SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2003
OR
__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______________to __________________.
Commission file number 1-7928
BIO-RAD LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
Delaware 94-1381833
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
|
1000 Alfred Nobel Drive, Hercules, California 94547
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(510) 724-7000
No Change
Former name, former address and former fiscal year, if changed since last
report.
Indicate by check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 month (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _____
Indicate by check mark whether the registrant is an accelerated filer (as definedinRule12b-2oftheExchangeAct). Yes X No_____
Indicate the number of shares outstanding of each of the issuer's classes of commonstock ,as of the latest practicable date--
SharesOutstanding
Title of each Class at April 30, 2003
Class A Common Stock,
Par Value $0.0001 per share 20,507,713
Class B Common Stock,
Par Value $0.0001 per share 4,850,342
|
|
|
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
BIO-RAD LABORATORIES, INC.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)
Three Months Ended
March 31,
2003 2002
NET SALES . . . . . . . . . . . . . . . . . . $245,969 $210,182
Cost of goods sold . . . . . . . . . . . . . 103,256 88,842
------- -------
GROSS PROFIT . . . . . . . . . . . . . . . . 142,713 121,340
Selling, general and administrative expense . 77,159 65,736
Product research and development expense . . 21,388 20,241
Interest expense . . . . . . . . . . . . . . 4,651 5,554
Foreign exchange losses . . . . . . . . . . . 769 750
Other (income) and expense, net . . . . . . . (604) 1,451
------- -------
INCOME BEFORE TAXES . . . . . . . . . . . . . 39,350 27,608
Provision for income taxes . . . . . . . . . (12,986) (8,835)
------- -------
NET INCOME . . . . . . . . . . . . . . . . . $ 26,364 $ 18,773
======== ========
Basic earnings per share:
Net income . . . . . . . . . . . . . . . $1.04 $0.75
======== ========
Weighted average common shares . . . . . 25,284 24,930
======== ========
Diluted earnings per share:
Net income . . . . . . . . . . . . . . . $1.01 $0.73
======== ========
Weighted average common shares 26,057 25,789
======== ========
|
The accompanying notes are an integral part of these statements.
BIO-RAD LABORATORIES, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
March 31, December 31,
2003 2002
ASSETS:
Cash and cash equivalents . . . . . . . . . . . . . . $ 25,223 $ 27,733
Accounts receivable, net . . . . . . . . . . . . . . . 213,955 212,282
Inventories, net . . . . . . . . . . . . . . . . . . . 172,917 166,372
Prepaid expenses, taxes and other current assets . . . 61,710 59,409
------- -------
Total current assets . . . . . . . . . . . . . . . 473,805 465,796
Net property, plant and equipment . . . . . . . . . . 144,633 142,235
Goodwill, net . . . . . . . . . . . . . . . . . . . . 69,519 69,519
Other assets . . . . . . . . . . . . . . . . . . . . . 51,440 43,153
------- -------
Total assets . . . . . . . . . . . . . . . . . . $739,397 $720,703
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Accounts payable . . . . . . . . . . . . . . . . . . . $ 79,001 $ 75,233
Accrued payroll and employee benefits . . . . . . . . 62,127 72,213
Notes payable and current maturities of long-term debt 11,146 7,486
Sales, income and other taxes payable . . . . . . . . 18,870 17,019
Other current liabilities . . . . . . . . . . . . . . 46,047 50,058
------- -------
Total current liabilities . . . . . . . . . . . . . 217,191 222,009
Long-term debt, net of current maturities . . . . . . 98,862 105,768
Deferred tax liabilities . . . . . . . . . . . . . . . 9,339 9,839
------- -------
Total liabilities . . . . . . . . . . . . . . . . . 325,392 337,616
------- -------
STOCKHOLDERS' EQUITY:
Preferred stock, $0.0001 par value, 7,500,000 shares
authorized; none outstanding . . . . . . . . . . . . -- --
Class A common stock, $0.0001 par value, 50,000,000 shares
authorized; outstanding - 20,468,991 at March 31, 2003
and 20,402,462 at December 31, 2002 . . . . . . . . . 2 2
Class B common stock, $0.0001 par value, 20,000,000 shares
authorized; outstanding - 4,850,942 at March 31, 2003
and 4,846,942 at December 31, 2002 . . . . . . . . . 1 1
Additional paid-in capital . . . . . . . . . . . . . . 37,383 36,141
Class A treasury stock, zero shares at March 31, 2003
and zero shares at December 31, 2002 at cost . . . . -- --
Retained earnings . . . . . . . . . . . . . . . . . . 371,205 344,841
Accumulated other comprehensive income:
Currency translation and other . . . . . . . . . . . 5,414 2,102
------- -------
Total stockholders' equity . . . . . . . . . . . . 414,005 383,087
------- -------
Total liabilities and stockholders' equity . . . $739,397 $720,703
======== ========
The accompanying notes are an integral part of these statements.
|
BIO-RAD LABORATORIES, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
Three Months Ended
March 31,
2003 2002
Cash flows from operating activities:
Cash received from customers . . . . . . . . . . . . . . $250,079 $206,711
Cash paid to suppliers and employees . . . . . . . . . . (207,392) (174,479)
Interest paid. . . . . . . . . . . . . . . . . . . . . . (8,529) (9,785)
Income tax payments . . . . . . . . . . . . . . . . . . (12,537) (4,797)
Miscellaneous receipts . . . . . . . . . . . . . . . . . 99 486
------- -------
Net cash provided by operating activities . . . . . . . 21,720 18,136
Cash flows from investing activities:
Capital expenditures, net. . . . . . . . . . . . . . . . (10,981) (8,443)
Payments for acquisitions. . . . . . . . . . . . . . . . (5,957) --
Net purchases of marketable securities and investments . (1,049) (238)
Foreign currency hedges, net . . . . . . . . . . . . . . (2,741) 97
------- -------
Net cash used in investing activities. . . . . . . . . . (20,728) (8,584)
Cash flows from financing activities:
Net borrowings under line-of-credit arrangements. . . . 3,381 4,071
Long-term borrowings. . . . . . . . . . . . . . . . . . 6,000 22,500
Payments on long-term debt. . . . . . . . . . . . . . . (13,035) (40,774)
Proceeds from issuance of common stock. . . . . . . . . 1,242 660
Treasury stock activity, net. . . . . . . . . . . . . . -- 1,541
------- -------
Net cash used in financing activities . . . . . . . . . (2,412) (12,002)
Effect of exchange rate changes on cash . . . . . . . . . . . (1,090) 267
------- -------
Net decrease in cash and cash equivalents . . . . . . . . . . (2,510) (2,183)
Cash and cash equivalents at beginning of period. . . . . . . 27,733 47,129
------- -------
Cash and cash equivalents at end of period. . . . . . . . . . $ 25,223 $ 44,946
======== ========
Reconciliation of net income to net cash provided by operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . $ 26,364 $ 18,773
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization. . . . . . . . . . . . . 9,896 8,817
Decrease (increase) in accounts receivable . . . . . . 2,036 (2,099)
Increase in inventories . . . . . . . . . . . . . . . (4,398) (2,609)
Decrease (increase) in other current assets. . . . . . 9,120 (2,792)
Decrease in accounts payable and other
current liabilities. . . . . . . . . . . . . . . . . (12,309) (9,454)
Increase (decrease) in income taxes payable. . . . . . (11,485) 5,211
Other. . . . . . . . . . . . . . . . . . . . . . . . . 2,496 2,289
------- -------
Net cash provided by operating activities . . . . . . . . . . $ 21,720 $ 18,136
======== ========
The accompanying notes are an integral part of these statements.
|
BIO-RAD LABORATORIES, INC.
Notes to Condensed Consolidated Financial Statements
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements of Bio-Rad Laboratories, Inc. ("Bio-Rad" or the "Company"), have been prepared in accordance with accounting principles generally accepted in the United States of America and reflect all adjustments which are, in the opinion of management, necessary to fairly state the results of the interim periods presented. All such adjustments are of a normal recurring nature. Results for the interim period are not necessarily indicative of the results for the entire year. The condensed consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements contained in the Company's Annual Report for the year ended December 31, 2002.
2. INVENTORIES
The principal components of inventories are as follows (in millions):
March 31, December 31,
2003 2002
Raw materials $ 39.6 $ 40.6
Work in process 37.4 30.8
Finished goods 95.9 95.0
------ ------
$172.9 $166.4
====== ======
|
3. PROPERTY, PLANT AND EQUIPMENT
The principal components of property, plant and equipment are as
follows (in millions):
March 31, December 31,
2003 2002
Land and improvements $ 9.6 $ 9.6
Buildings and leasehold
improvements 82.6 80.5
Equipment 250.8 239.4
------ ------
343.0 329.5
Accumulated depreciation (198.4) (187.3)
------ ------
Net property, plant and equipment $144.6 $142.2
====== ======
|
4. GOODWILL
The Company adopted Statement of Financial Accounting Standards No. 142, "Goodwill and Other Intangible Assets" as of January 1, 2002, which provides that goodwill is no longer subject to amortization over its useful life. Goodwill is subject to an annual assessment for impairment applying a fair-value based test. No goodwill was recorded or impaired during the three months ended March 31, 2003.
5. ACQUISITIONS
On March 31, 2003, the Company purchased for cash the chromatography column manufacturing business of Verdot Industrie (Verdot) of Riom, France. Bio-Rad acquired the outstanding shares of Verdot for approximately $6 million and will include these operations in its Life Science segment.
6. PRODUCT WARRANTY LIABILITY
The Company warrants certain equipment against defects in design, materials and workmanship, generally for one year. Upon shipment of that equipment, the Company establishes, as part of cost of goods sold, a provision for the expected cost of such warranty.
Components of the product warranty liability included in Other current liabilities, were as follows (in millions):
January 1, 2003 $ 7.1
Provision for warranty 3.0
Actual warranty costs (2.4)
----
March 31, 2003 $ 7.7
====
7. LONG-TERM DEBT
|
During the first quarter of 2003 the Company repurchased in the open market $6.7 million (par value) of its Senior Subordinated Notes due in 2007. The price paid includes interest to February 2004. The total amount of interest, unamortized debt issue cost and unamortized original issue discount recognized as a result of the repurchase was $1.0 million and has been included in interest expense.
8. EARNINGS PER SHARE
The Company calculates basic earnings per share (EPS) and diluted EPS in accordance with SFAS No. 128, "Earnings per Share." Basic EPS is computed by dividing net income (loss) by the weighted average number of common shares outstanding for that period. Diluted EPS takes into account the effect of dilutive instruments, such as stock options, and uses the average share price for the period in determining the number of common stock equivalents that are to be added to the weighted average number of shares outstanding. Common stock equivalents are excluded from the diluted earnings per share calculation if the effect would be anti-dilutive.
Weighted average shares used for diluted earnings per share
include the dilutive effect of outstanding stock options of 773,000 and 859,000 shares, for the three month periods ended March 31, 2003 and 2002, respectively.
Options to purchase 50,000 shares of common stock were outstanding for the three month period ended March 31, 2003 but were excluded from the computation of diluted earnings per share because the exercise price of the options was greater than the average market price of the common shares. There were no anti- dilutive shares for the three month period ended March 31, 2002.
9. STOCK OPTIONS AND PURCHASE PLANS
Stock Option Plans
The Company maintains incentive and non-qualified stock option plans for officers and certain other key employees. No options have been issued to non-employees.
In March of 2003, stockholders approved the 2003 Stock Option Plan of Bio-Rad Laboratories, Inc. (the Plan). The Plan authorizes the grant to employees of incentive stock options and non-qualified stock options. A total of 1,675,000 shares have been reserved for issuance and may be of either Class A or Class B Common Stock. No options have been granted from this plan during the first quarter of 2003.
The Company applies the recognition and measurement principles of APB Opinion No. 25, "Accounting for Stock Issued to Employees," and related interpretations in accounting for those plans. No stock-based employee compensation expense is reflected in net income as all options granted under those plans had an exercise price equal to or greater than the market value of the underlying common stock on the date of grant.
Had compensation cost for stock option grants been determined pursuant to SFAS No. 123, "Accounting for Stock-Based Compensation," the Company's pro forma net income and earnings per share would have been as follows (in millions, except per share data):
Three Months Ended
March 31,
2003 2002
Net income, as reported $26.4 $18.8
Deduct: Total stock-based employee
compensation expense determined under
fair value methods for all awards,
net of related tax effects 0.6 0.2
---- ----
Pro forma net income $25.8 $18.6
==== ====
Earnings per share:
Basic-as reported $1.04 $0.75
Basic-pro forma $1.02 $0.75
Diluted-as reported $1.01 $0.73
Diluted-pro forma $0.99 $0.72
6
|
|
|
Employee Stock Purchase Plan
The Company has an employee stock purchase plan that provides that eligible employees may contribute up to 10% of their compensation up to $25,000 annually toward the quarterly purchase of the Company's 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. No compensation expense is recorded in connection with the plan. The Company has authorized the sale of 1,890,000 shares of common stock under the plan.
The Company sold 18,641 shares for $0.6 million and 20,050 shares for $0.4 million under the plan to employees for the three months ended March 31, 2003 and 2002, respectively. At March 31, 2003, 321,912 shares remain authorized under the plan.
The fair value of the employees' purchase rights since 1995 was estimated using the Black-Scholes model with the following assumptions for the three month periods ended March 31, 2003 and 2002 respectively: no dividend yield for all periods; an expected life of three months for all periods; expected volatility of 37% and 34%; and risk-free interest rates of 1.01% and 1.68%. The weighted average fair value of those purchase rights granted during the three months ended March 31, 2003 and 2002 was $7.99 and $6.46, respectively.
10. FOREIGN EXCHANGE LOSSES
Foreign exchange losses include premiums and discounts on forward foreign exchange contracts and mark-to-market adjustments on foreign exchange contracts.
11. OTHER INCOME AND EXPENSE
Other (income) and expense, net includes the following components
(in millions):
Three Months Ended
March 31,
2003 2002
Write-down of investment in affiliates $ -- $ 2.0
Other (0.6) (0.5)
------ ------
Total Other (income) and expense, net $ (0.6) $ 1.5
====== ======
|
In the first quarter of 2002, the Company recorded a $2.0 million non- cash pre-tax charge reflecting the write-down of the Company's investment in Digilab, LLC. This reduced the investment value to zero.
12. COMPREHENSIVE INCOME
SFAS No. 130, "Reporting Comprehensive Income" requires disclosure of total non-stockholder changes in equity, which include unrealized gains and losses on securities classified as available-for sale under SFAS No. 115 "Accounting for Certain Investments in Debt and Equity Securities", foreign currency translation adjustments accounted for
under SFAS No. 52 "Foreign Currency Translation" and minimum pension liability adjustments made pursuant to SFAS No. 87 "Employers' Accounting for Pensions."
The components of the Company's total comprehensive income were (in millions):
Three Months Ended
March 31,
2003 2002
Net Income $26.4 $18.8
Currency translation adjustments 3.3 (0.1)
Net unrealized holding gains -- 0.2
----- -----
Total comprehensive income $29.7 $18.9
===== =====
|
13. SEGMENT INFORMATION
Information regarding industry segments for the three months ended March 31, 2003 and 2002 is as follows (in millions):
Life Clinical Other
Science Diagnostics Operations
Segment net sales 2003 $117.5 $126.1 $ 2.4
2002 $100.5 $107.9 $ 1.8
Segment profit(loss) 2003 $21.6 $ 18.8 $ 0.3
2002 $19.2 $ 10.8 $(0.3)
|
Segment results are presented in the same manner as the Company presents its operations internally to make operating decisions and assess performance. Net corporate operating income (expense) consists of receipts and expenditures that are not the primary responsibility of segment operating management.
Interest expense is charged to segments based on the carrying amount of inventory and receivables employed by that segment. The following reconciles total segment profit to consolidated income before taxes (in millions):
Three Months Ended
March 31,
2003 2002
Total segment profit $40.7 $29.7
Foreign exchange losses (0.8) (0.8)
Net corporate operating, interest
and other expense not allocated
to segments (1.1) 0.2
Other income and (expense), net 0.6 (1.5)
----- -----
Consolidated income before taxes $39.4 $27.6
===== =====
|
14. LEGAL PROCEEDINGS
The Company is party to various claims, legal actions and complaints arising in the ordinary course of business. The Company does not believe that any ultimate liability resulting from any of these lawsuits will have a material adverse effect on its results of operations, financial position or liquidity. However, the Company cannot give any assurance regarding the ultimate outcome of these lawsuits and their resolution could be material to the Company's operating results for any particular period, depending upon the level of income for the period.
15. NEW FINANCIAL ACCOUNTING STANDARDS
In April 2002, the Financial Accounting Standards Board (FASB)issued Statement of Financial Accounting Standards (SFAS) No. 145, "Rescission of FASB Statements No. 4, 44 and 64, Amendment of FASB Statement No. 13, and Technical Corrections." One of the major changes of this statement is to change the accounting for the classification of gains and losses from the extinguishment of debt. The Company adopted SFAS No. 145 as of January 1, 2002 and will follow APB 30, "Reporting the Results of Operations -- Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions" in determining whether such extinguishment of debt may be classified as extraordinary. As a result of adoption, the expenses incurred in the repurchase of outstanding debt on the open market has been included in interest expense. No other impact from adoption was recognized.
SFAS No. 146 "Accounting for Costs Associated with Exit or Disposal Activities", was issued in June 2002 and addresses accounting for restructuring and similar costs. SFAS 146 requires that a liability for costs associated with an exit or disposal activity be recognized and measured initially at fair value only when the liability is incurred. SFAS 146 is effective for exit or disposal activities that were initiated after December 31, 2002. The adoption of SFAS 146 did not have any impact on the condensed consolidated financial statements of the Company.
On December 31, 2002, the FASB issued SFAS No. 148, "Accounting for Stock-Based Compensation - Transition and Disclosure, an Amendment of FASB Statement No. 123." This statement provides alternative methods of transition for companies who voluntarily change to the fair value-based method of accounting for stock-based employee compensation in accordance with SFAS No. 123, "Accounting for Stock-Based Compensation." The statement requires prominent disclosures in both annual and interim financial statements about the method of accounting for stock-based compensation and the effect of the method used on reported results. The Company has adopted the disclosure requirements as required by the statement.
The Company continues to account for stock-based compensation using the intrinsic value method in accordance with the provisions of Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," elected under SFAS No. 123, as amended. As a result, the adoption of SFAS No. 148 did not have any impact on the condensed consolidated financial statements of the Company (see Note 9).
Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition.
This discussion should be read in conjunction with the information contained both in this report and in the Company's Consolidated Financial Statements for the year ended December 31, 2002.
The following table shows operating income and expense items as a percentage of net sales:
Three Months Ended Year Ended
March 31, December 31,
2003 2002 2002
Net sales 100.0% 100.0% 100.0%
Cost of goods sold 42.0 42.3 42.9
----- ----- -----
Gross profit 58.0 57.7 57.1
Selling, general and
administrative 31.4 31.3 32.4
Product research and
development 8.7 9.6 9.3
Net income 10.7 8.9 7.6
===== ===== =====
|
Critical Accounting Policies
As previously disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2002, the Company has identified accounting for income taxes, valuation of long-lived and intangible assets and goodwill, and valuation of inventories as the accounting policies critical to the operations of the Company. For a full discussion of these policies, please refer to the Form 10-K.
Forward Looking Statements
Other than statements of historical fact, statements made in this report include forward looking statements, such as statements with respect to the Company's future financial performance, operating results, plans and objectives. We have based these forward looking statements on our current expectations and projections about future events. However, actual results may differ materially from those currently anticipated depending on a variety of risk factors including among other things: our ability to successfully develop and market new products; our reliance on and access to necessary intellectual property; our substantial leverage and ability to service our debt; competition in and government regulation of the industries in which we operate; and the monetary policies of various countries. We undertake no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events, or otherwise.
The Company manufactures and supplies the life science research, healthcare, analytical chemistry and other markets with a broad range of products and systems used to separate complex chemical and biological materials and to identify, analyze and purify their components.
Three Months Ended March 31, 2003 Compared to Three Months Ended March 31, 2002
Corporate Results - Sales, Margins and Expenses
Net sales (sales) in the first quarter of 2003 rose 17% to 246.0 million from $210.2 million the first quarter of 2002. The positive impact to sales from a weakening US dollar represented $21.9 million of the $35.8 million increase in sales. The Life Science and Clinical Diagnostics segments each grew by 16.9% achieving sales of $117.5 million and $126.1 million, respectively. The positive impact from a weakening US dollar represented $11.3 million of Life Science's total sales growth and $10.5 million of the Clinical Diagnostics sales growth. The contributors to organic growth in Life Science were the process chromatography, food safety and DNA amplification product lines. Clinical Diagnostics sales growth was generated in several areas including quality controls, blood virus screening, autoimmune testing and diabetes monitoring.
Consolidated gross margins were 58.0% for the first quarter of 2003 compared to 57.7% for the first quarter of 2002 and 57.1% for all of 2002. The gross margin in Life Science declined slightly. The gross margin decline is attributable to several factors without any single one indicating a change in trends. Included are food safety product average pricing, factory utilization versus planned levels and sales mix. This decline was offset by increased gross margins in Clinical Diagnostics. Clinical Diagnostics gross margin improved primarily due to US sourced products sold into foreign markets, above average royalty and license revenue, and improved factory utilization from higher sales and production.
Selling, general and administrative expense (SG&A) represented 31.4% of sales for the first quarter of 2003 compared to 31.3% of sales in the prior period. Both Life Science and Clinical Diagnostics increased spending in absolute dollars with Life Science growing SG&A at a rate higher than sales growth and Clinical Diagnostics at a rate lower than sales growth. Life Science spending has been for personnel, advertising, facilities and new product marketing. Although the Company is making an investment in SG&A infrastructure in 2003, a longer term goal for management remains a gradual reduction in SG&A spending as a percent of sales.
Product research and development expense increased 5.7% to $21.4 million in the first quarter of 2003 as compared to the first quarter of 2002. Life Science and Clinical Diagnostics each increased their research and development expenditures in line with development plans in the area of proteomics, process chromatography, food safety, new diagnostic tests and expanded quality control systems.
Corporate Results - Other Items
Interest expense decreased from the prior year largely as a result of debt reductions that occurred throughout 2002. Included in the first quarter of 2003 is $1.0 million of costs to repurchase $6.7 million of the Company's outstanding subordinated debt. No equivalent amount was included in the first quarter of 2002. Other (income) expense, net in the first quarter of 2003 is mainly interest income compared with a $2.0 million non-cash pre-tax expense for the impairment of an investment and interest income in the first quarter of 2002.
Exchange gains and losses consist of the premiums and discounts on forward foreign exchange contracts used to hedge against future movements in intercompany accounts receivable and accounts payable, and the revaluation of intercompany accounts receivable and payable where the cost of hedging is prohibitive or a cost effective market does not exist. Gains and losses remained virtually unchanged for the first quarter of 2003 and 2002.
The Company's effective tax rate was 33% and 32% for the periods March 31, 2003 and 2002, respectively. The rate rose as tax credits represented a smaller percentage of total taxable income.
Financial Condition
The Company, as of March 31, 2003, had available approximately $100.0 million under its principal revolving credit agreement and $20.4 million under various foreign lines of credit. Cash and cash equivalents available were $25.2 million. Management believes that this availability, together with cash flow from operations, will be adequate to meet the Company's current objectives for operations, research and development and investment in facilities, equipment and systems.
Net cash provided by operations was $21.7 million and $18.1 million for the first quarter of 2003 and 2002, respectively. During the current quarter the Company purchased in the open market and retired $6.7 million of its Senior Subordinated Notes due in 2007. The Company will assess the opportunity to retire the remaining outstanding principle balance as the notes become available.
At March 31, 2003, consolidated net receivables increased by $1.7 million from December 31, 2002. This increase reflects the increased value of foreign receivables as the US dollar continued
to weaken from year-end 2002. On a constant currency basis, receivables actually fell as they are represented by lower cost disposables and apparatus products and less equipment which generally is characterized by longer collection periods and conditions precedent to payment.
At March 31, 2003, consolidated net inventories increased by $6.5 million. A third of the increase is attributable to the appreciation of inventory denominated in foreign currency. The remaining inventory increase is largely attributable to Clinical Diagnostics and in particular the Quality Controls product line which is characterized by long lead times and infrequent batch production necessary to meet customer specifications.
Net capital expenditures totaled $11.0 million for the first three months of 2003 compared to 8.4 million for the same period of 2002. Capital expenditures for the quarter include reagent rental equipment placed with Clinical Diagnostics customers who then commit to purchase the Company's diagnostic reagents. The remaining expenditures represent additions to production equipment, investment in data communication and business systems and expanded facilities. The most notable new facility is the manufacturing, laboratory and general office space being constructed on Company-owned land in Hercules, California. The estimated cost of this new 166,000 square foot facility is $25 million and is scheduled for occupancy early the first quarter of 2004. As of March 31, 2003 approximately $3.5 million has been capitalized on the project.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
During the three months ended March 31, 2003, there have been no material changes from the disclosures about market risk provided in the Company's Annual Report on Form 10-K for the year ended December 31, 2002.
Item 4. Controls and Procedures
The Company's chief executive officer and its principal financial officer after evaluating the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15-d-14(c)) as of a date within 90 days of the filing date of the quarterly report (the "Evaluation Date") have concluded that as of the Evaluation Date, the Company's disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company and its consolidated subsidiaries would be made known to them by others within those entities during the period in which this quarterly report was being prepared.
There were no significant changes in the Company's internal controls or in other factors that could significantly affect the Company's disclosure controls and procedures subsequent to the Evaluation Date, nor any significant deficiencies or material weaknesses in such disclosure controls and procedures requiring corrective actions. As a result, no corrective actions were taken.
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
At the Company's annual meeting of stockholders on April 29, 2003, the following individuals were reelected to the Board of Directors:
Class of
Common Stock Votes Votes
Elected From For Withheld
James J. Bennett Class B 4,719,778 302
Albert J. Hillman Class A 14,116,250 4,393,245
Ruediger Naumann-Etienne Class B 4,719,778 262
Philip L. Padou Class A 18,152,935 356,560
Alice N. Schwartz Class B 4,719,778 302
David Schwartz Class B 4,719,778 302
Norman Schwartz Class B 4,719,778 262
|
The following proposals were approved at the Company's annual meeting:
Votes Votes Broker
For Against Abstentions Non-Votes
Ratification of
Deloitte & Touche LLP
as the Company's
independent auditors 6,544,032 10,378 16,619 --
2003 Stock Option
Plan of Bio-Rad
Laboratories, Inc. 5,620,036 103,214 68,024 779,756
|
The foregoing matters are described in detail on pages 5, 6, 17, 18, 19 and 20 of the Company's definitive Proxy Statement dated April 3, 2003, filed with the Securities and Exchange Commission and incorporated herein by reference.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits
The following documents are filed as part of this report:
Exhibit No.
10.7 2003 Stock Option Plan
22.1 Proxy Statement dated April 3, 2003, pages 5, 6, 17,
18, 19 and 20 (definitive form filed March 27, 2003,
and incorporated by reference).
99.1 Certification of Chief Executive Officer
99.2 Certification of Chief Financial Officer
(b) Reports on Form 8-K
There were no reports on Form 8-K for the quarter ended March 31, 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereto duly authorized.
BIO-RAD LABORATORIES, INC.
(Registrant)
Date: May 13, 2003 /s/ Chrstine A. Tsingos
Christine A. Tsingos, Vice President
Chief Financial Officer
Date: May 13, 2003 /s/ James R. Stark
James R. Stark, Corporate Controller
|
CERTIFICATION
I, Norman Schwartz, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Bio-Rad Laboratories, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report fairly present, in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and
b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: May 13, 2003
/s/ Norman Schwartz
Norman Schwartz
Chief Executive Officer
|
CERTIFICATION
I, Christine A. Tsingos, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Bio-Rad Laboratories, Inc.;
2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report fairly present, in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report;
4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have:
a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared;
b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and
c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and
b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and
6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses.
Date: May 13, 2003
/s/ Christine A. Tsingos
Christine A. Tsingos
Vice President,
Chief Financial Officer
|
EXHIBIT 10.7
THE 2003 STOCK OPTION PLAN
OF
BIO-RAD LABORATORIES, INC.
Bio-Rad Laboratories, Inc., a Delaware corporation, has adopted The 2003 Stock Option Plan of Bio-Rad Laboratories, Inc. (the "Plan"), effective April 29, 2003, for the benefit of its eligible Employees.
The purposes of the Plan are as follows:
(1) To provide an additional incentive for Employees to further the growth, development and financial success of the Company by personally benefiting through the ownership of Company stock and/or rights which recognize such growth, development and financial success.
(2) To enable the Company and its Subsidiaries to obtain and retain the services of Employees considered essential to the long range success of the Company by offering them an opportunity to own stock in the Company and/or rights which will reflect the growth, development and financial success of the Company.
ARTICLE I.
DEFINITIONS
1.1 General. Whenever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise.
1.2 Administrator. "Administrator" shall mean the entity that conducts the general administration of the Plan as provided herein.
1.3 Board. "Board" shall mean the Board of Directors of the Company.
1.4 Change in Control. "Change in Control" shall mean a change in ownership or control of the Company effected through any of the following transactions:
(a) any person or related group of persons (other than the Company or a person that, prior to such transaction, directly or indirectly controls, is controlled by, or is under common control with, the Company) directly or indirectly acquires beneficial ownership (within the meaning of Rule 13d-3 under the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Company's outstanding securities pursuant to a tender or exchange offer for securities of the Company;
(b) a merger or consolidation of the Company with any other corporation (or other entity), other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being
converted into voting securities of the surviving entity or another entity) more than 50% of the combined voting power of the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or
(c) the sale or disposition by the Company of all or substantially all of the Company's assets.
1.5 Code. "Code" shall mean the Internal Revenue Code of 1986, as amended from time to time.
1.6 Committee. "Committee" shall have the meaning ascribed to it in Section 7.1.
1.7 Common Stock. "Common Stock" shall mean the Class A or Class B Common Stock of the Company, par value $0.0001 per share.
1.8 Company. "Company" shall mean Bio-Rad Laboratories, Inc., a Delaware corporation.
1.9 DRO. "DRO" shall mean a domestic relations order as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, or the rules thereunder.
1.10 Employee "Employee" shall mean any officer or other employee (as defined in accordance with Section 3401(c) of the Code) of the Company, or any Subsidiary.
1.11 Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
1.12 Fair Market Value. "Fair Market Value" shall mean, as of any date, the value of the Common Stock determined as follows:
(a) If the Common Stock is listed on any established stock exchange or traded on The Nasdaq National Market or the Nasdaq SmallCap Market, the Fair Market Value of a share of Common Stock shall be the closing sales price for such stock (or the average of the closing bid and ask, if no sales were reported) as quoted on such exchange or market (or the exchange or market with the greatest volume of trading in the Common Stock) on the last market trading day prior to the day of determination, as reported by The Nasdaq Stock Market or such other source as the Board deems reliable.
(b) In the absence of such markets for the Common Stock, the Fair Market Value shall be determined in good faith by the Board.
1.13 Holder. "Holder" shall mean a person who has been granted an Option.
1.14 Incentive Stock Option. "Incentive Stock Option" shall mean an Option which conforms to the applicable provisions of Section 422 of the Code and which is designated as an Incentive Stock Option by the Administrator.
1.15 Non-Qualified Stock Option."Non-Qualified Stock Option" shall mean an Option not intended to qualify or not designated by the Administrator as an Incentive Stock Option.
1.16 Option. "Option" shall mean a stock option granted under Article IV of the Plan. An Option granted under the Plan shall, as determined by the Administrator, be either a Non-Qualified Stock Option or an Incentive Stock Option.
1.17 Option Agreement. "Option Agreement" shall mean a written agreement executed by an authorized officer of the Company and the Holder, which shall contain such terms and conditions with respect to an Option, as the Administrator shall determine, consistent with the Plan.
1.18 Option Limit. "Option Limit" shall mean two hundred
twenty-five thousand (225,000) shares of Common Stock, as adjusted pursuant to
Section 8.3 of the Plan.
1.19 Performance Criteria. "Performance Criteria" shall mean the
following business criteria with respect to the Company, any Subsidiary or any
division or operating unit: (a) net income,(b) pre-tax income, (c) operating
income, (d) cash flow, (e) earnings per share, (f) return on equity, (g) return
on invested capital or assets, (h) cost reductions or savings, (i) funds from
operations, (j) appreciation in the Fair Market Value of Common Stock and
(k) earnings before any one or more of the following items:
interest, taxes, depreciation or amortization.
1.20 Plan. "Plan" shall mean The 2003 Stock Option Plan of Bio-Rad Laboratories, Inc.
1.21 Rule 16b-3. "Rule 16b-3" shall mean that certain Rule 16b-3 under the Exchange Act, as such Rule may be amended from time to time.
1.22 Section 162(m) Employee. "Section 162(m) Employee" shall mean any Employee designated by the Administrator as an Employee whose compensation for the fiscal year in which the Employee is so designated or a future fiscal year may be subject to the limit on deductible compensation imposed by Section 162(m) of the Code.
1.23 Securities Act. "Securities Act" shall mean the Securities Act of 1933, as amended.
1.24 Subsidiary. "Subsidiary" shall mean any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain. Subsidiary shall also mean any partnership, limited liability company or any equivalent foreign entity under applicable foreign laws in which the Company or any subsidiary owns more than 50% of the capital or profits interests.
1.25 Substitute Option. "Substitute Option" shall mean an Option granted under the Plan upon the assumption of, or in substitution for, outstanding equity awards previously granted by another company or entity, in connection with a corporate or similar transaction, such as a merger, combination, consolidation or acquisition of property or stock; provided, however, that in no event shall the term "Substitute Option" be construed to refer to an option granted in connection with the cancellation and repricing of an Option.
1.26 Termination of Employment."Termination of Employment" shall
mean the time when the employee-employer relationship between a Holder and the
Company or any Subsidiary is terminated for any reason, with or without cause,
including, but not by way of limitation, a termination by resignation,
discharge, death, disability or retirement; but excluding (a)terminations where
there is a simultaneous reemployment or continuing employment of a Holder by
the Company or any Subsidiary or a parent corporation thereof (within the
meaning of Section 422 of the Code), and (b) at the discretion of the
Administrator, terminations which result in a temporary severance of the
employee-employer relationship. The Administrator, in its absolute discretion,
shall determine the effect of all matters and questions relating to Termination
of Employment, including, but not by way of limitation, the question of whether
a Termination of Employment resulted from a discharge for cause, and all
questions of whether a particular leave of absence constitutes a Termination of
Employment; provided, however, that, with respect to Incentive Stock Options,
unless otherwise determined by the Administrator in its discretion, a leave of
absence, change in status from an employee to an independent contractor or
other change in the employee-employer relationship shall constitute a
Termination of Employment if, and to the extent that, such leave of absence,
change in status or other change interrupts employment for the purposes of
Section 422(a)(2) of the Code and the then applicable regulations and revenue
rulings under said Section.
ARTICLE II.
SHARES SUBJECT TO PLAN
2.1 Shares Subject to Plan.
(a) The shares of stock subject to Options shall be Common Stock, subject to Section 8.3 of the Plan. The aggregate number of such shares which may be issued upon exercise of such Options under the Plan shall not exceed One Million Six Hundred Seventy Five Thousand Shares (1,675,000). The shares of Common Stock issuable upon exercise of such Options may be either previously authorized but unissued shares or treasury shares.
(b) The maximum number of shares of Common Stock which may be subject to Options granted under the Plan to any individual in any calendar year shall not exceed the Option Limit. To the extent required by Section 162(m) of the Code, shares subject to Options which are canceled continue to be counted against the Option Limit.
2.2 Add-Back of Options. If any Option expires or is canceled without having been fully exercised, or is exercised in whole or in part for cash as permitted by the Plan, the number of shares of Common Stock subject to such Option but as to which such Option was not exercised prior to its
expiration or cancellation may again be optioned, granted or awarded hereunder, subject to the limitations of Section 2.1. Furthermore, any shares subject to Options which are adjusted pursuant to Section 8.3 and become exercisable with respect to shares of stock of another corporation shall be considered cancelled and may again be optioned, granted or awarded hereunder, subject to the limitations of Section 2.1. Notwithstanding the provisions of this Section 2.2, no shares of Common Stock may again be optioned, granted or awarded hereunder if such action would cause an Incentive Stock Option to fail to qualify as an "incentive stock option" under Section 422 of the Code.
ARTICLE III.
GRANTING OF OPTIONS
3.1 Option Agreement. Each Option shall be evidenced by an Option Agreement. Option Agreements evidencing Options intended to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 162(m) of the Code. Option Agreements evidencing Incentive Stock Options shall contain such terms and conditions as may be necessary to meet the applicable provisions of Section 422 of the Code.
3.2 Provisions Applicable to Section 162(m) Employees
(a) The Committee, in its discretion, may determine whether an Option is to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code.
(b) Notwithstanding anything in the Plan to the
contrary, the Committee may grant any Option to a Section
162(m) Employee, the restrictions to which lapse upon the
obtainment of performance goals which are related to one or more
of the Performance Criteria, that vests or becomes exercisable
or payable upon the attainment of performance goals which are
related to one or more of the Performance Criteria.
(c) To the extent necessary to comply with the
performance-based compensation requirements of Section 162(m)(4)
(C) of the Code, with respect to any Option granted under
Article VII which may be granted to one or more Section 162(m)
Employees, no later than ninety (90) days following the
commencement of any fiscal year in question or any other
designated fiscal period or period of service (or such other
time as may be required or permitted by Section 162(m) of the
Code), the Committee shall, in writing, (i) designate one or
more Section 162(m) Employees, (ii) select the Performance
Criteria applicable to the fiscal year or other designated
fiscal period or period of service, (iii) establish the various
performance targets, in terms of an objective formula or
standard, and amounts of such Options, as applicable, which
may be earned for such fiscal year or other designated fiscal
period or period of service, and (iv) specify the relationship
between Performance Criteria and the performance targets and the
amounts of such Options, as applicable, to be earned by each
Section 162(m) Employee for such fiscal year or other designated
fiscal period or period of service. Following the completion of
each fiscal year or other designated fiscal period or period of
service, the Committee shall certify in writing whether the applicable performance targets have been achieved for such fiscal year or other designated fiscal period or period of service. In determining the amount earned by a Section 162(m) Employee, the Committee shall have the right to reduce (but not to increase) the amount payable at a given level of performance to take into account additional factors that the Committee may deem relevant to the assessment of individual or corporate performance for the fiscal year or other designated fiscal period or period of service.
(d) Furthermore, notwithstanding any other provision of
the Plan, any Option which is granted to a Section 162(m)
Employee and is intended to qualify as performance-based
compensation as described in Section 162(m)(4)(C) of the Code
shall be subject to any additional limitations set forth in
Section 162(m) of the Code (including any amendment to Section
162(m) of the Code) or any regulations or rulings issued
thereunder that are requirements for qualification as
performance-based compensation as described in Section 162(m)(4)
(C) of the Code, and the Plan and such Options shall be deemed
amended to the extent necessary to conform to such requirements.
3.3 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan, the Plan, and any Option granted to any individual who is then subject to Section 16 of the Exchange Act, shall be subject to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of the Exchange Act) that are requirements for the Application of such exemptive rule. To the extent permitted by applicable law, the Plan and Options granted hereunder shall be deemed amended to the extent necessary to conform to such applicable exemptive rule.
3.4 At-Will Employment. Nothing in the Plan or in any Option Agreement hereunder shall confer upon any Holder any right to continue in the employ of the Company or any Subsidiary or shall interfere with or restrict in any way the rights of the Company and any Subsidiary, which are hereby expressly reserved, to discharge any Holder at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written employment agreement between the Holder and the Company and any Subsidiary.
3.5 Participants in Foreign Countries. The Board, or such officers of the Company as have been delegated proper authority by the Board, may at any time adopt, amend or delete such modifications, procedures, appendices and subplans as may be necessary or desirable to comply with provisions of the laws of foreign countries in which the Company or any Subsidiary may operate to assure the viability of Options granted under the Plan in such countries and to meet the objectives of the Plan. Any such modifications, procedures,appendices or subplans shall be and hereby are incorporated in their entirety into the Plan and, with regard to the subject matter thereof, shall supersede inconsistent provisions of the Plan.
ARTICLE IV.
GRANTING OF OPTIONS
4.1 Eligibility. Any Employee selected by the Committee pursuant to Section 4.4(a)(i) shall be eligible to be granted an Option. All grants shall be made at the discretion of the Committee or the Board, as the case may be, and no person shall be entitled to a grant of an Option as a matter of right.
4.2 Disqualification for Stock Ownership. No person may be granted an Incentive Stock Option under the Plan if such person, at the time the Incentive Stock Option is granted, owns stock possessing more than ten percent (10%) of the total combined voting power of all classes of stock of the Company or any then existing Subsidiary or parent corporation (within the meaning of Section 422 of the Code) unless such Incentive Stock Option conforms to the applicable provisions of Section 422 of the Code.
4.3 Qualification of Incentive Stock Options. No Incentive Stock Option shall be granted to any person who is not an Employee.
4.4 Granting of Options
(a) The Committee shall from time to time, in its absolute discretion, and subject to applicable limitations of the Plan:
(i) Select from among the Employees (including Employees who have previously been granted Options under the Plan) such of them as in its opinion should be granted Options;
(ii) Subject to the Option Limit, determine the number of shares of Common Stock to be subject to such Options granted to the selected Employees;
(iii) Subject to Section 4.3, determine whether such Options are to be Incentive Stock Options or Non-Qualified Stock Options and whether such Options are to qualify as performance-based compensation as described in Section 162(m)(4)(C) of the Code;and
(iv) Determine the terms and conditions of such
Options, consistent with the Plan; provided, however,
that the terms and conditions of Options intended to
qualify as performance-based compensation as described in
Section 162(m)(4)(C) of the Code shall include, but not
be limited to, such terms and conditions as may be
necessary to meet the applicable provisions of Section
162(m) of the Code.
(v) Upon the selection of an Employee to be granted an Option, the Committee shall instruct the Secretary of the Company to issue the Option and may impose such conditions on the grant of the Option as it deems appropriate, and the Committee shall authorize one or more of the officers of the Company to prepare, execute and deliver the Option Agreement with respect to such Option.
(vi) Any Incentive Stock Option granted under the Plan may be modified by the Committee, with the consent of the Holder, to disqualify such Option from treatment as an "incentive stock option" under Section 422 of the Code.
4.5 Options in Lieu of Cash Compensation. Options may be granted under the Plan to Employees in lieu of cash bonuses which would otherwise be payable to such Employees pursuant to such policies which may be adopted by the Administrator from time to time.
ARTICLE V.
TERMS OF OPTIONS
5.1 Option Price. The price per share of the shares of Common
Stock subject to each Option granted to Employees shall be set by the Committee
at the time the Option is granted; provided, however, that such price shall be
no less than 100% of the Fair Market Value of a share of Common Stock on the
date the Option is granted, and in the case of Incentive Stock Options granted
to an individual then owning (within the meaning of Section 424(d) of the Code)
more than 10% of the total combined voting power of all classes of stock of the
Company or any Subsidiary or parent corporation thereof (within the meaning of
Section 422 of the Code), such price shall not be less than 110% of the Fair
Market Value of a share of Common Stock on the date the Option is granted.
5.2 Option Term. The term of an Option granted to an Employee shall be set by the Committee in its absolute discretion; provided, however, that the term shall not be more than ten (10) years from the date the Option is granted; and, provided, further, that, in the case of Incentive Stock Options, the term shall not be more than five (5) years from the date the Incentive Stock Option is granted if the Incentive Stock Option is granted to an individual then owning (within the meaning of Section 424(d) of the Code) more than 10% of the total combined voting power of all classes of stock of the Company or any Subsidiary or parent corporation thereof (within the meaning of Section 422 of the Code). Except as limited by requirements of Section 422 of the Code and regulations and rulings thereunder applicable to Incentive Stock Options, the Committee may extend the term of any outstanding Option in connection with any Termination of Employment of the Holder by up to four (4) years, or amend any other term or condition of such Option relating to such a termination.
5.3 Option Vesting
(a) The period during which the right to exercise, in whole or in part, an Option granted to an Employee vests in the Holder shall be set by the Committee and the Committee may determine that an Option may not be exercised in whole or in part for a specified period after it is granted. At any time after grant of an Option, the Committee may, in its absolute discretion and subject to whatever terms and conditions it selects, accelerate the period during which an Option granted to an Employee vests and becomes exercisable.
(b) No portion of an Option granted to an Employee which is unexercisable at Termination of Employment shall thereafter become exercisable, except as may be otherwise provided by the
Committee either in the Option Agreement or by action of the Committee following the grant of the Option.
(c) To the extent that the aggregate Fair Market Value
of stock with respect to which "incentive stock options" (within
the meaning of Section 422 of the Code, but without regard to
Section 422(d) of the Code) are exercisable for the first time
by a Holder during any calendar year (under the Plan and all
other incentive stock option plans of the Company and any parent
or subsidiary corporation (within the meaning of Section 422 of
the Code) of the Company), exceeds $100,000, such Options or
other options shall be treated as non-qualified stock options to
the extent required by Section 422 of the Code. The rule set
forth in the preceding sentence shall be applied by taking
Options or other options into account in the order in which they
were granted. For purposes of this Section 5.3(c), the Fair
Market Value of stock shall be determined as of the time the
Option or other options with respect to such stock is granted.
5.4 Substitute Options. Notwithstanding the foregoing provisions of this Article V to the contrary, in the case of an Option that is a Substitute Option, the price per share of the shares subject to such Option may be less than the Fair Market Value per share on the date of grant, provided, that the excess of:
(a) the aggregate Fair Market Value (as of the date such Substitute Option is granted) of the shares subject to the Substitute Option; over
(b) the aggregate exercise price thereof; does not exceed the excess of;
(c) the aggregate fair market value (as of the time immediately preceding the transaction giving rise to the Substitute Option, such fair market value to be determined by the Administrator) of the shares of the predecessor entity that were subject to the grant assumed or substituted for by the Company; over
(d) the aggregate exercise price of such shares.
5.5 Restrictions on Common Stock. The Administrator may, in its sole discretion, provide under the terms of an Option that shares of Common Stock purchased upon exercise of such Option shall be subject to repurchase from the Holder by the Company, or shall be subject to such restrictions as the Administrator shall provide, which restrictions may include, without limitation, restrictions concerning voting rights and transferability and restrictions based on duration of employment with the Company and the Subsidiaries, Company performance and individual performance; provided, however, that, by action taken after the Common Stock is purchased upon exercise of the Option, the Administrator may, on such terms and conditions as it may determine to be appropriate, terminate the Company's repurchase right or remove any or all of the restrictions imposed by the terms of the Option Agreement. The Company's right to repurchase the Common Stock from the Holder then subject to the right shall provide that immediately upon a Termination of Employment and for such period as the Administrator shall
determine, the Company shall have the right to purchase the Common Stock at a price per share equal to the price paid by the Holder for such Common Stock, or such other price as is determined by the Administrator; provided, however, that, in the event of a Change in Control, such right of repurchase shall terminate immediately prior to the effective date of such Change in Control. Shares of Common Stock purchased upon the exercise of an Option may not be sold, transferred or encumbered until any repurchase right and any and all restrictions are terminated or expire. The Secretary of the Company or such other escrow holder as the Administrator may appoint shall retain physical custody of each certificate representing such shares of Common Stock until the repurchase right and any and all of the restrictions imposed under the Option Agreement with respect to the shares evidenced by such certificate terminate, expire or shall have been removed. In order to enforce the restrictions imposed upon shares of Common Stock hereunder, the Administrator shall cause a legend or legends to be placed on certificates representing all shares of Common Stock that are still subject to any repurchase right or restrictions under Option Agreements, which legend or legends shall make appropriate reference to the conditions imposed thereby. If a Holder makes an election under Section 83(b) of the Code, or any successor section thereto, to be taxed with respect to the Common Stock as of the date of transfer of the Common Stock rather than as of the date or dates upon which the Holder would otherwise be taxable under Section 83(a) of the Code, the Holder shall deliver a copy of such election to the Company immediately after filing such election with the Internal Revenue Service.
ARTICLE VI.
EXERCISE OF OPTIONS
6.1 Partial Exercise. An exercisable Option may be exercised in whole or in part. However, an Option shall not be exercisable with respect to fractional shares and the Administrator may require that, by the terms of the Option, a partial exercise be with respect to a minimum number of shares.
6.2 Manner of Exercise. All or a portion of an exercisable Option shall be deemed exercised upon delivery of all of the following to the Secretary of the Company or his office:
(a) A written notice complying with the applicable rules established by the Administrator stating that the Option, or a portion thereof, is exercised. The notice shall be signed by the Holder or other person then entitled to exercise the Option or such portion of the Option;
(b) Such representations and documents as the Administrator, in its absolute discretion, deems necessary or advisable to effect compliance with all applicable provisions of the Securities Act and any other federal or state securities laws or regulations. The Administrator may, in its absolute discretion, also take whatever additional actions it deems appropriate to effect such compliance including, without limitation, placing legends on share certificates and issuing stop-transfer notices to agents and registrars;
(c) In the event that the Option shall be exercised pursuant to Section 8.1 by any person or persons other than the Holder, appropriate proof of the right of such person or persons to exercise the Option; and
(d) Full cash payment (or cash equivalent) to the Secretary of the Company for the shares with respect to which the Option, or portion thereof, is exercised.
6.3 Conditions to Issuance of Stock Certificates.The Company shall not be required to issue or deliver any certificate or certificates for shares of stock purchased upon the exercise of any Option or portion thereof prior to fulfillment of all of the following conditions:
(a) The admission of such shares to listing on all stock exchanges on which such class of stock is then listed;
(b) The completion of any registration or other qualification of such shares under any state or federal law, or under the rulings or regulations of the Securities and Exchange Commission or any other governmental regulatory body which the Administrator shall, in its absolute discretion, deem necessary or advisable;
(c) The obtaining of any approval or other clearance from any state or federal governmental agency which the Administrator shall, in its absolute discretion, determine to be necessary or advisable;
(d) The lapse of such reasonable period of time following the exercise of the Option as the Administrator may establish from time to time for reasons of administrative convenience; and
(e) The receipt by the Company of full payment for such shares, including payment of any applicable withholding tax.
6.4 Rights as Stockholders. Holders shall not be, nor have any of the rights or privileges of, stockholders of the Company in respect of any shares purchasable upon the exercise of any part of an Option unless and until certificates representing such shares have been issued by the Company to such Holders.
6.5 Ownership and Transfer Restrictions. The Administrator, in
its absolute discretion, may impose such restrictions on the ownership and
transferability of the shares purchasable upon the exercise of an Option as it
deems appropriate. Any such restriction shall be set forth in the respective
Option Agreement and may be referred to on the certificates evidencing such
shares. The Holder shall give the Company prompt notice of any disposition of
shares of Common Stock acquired by exercise of an Incentive Stock Option within
(a) two years from the date of granting (including the date the Option is
modified, extended or renewed for purposes of Section 424(h) of the Code) such
Option to such Holder or (b) one year after the transfer of such shares to such
Holder.
6.6 Additional Limitations on Exercise of Options. Holders may be required to comply with any timing or other restrictions with respect to the settlement or exercise of an Option, including a window-period limitation, as may be imposed in the discretion of the Administrator.
ARTICLE VII.
ADMINISTRATION
7.1 Committee. The Committee shall be the Compensation Committee of the Board, unless the Board specifically assumes the functions of the Committee or appoints another committee to assume such functions.
7.2 Duties and Powers of Committee. It shall be the duty of the Committee to conduct the general administration of the Plan in accordance with its provisions. The Committee shall have the power to interpret the Plan and the Option Agreements, and to adopt such rules for the administration, interpretation, and application of the Plan as are consistent therewith, to interpret, amend or revoke any such rules and to amend any Option Agreement provided that the rights or obligations of the Holder of the Option that is the subject of any such Option Agreement are not affected adversely. Any such interpretations and rules with respect to Incentive Stock Options shall be consistent with the provisions of Section 422 of the Code. In its absolute discretion, the Board may at any time and from time to time assume any and all rights and duties of the Committee under the Plan, except with respect to matters which under Rule 16b-3 or Section 162(m) of the Code, or any regulations or rules issued thereunder, are required to be determined in the sole discretion of the Committee.
7.3 Majority Rule; Unanimous Written Consent. The Committee shall act by a majority of its members in attendance at a meeting at which a quorum is present or by a memorandum or other written instrument signed by all members of the Committee.
7.4 Compensation; Professional Assistance; Good Faith Actions. Members of the Committee shall receive such compensation, if any, for their services as members as may be determined by the Board. All expenses and liabilities which members of the Committee incur in connection with the administration of the Plan shall be borne by the Company. The Committee may, with the approval of the Board, employ attorneys, consultants, accountants, appraisers, brokers, or other persons. The Committee, the Company and the Company's officers and members of the Board shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Committee or the Board in good faith shall be final and binding upon all Holders, the Company and all other interested persons. No members of the Committee or Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or Options, and all members of the Committee and the Board shall be fully protected by the Company in respect of any such action, determination or interpretation.
ARTICLE VIII.
MISCELLANEOUS PROVISIONS
8.1 Not Transferable. No Option under the Plan may be sold, pledged, assigned or transferred in any manner other than by will or the laws of descent and distribution or, subject to the consent of the Administrator, pursuant to a DRO, unless and until such Option has been exercised, or the shares underlying such Option have been issued, and all restrictions applicable to such shares have lapsed. No Option or interest or right therein shall be liable for the debts, contracts or engagements of the Holder or his successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence.
During the lifetime of the Holder, only he may exercise an Option (or any portion thereof) granted to him under the Plan, unless it has been disposed of with the consent of the Administrator pursuant to a DRO. After the death of the Holder, any exercisable portion of an Option may, prior to the time when such portion becomes unexercisable under the Plan or the applicable Option Agreement, be exercised by his personal representative or by any person empowered to do so under the deceased Holder's will or under the then applicable laws of descent and distribution.
Notwithstanding the foregoing provisions of this Section 8.1, the Administrator, in its sole discretion, may determine to grant a Non-Qualified Stock Option which, by its terms as set forth in the applicable Option Agreement, may be transferred by the Holder, in writing and with prior written notice to the Administrator, to any one or more Permitted Transferees (as defined below), subject to the following terms and conditions: (a) a Non-Qualified Stock Option transferred to a Permitted Transferee shall not be assignable or transferable by the Permitted Transferee other than by will or the laws of descent and distribution; (b) any Non-Qualified Stock Option which is transferred to a Permitted Transferee shall continue to be subject to all the terms and conditions of the Non-Qualified Stock Option as applicable to the original Holder (other than the ability to further transfer the Non-Qualified Stock Option); and (c) the Holder and the Permitted Transferee shall execute any and all documents requested by the Administrator, including, without limitation, documents to: (i) confirm the status of the transferee as a Permitted Transferee, (ii) satisfy any requirements for an exemption for the transfer under applicable federal and state securities laws and (iii) evidence the transfer. For purposes of this Section, "Permitted Transferee" shall mean, with respect to a Holder, any child, stepchild, grandchild, parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew, mother-in-law, father-in-law, daughter-in-law, brother-in-law, or sister-in-law, including adoptive relationships, any person sharing the Holder's household (other than a tenant or employee), a trust in which these persons (or the Holder) control the management of assets, and any other entity in which these persons (or the Holder) owns more than fifty percent (50%) of the voting interests, or any other transferee specifically approved by the Administrator after taking into account any state or federal tax or securities laws applicable to transferable Non-Qualified Stock Options.
8.2 Amendment, Suspension or Termination of the Plan.
(a) Except as otherwise provided in this Section 8.2, the Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Board. However, without approval of the Company's stockholders given within twelve months before or after the action by the Board, no action of the Board may, except as provided in Section 8.3, increase the limits imposed in Section 2.1 on the maximum number of shares which may be issued under the Plan.
(b) No amendment, suspension or termination of the Plan shall, without the consent of the Holder alter or impair any rights or obligations under any Option theretofore granted, unless the Option itself otherwise expressly so provides.
(c) No Options may be granted during any period of suspension or after termination of the Plan, and in no event may any Option be granted under the Plan after the first to occur of the following events:
(i) The expiration of ten years from the date the Plan is adopted by the Board; or
(ii) The expiration of ten years from the date the
Plan is approved by the Company's stockholders under
Section 8.5.
8.3 Changes in Common Stock or Assets of the Company, Acquisition or Liquidation of the Company and Other Corporate Events.
(a) Subject to Section 8.3(d), in the event that the Administrator determines that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of the Company, or exchange of Common Stock or other securities of the Company, issuance of warrants or other rights to purchase Common Stock or other securities of the Company, or other similar corporate transaction or event, in the Administrator's sole discretion, affects the Common Stock such that an adjustment is determined by the Administrator to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Option, then the Administrator shall, in such manner as it may deem equitable, adjust any or all of:
(i)the number and kind of shares of Common Stock (or other securities or property) with respect to which Options may be granted (including, but not limited to, adjustments of the limitations in Section 2.1 on the maximum number and kind of shares which may be issued and adjustments of the Option Limit);
(ii)the number and kind of shares of Common Stock (or other securities or property) subject to outstanding Options; and
(iii)the grant or the exercise price with respect to any Option.
(b) Subject to Section 8.3(d), in the event of any transaction or event described in Section 8.3(a) or any unusual or nonrecurring transactions or events affecting the Company, any affiliate of the Company, or the financial statements of the Company or any affiliate, or of changes in applicable laws, regulations, or accounting principles, the Administrator, in its sole and absolute discretion, and on such terms and conditions as it deems appropriate, either by the terms of the Option or by action taken prior to the occurrence of such transaction or event (any such action applied to Employees and former Employees to be applied uniformly) and either automatically or upon the Holder's request, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Option under the Plan, to facilitate such transactions or events or to give effect to such changes in laws, regulations or principles:
(i) to provide for either the cancellation of any such Option for an amount of cash equal to the amount that could have been attained upon the exercise of such Option or realization of the Holder's rights had such Option been currently exercisable or payable or fully vested, or the replacement of such Option with other rights or property selected by the Administrator in its sole discretion;
(ii) to provide that the Option cannot vest, be exercised or become payable after such event;
(iii)to provide that such Option shall be exercisable as to all shares covered thereby, notwithstanding anything to the contrary in Section 5.3 or the provisions of such Option;
(iv)to provide that such Option be assumed by the successor or survivor corporation, or a parent or subsidiary thereof, or shall be substituted for by similar options, rights or awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices;
(v)to make adjustments in the number and type of shares of Common Stock (or other securities or property) subject to outstanding Options, and/or in the terms and conditions of (including the grant or exercise price), and the criteria included in, outstanding Options and Options which may be granted in the future; and
(vi)to provide that, for a specified period of time prior to such event, the restrictions imposed under an Option Agreement upon some or all shares of Common Stock may be terminated and some or all shares of such Common Stock may cease to be subject to repurchase after such event.
(c) Subject to Sections 8.3(d), 3.2 and 3.3, the Administrator may, in its discretion, include such further provisions and limitations in any Option, Option Agreement or certificate, as it may deem equitable and in the best interests of the Company.
(d) With respect to Options which are granted to
Section 162(m) Employees and are intended to qualify as
performance-based compensation under Section 162(m)(4)(C), no
adjustment or action described in this Section 8.3 or in any
other provision of the Plan shall be authorized to the extent
that such adjustment or action would cause such Option to fail
to so qualify under Section 162(m)(4)(C), or any successor
provisions thereto. No adjustment or action described in this
Section 8.3 or in any other provision of the Plan shall be
authorized to the extent that such adjustment or action would
cause the Plan to violate Section 422(b)(1) of the Code.
Furthermore, no such adjustment or action shall be authorized to
the extent such adjustment or action would result in short-swing
profits liability under Section 16 or violate the exemptive
conditions of Rule 16b-3 unless the Administrator determines
that the Option is not to comply with such exemptive conditions.
The number of shares of Common Stock subject to any Option shall
always be rounded to the next whole number.
(e) The existence of the Plan, any Option Agreement and the Options granted hereunder shall not affect or restrict in any way the right or power of the Company or the stockholders of the Company to make or authorize any adjustment, recapitalization, reorganization or other change in the Company's capital structure or its business, any merger or consolidation of the Company, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.
8.4 Change in Control. Notwithstanding any other provision of the Plan, in the event of a Change in Control, each outstanding Option shall, immediately prior to the effective date of the Change in Control, automatically become fully exercisable for all of the shares of Common Stock at the time subject to such Option and may be exercised for any or all of those shares as fully-vested shares of Common Stock.
8.5 Approval of Plan by Stockholders. The Plan shall be submitted for the approval of the Company's stockholders within twelve months after the date of the Board's initial adoption of the Plan. Options may be granted prior to such stockholder approval;
provided, however, that such Options shall not be exercisable nor shall such Options vest prior to the time when the Plan is approved by the stockholders; and provided, further, that if such approval has not been obtained at the end of said twelve-month period, all Options previously granted under the Plan shall thereupon be canceled and become null and void.
8.6 Tax Withholding. The Company shall be entitled to require payment in cash or deduction from other compensation payable to each Holder of any sums required by federal, state or local tax law to be withheld with respect to the issuance, vesting, exercise or payment of any Option.
8.7 Forfeiture Provisions. Subject to the limitations of applicable law, pursuant to its general authority to determine the terms and conditions applicable to Options under the Plan, the Administrator shall have the right to provide, in the terms of Options made under the Plan, or to require a Holder to agree by separate written instrument, that if (a)(i) the Holder at any time, or during a specified time period, engages in any activity in competition with the Company, or which is inimical, contrary or harmful to the interests of the Company, as further defined by the Administrator or (ii) the Holder incurs a Termination of Employment for cause, then (b) (i) any proceeds, gains or other economic benefit actually or constructively received by the Holder upon any exercise of the Option, or upon the receipt or resale of any Common Stock underlying any Option, must be paid to the Company, and (ii) the Option shall terminate and any unexercised portion of the Option (whether or not vested) shall be forfeited.
8.8 Effect of Plan upon Options and Compensation Plans. The adoption
of the Plan shall not affect any other compensation or incentive plans in
effect for the Company or any Subsidiary. Nothing in the Plan shall be
construed to limit the right of the Company (a) to establish any other forms of
incentives or compensation for Employees of the Company or any Subsidiary or
(b) to grant or assume options otherwise than under the Plan in connection with
any proper corporate purpose including but not by way of limitation, the grant
or assumption of options in connection with the acquisition by purchase, lease,
merger, consolidation or otherwise, of the business, stock or assets of any
corporation, partnership, limited liability company, firm or association.
8.9 Compliance with Laws. The Plan, the granting and vesting of Options under the Plan and the issuance and delivery of shares of Common Stock and the payment of money under the Plan or under Options granted hereunder are subject to compliance with all applicable federal and state laws, rules and regulations (including but not limited to state and federal securities law and federal margin requirements) and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Any securities delivered under the Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements. To the extent permitted by applicable law, the Plan and Options granted hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.
8.10 Inability to Obtain Authority. The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Company's counsel to be necessary to the lawful
issuance and sale of share of Common Stock hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such shares of Common Stock as to which such requisite authority shall not have been obtained.
8.11 Reservation of Shares. The Company, during the term of this Plan, shall at all times reserve and keep available such number of shares of Common Stock as shall be sufficient to satisfy the requirements of the Plan.
8.12 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan.
8.13 Governing Law. The Plan and any agreements hereunder shall be administered, interpreted and enforced under the internal laws of the State of Delaware without regard to conflicts of laws thereof.
* * * I hereby certify that the foregoing Plan was duly adopted by the Board of Directors of Bio-Rad Laboratories, Inc. on March 19, 2003.
Executed on this 30th day of April, 2003.
/s/ Sanford S. Wadler Sanford S. Wadler Secretary |
* * *
I hereby certify that the foregoing Plan was duly approved by the stockholders of Bio-Rad Laboratories, Inc. on April 29, 2003.
Executed on this 30th day of April, 2003.
/s/Sanford S. Wadler Sanford S. Wadler Secretary |
BIO-RAD LABORATORIES, INC.
2003 STOCK OPTION PLAN
APPENDIX
FOR GERMANY
1. Application. This Appendix shall apply only in relation to Options granted to eligible Employees residing and providing services in Germany.
2. Definitions. Unless otherwise defined herein, definitions as set out in Article I of the Plan are applicable to this Appendix.
3. Eligible Employees. The Committee's discretion with respect to Section 4.4(a)(i) of the Plan will be exercised in a way complying with German law, in particular with the labour law principle of equal treatment (arbeitsrechtlicher Gleichbehandlungs- grundsatz) and with the prohibition of discrimination (Diskriminie- rungsverbot).
4. Ex-gratia Benefit. The grant of an Option is an ex-gratia benefit (freiwillige Leistung). It is granted without any obligation; and even repeated granting will not create such obligation.
5. Adjustments upon Changes in Capitalization, Merger or Asset Sale. The Committee's discretion with respect to any adjustments pursuant to Section 8.3(a) will be exercised taking into fair consideration the circumstances why such adjustment is deemed appropriate.
6. Administrator's Decisions. The decisions of the Committee in connection with any interpretation of the Plan or in any dispute relating to an Option or other matters relating to the Plan shall be final and conclusive and binding on the relevant parties. It may only be revised by competent courts.
7. Governing Law. The Plan shall be governed by and construed in accordance with the laws of the State of Delaware but mandatory provisions of the laws of Germany may be applied.
BIO-RAD LABORATORIES, INC.
2003 STOCK OPTION PLAN
APPENDIX
FOR UNITED KINGDOM
1. Application. This Appendix shall apply only in relation to Options granted to eligible Employees residing and providing services in the United Kingdom.
2. Definitions. Definitions as set out in Article I of the Plan are applicable to this Appendix.
3. Taxes/Withholding. Each optionee shall be liable for the Company's or any Subsidiary's United Kingdom National Insurance Contribution in respect of the grant, exercise, release or assignment of any Option or the acquisition, sale or other disposition of any Stock issued upon exercise of an Option and the Company or any Subsidiary may require, as a condition of exercise, that any liability it has to account for United Kingdom income tax under the Pay As You Earn system and employer or employee National Insurance Contributions or any other federal, state or local tax withholding obligation relating to the exercise or acquisition of Stock under an option be satisfied by (in addition to the Company's or Subsidiary's right to withhold from any compensation paid or payable to the optionee an amount sufficient to satisfy such withholding obligations;) the optionee's tender of a cash payment in the minimum amount sufficient to satisfy such withholding obligations;.
4. Governing Law. The Plan shall be governed by and construed in accordance with the laws of the State of Delaware but mandatory provisions of United Kingdom law may be applied.
BIO-RAD LABORATORIES, INC.
2003 STOCK OPTION PLAN
APPENDIX
FOR ITALY
1. Application. This Appendix shall apply only in relation to Options granted to eligible Employees residing and providing services in Italy.
2. Definitions. Unless otherwise defined herein, definitions as set out in Article I of the Plan are applicable to this Appendix.
3. Ownership Limitation. Options may be granted to purchase an aggregate of shares, including any shares already held, owned or possessed by each optionee, not exceeding more than 10% of the voting rights in the ordinary shareholders' meeting of the Company or more than 10% of the capital or equity of the Company.
If an Optionee shall acquire after the date of grant of an Option a number of shares that, if added to the number of shares under Option, would exceed more than 10% of the voting rights in the ordinary shareholders' meeting of the Company or more than 10% of the capital or equity of the Company, he or she shall immediately inform the Company, and the portion of his or her Option in excess of such limits shall not be exercisable. In case of breach of this obligation by the Optionee, he or she shall keep the Company and any Subsidiary harmless and indemnified from any possible cost incurred as a consequence of the exercise of the portion of Option exceeding the above referred limits.
4. Exercise Price. The exercise price per share of Stock shall be not less than the higher of the following amounts:
(a)the average of the official stock exchange closing prices of the shares of the class of Stock to which the Option relates, as resulting on each day in which the shares are traded on the market in the period starting from the Date of Grant until the same calendar day of the previous month;
(b)the average of the official stock exchange closing prices of the shares of the class of Stock to which the Option relates, as resulting on each day in which the shares are traded on the market in the period starting from the day before the date of grant until the same calendar day of the previous month;
(c)the nominal value of the shares of the class of Stock to which the Option relates.
5. Consequences of Exercise. Any possible positive difference between the exercise price per share of Stock paid upon the exercise of the Option and the fair market price of those shares at that moment and, in general, any and all benefits granted to any optionee pursuant to the Plan and this Appendix:
(a)shall be deemed as an extraordinary payment and may not,in any way, be considered as a part of the normal remuneration of any optionee. In particular, the above mentioned positive difference in value shall be considered as already including the relevant incidence on the direct or indirect income institutions regulated by the collective and individual economic agreements in force from time to time such as, by way of example, the tredicesima and quattordicesima monthly installments and by the law such as, by way of example, the severance allowance TFR, the untaken holidays indemnity and the indemnity in lieu of notice and shall not, therefore, have any further impact on the calculation of the same;
(b) shall not confer upon any optionee any right to be granted any similar or additional benefits, within the scope of the Plan and this Appendix or otherwise;
(c) shall not confer upon any optionee, at the expiry of the Plan, any right to participate in any other stock option or incentive plan, or to be paid any further remuneration in kind.
6. Governing Law. The Plan shall be governed by and construed in accordance with the laws of the State of Delaware but mandatory provisions of the laws of Italy may be applied.
BIO-RAD LABORATORIES, INC.
2003 STOCK OPTION PLAN
APPENDIX
FOR FRANCE
1. Application. This Appendix shall apply only in relation to Options granted to eligible Employees residing and providing services in France.
2. Definitions. Unless otherwise defined herein, definitions as set out in Article I of the Plan are applicable to this Appendix.
3. Specific Conditions Applying to Options Granted to Eligible Employees under this Appendix.
(a)Options may only be granted to eligible Employees employed under the terms of a written or oral employment agreement and who do not own, as of the date of Option grant, shares of Stock representing more than 10% of the issued share capital of the Company.
(b)If the Stock is listed on any established stock exchange or a national market system, Options cannot be granted (i) during the ten trading sessions preceding and following the date on which the consolidated accounts or annual accounts of the Company are published and (ii) during a period (x) starting from the date on which the officers and directors of the Company become aware of any information which, if published, could significantly affect the company's market price and (y) ending at the close of the tenth trading session following the publication of the information.
(c)If the Stock is listed on any established stock exchange or a national market system, no Option may be granted less than twenty trading sessions after a coupon giving a right to a dividend or to a capital increase has been detached from the shares of Stock.
(d)Notwithstanding Section 1.14 of the Plan the fair market value of a share of Stock shall be determined subject to the following limitations:
(i)If the Stock is listed on any established stock exchange or a national market system, including, without limitation, the Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, or
(ii)If the Common Stock is regularly quoted by a recognized securities dealer but selling prices are not reported, the fair market value in no case shall be less than eighty per cent (80%) of the average of the closing sales price for a share of Stock as quoted on said stock exchange market during the twenty market trading days prior to the date of grant.
4. Exercise Limitations. No Option may be exercised prior to the expiration of a minimum period of one year following the date of grant. In addition, the shares of Stock acquired as a result of the exercise of all or part of the Option cannot be transferred by an optionee before the expiration of a three-year period which shall start running as from the expiration of the above mentioned period of one year.
5. Transfer Restrictions. The shares of Common Stock acquired as a result of the exercise of the Option may however be immediately transferred upon the occurrence of one of the events referred to under Article 91-bis of appendix II to the French General Tax Code, i.e., the dismissal, retirement, disability or death of the eligible Employee. In case of dismissal or retirement the exception to the non-transferability deadline of the shares of Common Stock shall be subject to the condition that the Option shall have been exercised at least three months before the dismissal or the retirement.
6. Modifications of Exercise Price. The Option exercise price shall be determined on the date of grant. Any adjustment made to the Option exercise price and/or the number of Options awarded under this Appendix, shall not provide more advantages to the optionee than those which would result from any adjustments that would be made in accordance with the provisions of Article L 225-181 of the French business code (Code de Commerce).
7. Payment. The consideration to be paid for the shares of Stock to be issued upon exercise of an Option may consist of (1) cash (2) check, or (3) any combination of the foregoing methods of payment.
8. Governing Law. The Plan shall be governed by and construed in accordance with the laws of the State of Delaware but mandatory provisions of the laws of France may be applied.
Exhibit 99.1
Bio-Rad Laboratories, Inc.,
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Norman Schwartz, of Bio-Rad Laboratories, Inc. (the
"Registrant"), do hereby certify in accordance with 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, that to my knowledge:
1. the Quarterly Report on Form 10-Q of the Registrant, to which this certificate is attached as an exhibit (the "Report"), fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
Dated: May 13, 2003 /s/ Norman Schwartz
Norman Schwartz
Chief Executive Officer
|
Exhibit 99.2
Bio-Rad Laboratories, Inc.,
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED
PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
I, Christine A. Tsingos, of Bio-Rad Laboratories, Inc. (the
"Registrant"), do hereby certify in accordance with 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002, that to my knowledge:
1. the Quarterly Report on Form 10-Q of the Registrant, to which this certificate is attached as an exhibit (the "Report"), fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and
2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant.
Dated: May 13, 2003 /s/ Christine A. Tsingos
Christine A. Tsingos
Vice President,
Chief Financial Officer
|