We advance science
& save lives,
together.
Bio-Rad Laboratories
2023 A N N UA L R E P O R T
(cid:68)(cid:503)(cid:581)(cid:301)(cid:581)(cid:404) (cid:503) (cid:301)(cid:550)(cid:904)(cid:90)(cid:503)(cid:467)(cid:488)(cid:550)(cid:503)(cid:467)(cid:488) (cid:687)(cid:675) (cid:904)(cid:836) (cid:834)(cid:835) (cid:843)(cid:1047)(cid:836)(cid:834)(cid:836)(cid:837)
NET REVENUE
(cid:949) (cid:95) (cid:148) (cid:146) (cid:95) (cid:136) (cid:136) (cid:95) (cid:159) (cid:148) (cid:214) (cid:951)
GROSS PROFIT
(cid:949) (cid:95) (cid:148) (cid:146) (cid:95) (cid:136) (cid:136) (cid:95) (cid:159) (cid:148) (cid:214) (cid:951)
(cid:836)(cid:834)(cid:835)(cid:843)
(cid:836)(cid:834)(cid:836)(cid:834)
(cid:836)(cid:834)(cid:836)(cid:835)
(cid:836)(cid:834)(cid:836)(cid:836)
2023
$(cid:904)(cid:836)(cid:915)(cid:837)(cid:835)(cid:836)
(cid:1006) (cid:836)(cid:915)(cid:839)(cid:838)(cid:840)
(cid:1006)(cid:904)(cid:836)(cid:915)(cid:843)(cid:836)(cid:837)
(cid:1006) (cid:836)(cid:915)(cid:842)(cid:834)(cid:836)
$ 2,671
(cid:836)(cid:834)(cid:835)(cid:843)
(cid:836)(cid:834)(cid:836)(cid:834)
(cid:836)(cid:834)(cid:836)(cid:835)
(cid:836)(cid:834)(cid:836)(cid:836)
2023
CASH FLOW FROM OPERATIONS
(cid:949) (cid:95) (cid:148) (cid:904)(cid:146) (cid:95) (cid:136) (cid:136) (cid:95) (cid:159) (cid:148) (cid:214) (cid:951)
OPERATING INCOME
(cid:949) (cid:95) (cid:148) (cid:904)(cid:146) (cid:95) (cid:136) (cid:136) (cid:95) (cid:159) (cid:148) (cid:214) (cid:951)
(cid:836)(cid:834)(cid:835)(cid:843)
(cid:836)(cid:834)(cid:836)(cid:834)
(cid:836)(cid:834)(cid:836)(cid:835)
(cid:836)(cid:834)(cid:836)(cid:836)
2023
$(cid:904)(cid:838)(cid:839)(cid:842)
(cid:1006)(cid:904)(cid:839)(cid:842)(cid:839)
(cid:1006)(cid:904)(cid:840)(cid:840)(cid:843)
(cid:1006)(cid:904)(cid:835)(cid:843)(cid:838)
$ 375
(cid:836)(cid:834)(cid:835)(cid:843)
(cid:836)(cid:834)(cid:836)(cid:834)
(cid:836)(cid:834)(cid:836)(cid:835)
(cid:836)(cid:834)(cid:836)(cid:836)
2023
$(cid:904)(cid:835)(cid:915)(cid:836)(cid:839)(cid:841)
(cid:1006) (cid:835)(cid:915)(cid:838)(cid:837)(cid:842)
(cid:1006)(cid:904)(cid:835)(cid:915)(cid:840)(cid:837)(cid:842)
(cid:1006) (cid:835)(cid:915)(cid:839)(cid:840)(cid:841)
$ 1,427
$(cid:904)(cid:836)(cid:837)(cid:834)
(cid:1006)(cid:904)(cid:838)(cid:836)(cid:835)
(cid:1006)(cid:904)(cid:839)(cid:834)(cid:834)
(cid:1006)(cid:904)(cid:838)(cid:842)(cid:837)
$ 338
Letter to Shareholders
As I reflect on the past year, we navigated difficult terrain that
called for resilience and adaptability in the face of rapidly
shifting market dynamics. The challenges we encountered
primarily impacted our biopharma-related business, including
biopharma production, biopharma research, and emerging
biotech. While we saw year-over-year declines in our sales
related to each of these markets, the drivers of those declines
varied across the segments.
During 2023, biopharma produc-
Looking at other drivers of our
tion began to adjust to post-
topline performance in 2023,
pandemic product demand. In
the continued softness in China,
biopharmaceutical research, we saw
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resets in development programs
sales, as well as other geopolitical
and reallocations of resources. The
(cid:503)(cid:675)(cid:675)(cid:703)(cid:418)(cid:675)(cid:915)(cid:904)(cid:301)(cid:550)(cid:675)(cid:611)(cid:904)(cid:581)(cid:418)(cid:467)(cid:301)(cid:687)(cid:503)(cid:772)(cid:418)(cid:550)(cid:779)(cid:904)(cid:301)(cid:824)(cid:418)(cid:404)(cid:687)(cid:418)(cid:411)(cid:904)(cid:611)(cid:703)(cid:651)
emerging biotech sector also hit a
(cid:651)(cid:418)(cid:675)(cid:703)(cid:550)(cid:687)(cid:675)(cid:914)(cid:904)(cid:159)(cid:703)(cid:651)(cid:904)(cid:836)(cid:834)(cid:836)(cid:837)(cid:904)(cid:651)(cid:418)(cid:646)(cid:611)(cid:651)(cid:687)(cid:418)(cid:411)(cid:904)(cid:675)(cid:301)(cid:550)(cid:418)(cid:675)
rough patch in 2023, with a number
were approximately $2.7 billion, a
of biotech funding sources drying up
decline of 4.1% on a currency-neutral
and higher interest rates combining
basis when compared to the prior
to dampen investments in research.
year. At the same time, we performed
While navigating what we consider
to be transient challenges during the
past year, we continued to expand
well on operating expenses, which
(cid:651)(cid:418)(cid:575)(cid:301)(cid:503)(cid:581)(cid:418)(cid:411)(cid:904)(cid:651)(cid:418)(cid:550)(cid:301)(cid:687)(cid:503)(cid:772)(cid:418)(cid:550)(cid:779)(cid:904)(cid:828)(cid:301)(cid:687)(cid:904)(cid:404)(cid:611)(cid:575)(cid:646)(cid:301)(cid:651)(cid:418)(cid:411)(cid:904)(cid:687)(cid:611)(cid:904)
2022.
our presence in these biopharma
The last four years have been
market subsegments and are still
challenging to navigate. For us,
(cid:404)(cid:611)(cid:581)(cid:827)(cid:411)(cid:418)(cid:581)(cid:687)(cid:904)(cid:503)(cid:581)(cid:904)(cid:687)(cid:488)(cid:418)(cid:503)(cid:651)(cid:904)(cid:550)(cid:611)(cid:581)(cid:467)(cid:936)(cid:687)(cid:418)(cid:651)(cid:575)(cid:904)(cid:467)(cid:651)(cid:611)(cid:773)(cid:687)(cid:488)
it is useful to look back to 2019,
outlook.
(cid:687)(cid:488)(cid:418)(cid:904)(cid:779)(cid:418)(cid:301)(cid:651)(cid:904)(cid:536)(cid:703)(cid:675)(cid:687)(cid:904)(cid:646)(cid:651)(cid:503)(cid:611)(cid:651)(cid:904)(cid:687)(cid:611)(cid:904)(cid:687)(cid:488)(cid:418)(cid:904)(cid:29)(cid:159)(cid:279)(cid:95)(cid:36)
pandemic, and 2023, the first year
post pandemic, to measure the
B i o - R a d L a b o r a to r i e s | 2 0 2 3 A n n u a l R e p o r t : 1
Letter to Shareholders
growth of our business excluding the
measured by the reduction in selling,
(cid:503)(cid:575)(cid:646)(cid:301)(cid:404)(cid:687)(cid:904)(cid:611)(cid:465)(cid:904)(cid:29)(cid:159)(cid:279)(cid:95)(cid:36)(cid:936)(cid:651)(cid:418)(cid:550)(cid:301)(cid:687)(cid:418)(cid:411)(cid:904)(cid:675)(cid:301)(cid:550)(cid:418)(cid:675)(cid:904)(cid:411)(cid:703)(cid:651)(cid:503)(cid:581)(cid:467)
general and administrative expenses,
this period. This provides a clearer
which have dropped from 35.7% to
picture of our company’s underlying
31.5% of sales over the same period.
performance. Between 2019 and
2023, and adjusting for currency
translations, we grew our combined
life science and clinical diagnostics
revenue at a compound annual
growth rate of 4.6%.
(cid:159)(cid:703)(cid:651)(cid:904)(cid:687)(cid:651)(cid:301)(cid:581)(cid:675)(cid:465)(cid:611)(cid:651)(cid:575)(cid:301)(cid:687)(cid:503)(cid:611)(cid:581)(cid:904)(cid:536)(cid:611)(cid:703)(cid:651)(cid:581)(cid:418)(cid:779)
has touched many parts of our
operations. Last year, we completed
our transition to a single enterprise
resource planning (ERP) system,
consolidated our manufacturing
(cid:280)(cid:418)(cid:904)(cid:488)(cid:301)(cid:772)(cid:418)(cid:904)(cid:301)(cid:550)(cid:675)(cid:611)(cid:904)(cid:575)(cid:301)(cid:411)(cid:418)(cid:904)(cid:675)(cid:503)(cid:467)(cid:581)(cid:503)(cid:827)(cid:404)(cid:301)(cid:581)(cid:687)(cid:904)
and distribution sites, streamlined
(cid:646)(cid:651)(cid:611)(cid:467)(cid:651)(cid:418)(cid:675)(cid:675)(cid:904)(cid:503)(cid:581)(cid:904)(cid:651)(cid:418)(cid:301)(cid:550)(cid:503)(cid:819)(cid:503)(cid:581)(cid:467)(cid:904)(cid:418)(cid:825)(cid:404)(cid:503)(cid:418)(cid:581)(cid:404)(cid:503)(cid:418)(cid:675)(cid:904)(cid:465)(cid:651)(cid:611)(cid:575)(cid:904)
our research and development
our operational transformation as
functions, and initiated several new
P R O D U C T H I G H L I G H T S
23
’
QX600™ Droplet
Digital™ PCR (ddPCR™)
StarBright™ Dyes and
Antibody Libraries
Advanced minimal residual
Continued to expand libraries
disease (MRD) research
of StarBright dyes for flow
through several industry
cytometry in immunology
collaborations leveraging
research, and antibodies
Bio-Rad’s QX600 Droplet
for the development of
Digital PCR (ddPCR) system
bioanalytical assays used in
featuring a simple user
preclinical and clinical drug
workflow and robust data
development.
analysis.
2 : B i o - R a d L a b o r a to r i e s | 2 0 2 3 A n n u a l R e p o r t
Letter to Shareholders
platform developments. While we
markets that we operate in are stable
have accomplished a lot over the
and sustainable for the long term.
past several years, there are still more
We are particularly well-positioned
opportunities for improvement.
to capture existing and emerging
Looking forward, we expect 2024
to be a year where we begin the
return to “normal.” It will likely be
a slow, gradual recovery given the
ongoing challenging geopolitical
environment, above-average interest
opportunities in the rapidly growing
biopharma, bioprocessing and
molecular diagnostics market
segments while making meaningful
contributions to advancing science
and saving lives.
rates, and inflationary pressures.
I cannot think of a better place to be.
(cid:90)(cid:611)(cid:773)(cid:418)(cid:772)(cid:418)(cid:651)(cid:915)(cid:904)(cid:95)(cid:904)(cid:301)(cid:575)(cid:904)(cid:301)(cid:550)(cid:675)(cid:611)(cid:904)(cid:404)(cid:611)(cid:581)(cid:827)(cid:411)(cid:418)(cid:581)(cid:687)(cid:904)(cid:687)(cid:488)(cid:301)(cid:687)(cid:904)(cid:687)(cid:488)(cid:418)
life science and clinical diagnostics
Norman Schwartz
PRESIDENT AND CEO
CFX Opus Deepwell Dx
Real-Time PCR System
Introduced the CFX Opus
PTC Tempo 96 and
PTC Tempo Deepwell
Thermal Cyclers
IH-500™ NEXT
Introduced the IH-500 NEXT
ddPCR™ Microsatellite
Instability (MSI) Kit
fully automated blood typing
Introduced the ddPCR
Deepwell Dx Real-Time PCR
Launched the PTC Tempo 96
system with enhanced features
Microsatellite Instability (MSI)
System offering researchers
and PTC Tempo Deepwell
for routine blood testing.
Kit and supporting software
efficient, accurate, and
Thermal Cyclers with
precise quantification to help
enhanced usability to support
improve in vitro diagnostic
PCR applications in basic and
assay development and
translational research, process
diagnostic testing.
development, and quality
control.
for oncology applications
including cancer tissue and
plasma samples.
B i o - R a d L a b o r a to r i e s | 2 0 2 3 A n n u a l R e p o r t : 3
202 3 In Review
Bio-Rad is a leader in developing, manufacturing, and marketing a broad range
of products for the life science research and clinical diagnostics markets, with a
global network of research, development, manufacturing, and sales operations,
(cid:611)(cid:772)(cid:418)(cid:651)(cid:904)(cid:842)(cid:915)(cid:834)(cid:834)(cid:834)(cid:904)(cid:418)(cid:575)(cid:646)(cid:550)(cid:611)(cid:779)(cid:418)(cid:418)(cid:675)(cid:915)(cid:904)(cid:301)(cid:581)(cid:411)(cid:904)(cid:1006)(cid:836)(cid:914)(cid:841)(cid:904)(cid:403)(cid:503)(cid:550)(cid:550)(cid:503)(cid:611)(cid:581)(cid:904)(cid:503)(cid:581)(cid:904)(cid:651)(cid:418)(cid:772)(cid:418)(cid:581)(cid:703)(cid:418)(cid:675)(cid:904)(cid:503)(cid:581)(cid:904)(cid:836)(cid:834)(cid:836)(cid:837)(cid:914)(cid:904)(cid:159)(cid:703)(cid:651)(cid:904)(cid:404)(cid:703)(cid:675)(cid:687)(cid:611)(cid:575)(cid:418)(cid:651)(cid:675)(cid:904)(cid:503)(cid:581)(cid:404)(cid:550)(cid:703)(cid:411)(cid:418)(cid:904)
universities, research institutions, hospitals, food safety and environmental quality
laboratories, and biopharmaceutical companies. Together, we develop innovative,
(cid:488)(cid:503)(cid:467)(cid:488)(cid:936)(cid:649)(cid:703)(cid:301)(cid:550)(cid:503)(cid:687)(cid:779)(cid:904)(cid:646)(cid:651)(cid:611)(cid:411)(cid:703)(cid:404)(cid:687)(cid:675)(cid:904)(cid:687)(cid:488)(cid:301)(cid:687)(cid:904)(cid:301)(cid:411)(cid:772)(cid:301)(cid:581)(cid:404)(cid:418)(cid:904)(cid:675)(cid:404)(cid:503)(cid:418)(cid:581)(cid:404)(cid:418)(cid:904)(cid:301)(cid:581)(cid:411)(cid:904)(cid:675)(cid:301)(cid:772)(cid:418)(cid:904)(cid:550)(cid:503)(cid:772)(cid:418)(cid:675)(cid:914)(cid:905)
$1.49B
Clinical Diagnostics
$2.67
BILLION
TOTAL SALES IN 2023
$1.18B
Life Science
21%
(cid:1)(cid:675)(cid:503)(cid:301)(cid:936)(cid:194)(cid:301)(cid:404)(cid:503)(cid:827)(cid:404)
$2.67
BILLION
TOTAL SALES IN 2023
48%
Americas
31%
EMEA
15%
Reference
Labs
31%
Hospital
Labs
5%
Transfusion
Labs
C
L I N I C AL DIA
G
10%
Applied
Markets
$2.67
BILLION
TOTAL SALES IN 2023
L
I
F
E S
CIENC E
21%
Academia /
Governments
4 : B i o - R a d L a b o r a to r i e s | 2 0 2 3 A n n u a l R e p o r t
N
O
S
T
I
C
S
18%
Biopharma
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 fiscal year ended December 31, 2023
OR
☐ TRANSRR
ITION 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)
1000 Alfred Nobel Drive,
Hercules,
(Address of principal executive offiff ces)
a
Californi
ff
Registrant's telephone number, including area code
(510) 724-7000
94-1381833
(I.R.S. Employer Identification No.)
94547
(Zip Code)
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
BIO.B
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
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
☒ No
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
subju ect to such filing requirements for the past 90 days.
☒ Yes
¨ No
Indicate by check mark whether the registrant has submu
itted electronically everyrr
Interactive Data File required to be submu
itted pursuant to
Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submu
it 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 effeff ctiveness
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.
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the
registrant included in the filing reflect the correction of an error to previously issued financial statements.
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive offiff cers during the relevant recovery period pursuant to §240.10D-1(b).
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, 2023, 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-affiff liates was approximately $7,746,096,434 and the aggregate market value of the registrant's Class B Common Stock held by non-
affiff liates was approximately $49,750,401.
As of Februarr
ry 13, 2024, there were 23,422,506 shares of Class A Common Stock and 5,095,930 shares of Class B Common Stock outstanding.
(1)
ff
Definitiv
e Proxy Statement to be mailed to stockholders in connection with the
registrant's 2024 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, 2023
TABLE OF CONTENTS
Part I.
Item 1. Business
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 1C. Cybersecurity
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 in 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
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3
10
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22
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24
24
24
24
26
26
33
35
83
83
84
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85
85
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86
90
90
2
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. Forward-looking statements generally can be identifieff d 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 actuat
l
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, actuat
l
results may differff materially from those currently anticipated depending on a variety of risk factors including, but
not limited to, the risks relating to our international operations, supply
geopolitical conditions, our ability to develop and market new or improved products, our ability to compete
effeff ctively, foreign currency exchange fluctuations, reductions in government funding or capital spending of our
customers, international legal and regulatory risks, product quality and liabia lity issues, our ability to integrate
acquired companies, products or technologies into our company successfulff
natural disasters and other catastrophic events beyond our control, and other risks and uncertainties identified under
“Part 1, 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.
ly, changes in the healthcare industry,rr
chain issues, global economic and
u
PART I.
ITEM 1. BUSINESS
General
Bio-Rad Laboa
ratories, Inc. (referred to in this report as “Bio-Rad,” “we,” “us,” and “our”) is a multinational
ff
manufact
urt er and worldwide distributor of our own life science research and clinical diagnostics products. Bio-Rad
ies the lifeff science research, healthcare, analytical chemistryrr and other markets with a broad
ff
manufact
urt es and supplu
range of products and systems used to separate complex chemical and biological materials and to identify, analyze
and purifyff
their components.
We have direct distribution channels in over 35 countries outside the United States through subsu idiaries whose focus
is sales, customer service and product distribution. In some locations outside and inside these 35 countries, sales
ff
effort
emented by distributors and agents.
s are supplu
Description of Business
Business Segments
Bio-Rad operates in two industryrr segments designated as Life Science and Clinical Diagnostics. Both segments
operate worldwide. Our Life Science segment and our Clinical Diagnostics segment generated 44% and 56%,
respectively, of our consolidated net sales for the year ended December 31, 2023. We generated approximately 42%
of our consolidated net sales for the year ended December 31, 2023 from the U.S. and approximately 58% from our
international locations, with Europe being our largest international region.
Life Science Segment
g
Our Life Science segment is at the forefront of discovery, creating advanced tools to answer complex biological
questions. These instruments, systems, reagents, and consumables are typically used to separate, purify,ff
atory or
characterize, or quantitate biological materials such as cells, proteins, and nucleic acids in the research labor
a
ing and quality control process, for food safety and science educd ation and literacy.
the biopharmaceutical manufact
Many of our products are used in establa ished research techniques, biopharmaceutical production processes and food
urt
ff
3
ff
urt e and market a broad portfolff
testing regimes. We are focused on the translational research market segment where our products help accelerate the
timelines from discovery in the laba to use in the clinic and with patients. We are a leader in the lifeff sciences market
io of many thousands of products that serve a global customer
and develop, manufact
eins), genomics (the
t
base. We focus on specific segments of the lifeff sciences market in proteomics (the study of prot
study of gene
tt
sales for products in the markets we serve is approximately $19 billion. Our principal lifeff science customers include
universities and medical schools, industrial research organizations, government agencies, pharmaceutical
manufact
s), biopharmaceutical production, cellular biology and food safety. We estimate that the worldwide
urt ers, biotechnology researchers, food producers and food testing labor
atories.
a
ff
Clinical Diagnostics Segment
g
g
Our Clinical Diagnostics segment designs, manufact
test kits and specialized quality controls that serve clinical labor
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.
atories in the global diagnostics market. Our
ts test systems, informatics systems,
urt es, markets and suppor
u
a
ff
We supply
several thousand products that cover more than 300 clinical diagnostic tests to the IVD test market. We
u
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 identifyff and measure subsu tances 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 labor
ier’s equipment,
a
reagent and consumable products. An installed base of diagnostic test systems thereforff e typically creates a recurring
source of revenue through the sale of test kits for each sample analyzed on an installed system. Our principal
clinical diagnostic customers include hospital labor
a
ion labor
and physician offiff ce labor
atories typically standardize test methodologies, which are dependent on a particular supplu
atories, diagnostic reference labor
atories, transfusff
atories.
atories
a
a
a
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 availabla e from numerous
sources, and while we experienced challenges as a result of the impact of COVID-19 on our supplu
we are now experiencing more normal supply
products. For more discussion relating to the impacts of the COVID-19 pandemic and the difficulty of securing
adequate supplu
components and materials from a sole supplu
unabla e to quickly establa ish additional or replacement sources for some components or materials.
ies, please see “Item 1A, Risk Factors” of this Annual Report. In certain instances, we acquire
ier. Due to the regulatory environment in which we operate, we may be
levels of raw materials and components used in the production of our
iers' operations,
u
Patents, Trademarks and Licenses
We own over 2,300 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 intellectuat
license agreements as valuable assets; however, we believe that our ability to develop and manufact
depends primarily on our knowledge, technology and special skills rather than our patent, trademark and licensing
positions.
l property. We view these patents, trademarks and
urt e our products
ff
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
4
We conduct our worldwide operations through an extensive direct sales force, employing approximately 810 direct
sales and sales management personnel around the world. Our sales force typically consists of experienced industryrr
sionals with scientific training, and we maintain a separate specialized sales force for each of our segments.
profesff
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
requiring their compliance with all applicable laws, including adhering to our anti-corruptu ion 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 labor
manufact
urt ers; and (4) leading companies in the biotechnology, pharmaceutical, chemical and food industries.
atories; (3) other leading diagnostic
a
ff
Our sales are affeff cted by a number of external factors. For example, a number of our customers, particularly in the
Life Science segment, are subsu tantially dependent on government grants and research contracts for their funding.
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 effiff cacy of our products offer
competition.
customers specific advantages over the
ff
Our Life Science segment does not face the same competitors for all of its products due to the breadth of its product
lines. Majoa r competitors in this market include Becton Dickinson, Danaher, Merck Millipore and Thermo Fisher
Scientific. We compete primarily based on meeting performance specifications and offeri
solutions.
ng comprehensive
ff
Majoa r competitors for our products in the Clinical Diagnostics segment include Roche, Abbott Labor
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 portfolff
atories,
a
io.
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 profesff
In addition, we regularly invest in
companies, universities, hospitals and medical schools, and within our industry.rr
companies that are engaged in the development of new technologies that either complement or expand our existing
portfolff
including degreed scientists, engineers, software developers and other technical suppor
io of products. We have approximately 1,110 employees worldwide focused on research and development,
sionals at pharma and bio-pharma
t staff.ff
u
Regulatory Matters
ing, marketing, post-market surveillance, distribution, advertising and labea
The development, testing, manufacturt
ling
of certain of our products (primarily diagnostic and donor screening products) are subju ect 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 Drugrr 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
manufact
ing practice” regulations, to be extensively tested and to
urt ed in accordance with FDA’s “good manufact
urt
ff
ff
5
led to disclose test results and performance claims and limitations. The FDA’s 510(k) clearance
be properly labea
process requires regulatory competence to execute and usually takes four to nine months, but it can take 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 suppor
t 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 manufact
urt er.
u
ff
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. Bio-Rad's IVD products currently meet the applicable
requirements of the EU IVDR.
ff
urt
ing facilities, as well as those of certain supplu
and the U.S. and/or medical device regulations and requirements from the countries in which we
Our manufact
iers, are subju ect to periodic 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, Japana
distribute product and other specified audits by regulatory authorities. If a regulatory body were to find that we or
certain supplu
iers 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 mandatory 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 effeff ct on our business.
We are also subju ect 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-kickbakk ck, 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 such laws or any other governmental regulations
that apply to us, we may be subju ect to penalties, including, without limitation, civil and criminal penalties, damages,
fines, the curtailment or restructurt
healthcare programs and imprisonment.
ing of our operations, and exclusion from participation in federal and state
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 adjud sting reimbursements for certain
medical products and services. In addition, the U.S. government, state legislaturt es 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 effeff ct 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 manufact
electromagnetic compatibility and safety compliance requirements to satisfy regulations in the United States, the
European Union and other jurisdictions.
urt er and distributor of sophisticated instrumentation, we must meet a wide array of
ff
6
Our operations are subju ect 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 subju ect to environmental laws and regulations that create liabia lities and clean-upu responsibility for spills,
disposals or other releases of hazardous subsu tances 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 subju ect 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
p
ff
urt e, sale, distribution and servicing of our vast array of products and services. Our employees are essential
At Bio-Rad, we consider our employees to be our most valuable asset, and critical to the effeff ctive development,
manufact
to satisfying our customers’ needs for products to advance science and healthcare. At December 31, 2023, we had
approximately 8,030 employees, the overwhelming majoa rity of which are full-time employees. Our employees are
located throughout the world with roughly 47% in the Americas, 36% in Europe, the Middle-East and Afriff ca, and
17% in Asia Pacific. Our employees work in over 140 locations in 36 different countries around the world.
y
Diversity, Equity and Inclusion
y, q
ff
At Bio-Rad, we recognize that diversity is a strength. Our differences offer
to our organization. We foster a work culture that embraces the diverse experience and knowledge of everyrr
employee, creating an inclusive culture regardless of race, gender, age, sexual orientation, disabia lity, or nationality.
We have been purposefulff
s to create an
inclusive culture. We actively encourage employee engagement and regularly solicit feedbadd ck regarding job
satisfaction, career growth and development, collabor
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.
s to hire, develop and retain diverse talent as well as in our effort
ation, empowerment, ethics, and manager effeff ctiveness. We
new and unique ideas and perspectives
in our effort
a
ff
ff
Compensation and Benefits
p
We provide a competitive total rewards program consisting of broad-based salary and bonus plans as well as annual
stock grants to senior management level employees. These programs combine to recognize and reward employees
based on individual, group, and overall company performance. We provide competitive health and welfareff
programs which include medical, dental, vision and lifeff
program, local pension plans, profitff
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 establa ished 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. Starting in 2023, we
introduced an upgraded and streamlined mental health/Employee Assistance Program solution tailored to the need
and preference of employees and families. In addition, we added a fertility benefit giving employees access to a
suite of services including pregnancy resources, in vitro fertilization (“IVF”), adoption, donor and surrogate services
resources.
sharing, employee assistance, child and elder care programs, employee
insurance, a 401(k) plan, an employee stock purchase
y
Health, Wellness and Safety
,
of our employees is of the highest importance to Bio-Rad. We prioritize, manage, and
ly track safety performance at all locations globally and integrate sound safety practices in everyrr aspect of
The health and welfareff
carefulff
our operations. We provide work site hazard evaluations, workplkk ace safety surveys, safety equipment selection,
safety program reviews, chemical exposure monitoring, safety training, and disposal of hazardous chemical and
infectious waste.
7
Training and Talent Development
p
g
We provide training programs for managers and employees to suppor
management series of courses cover essential management and leadership learning to provide our managers with the
necessary skills and experience needed to more effeff ctively lead and develop their teams. In addition, availabla e
courses for employees help them to be more effeff ctive at work, enhance interpersonal effeff ctiveness, and help them
achieve their full potential. We also support employees’ profesff
sional development by providing a reimbursement
program for qualified educdd ational expenses.
t their growth and development. Our
u
Investment in Sartorius AG
Sartorius AG ("Sartorius") is an international labor
pharmaceutical, and food industries. It operates in two divisions – Bioprocess Solutions Division and Laba Producd ts
& Services Division. Sartorius is headquartered in Gottingen, Niedersachsen, Germany and has voting ordinary
shares as well as non-voting preference shares listed on XETRARR and the Frankfurt Stock Exchanges.
atory and process technology provider for the biotech,
a
As of December 31, 2023, we own 12,987,900 ordinary voting shares and 9,588,908 preference shares of Sartorius,
representing approximately 38% of the outstanding ordinary shares (excluding treasury shares) and 28% of the
preference shares of Sartorius. As of December 31, 2023, the fair value of the investment in Sartorius was $$7,331.9
illimillio .n We account for our investment in Sartorius at fair market value and do not include any of the financial
information summarized below in our consolidated financial statements.
The following summarizes certain financial data of Sartorius as of and for the year ended December 31, 2022, (in
millions).
Current assets
Non-current assets
Current liabia lities
Non-current liabilities
Equity
Sales revenue
Gross profitff on sales
Earnings before interest and taxes (EBIT)
Net profitff
Cash flow from operating activities
Cash flow from investing activities
Cash flow from financing activities
€
December 31, 2022 (1)
2,023.2
4,954.6
1,803.4
2,515.5
2,658.9
Year Ended December 31, 2022 (1)
4,174.7
€
2,196.5
1,064.8
913.1
734.2
(1,129.9)
209.9
(1) As disclosed in Sartorius AG's consolidated financial statements for the year ended December 31, 2022,
prepared in accordance with the International Financial Reporting Standards (IFRS), the International
Financial Reporting Interpretations Committee (IFRIC) Standards, and the International Accounting
Standards Board (IASB) as required to be applied by the European Union, and based upon information
publicly disclosed by Sartorius. Bio-Rad does not assume, and by way of referencing the financial data of
Sartorius above shall not be deemed to assume, any responsibility or liabia lity for any errors or omissions in
the information publicly disclosed by Sartorius.
8
Refer to Sartoriius’ 2022 Annuall Report f
dund at https://www.sartorius.com/en/
company/investor-relations/sartorius-ag-investor-relations. hThe Sartoriius webbsiite andd anyy iinfformatiio din discllosedd
hthereon are not iincorpor
dated byby refference iinto hithis report.
tails, hwhiichh can bbe ffo
for furthher dde il
f
The following graph reflects the changes in the Sartorius share price over the most recent five annual periods:
Sartorius Stock Price
S
O
R
U
E
700
600
500
400
300
200
100
—
2018
2019
2020
2021
2022
2023
Preference per share price (EUR)
Ordinary per share price (EUR)
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
g .
SEC at http://www.sec.gov
p
Bio-Rad’s website address is www.bio-rad.com. We make availabla e, 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 afteff
r filing with the
SEC. The information on our website is not part of this Annual Report on Form 10-K.
9
ITEM 1A. RISK FACTORS
ly read the following
In evaluating our business and whether to invest in any of our securities, you should carefulff
risk factors in addition to the other information contained in this report. We believe that any of the following risks
could have a material effeff ct 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 affeff ct our business, results of operations, financial condition, our industry,rr
equity holdings, or the trading price of our common stock. Please carefulff
significant factors, events and uncertainties that make an investment in our securities riskykk and provide important
information for the understanding of the “forff ward-looking” statements discussed this report. Additional or
unforff eseen effeff cts from the COVID-19 pandemic and the global economic climate may give rise to or amplifyff
many of these risks discussed below.
the value of our
ly consider the following discussion of
rr
Business, Economic, Legal and Industry Risks
Our internatiott nal operations expos
material adverserr
effeff ct on our busineii
e us to additioi nal coststt and legal and
ss, results of operations and financ
xx
e
ii
regue
ial conditiodd
n.
latory risks, which couldll have a
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, 2023 our foreign entities generatedd 58% of our
net sales. Compliance with complex foreign and U.S. laws and regulations that apply to our international operations
g laws and regulations include,
increases our cost of doing business. These numerous and sometimes conflictin
among others, data privacy requirements, labor
r competition regulations, import and
trade restrictions, tariffs, duties, quotas and other trade barriers, export requirements, U.S. laws such as the Foreign
Corruptu Practices Act ("FCPA") and other U.S. federal laws and regulations establa ished by the offiff ce of Foreign
Asset Control, foreign laws such as the UK Briberyrr Act 2010 or other foreign laws which prohibit corrupt paym
to governmental offiff cials or certain payments or remunerations to customers. In addition, changes in laws or
regulations potentially could be disrupt
ive to our operations and business relationships in the affeff cted regions.
relations laws, tax laws, unfaiff
58%
u
a
ff
rr
ents
Given the high level of complexity of the foreign and U.S. laws and regulations that apply to our international
operations, 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. In
addition, we operate in some countries in which the business environment is subju ect to a higher risk of corruprr
tion.
Our success depends, in part, on our ability to anticipate these risks and manage these challenges through policies,
procedurd es and internal controls. However, we have a dispersed international sales organization, and we use
distributors and agents in many of our international operations. This structurt e makes it more difficult for us to
ensure that our international selling operations comply with laws and regulations, and our global policies and
procedurd es.
Violations of these laws and regulations could result in fines, criminal sanctions against us, our offiff cers 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 effort
s, 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, government regulations, and global economic conditions below.
ff
ff
The industries and market segme
compete effeff ctivtt ely.
ents in which we operate are highi
ly competitivtt
e, and we maya not be ablell
to
The lifeff 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 intellectuat
l property from
s, or to source high-demand
third parties or to fund research and development, manufact
ing and marketing effort
urt
ff
ff
10
materials and components. 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 effeff ctively and/or pricing
pressures resulting from competition could adversely affeff ct our business, results of operations and financial
condition.
We maya not be ablell
to grow our busineii
ss because of our failure to developll
new or improved products.tt
ff
ngs or to design, develop, manufact
ions, including those caused by the COVID-19 pandemic, have caused some delays to our ability to develop
Our future growth depends in part on our ability to continue to improve our product offeri
introduce new products that integrate technological advances. If we are unabla e to integrate technological advances
into our product offeri
ly and in a timely
manner, our business, results of operations and financial condition will be adversely affeff cted. Supply
rr
disrupt
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 effort
introduce will achieve market acceptance. Failure to launch successful ne
products may cause our products to become obsolete, which could harm our business, results of operations and
financial condition.
urt e and market new products successfulff
u
s will be successful or
ff
w products or improvements to existing
that new products we
ngs and develop and
chain
ff
ff
ff
ff
Global
ll
economic and geopoliticll
al conditiodd
ns couldll adverserr
ly affeff ct our operations.
ff
ions to global economic conditions and are negatively impacting our business in Russia. The escalation, in
In recent years, we have been faced with challenging global economic conditions. U.S. and international markets
have experienced inflationary pressures, and inflation rates in the U.S. and in other countries in which we operate
have been at elevated levels. Our raw material costs have increased, and we are not always able to recover these
increased costs from our customers. Russia’s invasion of Ukraine and sanctions against Russia also are causing
disrupt
rr
October 2023, of the conflict
between Israel and Hamas also has caused some disrupt
environment (including impacting international logistics), the stability of the Middle East region and our business in
that region. It is unknown how long any of these disrupt
become more severe. In addition, we expect moderating economic growth and changing government policies in
China will continue to affeff ct our commercial opportunities in the country. The bank failures in March 2023 and the
resulting volatility in the banking sector did cause and could continue to cause disrupt
conditions and may impact access to cash and other financial resources by our customers and supplu
deterioration in the global economic environment may result in a decrease in demand for our products, increased
competition, downward pressure on prices for our products and longer sales cycles. A weakening of macroeconomic
conditions is also adversely affeff cting our supplu
iers, which could continue to result in interruptu ions in the supply of
components and raw materials necessary for our products and raw material cost increases. Additionally, the United
States and other countries, such as China and India, have imposed tariffs on certain goods. Further escalation of
tariffs or other trade barriers could adversely impact our profitaff bia lity and/or our competitiveness. See also our risk
factors regarding our international operations above and regarding the COVID-19 pandemic and government
regulations below.
ions will continue and whether such disrupt
ions to the global business
ions to global economic
ions will
iers. A
u
rr
rr
rr
rr
Reductiott ns in government fundindd g and the capia tal
adverserr
effeff ct on our busineii
ss, results of operations or financ
spendingii
ii
programs of our customtt
n.
ial conditiodd
ii
ersrr couldll have a material
atories, government agencies, hospitals and
Our customers include universities, clinical diagnostics labor
a
pharmaceutical, biotechnology and chemical companies. The capital spending programs of these institutions and
companies have a significant effeff ct on the demand for our products. Such programs are based on a wide variety of
factors, including the resources availabla e to make such purchases, the availabia lity 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 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 affeff cted.
rr
11
A reductiott n or interruptu iott n in the supplu
contintt ue to adverserr
ly affeff ct our manufacff
yll of components and raw materiali sll has adverserr
ly affeff cted and couldll
turingii
operations and related product sales.
ff
rr
ff
ff
u
s will always be successful.
we cannot guarantee these effort
urt e our products in numerous manufacturt
urt e of our products requires the timely delivery of
iers in various countries. We work closely with our supplu
ier. The COVID-19 pandemic created delays and shortages in the supply of
sufficient amounts of quality components and
ing facilities around the world. We acquire our
sources of components and materials, in certain instances we acquire components and materials from a
The manufact
materials. We manufact
components and materials from many supplu
the continuity of supply, but
ff
diversify our
sole supplu
materials. These shortages, along with challenges in ramping up new production facilities, caused a backlog of sales
orders, some of which we consider to be significant, and delays in certain new product development activities. Some
of the backlog of sales orders continued into 2023, but has now moderated to a more typical level. We have
experienced raw material cost increases, some of which will likely continue. In addition, due to the regulatory
environment in which we operate, we may need to cease use of certain essential components and materials and be
is reduced
unabla e to establa ish acceptabla e replacement sources for such components or materials. When our supply
ability to
ed or of poor quality, and we are unabla e to develop alternative sources for such supply, our
rr
or interrupt
manufact
ff
our products. See also our risk factor regarding the COVID-19 pandemic below.
urt e our products in a timely or cost-effective manner is adversely affeff cted, which affeff cts our ability to sell
iers to ensure
Further, while we seek to
components and raw
u
u
u
ff
Pandemdd
affeff ct our busineii
ics or diseii ase outbreaks, such as the COVID-II
19 pandemdd
ic,c have affeff cted and couldll materiali
lyll adverserr
ly
ss, operations,s financ
ii
ial conditdd iott n and results of operations.
The COVID-19 pandemic has had, and similar outbreaks could again have, an adverse effeff ct on the United States
and global economies, as well as on aspects of our business, operations and financial condition and those of third
parties on whom we rely. If a new pandemic were to occur, we expect that parts of our business could again suffer
negative impacts, and that our customers, supplu
negatively impacted.
iers, logistics providers, and the global economy could also be
Breaches of our infon rmatiott n systemtt
operations.
s couldll have a material adverserr
effeff ct on our busineii
ss and results of
We have experienced and expect to continue to experience attempts by individuals and organizations 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 confidff ential 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
supplu
iers and employees in the normal course of business. Such information on our systems includes personally
identifiabla e 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 manufact
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. The Company is also subju ect to phishing and other fraud schemes including
fraudulent vendor communications with requests for payments and fraudulent attempts to redirect payments to
improper bank accounts, some of which have been successful.
changes to limit the success of such fraudulent activity, the Company will be unabla e to stop all such fraudulent
activity which may lead to unrecoverabla e payments to criminal accounts. Because the techniques used to obtain
unauthorized access, disabla e or degrade service, or sabot
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 successfulff
ier,
l property. Third parties could also gain control of
employee or other business information, such as our intellectuat
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 and supplu
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,
age systems change frequently and ofteff n are not recognized
ff While the Company has adopted training and process
, could misappropriate confidff ential customer, supplu
ing processes.
iers, financial
urt
a
ff
12
rr
ed, as they were in the December 2019 Cyberattack. Any significant breakdown, intrusrr
could also be disrupt
interruptu ion, corruptu ion, or destruction of our systems, as well as any data breaches, could have a material adverse
effeff ct on our business and results of operations. See also our risk factors regarding our information technology
systems below.
ion,
If our infon rmatiott n technologyo
integrat
e
conditiodd
ett our infon rmatiott n technology and
harmed.
ll
n could be
systemtt
o
s are disrup
ii
ee
repor
ll
ted, or if we fail to successfulff
ly impleme
a
nt,tt manage and
ting systemtt
s, our busineii
ss, results of operations and financ
ii
ial
Our information technology (IT) systems are an integral part of our business, and a significant disrupt
systems (which increasingly include cloud-based systems provided by third party vendors) could have a material
adverse effeff ct on our business, results of operations and financial condition. We depend on our IT systems to
y our vendors and collect accounts receivable. Our IT systems also allow us to
process orders, manage inventory, pa
effiff ciently purchase products from our supplu
iers and ship products to our customers on a timely basis, maintain cost-
effeff ctive operations and provide customer service. We cannot assure you that our contingency plans will allow us to
operate at our current level of effiff ciency.
ion of our IT
rr
rr
a
y evolving market requires effeff ctive planning, reporting and
Our ability to implement our business plan in a rapidl
analytical processes. We expect that we will need to continue to improve and further integrate our IT systems,
reporting systems and operating procedurd es by training and educd ating our employees with respect to these
improvements and integrations on an ongoing basis in order to effeff ctively run our business. We may suffer
interruptu ions in service, loss of data or reduced functionality when we upgrade or change systems or migrate to
cloud-based systems. If we fail to successfulff
operating procedurdd es, it could adversely affeff ct our business, results of operations and financial condition. See also
our risk factors regarding our data security above and events beyond our control below.
ly manage and integrate our IT systems, reporting systems and
We are subject to foreigngg currency exch
results of operations and financ
c
ial conditiodd
ii
n.
ange fluctuatiott ns,s which couldll have a material adverserr
effeff ct on our
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 affeff ct 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 subju ect to foreign exchange fluctuations. We cannot assure you that futurt e
shifts in currency exchange rates will not have a material adverse effeff ct on our results of operations and financial
condition.
Changes in the market value of our position in Sartortt
ius AG materially imp
ll
act our financ
ii
ial results.
Changes in the market value of our position in Sartorius AG will continue to materially impact our consolidated
statements of income (loss) and other financial statements. A decline in the market value of our position in
Sartorius AG will result in decreases in net income 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 actuat
increase in the market value of our position in Sartorius AG, these negative or positive impacts on us could be
material.
l operating performance of our business. Depending on the extent of the decline or of the
Our share price may change significantly based upon changes in the market value of our position in Sartorius AG,
independent of the actuat
significantly impacted by any distribution of dividends by Sartorius AG, particularly when the dividends amount
varies in comparison to prior year periods.
l performance of our business. Additionally, non-operating income for a period may be
13
The value of our position in Sartortt
Investment Companyn Act of 1940.
ius AG mightgg
cause us to be deemed an investment companyn underdd
the
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”)
The Company does not believe it is an investment company primarily in reliance on Section 3(b)(1) of the
Investment Company Act because we are “primarily engaged” in a business other than that of investing, reinvesting,
owning, holding or trading in securities. Rather, we are primarily engaged in the development, manufact
marketing of products for the lifeff science research and clinical diagnostic markets, and we believe that our historical
development, our public representations of policy, the activity of our offiff cers and directors, the nature of our present
assets, the sources of our present income, and the public perception of the nature of our business all suppor
t the
conclusion that we are an operating company and not an investment company. Although we have discussed this
issue with the staffff of the SEC and we are comforff
tabla e with our position, if it is determined later that the Company
may not rely on Section 3(b)(1) or any other exemption under the Investment Company Act and the Company were
deemed to be an unregistered investment company, such determination would have a material adverse effeff ct on our
business as we would need to register as an investment company and be subju ect to the regulations of the Investment
Company Act which are designed to restrict and regulate mutual funds rather than operating companies. It could
also call into question the validity of all contracts to which the Company is a party. If it appeared likely that we
would be deemed to be an investment company, we may modify our position in Sartorius AG in order to avoid such
determination.
ing and
urt
u
ff
We maya incur losses in future periods due to write-tt downs in the value of fiff nanc
ii
ial instruments.tt
We have positions in a variety of financial instruments including asset backed securities and other similar
investments. Financial markets are volatile 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.
vel 3 Fair Value Investments”, we made a loan of 400 million Euros to Sartorius-Herbst
As discussed further in the Notes to Consolidated Financial Statements, in Note 2. Fair Value Measurements, under
the heading “Le“
Beteiligungen II GmbH in November 2021 that is secured by the pledge of certain trusrr
termination of the trusrr
t, the trusrr
the trusrr
may, in case of an enforcement, have to be sold with a significff ant discount to the value of the underlying shares.
t represent the right to receive Sartorius ordinary shares (the "Loan"). Prior to a termination of
t interests, which are provided as collateral for the Loan, are not tradable on the capital markets and
t interests which upon
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 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.
Recent and planned changes to our organizatiott nal structure couldll negat
e
ivtt ely impact our busineii
ss.
We made significant changes to our organizational structurt e over the past few years, including the reorganization of
aspects of our European operations that was announced in February 2021 and restructurt
approved in 2023. These changes may have unintended consequences, such as distraction of our management and
employees, labor unr
attrition of our workforce, inability to attract or
retain key employees, and reduced employee morale or productivity.
ings that management
est, business disrupt
u
ion of supply,
ion, disrupt
a
rr
rr
14
Risks re
ii
lating to intellectual propertytt righi
ts maya negat
e
ivtt ely impact our busineii
ss.
l property rights and products. However, we cannot assure you that our
l property, reverse engineer or obtain and use information that we regard as proprietary, or have
l property rights will not be challenged, invalidated, circumvented or rendered unenforceable, or that
We rely on a combination of copyright, trade secret, patent and trademark laws and third-party nondisclosure
agreements to protect our intellectuat
intellectuat
meaningful protection or adequate remedies will be availabla e to us. Unauthorized third parties have attempted to
copy our intellectuat
developed equivalent technologies independently, and may do so in the future. Additionally, third parties have
asserted patent, copyright and other intellectuat
l property rights to technologies that are important to us and may do
so in the future. If we are unabla e 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 manufact
urt
ing and marketing such
l property rights or defend
products. From time to time, we also must enforce our patents or other intellectuat
ourselves against claimed infringement of the rights of others through litigation. As a result, we could incur
subsu tantial 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.
ff
Changes in the healthll care industry couldll have an adverserr
ii
financ
ial conditiodd
n.
effeff ct on our busineii
ss, results of operations and
There have been, and will continue to be, significff ant changes in the healthcare industryrr
These changes include:
in an effort
ff
to reduce costs.
•
•
ff
s to reform in Europe, has resulted in increased pressure on healthcare providers and other
The trend towards managed care, together with healthcare reform of the deliveryrr system in the United
States and effort
participants in the healthcare industryrr
and consolidation among other participants in the healthcare industry ha
groups, whose purchasing power gives them cost containment leverage. In particular, there has been a
consolidation of labor
competitive forces place constraints on the levels of overall pricing and thus could have a material adverse
effeff ct on our gross margins for products we sell in clinical diagnostic markets.
to reduce selling prices. Consolidation among healthcare providers
atories and a consolidation of blood transfusff
s resulted in fewer, more powerful
ion centers. These industryrr
trends and
a
rr
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 availabla e 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
Labor
atory Fee Schedule (CLFS), a fee schedule establa ished and adjud sted from time to time by the Centers
a
for Medicare and Medicaid Services (CMS). Some commercial payors are guided by the CLFS in
establa ishing their reimbursement rates. Labor
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 Afford
Care and Educd ation Reconciliation Act (PPACA) and the Middle Class Tax Relief and Job Creation Act of
2012, has reduced the payments for clinical labor
Protecting Access to Medicare Act of 2014 (PAMA) has made significant changes to the way Medicare will
pay for clinical labor
atory services, which has further reduced reimbursement rates.
atories and clinicians may decide not to order or perform
atory services paid under the CLFS. In addition, the
able Care Act, as amended by the Health
a
a
a
ff
ff
To the extent that the healthcare industryrr 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 availabla e for such tests, our business, results of operations
and financial condition could be adversely affeff cted. 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.
15
We are subject to substantial
by us could adv
erserr
ll
tt
government regue
lation, and any ch
n
lation or violatiott ns of regue
lations
ly affeff ct our busineii
ss, prospects,tt
resultstt of operations or financ
ial conditiodd
n.
anges in regue
ii
rts. The FDA regulates our Clinical Diagnostic products as medical devices, and we are subju ect to
Some of our products (primarily our Clinical Diagnostic products), production processes and marketing are subju ect
to U.S. federal, state and local, and foreign regulation, including by the FDA in the United States and its foreign
counterparr
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 manufact
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. Any delay in, or failure to receive or
maintain, clearance or approval for our products or changes in regulation could prevent us from generating revenue
from these products and adversely affeff ct 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 affeff ct the perceived safety and effiff cacy of our products and dissuade our customers from using
our products.
urt ed or distributed. In
ff
The FDA has issued a proposed rule pursuant to which it may begin enforcing its medical device requirements,
including premarket submu
labor
a
Science products for labor
atory developed tests. Changes in the FDA approach could negatively impact our customers who use our Life
ission requirements, applicable to certain clinical diagnostic products referred to as
atory developed tests.
a
ling, sale
ling regulations, China has enacted stricter labea
Many foreign governments have similar rules and regulations regarding the importation, registration, labea
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.
The EU in-vitro Diagnostics Regulation (the “EU IVDR”) includes broad changes regarding in vitro diagnostic
devices and medical devices. The EU IVDR required us to modify or re-register some products, and we expect will
continue to result in additional costs for ongoing compliance. In addition, Russia has enacted more stringent medical
product registration and labea
countries, such as Brazil and India, to impose more regulations that impact our product registrations. The United
Kingdom's withdrawal from the EU is resulting in additional regulatory requirements associated with goods
manufact
materials and personnel moving between the United Kingdom and the EU. 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
potential for reduced sales and/or fines for noncompliance. Increasing protectionism in such countries also impedes
our ability to compete with local companies. We may not be able to participate in certain public tenders in China,
India and Russia because of increasing measures to restrict access to such tenders for companies without local
manufact
condition. See also our risk factors regarding our international operations and regarding global economic and
geopolitical conditions above.
urt ed and sold in the United Kingdom and additional complexities and delays with respect to goods, raw
lities. Such regulations could adversely affeff ct our business, results of operations and financial
ling requirements, and we expect other
to comply, as well as the
a
ing capabi
urt
ff
ff
ff
We are also subju ect to government regulation of the use and handling of a number of materials and controlled
subsu tances. The U.S. Drugrr
Enforcement Administration establa ishes registration, security, recordkeeping, reporting,
storage, distribution and other requirements for controlled subsu tances pursuant to the Controlled Subsu tances Act of
1970. Failure to comply with present or future laws and regulations could result in subsu tantial liabia lity 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.
16
We cannot assure you that we willii be ablell
yy
, or
lyll
companyn successfulff
that we willii be ablell
e
to integrat
ett acquired companies, productstt or technologio es into our
to realizll e the anticipatedtt
benefie tsi
from the acquisitions.
As part of our overall business strategy, we pursue acquisitions of and investments in complementaryrr companies,
products and technologies. The benefits of any acquisition or investment 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 or invest in new companies,
products or technologies, we may be required to assume contingent liabia lities or record impairment charges for
goodwill and other intangible assets over time. Goodwill and non-amortizable intangible assets are subju ect 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
antitrusrr
consummate acquisitions. We cannot assure you that we will successfulff
problems we encounter in connection with any acquisitions or investments, and any such acquisitions or
investments could adversely affeff ct our business, results of operations and financial condition.
t enforcement and greater government scrutiny of mergers in the healthcare sector may impact our ability to
ly overcome these risks or any other
Product qualityll
operations and financ
and liability is
ii
ial conditiodd
ii
n.
sues couldll harm our repuee
tation and negat
e
ivtt ely impact our busineii
ss, resultstt of
ff
ff
urt
ing processes, as well as defects in third-party components included in our products. Our
the root cause of quality issues, especially
We must adequately address quality issues associated with our products, including defects in our engineering,
design and manufact
instruments, reagents and consumables are complex, and identifying
those affeff cting reagents or third-party components, is difficult. We may incur significant costs and expend
subsu tantial time in researching and remediating such issues. Quality issues could also delay our launching or
manufact
disclosure of risks related to our products, could result in product recalls or product liabia lity or other claims being
brought against us. In responding to shortages, we may source components from alternative supplu
distributors. Quality issues associated with components from these alternative sources may lead to product failures
and associated costs notwithstanding our effort
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.
ing of new products. In addition, quality issues, unapproved uses of our products, or inadequate
s to detect and remediate such quality issues. These issues could
iers and
urt
ff
ff
Lack of keye personnel couldll hurt our busineii
ss.
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, technicians and other specialized individuals have the
ing positions require very
necessary skills to develop, market and sell our products, and many of our manufact
specialized knowledge and skills. In addition, the global nature of our business also requires that we have
sophisticated and experienced staffff to comply with increasingly complex international laws and regulations. We
face intense competition for these profesff
sionals from our competitors, customers, marketing partners and other
companies throughout our industry.rr
or attract a sufficient number of qualified personnel, which could impair our ability to properly run our business.
competitive compensation and benefits, we may fail to retain
If we do not offer
urt
ff
ff
We maya have highi
er than anticipatedtt
taxaa liabilitiell
s.
We are subju ect 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 liabia lities requires estimation,
judgment and calculations where the ultimate tax determination may not be certain. Determination of our tax
liabia lities is subju ect 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.
17
Economic and political pressures to increase tax revenues in various jurisdictions may make resolving tax disputes
more difficult. In recent years, the tax authorities in Europe have disagreed with our tax positions related to hybrid
pricing and indirect taxes, among others. We regularly assess the
debt, research and development credits, transferff
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 accruarr
ls.
Changes in taxaa laws or rates, changes in thett
erserr
earnings could adv
ly affeff ct our financ
ll
ii
ial position and results of operations.
interpretation of taxaa laws or changes in the jurisdictio
dd
nal mix of our
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 subsu tantial 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
adjud stments to amounts previously reported that could materially impact our financial statements.
On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which includes an
Alternative Minimum Tax based on the Adjud sted Financial Statement Income of Applicable Corporations. We do
not believe the Inflation Reduction Act will have a material impact on our income tax provision and cash taxes, but
we continue to monitor U.S. Department of the Treasury guidance and regulations.
The tax effeff ct of our position in Sartorius AG and the jurisdictional mix of our earnings could continue to materially
affeff ct 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 Profitff
Shifting” (BEPS) by tax authorities in the countries in which we operate, could negatively impact our effeff ctive tax
rate. These recommendations focus on payments from affiff liates in high tax jurisdictions to affiff liates in lower tax
jurisdictions and the activities that give rise to a taxabla e presence in a particular country.
On October 8, 2021, the OECD announced that 136 countries have agreed on a two-pillar framework that would
dramatically alter the taxation of multinational enterprises and require that all profits to
minimum tax rate of 15%. On December 15, 2022, the European Union formally adopted the Pillar Two Directive
and EU member states were expected to enact the Pillar Two Directive by December 31, 2023. Other countries are
taking similar actions. We do not believe Pillar 2 legislation will have a material impact on our income tax provision
and cash taxes.
be subju ect to a global
ff
Enviroii nmental, healthll
results of operations and financ
and safea ty regue
ii
ial conditidd on.
lations and enfon rcement proceedindd gs maya negat
e
ivtt ely impact our busineii
ss,
Our operations are subju ect to federal, state, local and foreign environmental laws and regulations that govern such
activities as transportation of goods, materials that we use in our products, 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 subju ect to environmental laws and regulations that create liabia lity and
responsibility for spills, disposals or other releases of hazardous subsu tances 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 subju ect 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.
t
We may in the future incur capital and operating costs to comply with currently existing laws and regulations, and
enactments, and these expenditures may be significant. We have incurred, and may in the
possible new statutory
future incur, finff es related to environmental matters and/or liabia lity for costs or damages related to spills or other
releases of hazardous subsu tances into the environment at sites where we have operated, or at off-sff
we have sent hazardous subsu tances 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 affeff ct our
business, results of operations or financial condition.
ite locations where
18
In addition, there is an increasing focus by U.S. and international regulators, investors, customers, and other
stakeholders on environmental, social and governance (ESG) matters. Complying with new laws or regulations
concerning sustainability matters, climate related matters or other ESG matters will result in increased compliance
costs and create additional non-compliance risks. Failure to adequately meet our stakeholder’s expectations or
comply with any such laws or regulations may result in loss of business, reputational damage, an inability to attract
customers, an inability to attract and retain top talent, and a negative impact on our business, results of operations
and financial condition.
We also have announced certain sustainability goals, which require ongoing investment and operational changes.
Our effort
s may not achieve their intended outcomes, and we may not achieve such goals, which could negatively
ff
impact our reputation and business.
Our current and future debt and related covenants maya restrict our future operations.
We have subsu tantial debt and have the ability to incur additional debt. As of December 31, 2023, we had
approximately $1.2 billion of outstanding long-term indebtedness, primarily consisting of the 3.300% Senior Notes
due in March 2027 and the 3.700% Senior Notes due in March 2032 as further discussed in Note 6 of the
consolidated financial statements. In addition, we have a revolving credit facility that provides for up to $200.0
million in borrowing capacity, $0.2 million of which was utilized for domestic standby letters of credit as of
December 31, 2023. Our incurrence of subsu tantial amounts of debt may have important consequences. For instance,
it could:
• make it more difficult for us to satisfy our financial obligations, including those relating to our outstanding
•
•
•
•
•
debt;
require us to dedicate a subsu tantial portion of our cash flow from operations to the payment of interest and
principal due under our debt, which will reduce funds availabla e for other business purposes;
increase our vulnerabia lity to general adverse economic and industryrr conditions;
limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we
operate;
place us at a competitive disadvantage compared with some of our competitors that have less debt; and
limit our ability to obtain additional financing required to fund working capital and capital expenditures and
for other general corporate purposes.
Our existing credit facility, our Senior Notes and agreements we may enter in the future, contain or may contain
covenants imposing restrictions on our business. These restrictions may affeff ct 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; enter into transactions with affiff liates; sell assets; and in the case of some
of our subsu idiaries, guarantee debt. Our existing credit facility also requires that we comply with a maximum
consolidated leverage ratio test. Our ability to comply with these covenants may be affeff cted by events beyond our
control, including prevailing economic, financial and industryrr 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 accruerr d and unpaid interest.
We are subject to healthll care laws and regue
comply withi
such laws.
lations and couldll
face substantial
tt
penalties if we are unablell
to fully
We are subju ect 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-Kickbakk ck Statutt e, which prohibits, among other things, persons or entities from
soliciting, receiving, offeri
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;
ng or providing remuneration, directly or indirectly, in return for or to induce
ff
19
• 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-Kickbakk ck Statutt e constitutes a false
or fraudulent claim for purposes of the false claims statutt es;
•
•
•
the U.S. Physician Payment Sunshine Act, which requires certain manufact
and medical supplu
ies to record any transferff s of value to U.S. physicians and U.S. teaching hospitals;
urt ers of drugs, biologics, devices
ff
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-kickbakk ck 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 successfulff
ly
defend against it, could cause us to incur significff ant 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 subju ect to penalties, including civil and criminal
penalties, damages, fines, exclusion from the Medicare and Medicaid programs, and the curtailment or restructurt
of our operations, any of which could adversely affeff ct our ability to operate our business, results of operations and
financial condition.
ing
Risks Related to Being a Public Company
Our failure to establisll h and maintain effeff ctivtt e internal contrott
misstattt emen
tt
lose confidff ence
common stocktt
ts in our financ
ii
in our repor
ee
to declinll e.
ial stattt emen
tt
ii
ted financ
ts, ous
dd
l over financ
ii
ee
r failure to meet our repor
ting obligll atiott ns and cause investors to
ial infon rmatiott n, which in turn couldll cause the tradingii
price of our
ee
ial repor
ting couldll result in material
Maintaining effeff ctive disclosure controls and procedurd es and internal controls over financial reporting are necessary
for us to produce reliabla e financial statements. Material weaknesses in our internal control over financial reporting
have adversely affeff cted us in the past and could affeff ct us in the future and the results of our periodic management
evaluations and annual auditor attestation reports regarding the effeff ctiveness 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 confidff ence and could cause
the trading price of our common stock to decline.
General Business Risks
ii
s,rr
ertt
Natural disast
cause damage or disruii
and customtt
ll
climate
related events,s terrorist attatt cks,kk acts of war or othett
r events beyoe nd our contrott
ptu iott n to us and our employm
ees,s facilitie
ii
s, infon rmatiott n systemtt
s, securityii
systemtt
l maya
s, vendordd srr
ers,rr which couldll signi
ificantly impam ct our busineii
ss, results of operations and financ
ii
ial conditiodd
n.
We have significant manufact
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. These occurrences could damage or destroy
ing and distribution facilities, including in the United States, France, Switzerland,
urt
ff
20
ied to Western Europe), electricity outages, the inability to operate our production and distribution facilities
est at any of our sites or surrounding areas
our facilities which may result in interruptu ions to our business and losses that exceed our insurance coverage. In
addition, lack of fuel resources due to geo-political instability (such as Russia’s reduction in energy resources
supplu
due to power grid failures or lack of fuel, and strikes or other labor unr
could cause disrupt
Ukraine and the conflict
outbrt eak of a contagious disease like COVID-19 could also affeff ct the markets in which we operate, our business
operations and strategic plans. Political unrest may affeff ct our sales in certain regions, such as in Southeast Asia, the
Middle East and Eastern Europe. Any of these events could adversely affeff ct our business, results of operations and
financial condition.
ion to our business. Acts of terrorism, bioterrorism, violence or war (such as Russia's invasion of
between Israel and Hamas), weather-related events, or public health issues such as the
ff
a
rr
Risks Related to Our Common Stock
A signi
ificant majorityi of our voting stocktt
is held by the Schwartz family,yy which couldll
lead to conflict
ff
stt 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, effeff ct fundamental changes in our direction and control matters affeff cting us,
including the determination of business opportunities that may be suitabla e 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 effeff ct of delaying or preventing a
change in control of our company.
The forum selectiott n provision in our bylaws couldll
abilityii
favorablell
tt
of the Company’n s st
ockholde
for dispii utestt with th
’
i
rs to bring a claill m in
e Companyn or the Company’n s’ direii ctortt
s,rr offiff cersrr or othett
increase costs to bring a claill m,
ii
ii
a judicial forum viewed by the stockholde
discii ouragea
ii
claill ms
or limit the
rs as more
tt
r employm
ees.
rr
Our bylaws provide that unless we consent in writing to the selection of an alternative forum, the Court of Chanceryrr
of the State of Delaware (or, if the Court of Chancery doe
s 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, offiff cer 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
irs
claim against the Company or any of its directors, offiff cers or other employees governed by the internal affaff
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, offiff cers or other employees, which may discourage such lawsuits against the
Company or the Company’s directors, offiff cers 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 liabia lity 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 liabia lity created
by the Securities Act or the rules and regulations thereunder, subju ect 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.
21
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 1C. CYBERSECURITY
Cybersecurityi Riskii Managea ment and Stratt
g
y
y
gy
tegye
We have developed and implemented a cybersecurity risk management program intended to protect the
confidff entiality, integrity, and availabia lity of our critical systems and information. Our cybersecurity risk
management program includes a cybersecurity incident response plan.
We design and assess our program based on the National Institute of Standards and Technology Cybersecurity
Framework Special Publu ication 800-53, 800-61, rev 2 and Center for Internet Security, Critical Security Controls
(CIS Controls). This does not imply that we meet any particular technical standards, specifications, or
requirements, only that we use the National Institute of Standards and Technology Cybersecurity Framework as a
assess, and manage cybersecurity risks relevant to our business.
guide to help us identify,ff
Our cybersecurity risk management program is part of our overall enterprise risk management program, and shares
common methodologies, reporting channels and governance processes that apply across the enterprise risk
management program to other legal, compliance, strategic, operational, and financial risk areas.
Our cybersecurity risk management program includes:
•
•
•
•
•
•
risk assessments designed to help identify material cybersecurity risks to our critical systems, information,
products, services, and our broader enterprise IT environment;
a security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2)
our security controls, and (3) our response to cybersecurity incidents;
the use of external service providers, where appropriate, to assess, test or otherwise assist with aspects of
our security controls;
cybersecurity awareness training of our employees, incident response personnel, and senior management;
a cybersecurity incident response plan that includes procedurdd es for responding to cybersecurity incidents;
and
a third-party risk management process for critical service providers, supplu
iers, and vendors.
We have not identified risks from known cybersecurity threats, including as a result of any prior cybersecurity
incidents in the past three fiscal years, that have materially affeff cted or are reasonably likely to materially affeff ct us,
including our operations, business strategy, results of operations, or financial condition. For more information about
our cybersecurity related risks, see Part 1, Item 1A, Risk Factors under the risks titled "Breaches of our information
systems could have a material adverse effeff ct on our business and results of operations" and "If our information
ly implement, manage and integrate our information
technology systems are disrupt
technology and reporting systems, our business, results of operations and financial condition could be harmed."
ed, or if we fail to successfulff
rr
y
Cybersecurityi Governance
y
Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Legal and
Regulatory Compliance Committee (Committee) oversight of cybersecurity and other information technology risks.
The Committee oversees management’s implementation of our cybersecurity risk management program.
22
The Committee receives quarterly reports from management on our cybersecurity risks. In addition, management
updates the Committee, as necessary, regarding any material cybersecurity incidents, as well as any incidents with
lesser impact potential.
The Committee reports to the full Board regarding its activities, including those related to cybersecurity. The full
Board also receives briefings from management on our cyber risk management program. Board members receive
presentations or reports on cybersecurity topics from our SVP Global Technology & Systems, who is our Chief
Information Security Offiff cer (CISO), internal security staffff or external experts as part of the Board’s continuing
educdd ation on topics that impact public companies.
Our management team, including, our Chief Information Security Offiff cer, Chief Privacy Offiff cer, General Counsel,
Director of Information Security & IT Compliance, Corporate Treasurer, and Internal Audit Senior Director, is
responsible for assessing and managing our material risks from cybersecurity threats. The team has primary
responsibility for our overall cybersecurity risk management program and supeu rvises both our internal cybersecurity
personnel and our retained external cybersecurity consultants. Our management team includes a wealth of expertise
in navigating the complex landscape of cybersecurity, with a robust background in cyber risk management and
incident response. With a collective experience that spans several decades, our team has successfulff
mitigated diverse cyber threats, ranging from sophisticated attacks to emerging vulnerabia lities. Members of our
management team hold industry-rr
recognized certifications, including but not limited to CISSP, CISA, and CEH,
underscoring their commitment to continuous profesff
the field.
sional development and adherence to the highest standards in
ly addressed and
Our management team supeu rvises effort
incidents through various means, which may include briefings from internal security personnel; threat intelligence
and other information obtained from governmental, public or private sources, including external consultants
engaged by us; and alerts and reports produced by security tools deployed in the IT environment.
s to prevent, detect, mitigate, and remediate cybersecurity risks and
ff
a. The principal manufact
ff
urt
ing and research
ITEM 2. PROPERTIES
We own our corporate headquarters located in Hercules, Californi
locations for each segment are as follows:
ff
23
Segment
Location
Owned/Ldd eased
Life Science
Clinical Diagnostics
Shared
Boulder, Colorado
Oxford, England
Neuried, Germany
Shanghai, China
Suzhou, China
Irvine, California
Greater Seattle Area, Washington
Warsaw, Poland
Cressier, Switzerland
Dreieich, Germany
ff
r
Michigan
a
Greater San Francisco Bay Area, Californi
Ann Arbor,
Greater Paris Area, France
Lille, France
Leipzig, Germany
Singapore, Singapore
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Leased
Owned/Ldd eased
Owned/Ldd eased
Owned/Ldd eased
Leased
Leased
Owned
Leased
Leased
ff
urt
ing and research facilities also house administration, sales and distribution activities. In addition,
Most manufact
we lease offiff ce 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 liabia lity resulting from any of these matters will have a material
adverse effeff ct 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 BIO.B, respectively.
24
On Februarr
Common Stock. Bio-Rad has never paid a cash dividend and has no present plans to pay cash dividends.
ry 13, 2024, we had 147 holders of record of Class A Common Stock and 85 holders of record of Class B
In November 2017, the Board of Directors authorized a share repurchase program ("2017 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 both July 2020 and July 2022, the Board of Directors authorized
increasing the 2017 Share Repurchase Program to allow the Company to purchase up to an additional $200.0
million of stock, for a total authorization of $650.0 million of stock. As of December 31, 2023, the Company had
repurchased $650.0 million under the 2017 Share Repurchase Program, which completed the level of authorized
purchases under that share repurchase program. In July 2023, the board of directors authorized a new share
repurchase program ("2023 Share Repurchase Program") granting the Company authority to repurchase, on a
discretionary basis, up to $500 million of the outstanding shares of the Company’s common stock. As of
December 31, 2023, $278.7 million remained availabla e under the 2023 Share Repurchase Program.
The following tabla e contains information on the shares of our common stock that we purchased or otherwise
acquired during the three months ended December 31, 2023.
Total Number of Shares
Purchased
Average Price Paid
per Share
Total Number of Shares
Purchased as Part of
Publu icly Announced
Plans or Programs
Maximum Number (or
Approximate Dollar Value)
of Shares that May yet be
Purchased Under the Plans
or Programs (in millions)
—
—
659,416
$
303.30
—
—
—
—
—
$
$
$
487.7
278.7
278.7
Period
October 1 to October
31, 2023
November 1 to
November 30, 2023
December 1 to
December 31, 2023
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 Perforff mance Graph
The following graph compares the cumulative stockholder returns over the past five years for our Class A Common
Stock, the S&P 500 Index and S&P 500 Life Sciences Tools & Services Index, assuming $100 invested on
December 31, 2018, and reinvestment of dividends if paid:
S
R
A
L
L
O
D
350
300
250
200
150
100
50
2018
2019
2020
2021
2022
2023
Bio-Rad
S&P 500 Index
S&P 500 Life Sciences Tools & Services Index
25
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 OPERATRR IONS
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. 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, 2022, filed on February 17, 2023, for the discussion of the comparison
of the fiscal year ended December 31, 2022 to the fiscal year ended December 31, 2021.
Overview. We are a multinational manufact
urt er and worldwide distributor of our own lifeff science research and
clinical diagnostics products. Our business is organized into two reportabla e 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.
ff
We sell more than 12,000 products and services to a diverse client base comprised of scientific research, healthcare,
educdd ation and government customers 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.
ff
urt e and supply
We manufact
chemical and biological materials and to identify, analyze and purifyff components. As our customers require
standardization for their experiments and test results, much of our revenues are recurring in nature.
our customers with a range of reagents, apparatus and equipment to separate complex
u
u
t of many governments for both research and healthcare. The current global economic outlook
We rely on the suppor
is still uncertain as the need to control government social spending by many governments limits opportunities for
growth. Approximately 42% of our 2023 consolidated net sales are derived from the United States and
approximately 58% are derived from international locations, with Europe being our largest international region. The
se Yen, Chinese
international sales are largely denominated in local currencies such as the Euro, Swiss Franc, Japane
Yuan and British Sterling. As a result, our consolidated net sales expressed in dollars benefit when the U.S. dollar
weakens and sufferff when the dollar strengthens. When the dollar strengthens, we benefit from lower cost of sales
from our own international manufact
ing 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 has on our reuu
sults.
urt
a
ff
We are impacted by global economic conditions and our business was negatively impacted by the recent economic
constraints in China and the ongoing challenges impacting the biopharma market and small biotech companies. We
expect that these conditions will continue to negatively impact our business in 2024.
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 affeff ct the reported amounts of assets, liabia lities 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 liabia lities that are not readily apparent from other sources.
26
However, future events may cause us to change our assumptions and estimates, which may require adjud stment.
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.
Accountintt g for Income Taxeaa s
g f
are taxed pursuant to the tax laws of these jurisdictions. Our
We operate in multiple jurisdictions and our profitsff
effeff ctive income tax rate may be affeff cted 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 di
fferences resulting from
the different treatment of items for tax and accounting purposes. These differences result in deferred tax assets and
liabia lities, which are included in the consolidated balance sheet.
rr
We assess the likelihood that our deferred tax assets will be recovered from future taxabla e income, considering all
availabla e evidence such as historical levels of income, expectations and risks associated with estimates of future
taxable income and ongoing prudent
not that we will realize all or part of our deferred tax assets, an adjud stment 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.
and feasible tax strategies. When we determine that it is not more likely than
rr
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 statutt es of limitations
expire without the assessment of additional income taxes, we will be required to adjud st the amounts of the related
assets and liabia lities in the period in which such events occur. Such adjud stments may have a material impact on our
income tax provision and our results of operations.
p
Impaim rmii
ent of Goodwill
f
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.
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. We generally estimate the fair value of the reporting units in goodwill impairment assessments
using an income approach, which includes an analysis of the future cash flows expected to be generated and the risk
associated with achieving such cash flows. This approach requires significant management judgment including 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 reporting unit. Actual results may differ from
management’s estimates. There were no impairments for the years ended December 31, 2023, 2022 and 2021.
Revenue Recogno
g
ition
We recognize revenue from operations through the sale of products, services, license of intellectuat
rental of instruments.
l property and
27
We enter into contracts that can include various combinations of products and services, which are generally
accounted for as distinct performance obligations. The transaction consideration is allocated between separate
performance obligations of an arrangement based on the stand-alone selling price (“SSP”) for each distinct producdd t
or service.
We recognize revenue from product sales at the point in time when we have satisfied our performance obligation by
ring control of the product to the customer. We use judgment to evaluate whether and when control has
transferff
transferff
red and consider the right to payment, legal title, physical possession, risks and rewards of ownership, and
customer acceptance if it is not a formality, as indicators to determine the transferff
of control to the customer.
Fair Value Measurements
We elected the fair value option under ASC 825, Financial Instruments for accounting of the Loan to Sartorius-
the accounting. The Loan includes certain value appreciation rights that
Herbst Beteiligungen II GmbH to simplifyff
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. 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 lifeff
actuat
higher fair value, whereas a decrease in expected lifeff may result in a significantly lower fair value. All subsu equent
changes in fair value of the Loan and value appreciation right, including accruerr d interest are recognized in (Gains)
losses from change in fair market value of equity securities and loan receivable in our consolidated statements of
income (loss).
(in years) and expected dividend. The inputs are subju ect to estimation uncertainty and
l amounts realized may materially differ. An increase in the expected volatility may result in a significantly
Results of Operations - Sales, Gross Margins and Expenses
Comparison of the Year Ended December 31, 2023 to the Year Ended December 31, 2022
The following shows cost of goods sold, gross profit,ff
expense items and net income as a percentage of net sales:
Net sales
Cost of goods sold
Gross profitff
Selling, general and administrative expense
Research and development expense
Net loss
Net sales
2023
2022
100.0 %
46.6
53.4
31.5
9.3
(23.9)
100.0 %
44.1
55.9
29.5
9.2
(129.5)
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, 2023 were $2.67 billion, compared to $2.80 billion for the year
ended December 31, 2022, a decrease of 4.7%. COVID-related sales were approximately $3.6 million for the year
ended December 31, 2023 compared to approximately $109.2 million for the year ended December 31, 2022. On a
currency neutral basis, for the year ended December 31, 2023 sales decreased by approximately 4.1% compared to
28
the same period in 2022. Currency neutral sales decreased mainly in APAC and EMEA. Excluding COVID-related
sales, sales decreased 0.4% on a currency neutral basis from the year ended December 31, 2022. Sales of our Life
Sciences segment in 2023 were negatively impacted by demand constraints from biopharma and small biotech
customers in the biopharma market and the economic environment in China. In addition, the Russia sanctions
impacted both our Life Science and Clinical Diagnostics segments.
The Life Science segment sales for the year ended December 31, 2023 were $1.18 billion, a decrease of 12.5%
compared to the year ended December 31, 2022. On a currency neutral basis, sales decreased 12.0% compared to
the year ended December 31, 2022. The currency neutral sales decrease was mainly in Asia Pacific and EMEA.
COVID-related sales were $2.9 million in the year ended December 31, 2023 compared to approximately $105.2
million in the year ended December 31, 2022. Excluding COVID-related sales, sales decreased 4.9% on a currency
neutral basis driven primarily by lower process chromatography, qPCR and Western blotting products, as a result of
demand constraints from biopharma and small biotech customers, the economic environment in China, and Russia
sanctions.
The Clinical Diagnostics segment sales for the year ended December 31, 2023 were $1.49 billion, an increase of
2.6% compared to the year ended December 31, 2022. On a currency neutral basis, sales increased 3.2% compared
to the year ended December 31, 2022. COVID-related sales were $0.7 million in the year ended December 31, 2023
compared to approximately $4.0 million in the year ended December 31, 2022. Excluding COVID-related sales,
sales increased 3.4% on a currency neutral basis. The currency neutral sales increase was primarily driven by an
increased demand for our diagnostic testing systems, primarily diabetes, blood typing, and quality control products,
especially in Asia Pacific and EMEA, partially offsff et by a decline in our infectious disease products and lower sales
due to Russia sanctions.
Gross marging
Consolidated gross margin was 53.4% for the year ended December 31, 2023 compared to 55.9% for the year ended
December 31, 2022. Gross margin for the Life Science segment and Clinical Diagnostics segment for the year
ended December 31, 2023 decreased by approximately 4.1 percentage points and 0.7 percentage points,
respectively, from the year ended December 31, 2022. The decrease in gross margin was primarily driven by
product mix, increased material costs and inventory reserves.
Selling, general and administrative expense
g, g
p
Consolidated selling, general and administrative expense (SG&A) increased to $841.7 million or 31.5% of sales for
the year ended December 31, 2023 compared to $827.8 million or 29.5% of sales for the year ended December 31,
2022. The increase to SG&A expense was primarily driven by restructurt
ing costs as well as higher facility-related
expenses, partially offsff et by lower employee-related expenses.
Research and development expense
p
p
Consolidated research and development (R&D) expense decreased to $247.4 million or 9.3% of sales for the year
ended December 31, 2023 compared to $256.9 million or 9.2% of sales for the year ended December 31, 2022. The
decrease in R&D expense in the year ended December 31, 2023 compared to the year ended December 31,
2022 was primarily due to a change in the fair value of contingent consideration, partially offsff et by higher
restructurt
ing costs and continued investment in research and development.
Results of Operations – Non-operating
Interest expense
p
Interest expense for the years ended December 31, 2023 and 2022 was $49.4 million and $38.1 million,
respectively, an increase of $11.3 million compared to the prior year period. The increase was primarily due to the
sale in March 2022 of the $1.2 billion Senior Notes.
Foreign currency exchange gains and losses
g g
g
y
29
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 gains were $7.3 million and
$0.2 million for the years ended December 31, 2023 and December 31, 2022, 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.
q
Change in fair market value of equity securities and loan receivable
y
g
(Gains) losses from change in fair market value of equity securities and loan receivable was a loss of $1.25 billion
and $5.19 billion for the years ended December 31, 2023 and 2022, respectively. The change in the fair market
value primarily resulted from the recognition of lower holding losses of $1.26 billion compared to holding losses of
$5.07 billion in the year ended December 31, 2022 on our position in Sartorius AG. In addition, lower losses from
the change in fair market value of our loan receivable of $6.8 million in the year ended December 31, 2023,
compared to holding losses of $100.6 million in the year ended December 31, 2022 contributed to the change.
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,
2023 increased to $106.4 million compared to $44.6 million for the year ended December 31, 2022. The increase
was primarily due to higher interest rates favorably impacting our investments resulting from cash invested from the
$1.2 billion Senior Notes issued in March 2022. The increase to Other income, net also resulted from a $3 million
higher dividend from Sartorius AG in 2023 compared to 2022, and from no credit loss or other than temporaryrr
impairment in 2023 compared to a credit loss of $8 million and other than temporaryrr
impairment losses of $12
million in 2022.
Effeff ctive tax rate
Our effeff ctive tax rates were 25.0% and 22.9% for the years ended December 31, 2023 and 2022, respectively. The
effeff ctive tax rates for the years ended December 31, 2023 and 2022 were primarily driven by the unrealized gain/
loss in equity securities that was taxed at 22.3% and 22.5%, respectively, as well as the geographical mix of
earnings.
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 record liabia lities 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 effeff ct 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, 2023, based on the expected outcome of certain examinations or as a result of the expiration of
statutt es 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 $17.2 million.
On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which includes an
Alternative Minimum Tax based on the Adjud sted Financial Statement Income of Applicable Corporations. Based on
our initial evaluation, we do not believe the Inflation Reduction Act will have a material impact on our income tax
provision and cash taxes. We continue to monitor the changes in tax laws and regulations to evaluate their potential
impact on our business.
30
Liquidity and Capia tal
i Resources
ff
urt ed in a small number of locations, and are then shipped to local
Bio-Rad operates and conducts business globally, primarily through subsu idiary companies establa ished in the
markets in which we trade. Goods are manufact
distribution facilities around the world. Our product mix is diversified, and certain products compete largely on
product effiff cacy, 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 availabla e via the sale of short-term investments and access to our $200.0 million unsecured
revolving credit facility (Credit Agreement, as amended) that we entered into in April 2019, and to a lesser extent
international lines of credit. Borrowings under the Credit Agreement, as amended, are availabla e 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 amended, as of December 31, 2023, however,
$0.2 million was utilized for domestic standby letters of credit that reduced our borrowing availabia lity. In March
2022, we issued $400 million aggregate principal amount of 3.3% Senior Notes due 2027, and $800 million
aggregate principal amount of 3.7% Senior Notes due 2032. Net cash proceeds from the bond issuance afteff
r
deducting the underwriting discount and estimated offeri
ff
payabla e semiannually in arrears on March 15 and September 15 of each year until the principal is paid or made
availabla e for payment. Management believes that this availabia lity, together with cash flow from operations, will be
adequate to meet our current objectives for operations, research and development, capital additions for
manufact
reasonable proportion to our existing total availabla e capital.
ing and distribution, plant and equipment, information technology systems and acquisitions of
ng expenses was $1.186 billion. Interest on the Notes is
urt
ff
At December 31, 2023, we had availabla e $1.6 billion in cash, cash equivalents and short-term investments, of which
approximately 16% was held in our foreign subsu idiaries. 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 and borrowings. As part of our ongoing liquidity assessments, we regularly monitor the mix of
domestic and foreign cash flows (both inflows and outflows).
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 subsu tantial incremental costs.
On Februarr
ry 13, 2024, we entered into a new $200.0 million unsecured revolving credit facility with a group of
financial institutions. Borrowings under the credit agreement are on a revolving basis and can be used to make
acquisitions, for working capital and for other general corporate purposes. The credit agreement requires Bio-Rad to
comply with certain financial ratios and covenants, among other things. The new credit facility replaces the credit
facility which expires April 2024.
Cash Flowll
s from Operatiott ns
Net cash provided by operations was $374.9 million and $194.4 million for the years ended December 31, 2023 and
2022, respectively. The increase in operating cash flows was primarily due to lower cash paid to supplu
employees, higher dividend proceeds, and lower income tax paid, partially offsff et by higher interest paid, lower cash
received from customers, and lower proceeds from foreign exchange contracts.
iers and
Cash Flowll
s from Investing Activities
Our investing activities have consisted primarily of cash used for purchases of marketable securities and
investments, and acquisitions.
Net cash provided by investing activities was $20.2 million compared to net cash used for investing activities of
$1,207.6 million for the years ended December 31, 2023 and 2022, respectively, primarily due to the timing of our
purchases, maturities and sales of marketable securities and investments as a result of the cash proceeds from the
sale of Senior Notes issued in March 2022.
31
Cash Flowll
s from Financ
ii
ing Activities
Our financing activities have consisted primarily of cash from the issuance of senior notes.
Net cash used in financing activities was $425.6 million compared to net cash provided by financing activities of
$973.6 million for the years ended December 31, 2023 and 2022, respectively, primarily attributable to the sale in
March 2022 of the Senior Notes which yielded net cash proceeds of $1,186.2 million. The change also resulted from
higher payments for share repurchases in 2023.
Treasury Shares
During the year ended December 31, 2023, 160,811 shares of Class A treasury stock with an aggregate total cost of
$64.1 million were reissued to fulfill grants to employees under our restricted stock program and our Employee
Stock Purchase Program. Upon reissuing the Class A treasury stock, Additional paid-in capital was reduced by
$49.7 million from share reissuance activity during the year.
During the year ended December 31, 2022, 135,744 shares of Class A treasury stock with an aggregate total cost of
$58.4 million were reissued to fulfill grants to employees under our restricted stock program and our Employee
Stock Purchase Program. Upon reissuing the Class A treasury stock, Additional paid-in capital was reduced by
$51.8 million from share reissuance activity during the year.
The re-issuance of the treasury stock for the years ended December 31, 2023 and 2022 did not require cash
payments or receipts and thereforff e did not affeff ct liquidity.
During the year ended December 31, 2023, we repurchased 1,267,757 shares of Class A common stock for $428.7
million under our share repurchase programs, compared to the repurchase of 496,692 shares of our common stock
for $215.7 million during the year ended December 31, 2022. As of December 31, 2023, $278.7 million of stock
remained availabla e for repurchases under the Company's 2023 Share Repurchase Program. We designated these
repurchased shares as treasury stock.
Contractual Obligations
The following summarizes certain of our contractuat
obligations are expected to have on our cash flows in future periods (in millions):
l obligations as of December 31, 2023 and the effeff ct such
32
l Obligations
Contractuat
Long-term debt, including
current portion (1)
Interest payments (1)
Operating lease obligations (2)
Purchase obligations (3)
Long-term liabia lities (4)
$
$
$
$
$
Total
1,210.1 $
301.7 $
236.3 $
122.6 $
121.7 $
Payments Due by Period
Less
Than
One Year
1-3
Years
3-5
Years
More
than
5 Years
0.5 $
44.0 $
46.6 $
96.4 $
4.3 $
1.0 $
87.9 $
78.4 $
26.1 $
36.5 $
401.0 $
64.1 $
45.8 $
0.1 $
10.5 $
807.6
105.7
65.5
—
70.4
(1) These amounts represent expected cash payments, primarily from Senior Notes, which are included in our December 31, 2023
consolidated balance sheet. See Note 6 of the consolidated financial statements for additional information about our debt.
(2) Operating lease obligations are described in Note 17 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 generally within Accounts payabla e or Other current liabia lities.
(4) These amounts primarily represent recognized long-term obligations for other post-employment benefits and long-term deferred revenue.
Excluded from this tabla e are tax liabia lities for uncertain tax positions and contingencies in the amount of $76.5 million. We are not able to
reasonably estimate the timing of future cash flows of these tax liabia lities, thereforff e, our income tax obligations are excluded from the tabla e
above. See Note 7 of the consolidated financial statements for additional information about our income taxes.
Recent Accounting Pronouncements 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 investments, 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. We do not have derivative contracts that are designated for hedge
accounting treatment. As a result, all derivative instruments are carried at fair value on the balance sheet and
changes in fair value are included in reported earnings.
ii
g
g
We operate and conduct business in many countries and are exposed to movements in
Foreigngg Exchange Risk.
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 subsu idiaries for which the functional currency is not the U.S.
dollar.
Foreign currency exposures are managed and hedged on a centralized basis. This allows for natural offsff ets and
netting of foreign exchange exposures across entities. 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 liabia lities. We enter into foreign currency forward contracts to hedge the gains and
losses arising from remeasurement of non-US dollar denominated monetary assets and liabia lities, primarily cash,
33
accounts receivables and accounts payabla es. The majoa rity of forward contracts expire within 90 days or less. We
record the change in value of our foreign currency denominated cash, receivables and payables as a Foreign
exchange (gain) loss on our consolidated statements of income (loss) along with the change in fair market value of
the forward exchange contract used as an economic hedge of those assets or liabia lities.
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 hypothetical 10% depreciation / appreciation of foreign currencies relative to the U.S. dollar would result in
an unrealized gain / loss of $41.4 million on our derivative position as of December 31, 2023. The gains or losses on
foreign currency forward contracts resulting from changes in currency exchange rates are expected to approximately
offsff et remeasurement losses or gains on the exposures being hedged.
.kk Bio-Rad centrally manages the short-term cash surpluses and maintains a diversified portfolff
Interest Rate Riskii
io
of high-quality fixed income securities, such as U.S. Treasury, U.S. government agency securities, corporate notes
and bonds, and asset backed securities. A sharprr
value of our fixed-income investment portfolff
impact on interest income for our investment portfolff
and 100 basis points would have resulted in a decrease or increase in the fair value of our net investment position of
approximately $4.5 million and $8.9 million, respectively, as of December 31, 2023.
rise in interest rates could have a material adverse impact on the fair
io. Conversely, declines in interest rates could have a material adverse
io. A hypothetical increase or decrease in interest rates by 50
As of December 31, 2023, we had $1.20 billion in principal amount of fixed-rate long-term debt outstanding.
Interest rate changes affeff ct the fair value of our notes but do not impact our financial position, cash flows or results
of operations due to the fixed nature of the debt obligations.
p
Share price movement risk associatedtt withii
We face financial statement exposure
our investment in Sartortt
resulting from changes in the market value of our position in Sartorius. A 10% depreciation / appreciation on the
quoted stock prices for ordinary and preference shares of Sartorius at December 31, 2023, would result in an
approximate loss / gain of $0.73 billion reported in the financial statement line (Gains) losses from change in fair
market value of equity securities and loan receivable in our consolidated statements of income (loss) for the year
ended December 31, 2023.
ius.
34
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, 2023 and 2022
Consolidated Statements of Income (Loss) for each of the three years in the period ended
December 31, 2023
Consolidated Statements of Comprehensive Income (Loss) for each of the three years in the
period ended December 31, 2023
Consolidated Statements of Cash Flows for each of the three years in the period ended
December 31, 2023
Consolidated Statements of Changes in Stockholders’ Equity for each of the three years
in the period ended December 31, 2023
Notes to Consolidated Financial Statements
Page
36
39
41
42
43
44
45
35
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
atories, Inc.:
Bio-Rad Labor
a
Opinion on the Consolidatdd ed Financial Statements
We have audited the accompanying consolidated balance sheets of Bio-Rad Labor
atories, Inc. and subsu idiaries (the
Company) as of December 31, 2023 and 2022, the related consolidated statements of income (loss), comprehensive
income (loss), changes in stockholders’ equity, and cash flows for each of the years in the three-year period ended
December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the three-
year period ended December 31, 2023, in conformity with U.S. generally accepted accounting principles.
a
We also have audited, in accordance with the standards of the Publu ic Company Accounting Oversight Board
(United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based
on criteria establa ished in Internal Controt
ed Frameworkrr (2013) issued by the Committee of Sponsoring
Organizations of the Treadway Commission, and our report dated February 16, 2024 expressed an unqualified
opinion on the effeff ctiveness of the Company's internal control over financial reporting.
e
l - Integrat
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 procedurd es to assess the risks
of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing
procedurd es that respond to those risks. Such procedurd es 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 Matter
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated
financial statements that was communicated or required to be communicated to the audit committee and that: (1)
relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our
especially challenging, subju ective, or complex judgments. The communication of a critical audit matter 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 matter below, providing a separate opinion on the critical audit matter or on the
accounts or disclosures to which it relates.
Evaluation of the sufficie
u
ncyc of audit evidence over net sales
As discussed in Notes 1 and 15 to the consolidated financial statements, the Company recorded $2.7 billion
of net sales for the year ended December 31, 2023. The Company is a multinational manufact
urt er and
worldwide distributor of its own lifeff science research products and clinical diagnostics products. The
Company recognizes revenue through the sale of products, services, license of intellectuat
rental of instruments.
l property and
ff
36
We identified the evaluation of the sufficiency of audit evidence over net sales as a critical audit matter.
Evaluating the sufficff
Company’s global geographical dispersion and multiple revenue streams. This included determining the
Company locations and revenue streams for which procedurdd es were performed as well as the level of
supeu rvision and review to perform over the selected locations.
iency of audit evidence obtained required subju ective auditor judgment because of the
The following are the primary procedurdd es we performed to address this critical audit matter. We applied
auditor judgment to determine the nature and extent of procedurd es to be performed over net sales. For each
location for which procedurd es were performed, we evaluated the design and tested the operating
effeff ctiveness of certain internal controls related to the Company’s net sales processes for the selected
revenue streams. We assessed the recorded net sales by selecting a sample of revenue transactions during
the year and comparing the amounts recognized by the Company to relevant underlying documentation such
as contracts and shipping documents or other third-party evidence. We evaluated the sufficiency of the audit
evidence obtained by assessing the results of procedurd es performed, including the appropriateness of the
nature and extent of such evidence over net sales.
/s/ KPMG LLP
We have served as the Company's auditor since 2013.
ff
Santa Clara, California
February 16, 2024
37
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
atories, Inc.:
Bio-Rad Labor
a
Opinion on Internal Controt
l Over Financial Repor
e
ting
a
atories, Inc. and subsu idiaries' (the Company) internal control over financial reporting as of
We have audited Bio-Rad Labor
December 31, 2023, based on criteria establa ished in Internal Contrott
of Sponsoring Organizations of the Treadway Commission. In our opinion, the Company maintained, in all material respects,
l –
effeff ctive internal control over financial reporting as of December 31, 2023, based on criteria establa ished in Internal Contrott
ed Frameworkrr (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.
e
Integrat
ed Frameworkrr (2013) issued by the Committee
e
l – Integrat
We also have audited, in accordance with the standards of the Publu ic Company Accounting Oversight Board (United States)
(PCAOB), the consolidated balance sheets of the Company as of December 31, 2023 and 2022, the related consolidated
statements of income (loss), comprehensive income (loss), changes in stockholders' equity, and cash flows for each of the years
in the three-year period ended December 31, 2023, and the related notes (collectively, the consolidated financial statements),
and our report dated Februar
ry 16, 2024 expressed an unqualified opinion on those consolidated financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effeff ctive internal control over financial reporting and for its
assessment of the effeff ctiveness 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 effeff ctive 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
effeff ctiveness of internal control based on the assessed risk. Our audit also included performing such other procedurd es as we
considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definitio
e
n and Limitations of Internal Controt
l Over Financial Repor
e
ting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliabia lity 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 procedurd es
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 effeff ct 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 effeff ctiveness to future periods are subju ect to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedurd es may deteriorate.
/s/ KPMG LLP
Santa Clara, California
ry 16, 2024
Februarr
38
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 credit losses of $14,926 and $15,029 as of
December 31, 2023 and 2022, respectively
Inventoryrr
Prepaid expenses
Other current assets
Total current assets
Property, plant and equipment, net
Operating lease right-of-use assets
Goodwill, net
Purchased intangibles, net
Other investments
Other assets
Total assets
cember 31,
2023
2022
$
$
403,815
1,203,327
5,560
434,215
1,356,457
5,560
489,017
780,517
140,040
26,054
3,048,330
494,645
719,316
124,179
23,604
3,157,976
529,007
194,730
413,569
320,514
7,698,070
94,850
$ 12,299,070
498,612
180,952
406,488
332,147
8,830,892
94,599
$ 13,501,666
The accompanying notes are an integral part of these consolidated financial statements.
39
BIO-RAD LABORATORIES, INC.
Consolidated Balance Sheets
(continued)
(In thousands, except share data)
rr
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabia lities:
Accounts payable
Accrued payrol
Current maturt
Income and other taxes payable
Current operating lease liabia lities
Other current liabilities
l and employee benefits
ities of long-term debt and notes payable
Total current liabilities
Long-term debt, net of current maturities
Deferred income taxes
Operating lease liabilities
Other long-term liabia lities
Total liabilities
Commitments and contingent liabilities
Stockholders’ equity:
December 31,
2023
2022
$
$
144,625
139,929
486
35,759
40,379
161,621
522,799
1,199,052
1,475,495
165,478
195,113
3,557,937
135,041
194,790
465
32,428
36,336
169,648
568,708
1,197,716
1,770,481
153,597
195,912
3,886,414
Class A common stock, $0.0001 par value; 80,000,000 shares authorized; shares
issued - 25,169,944 and 25,162,075 at 2023 and 2022, respectively; shares
outstanding - 23,422,506 and 24,521,583 at 2023 and 2022, respectively
Class B common stock, $0.0001 par value; 20,000,000 shares authorized; shares
issued and outstanding - 5,095,930 and 5,074,130 at 2023 and 2022, respectively
Additional paid-in capital
Class A treasury stock at cost, 1,747,438 shares at 2023 and 640,492 shares at 2022
Retained earnings
Accumulated other comprehensive loss
Total stockholders’ equity
Total liabilities and stockholders’ equity
2
2
1
449,075
(632,536)
9,260,629
(336,038)
8,741,133
$ 12,299,070
1
447,454
(263,586)
9,898,203
(466,822)
9,615,252
$ 13,501,666
The accompanying notes are an integral part of these consolidated financial statements.
40
BIO-RAD LABORATORIES, INC.
Consolidated Statements of Income (Loss)
(In thousands, except per share data)
Net sales
Cost of goods sold
Gross profitff
Selling, general and administrative expense
Research and development expense
Income from operations
Interest expense
Foreign currency exchange (gains) losses, net
(Gains) losses from change in fair market value of equity
securities and loan receivable
Other income, net
Net income (loss) before income taxes
Benefit from (Provision for) income taxes
Net income (loss)
Basic earnings (loss) per share:
Net income (loss) per basic share
Weighted average common shares - basic
Diluted earnings (loss) per share:
Net income (loss) per diluted share
Weighted average common shares - diluted
Year Ended December 31,
2023
2022
2021
2,671,262 $
1,244,316
1,426,946
841,723
247,427
337,796
49,439
(7,347)
1,252,251
(106,443)
(850,104)
212,780
(637,324) $
2,802,249 $
1,234,919
1,567,330
827,825
256,889
482,616
38,114
(205)
2,922,545
1,284,449
1,638,096
877,122
260,638
500,336
1,551
2,753
5,193,554
(44,574)
(4,704,273)
1,076,738
(3,627,535) $
(4,926,248)
(26,775)
5,449,055
(1,194,798)
4,254,257
(21.82) $
29,209
(121.79) $
29,785
142.61
29,831
(21.82) $
29,209
(121.79) $
29,785
140.83
30,208
$
$
$
$
The accompanying notes are an integral part of these consolidated financial statements.
41
BIO-RAD LABORATORIES, INC.
Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
Net income (loss)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjud stments
Foreign other post-employment benefits adjud stments
Net unrealized holding gains (losses) on availabla e-for-sale (AFS)
investments
Other comprehensive income (loss), net of tax
Comprehensive income (loss)
Year Ended December 31,
2022
$ (637,324) $ (3,627,535) $ 4,254,257
2021
2023
132,412
(12,846)
(296,028)
20,859
(469,088)
15,099
11,218
130,784
(4,020)
(458,009)
$ (506,540) $ (3,918,804) $ 3,796,248
(16,100)
(291,269)
The accompanying notes are an integral part of these consolidated financial statements.
42
BIO-RAD LABORATORIES, INC.
Consolidated Statements of Cash Flows
(In thousands)
iers and employees
Cash flows from operating activities:
Cash received from customers
Cash paid to supplu
Interest paid, net
Income tax payments, net
Dividend proceeds and miscellaneous receipts, net
Proceeds from 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
Payments for purchases of intangible assets
Payments for investment in loan receivable
Payments for purchases of marketable securities and investments
Proceeds from sales of marketable securities and investments
Proceeds from maturities of marketable securities and investments
Net cash provided by (used in) investing activities
Cash flows from financing activities:
Proceeds from issuance of Notes, net of debt financing costs
Payments on long-term borrowings
Proceeds from issuance of common stock and from reissuance of treasury
stock under the employee stock purchase plan and upon exercise of stock
options
Tax payments from net share settlement
Payments for purchases of treasury stock
Payments of contingent consideration
Net cash (used in) provided by financing activities
Effeff ct of foreign exchange rate changes on cash
Net decrease 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,
2022
2021
2023
$ 2,684,248
(2,240,486)
(47,489)
(129,593)
100,101
8,162
374,943
$ 2,699,401
(2,408,043)
(24,435)
(158,259)
68,184
17,599
194,447
$ 2,886,489
(2,127,939)
(2,251)
(134,683)
35,282
12,566
669,464
(156,680)
211
2,500
—
—
—
(689,041)
501,939
361,279
20,208
(112,782)
161
1,360
(100,746)
(1,375)
—
(2,060,238)
708,214
357,813
(1,207,593)
(133,746)
52
—
(125,516)
—
(453,440)
(851,627)
425,537
341,359
(797,381)
—
(467)
1,186,220
(510)
—
(3,020)
18,484
(14,936)
(428,728)
—
(425,647)
321
(30,175)
434,544
404,369
$
17,560
(13,967)
(215,679)
(48)
973,576
2,981
(36,589)
471,133
434,544
$
20,632
(22,482)
(49,998)
(561)
(55,429)
(12,636)
(195,982)
667,115
471,133
$
The following tabla e 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,
$
2023
403,815
151
403
$
2022
434,215
13
316
$
2021
470,783
14
336
$
404,369
$
434,544
$
471,133
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.
43
BIO-RAD LABORATORIES, INC.
Consolidated Statements of Changes in Stockholders’ Equity
(In thousands)
Common
Stock
Additional Paid-
in Capia tal
Treasury Stock
Retained
Earnings
Accumulated
Other
Comprehensive
Income (Loss)
Total
Stockholders'
Equity
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
Balance at December 31, 2021
Net loss
Other comprehensive loss, net of tax
Issuance of common stock
Stock compensation expense
Purchase of treasury stock
Reissuance of treasury stock
3
—
—
—
—
—
—
3
—
—
—
—
—
—
429,376
—
—
(1,850)
51,160
—
(36,953)
441,733
—
—
(3,373)
60,917
—
(51,823)
(99,907)
9,277,759
— 4,254,257
—
—
—
—
—
—
—
(49,998)
43,615
(106,290)
(6,673)
13,525,343
— (3,627,535)
—
—
—
(215,679)
58,383
—
—
395
282,456
9,889,687
— 4,254,257
(458,009)
(1,850)
51,160
(49,998)
(458,009)
—
—
—
—
(175,553)
(11)
13,685,236
— (3,627,535)
(291,269)
(3,373)
60,917
(215,679)
6,955
(291,269)
—
—
—
—
Balance at December 31, 2022
$
3
$
447,454
$ (263,586) $ 9,898,203
$ (466,822) $ 9,615,252
Net loss
Other comprehensive loss, net of tax
Stock compensation expense
Purchase of treasury stock
Reissuance of treasury stock
Shares withheld related to net share
settlement of equity awards
Excise tax on stock repurchase
—
—
—
—
—
—
—
—
—
61,271
—
—
—
—
(428,728)
—
—
—
(44,714)
64,065
(250)
(14,936)
—
—
(4,287)
—
—
130,784
130,784
—
—
—
—
—
61,271
(428,728)
19,101
(14,936)
(4,287)
(637,324)
—
(637,324)
Balance at December 31, 2023
$
3
$
449,075
$ (632,536) $ 9,260,629
$ (336,038) $ 8,741,133
The accompanying notes are an integral part of these consolidated financial statements.
44
BIO-RAD LABORATORIES, INC.
Notes to Consolidated Financial Statements
1.
II
SIGNI
FICAN
TNN ACCOUNTINTT GNN POLIOO CIES
II
II
Basis of Presentation
The consolidated financial statements include the accounts of Bio-Rad Labor
majority owned subsu idiaries (referred to in this report as “Bio-Rad,” “we,” “us” and “our”) afteff
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 affeff ct the amounts
reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
atories, Inc. and all of our wholly and
r elimination of
a
Use of Estimates
The preparation of the consolidated financial statements requires management to make estimates and assumptions
that affeff ct the reported amounts of assets and liabia lities and the disclosure of contingencies at the date of the
financial statements as well as the reported amounts of revenues and expenses during the reporting periods. Bio-Rad
bases its estimates on historical experience and on various other market-specific and other relevant assumptions that
are believed to be reasonabla e under the circumstances, the results of which form the basis for making judgments
about the carrying values of assets and liabia lities that are not readily apparent from other sources. Such estimates
include, but are not limited to, revenue recognition, the valuation of inventory, the valuation of acquired intangible
assets, valuation of accounts receivable, estimation of warranty reserve, estimation of legal reserves, the recognition
and measurement of current and deferred income tax assets and fair value measurement of the Loan receivable.
Actual results could differ materially from those estimates.
Cash and Cash Equivalents
Cash and cash equivalents consist of cash and highly liquid investments with original maturities of three months or
less which are readily convertible into cash.
Short-term Restricted Investments
Short-term restricted investments of $5.6 million at both December 31, 2023 and 2022 represent a money market
fund that is provided as collateral to secure worker's compensation and general liabia lity insurance.
Available-for-Sale Investments
Availabla e-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 availabla e for current operations. Availabla e-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 (loss), net of any related tax effeff ct. Realized gains and losses and other-than-temporaryrr
impairments on investments are included in Other income, net (see Note 11).
Concentration of Credit Risk
Financial instruments that potentially subju ect 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
45
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
counterparr
counterparr
non-performance by these counterparr
amount of loss we would have incurred as of our fiscal year-end.
rties may be unable to meet the terms of the agreements. We attempt to minimize this risk by limiting the
rties to a diverse group of highly-rated domestic and international financial institutions. In the event of
rties, the carrying values of our financial instruments represent the maximum
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 trusrr
t"), which upon termination of the Trusrr
under the Sartorius family trusrr
Sartorius ordinary shares. The collateral is subju ect to market volatility based on fluctuation in value of the Sartorius
ordinary shares.
t represent the right to receive
t interests
t ("Trusrr
Accounts Receivable and Allowance for Credit Losses
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 contractuat
identified to be uncollectible are charged or written offff against the allowance for credit losses.
l payment terms. Amounts later determined and specifically
Any adjud stments 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 credit losses were as follows (in millions):
December 31,
Beginning balance
Provision for expected credit losses
Write-offs charged against the allowance
Recoveries collected
Ending balance
Inventory
2023
2022
2021
$
$
15.0 $
0.5
(1.2)
0.6
14.9 $
15.1 $
1.7
(1.9)
0.1
15.0 $
19.8
1.4
(6.4)
0.3
15.1
Inventories are valued at the lower of cost and net realizable value and include material, labor
a
l costs, and are relieved from inventory on a first-
Cost is determined using standard costs, which approximate actuat
in, first-out or average cost basis. We classify our inventories based on our historical and anticipated levels of sales;
any inventoryrr
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, 2023
and 2022.
and overhead costs.
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.
46
Depreciation is computed on a straight-line basis over the estimated usefulff
lives of property, plant and equipment are generally as follows: buildings, 10-50 years; leasehold improvements, the
lifeff 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.
lives of the assets. The estimated usefulff
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.
Internal-Use SSofftware Development CCosts
y, plant andd eq iuipment, net on hthe co
fof iintern lal use sofftware dduriingg hthe ap lpliicatiio dn devellopment st gage are capi
italiz ded costs
li
fn of su hch costs begins
dated bballance hsheets. Su hch capi
li
fof hthe ap lpliicatiions. Ca ipia
talizatiio
lnsolidid
begins hwhen
italiz ded
li
ipoint hthe projproject iis subbsu tantially
ially co
lmplete andd iis re dadyy
Costs iincurredd iin hthe ddevellopment
andd iin lcl d duded iin Property, pl
iin lcl dude costs didirectlyly asso i
hthe pr leli
rr
y proj
iminary proj
i
ffor i
bebetween 3- y5 years. Costs iincurred dd duriingg hthe pr leli
are expens ded as iincurredd.
ect st gage iis co
ciated iwi h h
d
i
th the ddevellopment
lmplete andd ceases at hthe
its inte d dnded purpose. Intern lal-use sofftware iis amor itiz ded on a straigighht l-liine bba isis over hthe es itimatedd us fef lulfff
rr
iminary proj
y proj
fof
imaintenance andd tr iai ini gng costs,
ect st gage, as wellll as
liflifeff
i
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 liabia lities, and Operating lease liabia lities 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 liabia lities represent our
obligation to make lease payments arising from the lease. Operating lease ROU assets and liabia lities 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 availabla e 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 liabia lities, we include the noncancellabla e 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.
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 usefulff
lives.
The estimated usefulff
lives used in computing amortization of intangible assets are as follows:
47
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 – 10 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 recoverabla e. Recoverabia lity of
property, plant and equipment, and other finite-lived intangible assets are 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 purpos
use, we group assets and liabia lities at the lowest level for which cash flows are separately identifiabla e.
es of recognition of impairment for assets held for
rr
There were no impairments of finite-lived intangible assets for the years ended December 31, 2023, 2022 and 2021.
Impairment of Goodwill
Goodwill represents the excess of the purchase price over the fair value of the net tangible and identifiabla e
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
effeff ct 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 actuat
impairment of goodwill.
l transaction may differ from that used to evaluate the
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.
We determined that there are two reporting units, which are the same as our operating segments namely Life
Science and Clinical Diagnostics. We generally estimate the fair value of the reporting units in goodwill impairment
assessments using an income approach, which includes an analysis of the future cash flows expected to be generated
and the risk associated with achieving such cash flows. This approach requires significant management judgment
including 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 reporting unit. Actual results may differ
from management’s estimates. We elected to perform a quantitative assessment of goodwill during the fourth
quarter of 2023 and concluded that the fair value of the reporting units exceeded the carrying amount and that
goodwill is not impaired. There were no impairments for the years ended December 31, 2023, 2022 and 2021.
Impairment of Indefinite-Lived Intangible Assets
48
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 adverse macroeconomic conditions, declining market and industryrr
trends in which the company
operates, rising cost factors including inflation, 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 liabia lity method, which requires the recognition of deferred tax
assets and liabia lities for the expected future tax consequences of events that have been included in the financial
statements. Under this method, deferred tax assets and liabia lities reflect the tax effeff cts of net operating losses, tax
credits, and temporary di
purpos
rr
the year in which such temporary di
tax assets and liabia lities is recognized in income in the period that includes the enactment date.
es and the amounts used for income tax purposes. They are determined using enacted tax rates in effeff ct for
fferences between the carrying amounts of assets and liabia lities for financial reporting
fferences are expected to reverse. The effeff ct of a change in tax rates on deferred
rr
rr
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 availabla e positive and negative evidence, including scheduled reversals of
deferred tax liabia lities, projected future taxabla e income, tax planning strategies and recent financial operations.
When we establa ish 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 adjud sted 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 accruerr d 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 intellectuat
rental of instruments. Revenue from contracts with customers is recognized upon transferff
products or services to customers in an amount that reflects the consideration we expect to receive in exchange for
those products or services. Revenue is recognized net of any taxes collected from customers (sales tax, value added
tax, etc.), which are subsu equently remitted to government authorities.
l property and
of control of promised
We enter into contracts that can include various combinations of products and services, which are generally
accounted for as distinct performance obligations. A product or service is considered distinct if it is separately
identifiabla e from other deliverables in the arrangement and if a customer can benefit from such product or service
on its own or with other resources that are readily availabla e to the customer. The transaction consideration is
allocated between separate performance obligations of an arrangement based on the stand-alone selling price
(“SSP”) for each distinct product or service.
We recognize revenue from product sales at the point in time when we have satisfied our performance obligation by
ring control of the product to the customer. We use judgment to evaluate whether and when control has
transferff
49
red and consider the right to payment, legal title, physical possession, risks and rewards of ownership, and
transferff
customer acceptance if it is not a formality, as indicators to determine the transferff
of control to the customer. For
products that include installation, the product and installation are separate performance obligations. The product
revenue is recognized when control has transferff
and installation service
revenue is recognized when the product installation is completed.
red to the customer, generally upon delivery,rr
Service revenues on extended warranty contracts are recognized ratably ove
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.
r the lifeff of the service agreement as a
a
We recognize revenues for a functional license of intellectuat
license and technology transferff s 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.
l property at a point in time when the control of the
rr
The primary purpos
purchasing our products and services, not to either provide or receive financing to or from our customers. We
record contract liabia lities when cash payments are received or due in advance of our performance.
e of our invoicing terms is to provide customers with simple and predictabla e methods of
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
ff
offere
d. The term between invoicing and when payment is due is not significant.
ff
a reagent rental program which provides our customers the ability to use an instrument and
In addition, we offer
consumables (reagents) 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 then determine the lease classification. Our reagent rental arrangements are predominantly classified as
operating leases and any sales-type leases have historically been immaterial and we do not enter into direct finance
leases.
We concluded that the use of the instrument (referred to as “lease elements”) in our reagent rental agreements is not
governed by the revenue recognition guidance of ASC 606 but instead is addressed by the lease guidance in ASC
842. Accordingly, we first allocate the transaction price between the lease elements and the non-lease elements
based on relative standalone selling prices. Our reagent rental arrangements are predominantly comprised of
variable lease payments that fluctuate depending on the volume of reagents purchased, as such arrangements
generally do not contain any fixed or minimum lease payments. Maintenance services and reagent sales are
allocated to the non-lease elements and recognized as income over time as control is transferff
r the period whereas reagents revenue is recognized upon transferff
services are recognized ratably ove
when either (i) the consumables are delivered or (ii) the consumables are consumed by the customer.
red. Maintenance
of control
a
Revenue attributed to the lease elements of our reagent rental arrangements represented approximately 3% of total
revenue in 2023, 3% of total revenue in 2022 and 2% of total revenue in 2021. Such revenue forms part of the Net
sales in our consolidated statements of income (loss).
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 (loss).
50
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 industryrr segment sources. The disaggregation of our revenues by industryrr segment sources are
presented in our Segment Information footnote (see Note 15).
Deferred revenues primarily represent unrecognized fees billed or collected for extended service arrangements
including installation services. The deferred revenue balance at December 31, 2023 and December 31, 2022 was
$68.3 million and $71.9 million, respectively. The short-term deferred revenue balance at December 31, 2023 and
December 31, 2022 was $51.1 million and $52.2 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 feedbadd ck. These costs are recorded within Cost of goods sold in our
consolidated statements of income (loss).
Warranty liabia lities are included in Other current liabilities and Other long-term liabia lities in the consolidated
balance sheets. Change in our warranty liabia lity were as follows (in millions):
January 1
Provision for warranty
Actual warranty costs
December 31
Shipping and Handling
2023
2022
2021
$
$
10.6 $
$
9.3
(11.5)
8.4 $
12.7
12.7
8.8
(10.9)
10.6
$
$
9.8
14.8
(11.9)
12.7
We classify all freight costs billed to customers as Net sales. Related freight costs are recognized upon transferff
control of the promised products to customers as a fulfillment cost and included in Cost of goods sold.
of
Research and Development
All research and development costs are expensed as incurred. Types of expense incurred in research and
development include materials and supplu
depreciation, facility costs and information technology.
ies, employee compensation, consulting and third-party services,
Foreign Currency
Balance sheet accounts of international subsu idiaries 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 adjud stments are recorded as a separate component of stockholders’ equity.
Foreign currency transaction gains and losses are included in Foreign currency exchange (gains) losses, net in the
consolidated statements of income (loss). 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 subsu idiary 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 affeff ct
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 liabia lity measured at their fair value at each balance sheet date.
51
The resulting gains or losses offsff et exchange gains or losses, on the related receivables and payables, all of which
are recorded in Foreign currency exchange (gains) losses, net in the consolidated statements of income (loss). We
classify the proceeds from forward foreign exchange contracts, net 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 10.
Earnings (Loss) Per Share
We compute net income (loss) per share of Class A Common Stock (Class A) and Class B Common Stock (Class
B) using the two-class method required for participating securities. Our participating securities include Class A and
Class B. Each share of Class A and Class B participates equally in earnings and losses, but may not participate
equally in dividend distributions. No dividends were distributed or declared during any of the periods presented.
Earnings (loss) is attributable equally to each share of Class A and Class B common stock and is determined based
on the weighted average number of the respective class of common stock outstanding for the year.
Accordingly, basic earnings (loss) per share is computed by dividing net income (loss) attributable to Bio-Rad by
the weighted average number of common shares outstanding for that period. Diluted earnings per share takes into
account the effeff ct of dilutive instruments, such as stock options, restricted stock and performance 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 (loss) per share calculation if the effeff ct of including such securities would be anti-dilutive.
The weighted average number of common shares outstanding used to calculate basic and diluted earnings (loss) per
share, and the anti-dilutive shares that are excluded from the diluted earnings (loss) per share calculation are as
follows (in thousands):
Basic weighted average shares common outstanding
Effeff ct of potentially dilutive stock options, restricted
stock and performance stock awards
Diluted weighted average common shares outstanding
Anti-dilutive shares
Fair Value of Financial Instruments
Year Ended December 31,
2022
2023
2021
29,209
29,785
29,831
—
29,209
212
—
29,785
325
377
30,208
33
For certain financial instruments, including cash and cash equivalents, short-term investments, accounts receivable,
marketable securities, accounts payabla e and foreign exchange contracts, the carrying amounts approximate fair
value.
ff
The estimated fair value of financial instruments is based on the exchange price that would be received for an asset
liabia lity (an exit price) using availabla e market information or other appropriate valuation
or paid to transfer a
methodologies in the principal or most advantageous market for the asset or liabia lity 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 effecff
estimated fair value (see Note 2).
t on the
52
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.rr The primary beneficiary ha
s 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.
rr
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 2). 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.
rr
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 (gains) losses from change in fair
market value of equity securities and loan receivable in our consolidated statements of income (loss). 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 afteff
income, net in our consolidated statements of income (loss). 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 adjud stments for
observable changes in price or impairments (see Note 2). We monitor our relationships with investees when changes
occur that could affeff ct whether we have the ability to exercise significant influence.
r-tax earnings of equity method investees is included in Other
Recent Accounting Pronouncements to be Adopted
In November 2023, the Financial Accounting Standards Board ("FASB") issued ASU 2023-07, “Improvements to
Reportabla e Segment Disclosures.” The ASU includes enhanced disclosure requirements, primarily related to
significant segment expenses that are regularly provided to and used by the chief operating decision maker
(CODM). The amendments are to be applied retrospectively to all prior periods presented in the financial
statements. ASU 2023-07 is effeff ctive for fiscal years beginning afteff
permitted. We are currently evaluating the effeff ct of adopting this pronouncement on our financial statements and
disclosures.
r December 15, 2023, with early adoption
In December 2023, the FASB issued ASU 2023-09, "Income Taxes (Topic 740): Improvements to Income Tax
Disclosures". The ASU includes enhanced disclosure requirements, primarily related to the rate reconciliation and
income taxes paid information. The amendments are to be applied prospectively in the financial statements. ASU
2023-09 is effeff ctive for fiscal years beginning afteff
currently evaluating the effeff ct of adopting this pronouncement on our financial statements and disclosures.
r December 15, 2024, with early adoption permitted. We are
2.
FAIR VALUE MEASEE UREMEN
TSNN ANDNN INVESTMENMM TSNN
RR
We determine the fair value of an asset or liability based on the assumptions that market participants would use in
pricing the asset or liabia lity 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 liabia lity. A fair value hierarchy has been establa ished 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
53
•
•
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 liabia lities carried at fair value and measured on a recurring basis as of December 31, 2023 are
classified in the hierarchy as follows (in millions):
Level 1
Level 2
Level 3
Total
Financial assets carried at fair value:
Cash equivalents:
r
Commercial papea
Time deposits
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)
Availabla e-for-sale investments:
Corporate debt securities
U.S. government sponsored agencies
Foreign government obligations
Municipal obligations
Asset-backed securities
Total availabla e-for-sale investments (e)
Forward foreign exchange contracts (f)
Total financial assets carried at fair value
Financial liabia lities carried at fair value:
Forward foreign exchange contracts (g)
Contingent consideration (h)
Total financial liabia lities carried at fair value
$
$
$
$
— $
—
—
28.0
28.0
7.1
7,399.3
—
—
—
—
—
—
—
—
7,434.4 $
12.5 $
36.6
7.0
—
56.1
—
—
—
531.6
255.9
12.7
12.1
323.7
1,136.0
4.1
1,196.2 $
— $
—
—
—
—
—
—
325.7
—
—
—
—
—
—
—
325.7 $
12.5
36.6
7.0
28.0
84.1
7.1
7,399.3
325.7
531.6
255.9
12.7
12.1
323.7
1,136.0
4.1
8,956.3
— $
—
— $
11.7 $
—
11.7 $
— $
17.5
17.5 $
11.7
17.5
29.2
Financial assets and liabia lities carried at fair value and measured on a recurring basis as of December 31, 2022 are
classified in the hierarchy as follows (in millions):
54
Financial assets carried at fair value:
Cash equivalents:
r
Commercial papea
Time deposits
Asset-backed securities
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)
Availabla e-for-sale investments:
Corporate debt securities
U.S. government sponsored agencies
Foreign government obligations
Municipal obligations
Asset-backed securities
Total availabla e-for-sale investments (e)
Forward foreign exchange contracts (f)
Total financial assets carried at fair value
Financial liabia lities carried at fair value:
Forward foreign exchange contracts (g)
Contingent consideration (h)
Total financial liabia lities carried at fair value
$
$
$
Level 1
Level 2
Level 3
Total
$
— $
5.7
—
—
31.5
37.2
6.8
8,530.4
—
21.1 $
—
1.4
6.0
—
28.5
—
—
—
—
—
—
—
—
—
—
8,574.4 $
699.3
230.7
13.5
23.1
333.4
1,300.0
1.5
1,330.0 $
— $
—
—
—
—
—
—
—
322.6
21.1
5.7
1.4
6.0
31.5
65.7
6.8
8,530.4
322.6
—
—
—
—
—
—
—
699.3
230.7
13.5
23.1
333.4
1,300.0
1.5
322.6 $ 10,227.0
— $
—
— $
6.2 $
—
6.2 $
— $
35.6
35.6 $
6.2
35.6
41.8
(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,
2023
December 31,
2022
$
$
5.6
1.5
7.1
$
$
5.6
1.2
6.8
(c) Equity securities are included in the following accounts in the consolidated balance sheets (in millions):
Short-term investments
Other investments
Total
December 31,
2023
December 31,
2022
$
$
67.2
7,332.1
7,399.3
$
$
56.5
8,473.9
8,530.4
(d) The Loan under the fair value option is included in Other investments in the consolidated balance sheets.
55
(e) Availabla e-for-sale investments are included in Short-term investments in the consolidated balance sheets.
(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 liabia lity position are included in Other current liabia lities in the
consolidated balance sheets.
(h) Contingent considerations in a liabia lity position are included in Other long-term liabia lities in the
consolidated balance sheets. The changes in the fair value of contingent consideration included in Research
and development expense and Selling, general and administrative expense amounted to $14.0 million and
$4.1 million in the consolidated statements of income (loss) for the year ended December 31, 2023,
respectively. No conditions triggering payment of the contingent consideration were met as of
December 31, 2023.
Level 1 Fair Value Measurements
As of December 31, 2023, we own 12,987,900 ordinary voting shares and 9,588,908 preference shares of Sartorius
AG (Sartorius), of Goettingen, Germany, a process technology supplu
chemical and food and beverage industries. We own approximately 38% of the outstanding ordinary shares
(excluding treasury shares) and 28% of the preference shares of Sartorius as of December 31, 2023. The Sartorius
family trusrr
t) 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.
t (Sartorius family members are beneficiaries of the trusrr
ier to the biotechnology, pharmaceutical,
The change in fair market value of our investment in Sartorius for the twelve months ended December 31, 2023 was
a loss of $1,259.4 million and is recorded in our consolidated statements of income (loss).
Level 2 Fair Value Measurements
To estimate the fair value of Level 2 debt securities as of December 31, 2023 and 2022, our primary pricing
provider uses 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 supplu
ied pricing as the secondary pricing source.
Availabla e-for-sale investments consist of the following (in millions):
Short-term investments:
Corporate debt securities
Municipal obligations
Asset-backed securities
U.S. government sponsored agencies
Foreign government obligations
December 31, 2023
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Allowances
for Credit
Losses
Estimated
Fair
Value
$
$
534.1 $
12.2
325.7
257.4
12.8
1,142.2 $
0.8 $
—
0.7
0.1
—
1.6 $
(3.3)
(0.1)
(2.7)
(1.6)
(0.1)
(7.8) $
— $
—
—
—
—
— $
531.6
12.1
323.7
255.9
12.7
1,136.0
56
The following is a summary of the amortized cost and estimated fair value of our debt securities at December 31,
2023 by contractuat
l maturity date (in millions):
Mature in less than one year
Mature in one to five years
Mature in more than five years
Total
Availabla e-for-sale investments consist of the following (in millions):
Amortized
Cost
Estimated Fair
Value
$
$
450.9 $
558.6
132.7
1,142.2 $
448.2
556.6
131.2
1,136.0
Short-term investments:
Corporate debt securities
Municipal obligations
Asset-backed securities
U.S. government sponsored agencies
Foreign government obligations
Total
December 31, 2022
Amortized
Cost
Unrealized
Gains
Unrealized
Losses
Estimated
Fair
Value
$
709.9 $
23.4
339.6
233.9
13.8
$
1,320.6 $
0.2 $
—
0.1
—
—
0.3 $
(10.8) $
(0.3)
(6.3)
(3.2)
(0.3)
(20.9) $
699.3
23.1
333.4
230.7
13.5
1,300.0
As of December 31, 2023 there were no significant continuous unrealized losses greater than 12 months.
Our evaluation of credit losses for availabla e-for-sale investments 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.
rr
At December 31, 2023, we have concluded that all payments related to our availabla e-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 availabla e-for-sale investments
portfolff
io as of December 31, 2023.
Included in Other current assets are $11.9 million and $11.6 million of interest receivable as of December 31,
2023 and December 31, 2022, respectively, primarily associated with securities in our availabla e-for-sale
investments portfolff
term nature of our interest receivable asset, we have made an accounting policy election not to measure an
allowance for credit losses for accruerr d interest receivable. We consider any uncollected interest receivabla e that is
eater than one year to be impaired for purposes of write-off. For the year ended December 31, 2023, we
d
overdue gr
have not written offff any uncollected interest receivable.
io. Associated interest on these securities is typically payabla e semi-annually. Due to the short-
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
affeff ct 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, are recorded at their fair value at each
balance sheet date. The notional amounts provide one measure of foreign exchange exposures as of December 31,
2023 and do not represent the amount of Bio-Rad's exposure to loss. The estimated fair value of these contracts
57
was derived using the spot rates and forward points from Refinitiv on the last business day of the quarter. The
resulting gains or losses from foreign exchange contracts offsff et gains or losses from foreign currency
remeasurement of the related receivables and payables, both of which are included in Foreign currency exchange
(gains) losses, net in the consolidated statements of income (loss).
The following is a summary of our forward foreign currency exchange contracts (in millions):
Contracts maturing in January through March 2024 to sell foreign currency:
Notional value
Unrealized gain/(loss)
Contracts maturing in January through March 2024 to purchase foreign currency:
Notional value
Unrealized gain/(loss)
December 31,
2023
$
$
$
$
873.5
(8.1)
133.6
0.5
Included in Other investments in the consolidated balance sheet are investments without readily determinable fair
value measured at cost with adjud stments for observable price changes or impairments. The carrying value of these
investments was $6.5 million as of December 31, 2023 and 2022.
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 (loss). The carrying value of these investments, net of impairments, was $32.3 million and $26.7 million as
of December 31, 2023 and December 31, 2022, respectively.
The carrying value and fair value of our long-term debt were as follows (in millions):
December 31, 2023
December 31, 2022
Senior notes
Other long-term debt
Total
Carrying Value
$
1,189.5 $
9.6
1,199.1 $
$
Fair Value
Carrying Value
Fair Value
1,102.5 $
9.6
1,112.1 $
1,187.6 $
10.1
1,197.7 $
1,056.0
10.1
1,066.1
The fair value of our long-term debt was determined based on quoted market prices and on borrowing rates
availabla e to the company at the respective period ends, which represent level 2 measurements.
Level 3 Fair Value Investments
rr
t”) from a beneficiary of
During the fourth quarter of 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 on January 31, 2029, subju ect to certain events which could trigger payment prior to maturity
(“Loan”). SHB used the Loan proceeds to partially finance the acquisition of interests under the Sartorius family
the Trusrr
trust (“Trusrr
interests, which upon termination of the Trusrr
Interest on the loan is payabla e annually in arrears at 1.5% per annum, and the entire principal amount is due at
maturity. In addition to contractuat
t represent the right to receive Sartorius ordinary shares,
acquired Trusrr
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 simplifyff
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
t. The Loan is collateralized by the pledge of certain of the Trusrr
t in mid-2028 represent the right to receive Sartorius ordinary shares.
l interest, we are entitled to certain value appreciation rights associated with the
t interests, which upon termination of the Trusrr
t
58
to estimate the fair value of the value appreciation right include volatility, the risk-free interest rate, expected lifeff
years) and expected dividend. The inputs are subju ect to estimation uncertainty and actuat
l amounts realized may
materially differ. An increase in the expected volatility may result in a significantly higher fair value, whereas a
decrease in expected lifeff may result in a significantly lower fair value. All subsu equent changes in fair value of the
Loan and value appreciation right, including accruedrr
interest are recognized in (Gains) losses from change in fair
market value of equity securities and loan receivable in our consolidated statements of income (loss). The overall
change in fair market value reflected in (Gains) losses from change in fair market value of equity securities and loan
receivable during the twelve months ended December 31, 2023 was a loss of $6.8 million, which includes a $24.5
million gain from change in fair market value of the Loan and a $31.3 million loss from change in fair market value
of the value appreciation right. The decrease in the fair market value of the value appreciation right was due to a
decline in the value of the Sartorius ordinary shares. As of December 31, 2023, the €400.0 million principal amount
of the loan is still due on January 31, 2029.
(in
The following tabla e provides a reconciliation of the Level 3 Loan measured at estimated fair value (in millions):
December 31, 2022
Net decrease in estimated fair market value of the loan
included in Gains (losses) in fair market value of equity
securities and loan receivable
Foreign currency adjud stments gains (losses), net
December 31, 2023
$
$
322.6
(6.8)
9.9
325.7
3.
GOODWILWW L AND OT
NN
HETT
REE PURCHASED
UU
II
INTANN NGIBLE AS
SESS
TS
Changes to goodwill by segment were as follows (in millions):
Balances as of Januaryrr 1:
Goodwill
2023
2022
Life
Science
Clinical
Diagnostics
Total
Life
Science
Clinical
Diagnostics
Total
$
333.3
$
408.4
$ 741.7
$
333.3
$
349.2
$ 682.5
Accumulated impairment losses and write-offs
Goodwill, net
(41.8)
291.5
(293.4)
(335.2)
115.0
406.5
(41.8)
291.5
(293.4)
(335.2)
55.8
347.3
Acquisitions
Foreign currency adjud stments
Period increase, net
Balances as of December 31:
Goodwill
Accumulated impairment losses and write-offs
—
—
—
0.4
6.7
7.1
0.4
6.7
7.1
—
—
—
55.9
3.3
59.2
55.9
3.3
59.2
333.3
(41.8)
415.5
748.8
(293.4)
(335.2)
333.3
(41.8)
408.4
741.7
(293.4)
(335.2)
Goodwill, net
$
291.5
$
122.1
$ 413.6
$
291.5
$
115.0
$ 406.5
Information regarding our identifiabla e purchased intangible assets with finite and indefinite lives is as follows (in
millions):
59
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
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)
5.2
1.8
12.0
4.9
5.6
2.3
Weighted-
Average
Amortization
Period (years)
5.0
2.8
12.8
5.8
6.6
3.1
$
$
$
$
December 31, 2023
Purchase
Price
Accumulated
Amortization
Net
Carrying
Amount
108.7 $
168.9
217.8
59.2
6.1
6.4
567.1
198.2
765.3 $
(98.9) $
(161.1)
(132.9)
(42.4)
(4.7)
(4.8)
(444.8)
—
(444.8) $
9.8
7.8
84.9
16.8
1.4
1.6
122.3
198.2
320.5
December 31, 2022
Purchase
Price
Accumulated
Amortization
Net
Carrying
Amount
104.7 $
166.2
211.1
59.0
6.1
6.4
553.5
191.0
744.5 $
(89.9) $
(153.9)
(121.6)
(38.5)
(4.5)
(4.0)
(412.4)
—
(412.4) $
14.8
12.3
89.5
20.5
1.6
2.4
141.1
191.0
332.1
Amortization expense related to purchased intangible assets for the years ended December 31, 2023, 2022 and 2021
was $23.8 million, $24.9 million and $28.4 million, respectively. Estimated future amortization expense (based on
existing purchased finite-lived intangible assets) for the years ending December 31, 2024, 2025, 2026, 2027, 2028
and thereafteff
respectively.
r is $21.3 million, $19.3 million, $14.4 million, $12.0 million, $12.0 million, and $43.3 million,
No impairment losses related to goodwill and purchased intangibles were recorded in 2023 and 2022.
60
4.
INVENTONN RYOO
Following are the components of Inventory at December 31, 2023 and December 31, 2022 (in millions):
Inventory:
Raw materials
Work in process
Finished goods
rr
Total Inventory
December 31,
2023
December 31,
2022
$
$
231.6
246.0
302.9
780.5
$
$
228.8
220.9
269.6
719.3
5.
PP
PROPERT
Y, PLANT ANDNN EQUIPMII
ENMM T,NN NET
Following are the components of Property, plant and equipment at December 31, 2023 and December 31, 2022 (in
millions):
Property, plant and equipment:
Land and improvements
Building and leasehold improvements
Equipment
Total property, plant and equipment
Less: accumulated depreciation and amortization
Property, plant and equipment, net
December 31,
2023
December 31,
2022
$
$
28.4
419.8
1,147.5
1,595.7
(1,066.7)
529.0
$
$
27.8
393.6
1,086.6
1,508.0
(1,009.4)
498.6
6.
NOTESTT
PAYABLE ANDNN LONG-OO
TERMEE
DEBTEE
The principal components of long-term debt are as follows (in millions):
3.3%, Senior Notes due 2027
3.7%, Senior Notes due 2032
Less unamortized discounts and debt issuance costs
Long-term debt less unamortized discounts and debt issuance costs
Finance leases and other debt
Less current maturt
Long-term debt
ities
December 31,
2023
December 31,
2022
$
400.0 $
800.0
(10.5)
1,189.5
10.1
(0.5)
400.0
800.0
(12.4)
1,187.6
10.6
(0.5)
$
1,199.1 $
1,197.7
Under domestic and international lines of credit, standby letters of credit and guarantee arrangements, we had
$208.0 million availabla e for borrowing and usage as of December 31, 2023, which was reduced by $4.3 million that
t our obligations.
was utilized for standby letters of credit and guarantee arrangements issued by our banks to suppor
u
61
Senior Notes due 2027 and 2032
In March 2022, pursuant to an indenture we issued $400.0 million in principal amount of Senior Notes due March
2027 (the “2027 Notes”) and $800.0 million in principal amount of Senior Notes due March 2032 (the “2032 Notes”
and, together with the 2027 Notes, the “Notes”). The issuance of the 2027 Notes yielded net cash proceeds of
$395.7 million at an effeff ctive rate of 3.5346% and the issuance of the 2032 Notes yielded net cash proceeds of
$790.5 million at an effeff ctive rate of 3.8429%. The 2027 Notes and the 2032 Notes pay a fixed rate of interest of
3.3% and 3.7% per annum, respectively. Interest on the Notes is payabla e semi-annually in arrears on March 15 and
September 15 of each year until the principal is paid or made availabla e for payment. We have the option to redeem
the Notes at any time, in whole or in part, at a redemption price calculated in accordance with the indenture, plus
accruerr d and unpaid interest thereon to the redemption date. In the event of a change of control, the holders may
require us to repurchase for cash all or a portion of their notes at a purchase price equal to 101% of the principal
amount of the notes, plus accruerr d and unpaid interest, if any. Our obligations under the Notes are unsecured senior
obligations that rank equally in right of payment with all of our other existing and future unsecured, unsubordinated
debt. The Notes include covenants that limit our ability to, among other things, (i) grant specified liens, (ii) engage
in specified sale and leaseback transactions, (iii) consolidate or merge with or into other companies or (iv) sell all or
subsu tantially all of our assets. We were in compliance with these covenants as of December 31, 2023.
Credit Agreg ement
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 capia tal and for other general corporate purposes. Since 2019, Bio-Rad entered into Amendments No. 1,
2, 3, and 4 (“Amendment”) to the Credit Agreement to add LIBOR replacement language, expand the definition of
EBITDA, increase certain financial baskets, clarifyff
the definitions of certain terms related to cash in the Leverage
Ratio calculation, clarifyff
compliance certificates as required by the Credit Agreement, and to replace the reference interest borrowing rate
from LIBOR to Term SOFR. We had no outstanding borrowings under the Credit Agreement as of December 31,
2023; however, $0.2 million was utilized for domestic standby letters of credit that reduced our borrowing
availabia lity as of December 31, 2023. The Credit Agreement matures in April 2024. If we had borrowed against our
Credit Agreement, the borrowing rate would have been 6.698% at December 31, 2023, which is based on the 3-
month LIBOR.
rterly and annual financials and the related
the intended timing for the delivery of qua
rr
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 affiff liates, 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, 2023 and 2022.
Maturities of finance leases and other debt at December 31, 2023 were as follows (in millions):
2024
2025
2026
2027
2028
2029 and thereafteff
r
Total Maturities of finance leases and other debt
$
$
0.5
0.5
0.5
400.5
0.5
807.6
1,210.1
62
7.
INCONN MEOO
TAXES
The U.S. and international components of income before taxes are as follows (in millions):
U.S.
International
Income (loss) before taxes
Year Ended December 31,
2023
(31.0) $
(819.1)
(850.1) $
2022
(2,403.4) $
(2,300.9)
(4,704.3) $
2021
2,941.8
2,507.3
5,449.1
$
$
The (benefitff
from) provision for income taxes consists of the following (in millions):
Current tax expense:
U.S. Federal
State
International
Current tax expense
Deferred tax (benefit)ff
U.S. Federal
State
International
Deferred tax expense
Non-current tax expense (benefit)ff
expense:
(Benefitff
from) provision for income taxes
Year Ended December 31,
2022
2023
2021
$
$
73.8 $
12.0
17.4
103.2
(291.7)
(15.7)
(15.2)
(322.6)
6.6
(212.8) $
112.8 $
20.1
24.1
157.0
(1,121.3)
(83.6)
(36.7)
(1,241.6)
7.9
(1,076.7) $
72.4
9.2
32.6
114.2
983.5
69.3
32.1
1,084.9
(4.3)
1,194.8
The reconciliation between our effeff ctive tax rate on income before taxes and the statutory
t
tax rate is as follows:
t
tax rate
U. S. statutory
Impact of foreign operations
U.S. taxation of foreign income
State taxes
Other
(Benefitff
from) provision for income taxes
Year Ended December 31,
2022
2021
2023
21.0 %
(20.4)
23.8
2.4
(1.8)
25.0 %
21.0 %
(10.0)
10.5
1.1
0.3
22.9 %
21.0 %
(8.6)
8.9
1.3
(0.7)
21.9 %
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 offsff hore 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 liabia lities. The Tax Act also amended Internal Revenue Code Section 174 requiring capitalization of
research and experimentation expenditures. The capitalized expenses are amortized over a period of 5 or 15 years.
On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which includes an
Alternative Minimum Tax based on the Adjud sted Financial Statement Income of Applicable Corporations. We do
not believe the Inflation Reduction Act will have a material impact on our income tax provision and cash taxes. We
continue to monitor the developments in tax laws and regulations to evaluate their potential impact on our business.
63
Our effeff ctive income tax rates were 25.0%, 22.9% and 21.9% for the years ended December 31, 2023, 2022 and
2021, respectively. The effeff ctive tax rates for the years ended December 31, 2023, 2022 and 2021 were primarily
driven by the unrealized gain/loss in equity securities that was taxed at 22.3%, 22.5% and 22.4%, respectively, as
well as the geographic mix of earnings.
Many jurisdictions in which we operate have statutt oryrr
Our effeff ctive tax rate is impacted, either favorably or unfavff orably, by many factors including, but not limited to the
jurisdictional mix of income before tax, changes to statutt oryrr
tax rates, changes in tax laws or regulations, tax audits
and settlements, and generation of tax credits.
tax rates that differ from the U.S. statutory
tax rate of 21%.
t
Deferred tax assets and liabia lities reflect the tax effeff cts of losses, credits, and temporary di
carrying amounts of assets and liabia lities for financial reporting purposes and the amounts used for income tax
rr
purpos
es. Significant components of deferred tax assets and liabia lities are as follows (in millions):
fferences between the
rr
Deferred tax assets:
ls
Bad debt, inventoryrr and warranty accruarr
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 liabia lities:
Property and equipment
Lease assets
Investments and intangible assets
Total deferred tax liabia lities
Net deferred tax liabia lities
December 31,
2023
2022
29.4 $
17.5
126.4
41.9
48.8
264.0
(53.2)
210.8
30.8
15.7
128.2
40.8
53.2
268.7
(72.8)
195.9
40.4
38.4
1,565.0
1,643.8
(1,433.0) $
39.5
38.7
1,842.8
1,921.0
(1,725.1)
$
$
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
establa ish 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 availabla e 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 federal, state and foreign deferred tax assets will not be realized as of December 31, 2023, and
have maintained a valuation allowance on such deferred tax assets.
The valuation allowance for deferred tax assets is as follows (in millions):
Beginning balance
Additions charged to expenses
Deductions from reserves
Ending balance
2023
72.8
—
(19.6)
53.2
$
$
December 31,
2022
$
$
46.4
26.4
—
72.8
2021
44.6
1.8
—
46.4
$
$
64
As of December 31, 2023, our federal, state and foreign net operating loss carryforwards were approximately
$18.2 million, $30.0 million and $301.4 million, respectively. Of our foreign net operating losses, $144.5 million
may be carried forward indefinitely. The majoa rity of the remaining foreign net operating losses, if not utilized, will
begin to expire in 2024. Our federal and state net operating loss carryforwards, if not utilized, will begin to expire in
2028. As of December 31, 2023, our federal and state tax credit carryforwards were approximately $7.7 million and
$74.6 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, subsu tantial 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 availabla e to offsff et 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 availabla e 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 liabia lities for unrecognized tax benefits related to uncertain tax positions. We do not believe any
currently pending uncertain tax positions will have a material adverse effeff ct 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 tabul
a
ar reconciliation of the total amounts of unrecognized tax benefits (in millions):
2023
2022
2021
Unrecognized tax benefits – January 1
$
85.5 $
61.9 $
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
Lapsa
e of statutt e of limitations
Foreign currency adjud stments
Unrecognized tax benefits – December 31
0.2
(12.8)
11.6
(0.2)
(0.9)
1.3
18.1
(0.2)
9.8
(2.2)
(0.8)
(1.1)
$
84.7 $
85.5 $
55.8
3.2
(2.1)
18.1
(2.4)
(10.8)
0.1
61.9
We recognize accruerr d interest and penalties related to unrecognized tax benefits as income tax expense. Related to
the unrecognized tax benefits noted above, the cumulative amount of accruerr d interest and penalties as of
December 31, 2023, 2022 and 2021 was $9.6 million, $6.7 million and $11.8 million, respectively. We accruedrr
interest and penalties of $2.8 million, $(1.1) million, and $(2.5) million for the years ended December 31, 2023,
2022, and 2021, respectively. The total unrecognized tax benefits and interest and penalties of $94.3 million as of
December 31, 2023 was partially offsff et by deferred tax assets of $17.8 million and prepaid taxes of $2.7 million, for
a net amount of $73.8 million.
As of December 31, 2023, based on the expected outcome of certain examinations or as a result of the expiration of
statutt es 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 $17.2 million. Subsu tantially all such
amounts will impact our effeff ctive income tax rate if recognized.
65
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 subsu tantial incremental costs. The determination of the
amount of the unrecognized deferred tax liabia lity for foreign earnings that are indefinitely reinvested is not
practicable to estimate.
8.
STOCTT
HH
KHCC
OLDE
RSEE ' 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 common stock participates equally in the earnings and losses of Bio-
Rad, and each share is identical to the next in all respects except as follows. Class A common stock has limited
voting rights compared to Class B. Each share of Class A is entitled to one tenth of a vote on most matters, whereas
each share of Class B is always 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. In contrast, 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
control over Bio-Rad.
Changes to Bio-Rad's issued common stock shares are as follows (in thousands):
Balance at January 1, 2021
Class B to Class A conversions
Issuance of common stock
Balance at December 31, 2021
Class B to Class A conversions
Issuance of common stock
Balance at December 31, 2022
Class B to Class A conversions
Issuance of common stock
Balance at December 31, 2023
Treasury Shares
Class A Shares
Class B Shares
25,073
16
45
25,134
20
8
25,162
8
—
25,170
5,076
(16)
18
5,078
(20)
16
5,074
(8)
30
5,096
The share repurchase activity under the share repurchase programs through open market transactions for the years
ended December 31, 2023, 2022 and 2021 are summarized as follows:
March 1, 2021 - March 31, 2021
May 1, 2022 - May 31, 2022
November 1, 2022 - November 30, 2022
May 1, 2023 – May 31, 2023
September 1, 2023 – September 30, 2023
November 1, 2023 – November 30, 2023
Number of
Shares
Purchased
Weighted-
Average Price
per Share
Total Shares
Repurchased
To Date
Remaining
Authorized
Value
(in millions)
89,506 $
255,284 $
241,408 $
549,863 $
58,478 $
659,416 $
558.60
489.65
375.63
377.20
364.61
303.30
663,083 $
918,367 $
1,159,775 $
1,709,638 $
1,768,116 $
2,427,532 $
223.1
98.1
207.4
—
478.7
278.7
For the years ended December 31, 2023 and 2022, we used 160,811 and 135,744, respectively, of the repurchased
shares in connection with the vesting of restricted stock units and our Employee Stock Purchase Program. As of
December 31, 2023, the Company had repurchased $650.0 million under the 2017 Share Repurchase Program,
66
which completed the level of authorized purchases under that share repurchase program. In July 2023, the board of
directors authorized a new share repurchase program ("2023 Share Repurchase Program") granting the Company
authority to repurchase, on a discretionary basis, up to $500 million of the outstanding shares of the Company's
common stock. As of December 31, 2023, $278.7 million remained availabla e for repurchases under the 2023 Share
Repurchase Program.
9.
ACCUMUUU
EE
LAUU TED OT
EE
HETT
R CO
PP
MPOO
REHEN
SINN VE INCONN MEOO
(LOSS)SS
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
adjud stments
Foreign other
post-employment
benefits
adjud stments
Net unrealized
holding gains
(losses) on
availabla e-for-sale
investments
Total
Accumulated
other
comprehensive
income (loss)
Balances as of January 1, 2022
$
(170.5) $
(10.9) $
5.8 $
Other comprehensive (loss) income,
before reclassifications
Amounts reclassified from accumulated
other comprehensive income (loss)
Income tax effeff cts
Other comprehensive income (loss), net of
income taxes
Balances as of December 31, 2022
Other comprehensive income (loss),
before reclassifications
Amounts reclassified from accumulated
other comprehensive income (loss)
$
Income tax effeff cts
Other comprehensive income (loss), net of
income taxes
Balances as of December 31, 2023
$
(296.3)
—
0.3
(296.0)
(466.5) $
132.9
—
(0.5)
132.4
(334.1) $
25.4
0.1
(4.6)
20.9
10.0 $
(13.1)
0.7
(0.4)
(12.8)
(2.8) $
(21.5)
0.6
4.8
(16.1)
(10.3) $
13.4
1.2
(3.4)
11.2
0.9 $
(175.6)
(292.4)
0.7
0.5
(291.2)
(466.8)
133.2
1.9
(4.3)
130.8
(336.0)
All amounts reclassified out of accumulated other comprehensive income (loss) were reclassified into Other
income, net in the consolidated statements of income (loss). Reclassification adjud stments are calculated using the
specific identification method.
10.
SHARHH E-BASED CO
MPOO
R
ENPP
SANN TIONII
/ENN QUITY AWARDWW
UU
SD ANDNN PURCHASE
PLANS
Equityi Award Planll
The 2017 Incentive Award Plan (2017 Plan) authorizes the grant of stock options, restricted stock, restricted stock
units, performance-based stock units and other types of equity awards to offiff cers and certain other 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 anniversaryrr
date of the grant. Starting in September 2020, equity awards granted vest in increments of 25% per year on the
yearly anniversary da
te of the grant.
rr
67
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, 2023, there were 1,112,483 shares availabla e to be
granted.
Perforff marr
tt
nce-based Stock awards
Bio-Rad grants certain executive offiff cers Performance-based stock unit (PSU) awards, which are administered
under the 2017 Plan. PSUs generally vest over a three-year performance period based on achievement of specificff
performance goals. Based on the extent to which the targets are achieved, vested shares may range from zero to 200
percent of the target award.
We consider the dilutive impact of PSUs in our diluted net income per share calculation only to the extent that the
performance conditions would have been met if the reporting period was the end of the performance period.
Employm
ee Stocktt
s
Purchase Planll
Our 2011 Employee Stock Purchase Plan ("2011 ESPP" or "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. The Board of Directors 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, including performance-based stock awards. Share-based compensation expense is
allocated in the consolidated statements of income (loss) 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,
2022
2021
2023
$
$
6.1
43.9
11.3
61.3
$
$
5.4
45.6
9.9
60.9
$
$
4.9
38
8.3
51.2
The income tax benefit related to share-based compensation expense was $9.8 million, $8.8 million and $7.4 million
for the years ended December 31, 2023, 2022 and 2021, 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, 2023, 2022 and 2021
was $1.3 million, $4.0 million and $18.5 million, respectively.
For equity awards, we amortize the grant date fair value on a straight-line basis over the requisite service periods of
the awards, which are generally the vesting periods. We recognize forfeitures as they occur.
Stocktt
Options
No stock options were granted during the years ended December 31, 2023 and 2022. The weighted-average fair
value of stock options granted was estimated using a Black-Scholes option-pricing model with the following
weighted-average assumptions for the year ended December 31, 2021:
68
Expected volatility
Risk-free interest rate
Expected lifeff
Expected dividend
Weighted-average fair value of options granted
(in years)
Year Ended
December 31,
2021
27 %
1.05 %
7.3
—
251.93
$
Expected volatility is based on the historical volatilities of our common stock for a period equal to the stock
option’s expected life.ff The risk-free interest rate is based on the U.S. Treasury yield curve in effeff ct at the time of the
grant. The expected lifeff
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 thereforff e use an expected dividend yield of zero.
The following tabla e summarizes stock option activity:
Outstanding, January 1, 2023
Granted
Exercised
Forfeited
Outstanding, December 31, 2023
Unvested, December 31, 2023
Exercisabla e, December 31, 2023
Weighted-
Average
Exercise
Price
Weighted-
Average
Remaining
Contractual
Term (in
years)
t
Aggregate
Intrinsic
Value
(in millions)
270.03
—
129.89
579.93
410.50
583.87
374.10
5.49 $
6.76 $
5.22 $
2.3
0.1
2.2
Shares
206,420 $
— $
(108,350) $
(8,310) $
89,760 $
15,576 $
74,184 $
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,
2023, 2022 and 2021 was $20.2 million, $15.2 million and $33.0 million, respectively.
No cash was received from stock options exercised during the year ended December 31, 2022. Cash received from
stock options exercised during the year ended December 31, 2023 and 2021 amounted to $0.7 million and $3.6
million, respectively.
As of December 31, 2023, there was $2.1 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
one year.
69
Restricted Stocktt
Units - Service & Perforff marr
nce-based
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 tabla es summarize restricted stock units and performance-based stock units activity:
Restricted Stock
Units
Weighted-
Average
Grant-Date
Fair Value
Weighted-
Average
Remaining
Contractuat
l Term
(in years)
Aggregate
Intrinsic Value
(in millions)
Outstanding, January 1, 2023
Granted
Vested
Forfeited
Outstanding, December 31, 2023
314,242
193,937
(113,419)
(50,167)
344,593
$
$
$
$
$
516.85
393.16
485.12
499.45
460.22
1.78 $
111.3
Performance-
based Stock
Units
Weighted-
Average
Grant-Date
Fair Value
Weighted-
Average
Remaining
Contractuat
l Term
(in years)
Aggregate
Intrinsic Value
(in millions)
Outstanding, January 1, 2023
Granted
Vested
Forfeited
Outstanding, December 31, 2023
11,391
16,296
$
$
— $
$
$
(4,520)
23,167
486.25
366.47
—
427.84
413.39
1.54 $
7.5
The total fair value of restricted stock units and performance-based stock units vested for the years ended
December 31, 2023, 2022 and 2021 was $44.7 million, $54.5 million and $104.4 million, respectively. As of
December 31, 2023, there was approximately $138.1 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.
Employm
ee Stocktt
s
Purchase Planll
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 lifeff
Expected dividend
Weighted-average fair value
(in years)
of purchase rights
Year Ended December 31,
2022
2021
2023
5.15
35 %
%
0.24
—
1
41 %
.71 %
0.25
—
25 %
0.05 %
0.25
—
$
90.11
$
124.26
$
127.16
70
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 lifeff of the purchase rights. The risk-free interest rate is based on
eld curve in effeff ct at the time of the grant. We do not anticipate paying any cash dividends in
the U.S. Treasury yi
the future and thereforff e use an expected dividend yield of zero.
rr
We sold 56,985 shares for total employee contributions of $17.8 million, 44,480 shares for total employee
contributions of $17.6 million and 31,639 shares for total employee contributions of $17.0 million under the 2011
ESPP to employees for the years ended December 31, 2023, 2022 and 2021, respectively. At December 31, 2023,
418,879 shares remain authorized and availabla e for issuance under the 2011 ESPP.
11.
OTHETT
REE INCONN MEOO
,EE NET
Other income, net includes the following components (in millions):
Year Ended December 31,
2022
2023
2021
impairment losses on investments
Interest and investment income
Net realized gains on investments
Other-than-temporaryrr
Current expected credit losses on loans to equity method investees
Gain on divestiture of a division
Escrow receipts on prior acquisition
Other income
Other income, net
$
$
(100.9) $
(0.7)
—
—
—
(2.5)
(2.3)
(106.4) $
(58.0) $
(2.3)
11.9
7.5
(1.4)
—
(2.3)
(44.6) $
(18.9)
(8.0)
0.8
—
—
—
(0.7)
(26.8)
71
12.
SUPPUU LEPP MEEE
NTEE ALTT
CASHSS FLOW INFONN RMAT
OO
IONTT
The reconciliation of net income (loss) to net cash provided by operating activities is as follows (in millions):
2023
Year Ended December 31,
2022
(3,627.5) $
(637.3) $
2021
4,254.3
137.6
39.3
51.2
0.8
—
(4,926.2)
—
(40.7)
—
(20.4)
46.1
(12.9)
69.9
(28.8)
1,084.9
(6.2)
10.5
10.1
669.5
145.9
46.5
61.3
—
—
1,252.3
(2.5)
(41.0)
(18.1)
11.4
(46.3)
5.6
137.3
39.9
60.9
11.9
7.5
5,193.6
(1.4)
(38.1)
—
(87.4)
(158.8)
(27.3)
(51.8)
(21.3)
(322.6)
(3.7)
(4.1)
0.6
374.9 $
(94.2)
(1.2)
(1,241.6)
(5.1)
5.6
20.3
194.4 $
6.9 $
0.4 $
7.3 $
— $
5.2
6.0
Net income (loss)
Adjud stments to reconcile net income (loss)
impairment losses on investments
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-temporaryrr
Current expected credit losses on loans
(Gains) losses from change in fair market value of equity
securities and loan receivable
Gain on divestiture of a division
Payments for operating lease liabia lities
Changes in fair value of contingent consideration
(Increase) decrease in accounts receivable
(Increase) decrease in inventories
(Increase) decrease in other current assets
Increase (decrease) in accounts payabla e and other current
liabia lities
Decrease in income taxes payabla e
Increase (decrease) in deferred income taxes
Increase in other long-term assets
Increase (decrease) in other long-term liabia lities
Other
Net cash provided by operating activities
Non-cash investing activities:
Purchased property, plant and equipment
Purchased marketable securities and investments
$
$
$
$
72
13.
COMMITME
OO
NTEE STT ANDNN CONTOO INTT GENT
NN
BB
LIABII
ILITIES
Deferred Profitff Sharing Retirement Plan
sharing plan covering subsu tantially all U.S. employees. Contributions are made at the discretion of
We have a profitff
management. As of December 31, 2023 and 2022, the liabia lity related to the U.S. profitff
$1.9 million and $1.2 million, respectively. The contribution expense was $20.2 million, $19.1 million and $18.4
million for the years ended December 31, 2023, 2022 and 2021, respectively.
sharing plan was
Purchase Obligations
As of December 31, 2023, we had purchase obligations that have not been recognized on our balance sheet of
$122.6 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, generally within
Accounts payabla e or Other current liabia lities.
The annual future fixed and determinable portion of our purchase obligations that have not been recognized on our
balance sheet as of December 31, 2023 were as follows in millions:
2024
2025
2026
2027
2028
r
2029 and thereafteff
Long-Term Liabilities
$
96.4
24.3
1.8
0.1
—
—
As of December 31, 2023, we had obligations that have been recognized on our balance sheet of $121.7 million,
which primarily represent long-term deferred revenue and other post-employment benefits. Excluded are tax
liabia lities for uncertain tax positions and contingencies. We are not able to reasonably estimate the timing of future
cash flows of these tax liabia lities, thereforff e, 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, 2023 were as follows in millions:
2024
2025
2026
2027
2028
r
2029 and thereafteff
Letters of Credit/Guarantees
$
4.3
29.8
6.7
4.8
5.7
70.4
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
liabla e for $4.3 million of standby letters of credit/gtt uarantees with financial institutt
ions as of December 31, 2023.
73
Other Post-Employment Benefits
t
ily required to provide retirement benefits or a lump sum termination
lly any reason. These plans are accounted for as defined
In several foreign locations we are statutor
indemnity to our employees upon termination for virtuat
benefit plans and the associated net benefit obligation as of December 31, 2023 and 2022 of $62.2 million and
l and employee benefits and Other long-term
$46.8 million, respectively, has been included in Accrued payrol
liabia lities in the Consolidated Balance Sheets. Most plans are not required to be funded, and as such, there is no trusrr
or other device used to accumulate assets or settle these obligations. However, some of these plans require funding
based on local laws in which there is a trusrr
accumulate assets to assist in settling these obligations. The following disclosures include such plans, which are
located in France, Switzerland, Germany, Korea, India, Thailand, Italy, Dubau i and Japan.
t or other device administered by an external plan manager that is used to
a
rr
t
Obligatiott ns and Fundeddd
The following tabla e sets forth the change in benefit obligations, fair value of plan assets and amounts recognized in
the Consolidated Balance Sheets for the plans (in millions):
Stattt us
74
$
Change in benefit obligation:
Benefit obligation at beginning of year
Service cost
Interest cost
Plan participants' contributions
Actuarial (gain) loss
Gross benefits paid
Plan amendments
Acquisitions
Settlements
Foreign currency adjud stments
Benefit obligation at end of year
g
Change in plan assets:
p
Fair value of plan assets at beginning year
Actual return on plan assets
Employer contributions
Plan participants' contributions
Gross benefits paid
Acquisitions
Settlements
Foreign currency adjud stments
Fair value of plan assets at end of year
Underfunded status of pl
t
ans
g
Amounts recognized in the consolidated balance
sheets:
Current liabia lities (Accrued payrol
benefits)
Noncurrent liabia lities (Other long-term liabia lities)
l and employee
rr
Net liabia lity, end of fiscal year
$
2023
2022
129.2 $
5.4
3.4
3.3
14.0
(1.0)
(0.7)
2.5
(10.6)
8.9
154.4
82.4
1.7
4.7
3.3
0.3
2.4
(10.5)
7.9
92.2
(62.2)
(2.7)
(59.5)
(62.2) $
Components of Net Periodic Benefie ti Cost
hThe ffollllo iwi gng sets fforthh hthe net pe iri diodic bbenefifit cost (i(incom )e) ffor hthe pe iri dods iindidi
cated (i(in
d
illimillions)):
2023
2022
2021
Service costs
Interest costs
Expected returns on plan assets
Amortization of actuat
rial losses
Amortization of prior service costs
Curtailments
Settlements
Net periodic benefit costs
$
$
6.6 $
0.8
(1.0)
0.3
(0.3)
—
(0.2)
6.2 $
5.4 $
3.4
(2.2)
(0.1)
(0.4)
—
1.3
7.4 $
75
155.5
6.6
0.8
3.1
(23.5)
0.7
(1.0)
—
(7.6)
(5.4)
129.2
79.4
1.5
4.3
3.1
2.8
—
(7.6)
(1.1)
82.4
(46.8)
(1.5)
(45.3)
(46.8)
8.0
0.5
(1.0)
1.8
—
(1.9)
1.2
8.6
Assumptions
The above actuat
rial net gains were primarily based on financial, demographic and experience assumptions.
hThe weigighht ded-averagge assu
imptions us ded iin computiingg hthe bbenefifit blobligigatiions were as ffollllows:
Discount rate
Compensation rate increase
2023
2022
2.0 %
1.8 %
hThe weigighht ded-averagge assu
imptions us ded iin computiingg hthe net pe iri diodic bbenefifit costs were as ffollllows:
2023
2022
2021
Discount rate
Expected long-term rate of return on plan assets
2.5 %
2.6 %
0.6 %
1.3 %
2.6 %
1.7 %
0.3 %
1.1 %
The accumulated benefit obligation (ABO), an estimate based on the assumption if these plans were to be
terminated immediately, as of December 31, 2023 and 2022 was $114.8 million and $114.9 million, respectively.
The ABO and fair value of plan assets for these plans with ABO in excess of plan assets were $22.6 million and
$32.5 million as of December 31, 2023 and 2022, respectively.
In some fforeigign llocatiions we hhave serviice award ld plans hthat are paidid bbasedd upon hthe
Under these plans, the liabia lity as of December 31, 2023 and 2022 was $2.4 million and $2.5 million, respectively,
and has been included in Accrued payrol
l and employee benefits and Other long-term liabia lities in the Consolidated
Balance Sheets.
of years fof employmployment.
number of ye
b
rr
Concentrations of Labor Subject to Collective Bargaining Agreements
At December 31, 2023, approximately seven percent of Bio-Rad's approximately 3,370 U.S. employees were
covered by a collective bargaining agreement, which will expire on November 14, 2025. Many of Bio-Rad's non-
U.S. full-time employees, especially in France, are covered by collective bargaining agreements.
14.
LEGAL PROCEEDCC
INDD GSNN
We are a party to various claims, legal actions and complaints arising in the ordinary course of business. We record
a reserve when we believe a loss arising from these matters is probable and can be reasonably estimated. Significant
judgment is required in both the determination of the probability of a loss and the determination as to whether a loss
is reasonably estimabla e. As additional information becomes availabla e, any potential liabia lity related to these matters
is assessed and the estimates revised. While we do not believe, at this time, that any ultimate liabia lity resulting from
any of these matters will have a material adverse effeff ct 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.
15.
SEGMENMM TNN INFORM
ATMM IONTT
NN
ff
urt er and worldwide distributor of its own lifeff science research products and
Bio-Rad is a multinational manufact
clinical diagnostics products. We have two reportabla e segments: Life Science and Clinical Diagnostics. These
reportabla e segments are strategic business lines that offer
ff more than 12,000 different products and services and
require different marketing strategies. 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.
76
The Life Science segment develops, manufact
used for biological research, biopharmaceutical production processes and food testing regimes. These products are
sold to universities and medical schools, industrial research organizations, government agencies, pharmaceutical
manufact
urt ers, biotechnology researchers, food producers and food testing labor
urt es, and markets instruments, systems, reagents, and consumables
atories.
a
ff
ff
The Clinical Diagnostics segment designs, manufact
test kits and specialized quality controls that serve clinical labor
products are primarily sold to hospital labor
physician offiff ce labor
a
atories, diagnostic reference labor
urt es, markets and suppor
atories.
u
a
a
a
ff
ts test systems, informatics systems,
atories in the global diagnostics market. These
atories, transfusff
a
ion labor
atories, and
Other Operations represent a small miscellaneous operation from a prior acquisition, which was sold during 2023
with no material impact on the consolidated statements of income (loss).
Segment results are presented in the same manner as we present our operations internally to make operating
decisions and assess performance. The accounting policies of the segments are the same as those described in
Significant Accounting Policies (see Note 1). Our chief operating decision maker ("CODM") views all operating
expenses including depreciation and amortization and corporate overhead as directly suppor
segments and these costs are fully allocated to our reportabla e segments. The CODM evaluates the performance of
our segments and allocates resources primarily based on operating income, which represents revenues reduced by
product costs and operating expenses.
ting the strategies of our
u
Information regarding industryrr segments at December 31, 2023, 2022, and 2021 and for the years then ended is as
follows (in millions):
Net sales
Depreciation and amortization
Operating profitff
(loss)
Segment assets
Life
Science
$ 1,178.4
1,347.2
1,400.8
Clinical
Diagnostics
1,489.3
$
1,451.0
1,515.9
Other
Operations
3.6
$
4.0
5.8
$
$
$
$
$
$
62.8
57.9
54.8
108.9
266.8
319.7
287.1
269.9
207.7
$
$
$
83.1
79.4
82.8
229.6
217.7
181.8
493.1
448.8
363.5
—
—
—
(0.7)
(1.9)
(1.2)
0.3
0.6
1.0
2023
2022
2021
2023
2022
2021
2023
2022
2021
2023
2022
2021
77
The following reconciles total operating profit to
ff
consolidated income (loss) before income taxes (in millions):
Year Ended December 31,
2022
2021
2023
Total operating profitff
Interest expense
Foreign currency exchange gains (losses), net
Gains (losses) from change in fair market value of equity securities and loan
receivable
Other income, net
Consolidated income (loss) before income taxes
$
337.8 $
(49.3)
7.3
(1,252.3)
482.6 $
(38.1)
0.2
(5,193.6)
500.3
(1.5)
(2.7)
4,926.2
106.4
44.6
26.8
$
(850.1) $ (4,704.3) $ 5,449.1
The following reconciles total segment assets to consolidated total assets (in millions):
December 31,
2023
2022
Total segment assets
Cash, short-term investments and other current assets
Property, plant and equipment, net, and operating lease right-of-use assets
Goodwill, net
Other long-term assets
Total assets
$
780.5 $
719.3
2,438.7
679.6
406.5
9,257.6
$ 12,299.1 $ 13,501.7
2,267.8
723.7
413.6
8,113.5
The following presents net sales to external customers by geographic region based primarily on the location of the
use of the product or service (in millions):
United States
Europe
Asia
Other (primarily Canada and Latin America)
Total net sales
Year Ended December 31,
2022
2023
2021
$
$
1,121.9 $
819.8
563.0
166.6
2,671.3 $
1,155.5 $
851.9
639.4
155.4
2,802.2 $
1,130.6
946.9
688.4
156.6
2,922.5
The following presents Property, plant and equipment, net, Operating lease right-of-use assets and Other assets,
excluding deferred income taxes, by geographic region based upon the location of the asset (in millions):
United States
Europe
Asia
Other (primarily Canada and Latin America)
Total Property, plant and equipment, net, Operating lease right-of-use assets
and Other assets, excluding deferred income taxes
$
$
December 31,
2023
2022
477.3 $
197.0
82.7
19.1
776.1 $
465.7
183.7
63.8
15.6
728.8
78
16.
RESTEE RUTT
CTUU URINRR GNN COSTSOO
ff
urt
ry 2021, we announced our strategy-driven restructurt
ing plan in furtherance of our ongoing program to
ing plan primarily impacted our operations in EMEA and included
In Februarr
improve operating performance. The restructurt
the elimination of certain positions, the consolidation of certain functions, and the relocation of certain
ing plan was implemented in phases and is
manufact
subsu tantially complete as of December 31, 2023. The timing of the remaining employee termination benefit
payments is in accordance with statutory
changes in the estimates of employee termination benefits. From February 2021 to December 31, 2023, total
restructurt
requirements. The adjud stments to expense recorded were primarily due to
ing operations from EMEA to APAC. The restructurt
ing-related expenses were $70.7 million.
t
The following tabla e summarizes the activity of our February 2021 plan restructurt
ing reserves (in millions):
Balances as of January 1
Adjud stment to expense
Cash payments
Foreign currency adjud stments
Balances as of December 31
Life
Science
2023
Clinical
Diagnostics
Total
Life
Science
2022
Clinical
Diagnostics
Total
$
$
1.9 $
—
(1.7)
—
0.2 $
29.7 $
2.1
(19.4)
0.4
12.8 $
31.6 $
2.1
(21.1)
0.4
13.0 $
5.2 $
1.1
(4.1)
(0.3)
1.9 $
41.9 $
3.1
(12.7)
(2.6)
29.7 $
47.1
4.2
(16.8)
(2.9)
31.6
Management approved three new restructurt
identified opportunities to further streamline and improve operating performance.
ing plans in February 2023, June 2023, and October 2023 to implement
Our February 2023 plan was implemented in phases and is subsu tantially complete as of December 31, 2023. The
timing of the remaining employee termination benefit payments is in accordance with statutory
February 2023 to December 31, 2023, total restructurt
estimated termination benefits to employees.
ing-related expenses were $14.2 million, representing
requirements. From
t
The following tabla e summarizes the activity of our February 2023 plan restructurt
ing reserves (in millions):
Balances as of January 1, 2023
Charged to expense - employee termination benefits
Cash payments
Foreign currency adjud stments
Balances as of December 31, 2023
Life Science
Clinical
Diagnostics
Total
$
$
— $
2.7
(1.8)
0.1
1.0 $
— $
11.5
(6.0)
0.4
5.9 $
—
14.2
(7.8)
0.5
6.9
ing plan is subsu tantially complete as of December 31, 2023. The timing of the remaining
Our June 2023 restructurt
employee termination benefit payments is in accordance with statutory
December 31, 2023, total restructurt
benefits to employees.
t
ing-related expenses were $8.1 million, representing estimated termination
requirements. From June 2023 to
The following tabla e summarizes the activity of our June 2023 plan restructurt
ing reserves (in millions):
79
Balances as of January 1, 2023
Charged to expense - employee termination benefits
Cash payments
Foreign currency adjud stments
Balances as of December 31, 2023
Life Science
Clinical
Diagnostics
Total
$
$
— $
4.0
(3.5)
—
0.5 $
— $
4.1
(2.9)
0.1
1.3 $
—
8.1
(6.4)
0.1
1.8
Our October 2023 restructurt
December 31, 2023, total restructurt
benefits to employees.
ing plan is expected to be subsu tantially complete in early 2024. From October 2023 to
ing-related expenses were $3.5 million, representing estimated termination
The following tabla e summarizes the activity of our October 2023 plan restructurt
ing reserves (in millions):
Balances as of January 1, 2023
Charged to expense - employee termination benefits
Cash payments
Foreign currency adjud stments
Balances as of December 31, 2023
Life Science
Clinical
Diagnostics
Total
$
$
— $
2.7
(1.2)
—
1.5 $
— $
0.8
(0.3)
0.1
0.6 $
—
3.5
(1.5)
0.1
2.1
Combined, the liabia lity of $23.8 million as of December 31, 2023 consisted of $22.9 million recorded in Accruerr d
payroll and employee benefits and $0.9 million recorded in Other long-term liabilities in the consolidated balance
sheets. Restructurt
millions):
ing-related expense is allocated in the consolidated statements of income (loss) as follows (in
Cost of goods sold
Selling, general and administrative expense
Research and development expense
Restructurt
ing expense
17.
LEASES
EE
Year ended December 31,
2022
2021
2023
$
$
3.9
17.5
6.5
27.9
$
$
1.1
3.0
0.1
4.2
$
$
25.0
26.1
13.3
64.4
We have operating leases and to a lesser extent finance leases, for buildings, vehicles and equipment. Our leases
have remaining lease terms of 1 year to 15 years, which includes our determination to exercise renewal options.
The components of lease expense were as follows (in millions):
80
Operating lease cost
Finance lease cost:
Amortization of right-to-use assets
Interest on lease liabia lities
Total finance lease cost
Year Ended December 31,
2022
2021
2023
63.4 $
57.5 $
53.2
0.4 $
0.7
1.1 $
0.4 $
0.8
1.2 $
0.5
0.8
1.3
$
$
$
Operating lease cost includes original reduction in the carrying amount of right-of-use assets, the impact of
remeasurements, modifications, impairments and abandonments.
Our short-term leases are expensed as incurred, reflecting leases with a lease term of one year or less, and are not
significant for the years ended December 31, 2023, 2022 and 2021. Operating lease variable cost is primarily
comprised of reimbursed actuat
the years ended December 31, 2023, 2022 and 2021.
l common area maintenance, property taxes and insurance, which are immaterial for
Supplu
emental cash flow information related to leases were as follows (in millions):
Year Ended December 31,
2022
2021
2023
Cash paid for amounts included in the measurement of lease
liabia lities:
Operating cash flows from operating leases
Operating cash flows from finance leases
Financing cash flows from finance leases
Right-of-use assets obtained in exchange for lease obligations:
Operating leases
Finance leases
$
$
$
$
$
41.0 $
0.7 $
0.4 $
53.7 $
— $
38.1 $
0.8 $
0.4 $
21.2 $
0.1 $
Supplu
emental balance sheet information related to leases were as follows (in millions):
Operating Leases
Operating lease right-of-use assets
Current operating lease liabia lities
Operating lease liabia lities
Total operating lease liabia litie
s
December 31,
2023
2022
$
$
$
194.7 $
40.4 $
165.5
205.9 $
40.7
0.8
0.5
45.5
—
181.0
36.3
153.6
189.9
Finance leases are included in Property, plant and equipment, Current maturities of long-term debt, and Long-term
debt and notes payabla e, net of current maturities.
81
December 31,
2023
2022
Finance Leases
Property, plant and equipment, gros
s
Less: accumulated depreciation and amortization
Property, plant and equipment, ne
t
Current maturities of long-term debt and notes payabla e
Long-term debt, net of current maturities
Total finance lease liabia lities
$
$
$
$
11.9 $
(5.9)
6.0 $
0.5 $
9.6
10.1 $
11.9
(5.5)
6.4
0.5
10.1
10.6
7
15
3.0 %
6.3 %
December 31,
2023
2022
7
14
3.9 %
6.4 %
Operating
Leases
Finance
Leases
46.6
45.1
33.3
25.6
20.2
65.5
236.3
(30.4)
205.9
$
$
1.2
1.1
1.1
1.1
1.1
10.8
16.4
(6.3)
10.1
$
$
Weighted Average Remaining Lease Term
Operating leases - in years
Finance leases - in years
Weighted Average Discount Rate
Operating leases
Finance leases
Maturities of lease liabia lities were as follows (in millions):
Year Ending December 31,
2024
2025
2026
2027
2028
r
Thereafteff
Total lease payments
Less imputed interest
Total
The value of our operating lease portfolff
vehicles and other equipment with shorter terms and higher-turn ove
t
r.
io is principally for facilities with longer durations than the lesser value
As of December 31, 2023, operating leases that have not commenced are not material.
18.
QUARTERLY FINANC
IACC L DATA (UNAUDI
UU
II
TED)EE
The following tabla es provide unaudited condensed consolidated quarterly financial data for all of the periods in the
years ended December 31, 2023 and 2022.
Summarized quarterly financial data for the years ended December 31, 2023 and 2022 are as follows (in millions,
except per share data):
82
First
Quarter
Second
Quarter
Third
Quarter
Fourth
Quarter
$
$
676.8 $
362.4
69.0
2.33
2.32
681.1 $
362.5
(1,162.3)
(39.59)
(39.59)
700.1 $
402.6
(3,367.3)
(112.50)
(112.50)
691.1 $
395.0
(925.1)
(31.05)
(31.05)
632.1 $
335.7
106.3
3.65
3.64
680.8 $
372.6
(162.8)
(5.48)
(5.48)
681.2
366.3
349.7
12.15
12.14
730.3
397.1
827.7
27.89
27.78
2023
Net sales
Gross profitff
Net income (loss)
Basic earnings (loss) per share
Diluted earnings (loss) per share
2022
Net sales
Gross profitff
Net income (loss)
Basic earnings (loss) per share
Diluted earnings (loss) per share
19.
SUBSEQ
UU
UENT EVENVV
TSNN
On Februarr
ry 13, 2024, we entered into a new $200.0 million unsecured revolving credit facility with a group of
financial institutions. Borrowings under the credit agreement are on a revolving basis and can be used to make
acquisitions, for working capital and for other general corporate purposes. The credit agreement requires Bio-Rad to
comply with certain financial ratios and covenants, among other things. The new credit facility replaces the credit
facility which expires April 2024.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
Not applicable.
ITEM 9A. CONTROLS AND PROCEDURES
(a) Ea
valuatiott n of Discii
losure Contrott
ls and Procedures
We maintain “disclosure controls and procedurd es”, as such term is defined in Rules 13a-15(e) and 15d-15(e) under
the Securities Exchange Act of 1934, as amended (“Exchange Act”), that are designed to ensure that information
it under the Exchange Act is recorded, processed,
required to be disclosed by us in reports that we file or submu
summarized, and reported within the time periods specified in Securities and Exchange Commission rules and
forms, and that such information is accumulated and communicated to our management, including our Chief
Executive Offiff cer ("CEO") and Chief Financial Offiff cer ("CFO"), as appropriate, to allow for timely decisions
regarding required disclosure. In designing and evaluating our disclosure controls and procedurd es, management
recognized that disclosure controls and procedurdd es, no matter how well conceived and operated, can provide only
reasonable, not absolute, assurance that the objectives of the disclosure controls and procedurd es are met.
Additionally, in designing disclosure controls and procedurdd es, our management necessarily was required to apply its
relationship of possible disclosure controls and procedurd es. The design of
judgment in evaluating the cost-benefitff
any disclosure controls and procedurd es also is based in part upon certain assumptions about the likelihood of future
events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential
future conditions.
83
Subju ect to the limitations noted above, our management, with the participation of our CEO and CFO, has evaluated
the effeff ctiveness of the design and operation of our disclosure controls and procedurd es as of the end of the year
covered by this Annual Report on Form 10-K. Based on that evaluation, our CEO and CFO concluded that our
disclosure controls and procedurdd es were effeff ctive to meet the objective for which they were designed and operate at
the reasonable assurance level.
(b) Managea ment’s Repor
ee
t on Internal Contrott
l Over Financ
ii
ee
ial Repor
ting
Our management is responsible for establa ishing and maintaining adequate internal control over financial reporting
for the Company as defined in Rule 13a-15(f) or 15(d)-15(f) of the Exchange Act. Our internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliabia lity of financial
reporting and the preparation of consolidated financial statements for external purposes in accordance with U.S.
generally accepted accounting principles, and includes those policies and procedurdd es that: (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
Company’s assets; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of consolidated financial statements in accordance with U.S. generally accepted accounting principles,
and that our receipts and expenditures are being made only in accordance with authorizations of our management
and directors; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effeff ct on our consolidated financial
statements.
Our management assessed the effeff ctiveness of the Company’s internal control over financial reporting as of
l - Integre ated Frameworkrr (2013) issued by the
December 31, 2023 using the criteria establa ished in Internal Controt
Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on this assessment and
those criteria, management concluded that our internal control over financial reporting was effeff ctive as of
December 31, 2023. Our internal control over financial reporting has been audited by KPMG, LLP, an independent
registered public accounting firm, as stated in their report, which appears in Part II, Item 8 of this Form 10-K.
(c) Changes in Internal Contrott
l over Financ
ii
ee
ial Repor
ting
Management continuously reviews disclosure controls and procedurd es, and internal control over financial reporting,
and accordingly may, from time to time, make changes aimed at enhancing their effeff ctiveness to ensure that its
systems evolve with its business. There were no changes in our internal controls over financial reporting (as
defined in Rules 13a-15(f) and 15(d)-15(f) under the Exchange Act) during the quarter ended December 31, 2023
that have materially affeff cted, or are reasonably likely to materially affeff ct, our internal control over financial
reporting.
(d) Inherent Limitatio
ii
ns on Effeff ctivtt eness of Internal Contrott
ls
Because of its inherent limitations, our internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effeff ctiveness to future periods are subju ect to the risk that
controls may become inadequate because of changes in conditions, or that the degree of compliance with the
policies or procedurdd es may deteriorate.
ITEM 9B. OTHER INFORMATION
During the three months ended December 31, 2023, no director or offiff cer of the Company adopted or terminated a
“RulRR e 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item
408(a) of Regulation S-K.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
84
PART III.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATRR E GOVERNANCE
Part of the information required to be furnished pursuant to this item is incorporated by reference from portions of
Bio-Rad’s definitive proxy statement to be mailed to stockholders in connection with our 2024 annual meeting of
stockholders (the “2024 Proxy Statement”) under “Executive Offiff cers,” “Election of Directors,” “Committees of the
Board of Directors” and “Section 16(a) Beneficial Ownership Reporting Compliance.”
Bio-Rad’s Board of Directors has determined that each of Jeffrey L. Edwards, Gregory K. Hinckley and Melinda
Litherland is an “audit committee financial expert,” as defined in Item 407(d)(5) of Regulation S-K. Each of Jeffreff y
L. Edwards, Gregory K. Hinckley and Melinda Litherland is also an “independent” director, as determined in
accordance with the independence standards set forth in Rule 10A-3 under the Securities Exchange Act of 1934, as
amended, and Section 303A.02 of the New York Stock Exchange (NYSE) Listed Company Manual.
We have adopted a code of business ethics and conduct that applies to our principal executive offiff cer, principal
financial offiff cer, controller (or persons performing similar functions), all other employees and our directors. It is
availabla e through the Corporate Governance section of our website (www.bio-rad.com). We will also provide a
copy of the code of ethics to any person, without charge, upon request, by writing to us at “Bio-Rad Labor
Inc., Investor Relations, 1000 Alfred Nobel Drive, Hercules, CA 94547.” We intend to satisfy any disclosure
requirement under Item 5.05 of Form 8-K regarding an amendment to, or waiver from, a provision of the code of
ethics by posting such information on the Corporate Governance section of our website (www.bio-rad.com) within
four business days following the date of the amendment or waiver.
atories,
a
ITEM 11. EXECUTIVE COMPENSATION
The information required to be furnished pursuant to this item is incorporated by reference from portions of the
2024 Proxy Statement under “Compensation Discussion and Analysis,” “Summary Compensation Tabla e,” “Grants
of Plan-Based Awards,” “Outstanding Equity Awards at Fiscal Year-End,” “Option Exercises and Stock Vested
Tabla e,” “Pension Benefits,” “Nonqualified Deferred Compensation Plans,” “Potential Payments on Termination or
Change in Control,” “Director Compensation,” “Compensation Committee Interlocks and Insider Participation” and
"Pay Ratio Disclosure.” In addition, the information from a portion of the 2024 Proxy Statement under
“Compensation Committee Report” is incorporated herein by reference and furnished on this Form 10-K and shall
not be deemed “filff ed” for purposes of Section 18 of the Securities and Exchange Act of 1934, nor shall it be deemed
incorporated by reference in any filing under the Securities Act of 1933.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
Part of the information required to be furnished pursuant to this item is incorporated by reference from a portion of
the 2024 Proxy Statement under “Principal and Management Stockholders.”
85
Equity Compensation Plan Information as of December 31, 2023
Number of securities
to be issued
upon exercise of
outstanding options,
warrants and rights
(a)
Weighted-average exercise
price of
outstanding options,
warrants and rights
(b)(3)
Number of securities remaining
availabla e for future issuance under
equity compensation plans (excluding
securities reflected in column (a))
(c)
Plan categoryrr
Equity compensation plans
approved by
security holders (1)
Equity compensation plans
not approved by
security holders
Total
457,520
$
—
457,520
$
410.50
—
410.50
1,531,362
(2)
—
1,531,362
atories, Inc. 2017 Incentive
(1) Consists of the Bio-Rad Labor
a
Award Plan, and the Bio-Rad Labor
atories, Inc. 2007 Incentive Award Plan, the Bio-Rad Labor
a
atories, Inc. 2011 Employee Stock Purchase Plan.
a
a
(2) Consists of 1,112,483 shares availabla e under the Bio-Rad Labor
atories, Inc. 2017 Incentive Award Plan and 418,879
shares available under the Bio-Rad Labor
a
atories, Inc. 2011 Employee Stock Purchase Plan.
(3) Excludes Restricted Stock Units and Perforff mance Stock Units.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACT
RR
IONS, AND DIRECTOR
INDEPENDENCE
The information required to be furnished pursuant to this item is incorporated by reference from portions of the
2024 Proxy Statement under “Transactions with Related Persons” and “Committees of the Board of Directors.”
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Our independent registered public accounting firm is "KPMG LLP, Santa Clara, CA, Auditor Firm ID: 185"
The information required to be furnished by this item is incorporated by reference from a portion of the 2024 Proxy
Statement under “Report of the Audit Committee of the Board of Directors.”
PART IV.
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)1
Index to Financial Statements – See Item 8 of Part II of this report “Financial Statements and
Supplu
ementary Data" on page 35 for a list of financial statements.
2
Scheduld e II Valuation and Qualifyiff ng Accounts
All financial statement schedules are omitted because they are not required, or the required
information is included in the consolidated financial statements or the notes thereto.
3.
Index to Exhibits
The exhibits listed below in the accompanying Index to Exhibits are filed or incorporated by reference as part
of this report.
86
BIO-RAD LABORATORIES, INC.
INDEX TO EXHIBITS ITEM 15(a)3
Exhibit 32.1 is furnished herewith and should not be deemed to be “fileff d under the Securities Exchange Act of 1934.”
Exhibit No.
3.1 Restated Certificate of Incorporation of Bio-Rad Laboratories, Inc. (1)
3.1.1 Certificate of Amendment to Restated Certificate of Incorporation of Bio-Rad Laboratories, Inc. (1)
Amended and Restated Bylaws of Bio-Rad Laboratories, Inc. (2)
4.1 Description of Bio-Rad Laboratories, Inc. Class A and Class B Common Stock. (3)
4.2 Indenture, dated as of March 2, 2022, by and between Bio-Rad Laboratories, Inc. and Wilmington Trust, National
Association. (4)
4.3 First Supplemental Indenture, dated as of March 2, 2022, by and between Bio-Rad Laboratories, Inc. and
Wilmington Trust, National Association. (5)
4.4 Form of Global Security for the 3.300% Senior Notes due 2027. (6)
4.5 Form of Global Security for the 3.700% Senior Notes due 2032. (7)
10.1 Credit Agreement, dated as of April 15, 2019, by and among Bio-Rad Laboratories, Inc., the lenders referred to
therein, JPMorgan Chase Bank, N.A., as administrative agent, Bank of America, N.A., HSBC Bank USA
National Association, and Mug Bank, Ltd., as co-syndication agents, and Citibank, N.A., and Wells Fargo Bank,
N.A., National Association as co-documentation agents. (8)
10.1.1 Amendment No. 1 dated as of November 15, 2021 to Credit Agreement dated as of April 15, 2019, by and among
Bio-Rad Laboratories, Inc., the lenders referred to therein, and JPMorgan Chase Bank, N.A., as a lender and as
administrative agent. (9)
10.1.2 Amendment No. 2 dated as of April 15, 2022 to Credit Agreement dated as of April 15, 2019, by and among Bio-
Rad Laboratories, Inc., the lenders referred to therein, and JPMorgan Chase Bank, N.A., as a lender and as
administrative agent. (10)
10.1.3 Amendment No. 3 dated as of February 1, 2023 to Credit Agreement dated as of April 15, 2019, by and among
Bio-Rad Laboratories, Inc., the lenders referred to therein, and JPMorgan Chase Bank, N.A., as a lender and as
administrative agent. (11)
10.1.4 Amendment No. 4 dated as of May 12, 2023 to Credit Agreement dated as of April 15, 2019, by and among Bio-
Rad Laboratories, Inc., the lenders referred to therein, and JPMorgan Chase Bank, N.A., as a lender and as
administrative agent. (12)
10.2 Credit Agreement, dated as of February 13, 2024, by and among Bio-Rad Laboratories, Inc., Bio-Rad Europe
GmbH, Bio-Rad IHC Europe GmbH and Bio-Rad Laboratories (Singapore) Pte Ltd, the lenders referred to
therein, and Wells Fargo Bank, National Association, as agent. (13)
10.3 Bio-Rad Laboratories, Inc. 2011 Employee Stock Purchase Plan. (14)*
87
10.3.1 First Amendment to the Bio-Rad Laboratories, Inc. 2011 Employee Stock Purchase Plan (15)*
10.4 Employees’ Deferred Profit Sharing Retirement Plan (Amended and Restated effective January 1, 1997). (16)*
10.5 2007 Incentive Award Plan. (17)*
10.5.1 Restricted Stock Unit Award Grant Notice and Restricted Stock Unit Award Agreement under the 2007 Incentive
Award Plan. (18)*
10.5.2 Amendment to the Bio-Rad Laboratories, Inc. 2007 Incentive Award Plan. (19)*
10.6 Bio-Rad Laboratories, Inc. 2017 Incentive Award Plan (20)*
10.6.1 Global Restricted Stock Unit Award Grant Notice and Global Restricted Stock Unit Award Agreement under
2017 Incentive Award Plan (21)*
10.6.2 Stock Option Grant Notice and Non-Qualified Stock Option Agreement under 2017 Incentive Award Plan (22)*
10.6.3 Global Restricted Stock Unit Award Grant Notice and Global Restricted Stock Unit Award Agreement under
2017 Incentive Award Plan (updated September 2020) (23)*
10.6.4 Stock Option Grant Notice and Non-Qualified Stock Option Agreement under 2017 Incentive Award Plan
(updated September 2020) (24)*
10.6.5 Performance Stock Unit Award Agreement under 2017 Incentive Award Plan. (25)*
10.7 Employment Offer Letter between the Company and Ilan Daskal dated March 15, 2019 (26)*
10.8 Employment Offer Letter between the Company and Andrew J. Last dated March 15, 2019 (27)*
10.9 Form of Indemnification Agreement. (28)
10.10 Executive Change in Control Severance Plan (29)*
21.1 Listing of Subsidiaries
23.1 Consent of Independent Registered Public Accounting Firm
31.1 Certification of Principal Executive Officer and Principal Financial Officer Required by Exchange Act Rules
13a-14(a) and 15d-14(a)
32.1 Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002
97 Policy for Recovery of Erroneously Awarded Compensation, effective as of October 2, 2023.
101.INS
The instance document does not appear in the interactive data file because its XBRL tags are embedded within
the inline XBRL document.
101.SCH Inline XBRL Taxonomy Extension Schema Document
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document
88
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.DEF
101.LAB Inline XBRL Taxonomy Extension Labea
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104
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The cover page Interactive Data File is formatted in Inline XBRL and is contained in Exhibits 101
(1) Incorporated by reference to Exhibits to Bio-Rad’s Form 10-K filing for the fiscal year ended December 31,
2010.
(2) Incorporated by reference to Exhibit 3.1 to Bio-Rad’s Form 8-K filed on October 27, 2017.
(3) Incorporated by reference to Exhibit 4.1 to Bio-Rad’s Form 10-K filing for the fiscal year ended December 31,
2019.
(4) Incorporated by reference to Exhibit 4.1 to Bio-Rad’s Form 8-K filed on March 2, 2022
(5) Incorporated by reference to Exhibit 4.2 to Bio-Rad’s Form 8-K filed on March 2, 2022.
(6) Incorporated by reference to Exhibit 4.3 to Bio-Rad’s Form 8-K filed on March 2, 2022.
(7) Incorporated by reference to Exhibit 4.4 to Bio-Rad’s Form 8-K filed on March 2, 2022.
(8) Incorporated by reference to Exhibit 10.1 to Bio-Rad’s Form 8-K filed on April 16, 2019.
(9) Incorporated by reference to Exhibit 10.1 to Bio-Rad’s Form 8-K filed on November 18, 2021.
(10) Incorporated by reference to Exhibit 10.1 to Bio-Rad’s Form 8-K filed on April 20, 2022.
(11) Incorporated by reference to Exhibit 10.1.3 to Bio-Rad’s Form 10-K filing for the fiscal year ended December
31, 2022.
(12) Incorporated by reference to Exhibit 10.1 to Bio-Rad’s Form 10-Q filing for the quarter ended June 30, 2023.
(13) Incorporated by reference to Exhibit 10.1 to Bio-Rad’s Form 8-K filed on February 14, 2024.
(14) Incorporated by reference to Exhibit 10.9 to Bio-Rad's Form 10-Q filing for the quarter ended June 30, 2011.
(15) Incorporated by reference to Exhibit 10.2 to Bio-Rad’s Form 10-Q filing for the quarter ended March 31, 2017.
(16) Incorporated by reference to Exhibit 10.6 to Bio-Rad’s Form 10-Q filing for the quarter ended September 30,
1997.
(17) Incorporated by reference to Exhibit 4.1 to Bio-Rad’s Form S-8 filed on July 30, 2007.
(18) Incorporated by reference to Exhibit 10.8.1 to Bio-Rad’s Form 10-Q filing for the quarter ended September 30,
2009.
(19) Incorporated by reference to Exhibit 10.1 to Bio-Rad’s Form 10-Q filing for the quarter ended March 31, 2014.
(20) Incorporated by reference to Exhibit 10.1 to Bio-Rad’s Form 10-Q filing for the quarter ended March 31, 2017.
89
(21) Incorporated by reference to Exhibit 10.1 to Bio-Rad’s Form 10-Q filing for the quarter ended September 30,
2017.
(22) Incorporated by reference to Exhibit 10.2 to Bio-Rad’s Form 10-Q filing for the quarter ended September 30,
2017.
(23) Incorporated by reference to Exhibit 10.1 to Bio-Rad’s Form 10-Q filing for the quarter ended September 30,
2020.
(24) Incorporated by reference to Exhibit 10.2 to Bio-Rad’s Form 10-Q filing for the quarter ended September 30,
2020.
(25) Incorporated by reference to Exhibit 10.1 to Bio-Rad’s Form 10-Q filing for the quarter ended September 30,
2022.
(26) Incorporated by reference to Exhibit 10.1 to Bio-Rad’s 8-K filed on April 2, 2019.
(27) Incorporated by reference to Exhibit 10.1 to Bio-Rad’s 8-K filed on April 22, 2019.
(28) Incorporated by reference to Exhibit 10.1 to Bio-Rad’s Form 10-Q for the quarter ended June 30, 2017.
(29) Incorporated by reference to Exhibit 10.9 to Bio-Rad’s Form 10-K filing for the fiscal year ended December 31,
2021.
* Indicates a management contract or compensatory plan or arrangement.
Item 16. FORM 10-K SUMMARY
None.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
BIO-RAD LABORATORIES, INC.
By:
/s/ Norman Schwartz
Norman Schwartz
President and Chief Executive Offiff cer
Date:
February 16, 2024
rr
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the dates indicated.
90
/s/ Norman Schwartz
(Norman Schwartz)
Chairman of the Board, President and
Chief Executive Offiff cer, Principal Executive
Offiff cer, Principal Financial Offiff cer
February 16, 2024
/s/ Tania Devilliers
(Tania Devilliers)
Senior Director, Corporate Controller,
Interim Principal Accounting Offiff cer
February 16, 2024
Other Directors:
/s/ Jeffrey L. Edwards
(Jeffreff
y L. Edwards)
/s/ Gregory K. Hinckley
(Gregory K. Hinckley)
/s/ Melinda Litherland
(Melinda Litherland)
/s/ Arnold
r
(Arnold A. Pinkston)
A. Pinkston
/s/ Allison Schwartz
(Allison Schwartz)
Director
Director
Director
Director
Director
February 16, 2024
February 16, 2024
February 16, 2024
February 16, 2024
February 16, 2024
91
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Bio-Rad Laboratories Corporate Information
A N N UA L M E E T I N G
The Annual Meeting of
Stockholders will be held at
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(cid:90)(cid:418)(cid:651)(cid:404)(cid:703)(cid:550)(cid:418)(cid:675)(cid:915)(cid:904)(cid:29)(cid:301)(cid:550)(cid:503)(cid:465)(cid:611)(cid:651)(cid:581)(cid:503)(cid:301)(cid:904)(cid:843)(cid:838)(cid:839)(cid:838)(cid:841)(cid:915)(cid:904)
(cid:611)(cid:581)(cid:904)(cid:226)(cid:703)(cid:418)(cid:675)(cid:411)(cid:301)(cid:779)(cid:915)(cid:904)(cid:1)(cid:646)(cid:651)(cid:503)(cid:550)(cid:904)(cid:836)(cid:837)(cid:915)(cid:904)(cid:836)(cid:834)(cid:836)(cid:838)(cid:915)
(cid:301)(cid:687)(cid:904)(cid:838)(cid:916)(cid:834)(cid:834)(cid:904)(cid:194)(cid:146)(cid:904)(cid:194)(cid:301)(cid:404)(cid:503)(cid:827)(cid:404)(cid:904)(cid:226)(cid:503)(cid:575)(cid:418)(cid:914)
Bio-Rad will provide without
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upon written request to the
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(cid:1)(cid:581)(cid:581)(cid:703)(cid:301)(cid:550)(cid:904)(cid:198)(cid:418)(cid:646)(cid:611)(cid:651)(cid:687)(cid:904)(cid:827)(cid:550)(cid:418)(cid:411)(cid:904)(cid:773)(cid:503)(cid:687)(cid:488)(cid:904)(cid:687)(cid:488)(cid:418)
Securities and Exchange
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T R A N S F E R AG E N T
Computershare
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(cid:773)(cid:773)(cid:773)(cid:914)(cid:404)(cid:611)(cid:575)(cid:646)(cid:703)(cid:687)(cid:418)(cid:651)(cid:675)(cid:488)(cid:301)(cid:651)(cid:418)(cid:914)(cid:404)(cid:611)(cid:575)
AU D I TO R S
KPMG LLP
C O M M O N S TO C K
Traded on the
New York Stock Exchange
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(cid:214)(cid:779)(cid:575)(cid:403)(cid:611)(cid:550) BIO
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(cid:214)(cid:779)(cid:575)(cid:403)(cid:611)(cid:550) BIO.B
D I R E C TO R S
Norman Schwartz
Chairman of the Board
Jeffrey L. Edwards
Director
Gregory K. Hinckley
Director
Melinda Litherland
Director
Arnold A. Pinkston
Director
Allison Schwartz
Director
Alice N. Schwartz
Director Emeritus
O F F I C E R S
Norman Schwartz
Chairman of the Board,
President and Chief
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OT H E R S E N I O R E X E C U T I V E S
Jim Barry
Senior Vice President,
Global Manufacturing
Lee Boyd
Senior Vice President,
Global Commercial
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James Casper
Senior Vice President,
Digital Commercial Excellence
Bob Doust
Senior Vice President,
Research & Development,
Clinical Diagnostics Group
Carla Evans
Senior Vice President,
Global Real Estate & Facilities
Darren Link
Senior Vice President,
Research & Development,
Life Science Group
Andrew Last
Executive Vice President,
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Erik Molitor
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Global Technology & Systems
Mike Crowley
Executive Vice President,
Global Commercial Operations
Morgan Norris
Senior Vice President,
Marketing, Life Science Group
Timothy S. Ernst
Executive Vice President,
General Counsel & Secretary
Sedat Evran
Executive Vice President,
Global Supply Chain
Simon May
Executive Vice President,
President, Life Science Group
Colleen Corey
Executive Vice President,
Global Human Resources
Jonathan Seaton
Senior Vice President,
Corporate Business
Development
Ryan Short
Senior Vice President,
Global Commercial
Operations, Americas
Matthew Werner
Senior Vice President,
Chief Compliance &
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Mario Wijker
Senior Vice President,
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Quality Assurance
CORPORATE OFFICES
1000 Alfred Nobel Drive
Hercules, California 94547 USA
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www.bio-rad.com