian supplied
pricing as the secondary pricing source.

Available-for-sale investments consist of the following (in millions):

December 31, 2021

Amortized
Cost

Unrealized
Gains

Unrealized
Losses

Allowances
for Credit
Losses

Estimated
Fair
Value

Short-term investments:

Corporate debt securities
Municipal obligations
Asset-backed securities
U.S. government sponsored agencies
Foreign government obligations
Other foreign obligations

Long-term investments:
Asset-backed securities

Total

181.9 $
9.0
87.5
44.3
1.0
3.8
327.5

—
—
327.5 $

0.5 $
—
0.1
—
—
—
0.6

—
—
0.6 $

(0.2)
—
(0.2)
—
—
—
(0.4)

—
—
(0.4) $

— $
—
—
—
—
—
—

—
—
— $

182.2
9.0
87.4
44.3
1.0
3.8
327.7

—
—
327.7

The following is a summary of the amortized cost and estimated fair value of our debt securities at December 31,
2021 by contractual maturity date (in millions):

Mature in less than one year
Mature in one to five years
Mature in more than five years

Total

Available-for-sale investments consist of the following (in millions):

Amortized
Cost

Estimated Fair
Value

135.5 $
153.7
38.3
327.5 $

135.5
153.9
38.3
327.7

Short-term investments:

Corporate debt securities
Municipal obligations
Asset-backed securities
U.S. government sponsored agencies
Foreign government obligations
Other foreign obligations

Long-term investments:
Asset-backed securities

December 31, 2020

Amortized
Cost

Unrealized
Gains

Unrealized
Losses

Estimated
Fair
Value

130.5 $
15.0
35.8
74.7
4.0
2.1
262.1

0.1
0.1

2.7 $
0.2
0.3
2.2
—
—
5.4

—
—

— $
—
—
—
—
—
—

—
—

133.2
15.2
36.1
76.9
4.0
2.1
267.5

0.1
0.1

Total

262.2 $

5.4 $

— $

267.6

There were no significant unrealized losses as of December 31, 2021 and December 31, 2020 in either the less than
or greater than 12 month categories.

Our evaluation of credit losses for available-for-sale debt securities included the extent to which the fair value is
less than the amortized cost basis, adverse conditions specifically related to the debt security, an industry or
geographic area, and any changes in the rating of a security by a rating agency. Credit loss impairments are
limited to the amount that the fair value of an instrument is less than its amortized cost basis.

At December 31, 2021, we have concluded that all payments related to our available-for-sale investments are
expected to be made in full and on time at par value. The diminution of value in the intervening period is due to
market conditions such as illiquidity and interest rate movements and not due to significant, inherent credit concerns
surrounding the issuer. As a result, we have no allowances for credit losses on our available-for-sale investments
portfolio as of December 31, 2021.

Included in other current assets are $2.2 million and $1.4 million of interest receivable as of December 31, 2021
and December 31, 2020, respectively, primarily associated with securities in our available-for-sale investments
portfolio. Associated interest on these securities is typically payable semi-annually. Due to the short-term nature
of our interest receivable asset, we have made an accounting policy election not to measure an allowance for
credit losses for accrued interest receivable. We consider any uncollected interest receivable that is overdue
greater than one year to be impaired for purposes of write-off. For the year ended December 31, 2021, we have
not written-off any uncollected interest receivable.

As part of distributing our products, we regularly enter into intercompany transactions. We enter into forward
foreign 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. 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 denominated primarily in currencies of
industrial countries, are recorded at their fair value at each balance sheet date. The notional principal amounts
provide one measure of the transaction volume outstanding as of December 31, 2021 and do not represent the
amount of Bio-Rad's exposure to loss. The estimated fair value of these contracts was derived using the spot rates
from Refinitiv on the last business day of the quarter and the points provided by counterparties. The resulting gains
or losses offset exchange gains or losses on the related receivables and payables, both of which are included in
foreign exchange losses, net in the consolidated statements of income.

The following is a summary of our forward foreign currency exchange contracts (in millions):

Contracts maturing in January through March 2022 to sell foreign currency:

Notional value
Unrealized gain/(loss)

Contracts maturing in January through March 2022 to purchase foreign currency:

Notional value
Unrealized gain/(loss)

December 31,
2021

$
$

125.0
1.0

453.1
(2.1)

Included in other investments in the consolidated balance sheet are investments without readily determinable fair
value measured at cost with adjustments for observable price changes or impairments. The carrying value of these
investments was $6.5 million and $0.5 million as of December 31, 2021 and December 31, 2020, respectively.

Also included in other investments in the consolidated balance sheet are our equity method investments, for which
our share of the equity method investees earnings is included in other income, net in our consolidated statements of
income. The carrying value of these investments was $59.1 million and $38.4 million as of December 31, 2021 and
December 31, 2020, respectively.

Level 3 Fair Value Investments

During the fourth quarter of 2021, we extended a collateralized loan to SHB with a principal amount of
€400 million due at the latest on January 31, 2029, subject to certain events which could trigger payment prior to
maturity (the “Loan”). The Loan proceeds will be used by SHB to partially finance the acquisition of interests
under the Sartorius family trust (“Trust”) from a beneficiary of the Trust. Interest on the loan is payable annually in
arrears at 1.5% per annum, and the entire principal amount is due at maturity. In addition to contractual interest, we
are entitled to certain value appreciation rights associated with the acquired Trust interests, which upon termination
of the Trust represent the right to receive Sartorius ordinary shares, that is due upon repayment of the Loan. We
elected the fair value option under ASC 825, Financial Instruments for accounting of the Loan to SHB to simplify
the accounting. The fair value of the Loan and value appreciation right is estimated under the income approach
using a discounted cash flow, and option pricing model, respectively, which results in a fair value measurement
categorized in Level 3. The significant assumptions used to estimate fair value of the Loan include an estimate of
the discount rate and cash flows of the Loan and the significant assumptions used to estimate the fair value of the
value appreciation right include volatility, the risk-free interest rate, expected life (in years) and expected dividend.
The inputs are subject to estimation uncertainty and actual amounts realized may materially differ. An increase in
the expected volatility may result in a significantly higher fair value, whereas a decrease in expected life may result
in a significantly lower fair value. All subsequent changes in fair value of the Loan and value appreciation right,
including accrued interest are recognized in Change in fair value of equity and debt securities in our consolidated
statements of income. The overall change in fair value reflected in Change in fair value of equity and debt
securities during the year ended December 31, 2021 was $10.8 million.

The following table provides a reconciliation of the Level 3 Loan measured at estimated fair value (in millions):

December 31, 2020
Purchases
Net decrease in estimated fair value of the Loan included
in Change in fair value of equity and debt securities
Settlements
December 31, 2021

$
$

$
$
$

—
453.4

(10.3)
—
443.1

GOODWILL AND OTHER PURCHASED INTANGIBLE ASSETS

Changes to goodwill by segment were as follows (in millions):

Balances as of January 1:

Goodwill

2021

2020

Life
Science

Clinical
Diagnostics

Total

Life
Science

Clinical
Diagnostics

Total

277.9

349.2

$ 627.1

250.1

349.2

$ 599.3

Accumulated impairment losses and write-offs

Goodwill, net

(41.8)

236.1

(293.4)

(335.2)

55.8

291.9

Acquisitions (see Note 2)

Other adjustments

Period increase

55.4
—

55.4

—
—

—

55.4
—

55.4

(41.8)

208.3

29.8
(2.0)

27.8

(293.4)

(335.2)

55.8

264.1

—
—

—

29.8
(2.0)

27.8

Balances as of December 31:

Goodwill

Accumulated impairment losses and write-offs

333.3

(41.8)

349.2

682.5

(293.4)

(335.2)

277.9

(41.8)

349.2

627.1

(293.4)

(335.2)

Goodwill, net

291.5

55.8

$ 347.3

236.1

55.8

$ 291.9

During the year ended December 31, 2020, goodwill for a U.S. private company acquired in March 2019 was
decreased by $2.0 million due to the release from an escrow account setup during our acquisition, which should
have been classified as a prepaid asset in the opening balance sheet as of acquisition date.

Information regarding our identifiable purchased intangible assets with finite and indefinite lives is as follows (in
millions):

Customer relationships/lists
Know how
Developed product technology
Licenses
Tradenames
Covenants not to compete

Total finite-lived intangible assets
In-process research and development
Total purchased intangible assets

Weighted-
Average
Amortization
Period (years)
5.27
3.75
13.42
6.79
7.33
3.78

December 31, 2021

Purchase
Price

Accumulated
Amortization

Net
Carrying
Amount

111.8 $
171.6
215.6
64.9
6.3
6.5
576.7
86.3
663.0 $

(90.7) $

(154.9)
(115.6)
(40.6)
(4.4)
(2.9)
(409.1)
—
(409.1) $

21.1
16.7
100.0
24.3
1.9
3.6
167.6
86.3
253.9

Customer relationships/lists
Know how
Developed product technology
Licenses
Tradenames
Covenants not to compete
Other

Total finite-lived intangible assets
In-process research and development
Total purchased intangible assets

Weighted-
Average
Amortization
Period (years)
5.51
4.75
14.00
7.73
7.82
3.87
—

December 31, 2020

Purchase
Price

Accumulated
Amortization

Net
Carrying
Amount

116.6 $
196.6
218.1
65.6
6.6
4.5
0.1
608.1
4.8
612.9 $

(87.2) $

(175.4)
(107.1)
(37.4)
(4.2)
(2.0)
(0.1)
(413.4)
—
(413.4) $

29.4
21.2
111.0
28.2
2.4
2.5
—
194.7
4.8
199.5

Amortization expense related to purchased intangible assets for the years ended December 31, 2021, 2020 and 2019
was $28.4 million, $27.5 million and $23.5 million, respectively. Estimated future amortization expense (based on
existing purchased finite-lived intangible assets) for the years ending December 31, 2022, 2023, 2024, 2025, 2026
and thereafter is $25.4 million, $23.9 million, $21.0 million, $19.0 million, $14.0 million, and $64.3 million,
respectively.

No impairment losses related to goodwill and purchased intangibles were recorded in 2021 and 2020.

NOTES PAYABLE AND LONG-TERM DEBT

The principal components of long-term debt are as follows (in millions):

Finance leases and other debt
Less current maturities
Long-term debt

December 31,
2021

December 31,
2020

11.0
(0.5)

10.5 $

14.1
(1.8)

12.3

Under domestic and international lines of credit, standby letters of credit and guarantee arrangements, we had
$208.4 million available for borrowing and usage as of December 31, 2021, which was reduced by $4.7 million that
was utilized for standby letters of credit and guarantee arrangements issued by our banks to support our obligations.

Credit Agreement

In April 2019, Bio-Rad entered into a $200.0 million unsecured revolving credit facility ("Credit Agreement").
Borrowings under the Credit Agreement are on a revolving basis and can be used to make permitted acquisitions,
for working capital and for other general corporate purposes. In November 2021, Bio-Rad entered into Amendment
No. 1 (“Amendment”) to the Credit Agreement to add LIBOR replacement language, expand the definition of
EBITDA, and increase certain financial baskets in the Credit Agreement. We had no outstanding borrowings under
the Credit Agreement as of December 31, 2021; however, $0.2 million was utilized for domestic standby letters of
credit that reduced our borrowing availability as of December 31, 2021. The Credit Agreement matures in April
2024. If we had borrowed against our Credit Agreement, the borrowing rate would have been 1.334% at
December 31, 2021, which is based on the 3-month LIBOR.

The Credit Agreement requires Bio-Rad to comply with certain financial ratios and covenants, among other things.
These ratios and covenants include a leverage ratio test and an interest coverage test, as well as certain 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 and create liens. We were in compliance with all of these ratios and
covenants as of December 31, 2021 and 2020.

Maturities of finance leases and other debt at December 31, 2021 were as follows: 2022 - $0.5 million; 2023 - $0.5
million; 2024 - $0.5 million; 2025 - $0.4 million; 2026 - $0.5 million; and 2027 and thereafter - $8.6 million.

INCOME TAXES

The U.S. and international components of income before taxes are as follows (in millions):

U.S.
International
Income before taxes

Year Ended December 31,

2021

2020

2019

2,930.8 $
2,507.3
5,438.1 $

2,339.7 $
2,567.9
4,907.6 $

1,034.0
1,227.1
2,261.1

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:
U.S. Federal
State
International
Deferred tax expense
Non-current tax expense (benefit)
Provision for income taxes

Year Ended December 31,
2020

2021

2019

72.4 $
9.2
32.6
114.2

981.3
68.9
32.1
1,082.3
(4.3)
1,192.2 $

69.9 $
12.0
22.3
104.2

893.5
54.0
31.5
979.0
18.2
1,101.4 $

13.0
4.4
23.5
40.9

409.7
24.4
16.1
450.2
11.3
502.4

The reconciliation between our effective tax rate on income before taxes and the statutory tax rate is as follows:

U. S. statutory tax rate
Impact of foreign operations
U.S. taxation of foreign income
State taxes
Other
Provision for income taxes

Year Ended December 31,
2020

2019

2021

21.0 %
(8.6)
8.9
1.3
(0.7)
21.9 %

21.0 %
(9.9)
10.2
1.1
—
22.4 %

21.0 %
(9.7)
10.3
1.0
(0.4)
22.2 %

On December 22, 2017, the U.S. enacted comprehensive tax legislation (the “Tax Act”). The Tax Act made broad
and complex changes to the U.S. tax code, including the imposition of a one-time mandatory deemed repatriation
tax (“Transition Tax”) on certain earnings accumulated offshore since 1986 and the reduction of the corporate tax
rate from 35% to 21% for U.S. taxable income, resulting in a one-time remeasurement of U.S. federal deferred tax
assets and liabilities.

Our effective income tax rates were 21.9%, 22.4% and 22.2% for the years ended December 31, 2021, 2020 and
2019, respectively. The effective tax rates for the years ended December 31, 2021, 2020 and 2019 were driven by
the unrealized gain in equity securities that is taxed at approximately 22% as well as the geographic mix of earnings
and the taxation of our foreign earnings.

Many jurisdictions in which we operate have statutory tax rates that differ from the U.S. statutory tax rate of 21%.
Our effective tax rate is impacted, either favorably or unfavorably, by many factors including, but not limited to the
jurisdictional mix of income before tax, changes to statutory tax rates, changes in tax laws or regulations, tax audits
and settlements, and generation of tax credits.

Deferred tax assets and liabilities reflect the tax effects of losses, credits, and 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):

Deferred tax assets:

Bad debt, inventory and warranty accruals
Other post-employment benefits, vacation and other reserves
Tax credit and net operating loss carryforwards
Lease obligations
Other

Total gross deferred tax assets

Valuation allowance

Total deferred tax assets

Deferred tax liabilities:

Property and equipment
Lease assets
Investments and intangible assets
Total deferred tax liabilities

Net deferred tax liabilities

December 31,

2021

2020

32.0 $
23.8
104.5
46.6
64.8
271.7
(46.4)
225.3

29.6
29.8
93.5
49.3
44.8
247.0
(44.6)
202.4

35.0
44.5
3,155.7
3,235.2
(3,009.9) $

37.0
46.8
2,143.4
2,227.2
(2,024.8)

The realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the
appropriate character in future periods. We regularly assess our ability to realize our deferred tax assets and
establish a valuation allowance if it is more likely than not that some portion, or all, of our deferred tax assets will
not be realized. In assessing the realizability of our deferred tax assets, we weigh all available positive and negative
evidence. Due to the weight of objectively verifiable negative evidence, we believe that it is more likely than not
that certain of our state and foreign deferred tax assets will not be realized as of December 31, 2021, and have
maintained a valuation allowance on such deferred tax assets. The valuation allowance against our deferred tax
assets in certain states and foreign jurisdictions increased by $1.8 million for the year ended December 31, 2021.
The valuation allowance for deferred tax assets is as follows (in millions):

Beginning balance
Additions charged to expenses
Deductions from reserves
Ending balance

2021

44.6
1.8
—
46.4

December 31,
2020

67.2
—
(22.6)
44.6

2019

70.8
—
(3.6)
67.2

As of December 31, 2021, our federal, state and foreign net operating loss carryforwards were approximately
$40.0 million, $94.2 million and $297.4 million, respectively. Of our foreign net operating losses, $107.1 million
may be carried forward indefinitely. The majority of the remaining foreign net operating losses, if not utilized, will
begin to expire in 2025. Our federal and state net operating loss carryforwards, if not utilized, will begin to expire
in 2028. As of December 31, 2021, our federal and state tax credit carryforwards were approximately $5.4 million
and $38.1 million, respectively. Our federal tax credits, if not utilized, will begin to expire in 2029, and our state
tax credits, generally, may be carried forward indefinitely.

Federal and state tax laws impose restrictions on the utilization of net operating loss and certain tax credit
carryforwards in the event of a change in our ownership as defined by the Internal Revenue Code Sections 382 and
383. Under Section 382 and 383 of the Internal Revenue Code, substantial changes in our ownership and the
ownership of acquired companies may limit the amount of net operating loss and research and development credit
carryforwards that are available to offset taxable income. The annual limitation would not automatically result in
the loss of net operating loss or research and development credit carryforwards but may limit the amount available
in any given future period.

Our income tax returns are audited by U.S. federal, state and foreign tax authorities. We are currently under
examination by many of these tax authorities. The tax years open to examination include the years 2012 and
forward for the U.S. and certain foreign jurisdictions including France, Germany, India and Switzerland. There are
differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax
authorities involving issues of the timing and amount of deductions and allocations of income among various tax
jurisdictions. We evaluate our exposures associated with our tax filing positions on a quarterly basis.

We record liabilities for unrecognized tax benefits related to uncertain tax positions. We do not believe any
currently pending uncertain tax positions will have a material adverse effect on our consolidated financial
statements, although an adverse resolution of one or more of these uncertain tax positions in any period may have a
material impact on the results of operations for that period.

The following is a tabular reconciliation of the total amounts of unrecognized tax benefits (in millions):

Unrecognized tax benefits – January 1

Additions to tax positions related to prior years
Reductions to tax positions related to prior years
Additions to tax positions related to the current year
Settlements
Lapse of statute of limitations
Currency translation
Unrecognized tax benefits – December 31

2021

2020

2019

55.8 $

39.2 $

3.2
(2.1)
18.1

(2.4)
(10.8)
0.1

14.0
(1.5)
3.4

—
(0.6)
1.3

61.9 $

55.8 $

29.8

7.6
(0.7)
3.0

—
(0.4)
(0.1)

39.2

Bio-Rad recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense.
Related to the unrecognized tax benefits noted above, the cumulative amount of accrued interest and penalties as of
December 31, 2021, 2020 and 2019 was $11.8 million, $14.3 million and $11.2 million, respectively. Bio-Rad
accrued interest and penalties of $(2.5) million, $2.8 million, and $1.7 million for the years ended December 31,
2021, 2020, and 2019, respectively. The total unrecognized tax benefits and interest and penalties of $73.6 million
as of December 31, 2021 was partially offset by deferred tax assets of $1.6 million and prepaid taxes of $13.7
million, for a net amount of $58.3 million.

It is generally our intention to repatriate certain foreign earnings to the extent that such repatriations are not
restricted by local laws or accounting rules, and there are no substantial incremental costs. The determination of the
amount of the unrecognized deferred tax liability for foreign earnings that are indefinitely reinvested is not
practicable to estimate.

STOCKHOLDERS' EQUITY

Bio-Rad’s issued and 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 all
respects except as follows. 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 directors, with Class B stockholders electing the remaining directors. Cash dividends
may be paid on Class A shares without paying a cash dividend on Class B shares but no cash dividend 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 founders of Bio-Rad, the
Schwartz family, collectively hold a majority of Bio-Rad’s voting stock. As a result, the Schwartz family is able to
exercise significant influence over Bio-Rad.

Changes to Bio-Rad's issued common stock shares are as follows (in thousands):

Balance at January 1, 2019

Class B to Class A conversions

Issuance of common stock

Balance at December 31, 2019

Class B to Class A conversions

Issuance of common stock

Balance at December 31, 2020

Class B to Class A conversions

Issuance of common stock

Balance at December 31, 2021

Treasury Shares

Class A Shares

Class B Shares

24,884

24,966

25,073

25,134

5,096

(24)

5,090

(32)

5,076

(16)

5,078

In November 2017, the Board of Directors authorized a share repurchase program, granting the Company authority
to repurchase, on a discretionary basis, up to $250.0 million of outstanding shares of our common stock. In July
2020, the Board of Directors authorized increasing the Share Repurchase Program to allow the Company to
repurchase up to an additional $200.0 million of stock. Repurchases may be made at management's discretion from
time to time on the open market or through privately negotiated transactions. The share repurchase activity under

the share repurchase program through open market transactions for the years ended December 31, 2021, 2020 and
2019 are summarized as follows:

May 1, 2019 - May 31, 2019

June 1, 2019 - June 30, 2019

August 1, 2019 - August 31, 2019

November 1, 2019 - November 30, 2019

March 1, 2020 - March 31, 2020

March 1, 2021 - March 31, 2021

Number of
Shares
Purchased

Weighted-
Average Price
per Share

Total Shares
Repurchased
To Date

Remaining
Authorized
Value
(in millions)

25,421 $

25,977 $

14,745 $

22,343 $

291,941 $

89,506 $

291.70

292.01

339.05

358.04

342.55

558.60

218,571 $

244,548 $

259,293 $

281,636 $

573,577 $

663,083 $

193.7

186.1

181.1

173.1

73.1

223.1

For the years ended December 31, 2021 and 2020, we used 114,711 and 117,423, respectively, of the repurchased
shares in connection with the vesting of restricted stock units. As of December 31, 2021, $223.1 million remained
under the Share Repurchase Program.

ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income (loss) included in our consolidated balance sheets and consolidated
statements of changes in stockholders' equity consists of the following components (in millions):

Foreign currency
translation
adjustments

Foreign other
post-employment
benefits
adjustments

Net unrealized
holding gains
(losses) on
available-for-sale
investments

Total
Accumulated
other
comprehensive
income (loss)

Balances as of January 1, 2020

Other comprehensive (loss) income,
before reclassifications
Amounts reclassified from Accumulated
other comprehensive income

Income tax effects
Other comprehensive income (loss), net of
income taxes

Balances as of December 31, 2020
Other comprehensive income (loss),
before reclassifications
Amounts reclassified from Accumulated
other comprehensive income

Income tax effects
Other comprehensive income (loss), net of
income taxes

Balances as of December 31, 2021

(72.4) $

(22.2) $

7.2 $

371.9

—

(0.9)

371.0

298.6 $

(469.5)

—

0.4

(469.1)

(170.5) $

(5.3)

0.3

1.2

(3.8)

(26.0) $

17.9

0.3

(3.1)

15.1

(10.9) $

4.0

(0.6)

(0.8)

2.6

9.8 $

(4.0)

(1.2)

1.2

(4.0)

5.8 $

(87.4)

370.6

(0.3)

(0.5)

369.8

282.4

(455.6)

(0.9)

(1.5)

(458.0)

(175.6)

All amounts reclassified out of accumulated other comprehensive income were reclassified into other income, net in
the consolidated statements of income. Reclassification adjustments are calculated using the specific identification
method.

SHARE-BASED COMPENSATION/EQUITY AWARD AND PURCHASE PLANS

Equity Award Plan
We have the 2017 Incentive Award Plan (2017 Plan) for officers and certain other employees. The 2017 Plan
authorizes the grant of stock options, restricted stock, restricted stock units, and other types of equity awards to
employees. Stock options are granted at exercise prices not less than the fair market value of the underlying
common stock on the date of grant and have a maximum term of 10 years. We may issue stock options for either
Class A or Class B common stock. Prior to September 2020, equity awards granted vest in increments of 20% per
year on the yearly anniversary date of the grant. Starting in September 2020, equity awards granted vest in
increments of 25% per year on the yearly anniversary date of the grant.

A total of 2,108,724 shares have been reserved for issuance of equity awards under the 2017 Plan and may be of
either Class A or Class B common stock. At December 31, 2021, there were 1,377,044 shares available to be
granted.

Employee Stock Purchase Plans
Our 2011 Employee Stock Purchase Plan (2011 ESPP) provides that eligible employees may contribute up to the
greater of 10% of their compensation or $25,000 annually towards 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 1,300,000 shares of Class A
common stock under the 2011 ESPP.

Share-Based Compensation

Included in our share-based compensation expense is the cost related to stock option grants, ESPP stock purchases
and restricted stock unit awards. Share-based compensation expense is allocated in the consolidated statements of
income as follows (in millions):

Cost of goods sold
Selling, general and administrative expense
Research and development expense

Share-based compensation expense

Year ended December 31,
2020

2019

2021

4.9
38.0
8.3
51.2

3.4
31.8
6.4
41.6

2.9
27.9
4.8
35.6

The income tax benefit related to share-based compensation expense was $7.4 million, $6.0 million and $5.6 million
for the years ended December 31, 2021, 2020 and 2019, respectively. We did not capitalize any share-based
compensation expense as it was immaterial.

The tax benefit from equity awards vested or exercised during the years ended December 31, 2021, 2020 and 2019
was $18.5 million, $11.2 million and $5.4 million, respectively.

For equity awards, we amortize the fair value on a straight-line basis. All equity awards are amortized over the
requisite service periods of the awards, which are generally the vesting periods. We recognize forfeitures as they
occur.

Stock Options

The weighted-average fair value of stock options granted was estimated using a Black-Scholes option-pricing model
with the following weighted-average assumptions:

Expected volatility
Risk-free interest rate
Expected life (in years)
Expected dividend
Weighted-average fair value of options granted

Year Ended December 31,
2020

2019

2021

27 %
1.05 %
7.3

27 %
0.31 %
7.4

—
251.93

—
153.32

22 %
1.69 %
7.5

—
93.96

Expected volatility is 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. 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. We do not anticipate paying any cash dividends in
the future and therefore use an expected dividend yield of zero.

The following table summarizes stock option activity:

Outstanding, December 31, 2020

Granted
Exercised
Forfeited

Outstanding, December 31, 2021

Unvested, December 31, 2021
Exercisable, December 31, 2021

Weighted-
Average
Exercise Price
285,123
196.29
$
16,004
814.95
$
(50,686) $
144.01
— $
—
246.41
$

250,441

Weighted-
Average
Remaining
Contractual
Term (in
years)

Aggregate
Intrinsic
Value
(in millions)

4.31 $

128.5

64,101
186,340

$
$

493.51
161.41

7.59 $
3.18 $

17.7
110.7

Intrinsic value for stock options is defined as the difference between the current market value and the exercise price.
The total intrinsic value on the date of exercise of stock options exercised during the years ended December 31,
2021, 2020 and 2019 was $33.0 million, $24.4 million and $11.5 million, respectively.

Cash received from stock options exercised during the years ended December 31, 2021, 2020 and 2019 was $3.6
million, $3.8 million and $2.6 million, respectively.

As of December 31, 2021, there was $8.5 million of total unrecognized compensation expense from stock options.
This amount is expected to be recognized in the future over a remaining weighted-average period of approximately
three years.

Restricted Stock Units
Restricted stock units are rights to receive shares of company stock. The fair value of a 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:

Restricted Stock
Units

Weighted-
Average
Grant-Date
Fair Value

Weighted-Average
Remaining
Contractual Term
(in years)

Aggregate
Intrinsic Value
(in millions)

Outstanding, December 31, 2020

Granted
Vested
Forfeited

Outstanding, December 31, 2021

386,363
85,541
(128,092)
(26,952)
316,860

$
$
$
$
$

360.90
810.51
319.38
401.99
495.57

1.65 $

239.4

The total fair value of restricted stock units vested for the years ended December 31, 2021, 2020 and 2019 was
$104.4 million, $65.0 million and $44.8 million, respectively. As of December 31, 2021, there was approximately
$139.7 million of total unrecognized compensation expense related to restricted stock units. This amount is
expected to be recognized over a remaining weighted-average period of approximately three years.

Employee Stock Purchase Plans
The fair value of the employees’ purchase rights under the 2011 ESPP 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
Weighted-average fair value

of purchase rights

Year Ended December 31,
2020

2021

25 %
0.05 %
0.25
—

41 %
0.5 %
0.25
—

2019

31 %
2.25 %
0.25
—

$127.16

$ 94.93

$ 60.39

The assumptions are primarily based on historical data. Volatility is 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 31,639 shares for total employee contributions of $17.0 million, 47,548 shares for total employee
contributions of $16.4 million and 58,717 shares for total employee contributions of $14.3 million under the 2011
ESPP to employees for the years ended December 31, 2021, 2020 and 2019, respectively. At December 31, 2021,
520,344 shares remain authorized and available for issuance under the 2011 ESPP.

10.

OTHER INCOME AND EXPENSE, NET

Other (income) expense, net includes the following components (in millions):

Interest and investment income
Net realized gains on investments
Other-than-temporary impairment losses on investments
Gain on divestiture of a division
Other (income) expense
Other income, net

Year Ended December 31,
2020

2021

2019

(18.9) $
(8.0)
0.8
—
(0.7)
(26.8) $

(18.2) $
(1.0)
4.6
(11.7)
1.8
(24.5) $

(30.5)
(1.5)
5.8
—
0.1
(26.1)

11.

SUPPLEMENTAL CASH FLOW INFORMATION

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
Depreciation and amortization
Reduction in the carrying amount of right-of-use assets
Share-based compensation
Other-than-temporary impairment losses on investments
Changes in fair market value of equity and debt securities
Gain on divestiture of a division
Payments for operating lease liabilities
(Increase) decrease in accounts receivable
Decrease (increase) in inventories
(Increase) decrease in other current assets
Increase in accounts payable and other current liabilities
(Decrease) increase in income taxes payable
Increase in deferred income taxes
Increase in other long-term assets
Increase in other long-term liabilities
Other

Net cash provided by operating activities

Non-cash investing activities:
Purchased property, plant and equipment
Purchased marketable securities and investments
Sold marketable securities and investments

Year Ended December 31,
2020

2019

2021

4,245.9 $

3,806.3 $

1,758.7

133.8
39.3
51.2
0.8
(4,926.2)
—
(40.7)
(20.4)
46.1
(12.2)
69.9
(28.8)
1,082.3
(5.2)
10.5
10.2
656.5 $

138.1
37.1
41.6
4.6
(4,495.8)
(11.7)
(36.5)
(15.0)
(52.1)
(8.4)
124.7
39.0
978.9
(6.4)
26.9
4.0
575.3 $

134.2
40.3
35.6
5.8
(2,031.0)
—
(38.6)
1.6
24.2
61.8
10.6
(4.2)
450.2
(1.7)
13.4
(3.0)
457.9

5.2 $
6.0 $
— $

1.2 $
4.6 $
— $

8.1
1.4
1.3

$
$
$

12.

COMMITMENTS AND CONTINGENT LIABILITIES

Deferred Profit Sharing Retirement Plan

We have a profit sharing plan covering substantially all U.S. employees. Contributions are made at the discretion of
management. As of December 31, 2021 and 2020, the liability related to the U.S. profit sharing plan was
$3.8 million and $3.0 million, respectively. The contribution expense was $18.4 million, $10.6 million and $16.1
million for the years ended December 31, 2021, 2020 and 2019, respectively.

Purchase Obligations

As of December 31, 2021, we had purchase obligations that have not been recognized on our balance sheet of
$16.7 million, which include agreements to purchase goods or services that are enforceable and legally binding to
Bio-Rad and that specify all significant terms and exclude agreements that are cancelable without penalty.
Recognition of purchase obligations occurs when products or services are delivered to Bio-Rad.

The annual future fixed and determinable portion of our purchase obligations that have not been recognized on our
balance sheet as of December 31, 2021 are as follows: 2022 - $12.2 million, 2023 - $3.2 million, 2024 -
$1.1 million, 2025 - $0.2 million, 2026 - $0 million and after 2026 - $0 million.

Long-Term Liabilities

As of December 31, 2021, we had obligations that have been recognized on our balance sheet of $124.8 million,
which primarily represent recognized long-term obligations for other post-employment benefits as indicated below
that are mostly due in more than 5 years, and long-term deferred revenue. Excluded are tax liabilities for uncertain
tax positions and contingencies. We are not able to reasonably estimate the timing of future cash flows of these tax
liabilities, therefore, our income tax obligations are excluded.

The annual future fixed and determinable portion of our obligations that have been recognized on our balance sheet
as of December 31, 2021 were as follows: 2022 - $10.7 million, 2023 - $14.4 million, 2024 - $7.4 million, 2025 -
$5.2 million, 2026 - $3.8 million and after 2026 - $83.3 million.

Letters of Credit/Guarantees

In the ordinary course of business, we are at times required to post letters of credit/guarantees. The letters of credit/
guarantees are issued by financial institutions to guarantee our obligations to various parties. We were contingently
liable for $4.7 million of standby letters of credit/guarantees with financial institutions as of December 31, 2021.