|
(Mark One)
|
|
ý
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Delaware
|
|
94-1381833
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
1000 Alfred Nobel Drive, Hercules, California
|
|
94547
|
(Address of principal executive offices)
|
|
(Zip Code)
|
|
Yes x
|
No o
|
|
Yes x
|
No o
|
Large accelerated filer
|
x
|
|
Accelerated filer
|
o
|
Non-accelerated filer
|
o
|
(Do not check if smaller reporting company)
|
Smaller reporting company
|
o
|
|
|
|
Emerging growth company
|
o
|
|
|
|
|
|
|
Yes o
|
No x
|
|
|
|
Title of Class
|
|
Shares Outstanding at April 27, 2017
|
Class A Common Stock, Par Value $0.0001 per share
|
|
24,490,423
|
Class B Common Stock, Par Value $0.0001 per share
|
|
5,115,282
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
ASSETS:
|
(Unaudited)
|
|
|
||||
Cash and cash equivalents
|
$
|
291,663
|
|
|
$
|
456,264
|
|
Short-term investments
|
382,412
|
|
|
383,176
|
|
||
Restricted investments
|
4,560
|
|
|
4,560
|
|
||
Accounts receivable, net
|
373,443
|
|
|
372,348
|
|
||
Inventories:
|
|
|
|
||||
Raw materials
|
120,243
|
|
|
116,540
|
|
||
Work in process
|
126,620
|
|
|
125,982
|
|
||
Finished goods
|
312,956
|
|
|
282,439
|
|
||
Total inventories
|
559,819
|
|
|
524,961
|
|
||
Other current assets
|
120,674
|
|
|
103,215
|
|
||
Total current assets
|
1,732,571
|
|
|
1,844,524
|
|
||
Property, plant and equipment, at cost
|
1,261,505
|
|
|
1,227,388
|
|
||
Less: accumulated depreciation and amortization
|
(756,401
|
)
|
|
(738,774
|
)
|
||
Property, plant and equipment, net
|
505,104
|
|
|
488,614
|
|
||
Goodwill, net
|
516,191
|
|
|
477,115
|
|
||
Purchased intangibles, net
|
190,614
|
|
|
161,609
|
|
||
Other investments
|
955,620
|
|
|
830,790
|
|
||
Other assets
|
52,669
|
|
|
47,852
|
|
||
Total assets
|
$
|
3,952,769
|
|
|
$
|
3,850,504
|
|
|
|
|
|
||||
LIABILITIES AND STOCKHOLDERS’ EQUITY:
|
|
|
|
||||
Accounts payable, accrued payroll and employee benefits
|
$
|
231,485
|
|
|
$
|
296,473
|
|
Current maturities of long-term debt and notes payable
|
466
|
|
|
334
|
|
||
Income and other taxes payable
|
33,042
|
|
|
28,124
|
|
||
Other current liabilities
|
142,511
|
|
|
146,391
|
|
||
Total current liabilities
|
407,504
|
|
|
471,322
|
|
||
Long-term debt, net of current maturities
|
434,289
|
|
|
434,186
|
|
||
Other long-term liabilities
|
403,510
|
|
|
358,237
|
|
||
Total liabilities
|
1,245,303
|
|
|
1,263,745
|
|
||
|
|
|
|
||||
Stockholders’ equity:
|
|
|
|
||||
Class A common stock, shares issued 24,490,545 and 24,454,048 at 2017 and 2016, respectively; shares outstanding 24,490,423 and 24,453,926 at 2017 and 2016, respectively
|
2
|
|
|
2
|
|
||
Class B common stock, shares issued 5,116,199 and 5,123,883 at 2017 and 2016, respectively; shares outstanding 5,115,282 and 5,122,966 at 2017 and 2016, respectively
|
1
|
|
|
1
|
|
||
Additional paid-in capital
|
342,584
|
|
|
332,911
|
|
||
Class A treasury stock at cost, 122 shares at 2017 and 2016
|
(12
|
)
|
|
(12
|
)
|
||
Class B treasury stock at cost, 917 shares at 2017 and 2016
|
(89
|
)
|
|
(89
|
)
|
||
Retained earnings
|
1,848,337
|
|
|
1,836,180
|
|
||
Accumulated other comprehensive income
|
516,643
|
|
|
417,766
|
|
||
Total stockholders’ equity
|
2,707,466
|
|
|
2,586,759
|
|
||
Total liabilities and stockholders’ equity
|
$
|
3,952,769
|
|
|
$
|
3,850,504
|
|
|
Three Months Ended
|
|
||||||
|
March 31,
|
|
||||||
|
2017
|
|
2016
|
|
||||
|
|
|
|
|
||||
Net sales
|
$
|
500,051
|
|
|
$
|
471,197
|
|
|
Cost of goods sold
|
230,064
|
|
|
207,168
|
|
|
||
Gross profit
|
269,987
|
|
|
264,029
|
|
|
||
Selling, general and administrative expense
|
194,940
|
|
|
189,716
|
|
|
||
Research and development expense
|
49,488
|
|
|
48,586
|
|
|
||
Income from operations
|
25,559
|
|
|
25,727
|
|
|
||
Interest expense
|
5,041
|
|
|
5,580
|
|
|
||
Foreign currency exchange losses, net
|
1,789
|
|
|
1,129
|
|
|
||
Other (income) expense, net
|
(1,418
|
)
|
|
(1,177
|
)
|
|
||
Income before income taxes
|
20,147
|
|
|
20,195
|
|
|
||
Provision for income taxes
|
(7,734
|
)
|
|
(7,919
|
)
|
|
||
Net income
|
$
|
12,413
|
|
|
$
|
12,276
|
|
|
|
|
|
|
|
||||
Basic earnings per share:
|
|
|
|
|
||||
Net income per basic share
|
$
|
0.42
|
|
|
$
|
0.42
|
|
|
Weighted average common shares - basic
|
29,580
|
|
|
29,364
|
|
|
||
|
|
|
|
|
||||
Diluted earnings per share:
|
|
|
|
|
||||
Net income per diluted share
|
$
|
0.41
|
|
|
$
|
0.42
|
|
|
Weighted average common shares - diluted
|
29,911
|
|
|
29,506
|
|
|
|
Three Months Ended
|
|
||||||
|
March 31,
|
|
||||||
|
2017
|
|
2016
|
|
||||
Net income
|
$
|
12,413
|
|
|
$
|
12,276
|
|
|
Other comprehensive income:
|
|
|
|
|
||||
Foreign currency translation adjustments
|
18,843
|
|
|
37,935
|
|
|
||
Foreign other post-employment benefits adjustments, net of income taxes
|
(115
|
)
|
|
(640
|
)
|
|
||
Net unrealized holding gains (losses) on available-for-sale (AFS) investments, net of income taxes
|
80,149
|
|
|
(4,093
|
)
|
|
||
Other comprehensive income, net of income taxes
|
98,877
|
|
|
33,202
|
|
|
||
Comprehensive income
|
$
|
111,290
|
|
|
$
|
45,478
|
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2017
|
|
2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Cash received from customers
|
$
|
508,982
|
|
|
$
|
492,407
|
|
Cash paid to suppliers and employees
|
(550,956
|
)
|
|
(508,820
|
)
|
||
Interest received (paid), net
|
329
|
|
|
(187
|
)
|
||
Income tax (payments) refunds, net
|
(8,804
|
)
|
|
10,421
|
|
||
Investment proceeds and miscellaneous receipts, net
|
1,658
|
|
|
1,667
|
|
||
Excess tax benefits from share-based compensation
|
—
|
|
|
(67
|
)
|
||
Payments for forward foreign exchange contracts, net
|
(7,429
|
)
|
|
(2,869
|
)
|
||
Net cash used in operating activities
|
(56,220
|
)
|
|
(7,448
|
)
|
||
Cash flows from investing activities:
|
|
|
|
||||
Capital expenditures
|
(39,332
|
)
|
|
(25,296
|
)
|
||
Proceeds from dispositions of property, plant and equipment
|
15
|
|
|
1
|
|
||
Payments for acquisitions and long-term investments
|
(73,541
|
)
|
|
(9,634
|
)
|
||
Payments for purchases of marketable securities and investments
|
(68,305
|
)
|
|
(71,485
|
)
|
||
Proceeds from sales of marketable securities and investments
|
20,201
|
|
|
20,381
|
|
||
Proceeds from maturities of marketable securities and investments
|
50,570
|
|
|
35,175
|
|
||
Net cash used in investing activities
|
(110,392
|
)
|
|
(50,858
|
)
|
||
Cash flows from financing activities:
|
|
|
|
||||
Net payments on line-of-credit arrangements and notes payable
|
(36
|
)
|
|
—
|
|
||
Payments on long-term borrowings
|
(76
|
)
|
|
(77
|
)
|
||
Payments of contingent consideration
|
(3,105
|
)
|
|
(3,500
|
)
|
||
Proceeds from issuances of common stock for share-based compensation
|
3,890
|
|
|
3,768
|
|
||
Excess tax benefits from share-based compensation
|
—
|
|
|
67
|
|
||
Net cash provided by financing activities
|
673
|
|
|
258
|
|
||
Effect of foreign exchange rate changes on cash
|
1,338
|
|
|
4,114
|
|
||
Net decrease in cash and cash equivalents
|
(164,601
|
)
|
|
(53,934
|
)
|
||
Cash and cash equivalents at beginning of period
|
456,264
|
|
|
457,549
|
|
||
Cash and cash equivalents at end of period
|
$
|
291,663
|
|
|
$
|
403,615
|
|
Reconciliation of net income to net cash used in operating activities:
|
|
|
|
||||
Net income
|
$
|
12,413
|
|
|
$
|
12,276
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
||||
Depreciation and amortization
|
33,662
|
|
|
34,090
|
|
||
Share-based compensation
|
5,393
|
|
|
4,645
|
|
||
(Gains) losses on dispositions of securities
|
(126
|
)
|
|
229
|
|
||
Excess tax benefits from share-based compensation
|
—
|
|
|
(67
|
)
|
||
Changes in fair value of contingent consideration
|
(9,400
|
)
|
|
(1,284
|
)
|
||
Decrease in accounts receivable
|
6,846
|
|
|
19,991
|
|
||
Increase in inventories
|
(26,864
|
)
|
|
(34,400
|
)
|
||
Increase in other current assets
|
(19,155
|
)
|
|
(15,730
|
)
|
||
Decrease in accounts payable and other current liabilities
|
(61,155
|
)
|
|
(47,666
|
)
|
||
(Decrease) increase in income taxes payable
|
(1,655
|
)
|
|
14,075
|
|
||
(Decrease) increase in deferred income taxes
|
(163
|
)
|
|
3,394
|
|
||
Net decrease/increase in other long-term assets/liabilities
|
3,984
|
|
|
2,999
|
|
||
Net cash used in operating activities
|
$
|
(56,220
|
)
|
|
$
|
(7,448
|
)
|
•
|
Level 1: Quoted prices in active markets for identical instruments
|
•
|
Level 2: Other significant observable inputs (including quoted prices in active markets for similar instruments)
|
•
|
Level 3: Significant unobservable inputs (including assumptions in determining the fair value of certain investments)
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Financial Assets Carried at Fair Value:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
—
|
|
|
$
|
16.3
|
|
|
$
|
—
|
|
|
$
|
16.3
|
|
Foreign time deposits
|
10.2
|
|
|
—
|
|
|
—
|
|
|
10.2
|
|
||||
U.S. government sponsored agencies
|
—
|
|
|
5.0
|
|
|
—
|
|
|
5.0
|
|
||||
Money market funds
|
4.9
|
|
|
—
|
|
|
—
|
|
|
4.9
|
|
||||
Total cash equivalents (a)
|
15.1
|
|
|
21.3
|
|
|
—
|
|
|
36.4
|
|
||||
Restricted investment:
|
4.6
|
|
|
—
|
|
|
—
|
|
|
4.6
|
|
||||
Available-for-sale investments:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
—
|
|
|
189.0
|
|
|
—
|
|
|
189.0
|
|
||||
U.S. government sponsored agencies
|
—
|
|
|
72.8
|
|
|
—
|
|
|
72.8
|
|
||||
Foreign government obligations
|
—
|
|
|
2.9
|
|
|
—
|
|
|
2.9
|
|
||||
Brokered certificates of deposit
|
—
|
|
|
3.6
|
|
|
—
|
|
|
3.6
|
|
||||
Municipal obligations
|
—
|
|
|
14.8
|
|
|
—
|
|
|
14.8
|
|
||||
Marketable equity securities
|
894.1
|
|
|
—
|
|
|
—
|
|
|
894.1
|
|
||||
Asset-backed securities
|
—
|
|
|
61.7
|
|
|
—
|
|
|
61.7
|
|
||||
Total available-for-sale investments (b)
|
894.1
|
|
|
344.8
|
|
|
—
|
|
|
1,238.9
|
|
||||
Forward foreign exchange contracts (c)
|
—
|
|
|
3.1
|
|
|
—
|
|
|
3.1
|
|
||||
Total financial assets carried at fair value
|
$
|
913.8
|
|
|
$
|
369.2
|
|
|
$
|
—
|
|
|
$
|
1,283.0
|
|
|
|
|
|
|
|
|
|
||||||||
Financial Liabilities Carried at Fair Value:
|
|
|
|
|
|
|
|
||||||||
Forward foreign exchange contracts (d)
|
$
|
—
|
|
|
$
|
1.7
|
|
|
$
|
—
|
|
|
$
|
1.7
|
|
Contingent consideration (e)
|
—
|
|
|
—
|
|
|
26.0
|
|
|
26.0
|
|
||||
Total financial liabilities carried at fair value
|
$
|
—
|
|
|
$
|
1.7
|
|
|
$
|
26.0
|
|
|
$
|
27.7
|
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
|
Total
|
||||||||
Financial Assets Carried at Fair Value:
|
|
|
|
|
|
|
|
||||||||
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
Commercial paper
|
$
|
—
|
|
|
$
|
14.1
|
|
|
$
|
—
|
|
|
$
|
14.1
|
|
Foreign time deposits
|
11.8
|
|
|
—
|
|
|
—
|
|
|
11.8
|
|
||||
Domestic time deposits
|
—
|
|
|
20.0
|
|
|
—
|
|
|
20.0
|
|
||||
U.S. government sponsored agencies
|
—
|
|
|
1.1
|
|
|
—
|
|
|
1.1
|
|
||||
Money market funds
|
5.9
|
|
|
—
|
|
|
—
|
|
|
5.9
|
|
||||
Total cash equivalents (a)
|
17.7
|
|
|
35.2
|
|
|
—
|
|
|
52.9
|
|
||||
Restricted investment:
|
4.6
|
|
|
—
|
|
|
—
|
|
|
4.6
|
|
||||
Available-for-sale investments:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
—
|
|
|
179.4
|
|
|
—
|
|
|
179.4
|
|
||||
U.S. government sponsored agencies
|
—
|
|
|
82.5
|
|
|
—
|
|
|
82.5
|
|
||||
Foreign government obligations
|
—
|
|
|
4.4
|
|
|
—
|
|
|
4.4
|
|
||||
Brokered certificates of deposit
|
—
|
|
|
3.6
|
|
|
—
|
|
|
3.6
|
|
||||
Municipal obligations
|
—
|
|
|
15.4
|
|
|
—
|
|
|
15.4
|
|
||||
Marketable equity securities
|
767.8
|
|
|
—
|
|
|
—
|
|
|
767.8
|
|
||||
Asset-backed securities
|
—
|
|
|
62.5
|
|
|
—
|
|
|
62.5
|
|
||||
Total available-for-sale investments (b)
|
767.8
|
|
|
347.8
|
|
|
—
|
|
|
1,115.6
|
|
||||
Forward foreign exchange contracts (c)
|
—
|
|
|
0.6
|
|
|
—
|
|
|
0.6
|
|
||||
Total financial assets carried at fair value
|
$
|
790.1
|
|
|
$
|
383.6
|
|
|
$
|
—
|
|
|
$
|
1,173.7
|
|
|
|
|
|
|
|
|
|
||||||||
Financial Liabilities Carried at Fair Value:
|
|
|
|
|
|
|
|
||||||||
Forward foreign exchange contracts (d)
|
$
|
—
|
|
|
$
|
1.3
|
|
|
$
|
—
|
|
|
$
|
1.3
|
|
Contingent consideration (e)
|
—
|
|
|
—
|
|
|
38.5
|
|
|
38.5
|
|
||||
Total financial liabilities carried at fair value
|
$
|
—
|
|
|
$
|
1.3
|
|
|
$
|
38.5
|
|
|
$
|
39.8
|
|
(a)
|
Cash equivalents are included in Cash and cash equivalents in the Condensed Consolidated Balance Sheets.
|
(b)
|
Available-for-sale investments are included in the following accounts in the Condensed Consolidated Balance Sheets (in millions):
|
|
March 31,
2017 |
|
December 31, 2016
|
||||
Short-term investments
|
$
|
382.4
|
|
|
$
|
383.2
|
|
Other investments
|
856.5
|
|
|
732.4
|
|
||
Total
|
$
|
1,238.9
|
|
|
$
|
1,115.6
|
|
(c)
|
Forward foreign exchange contracts in an asset position are included in Other current assets in the Condensed Consolidated Balance Sheets.
|
(d)
|
Forward foreign exchange contracts in a liability position are included in Other current liabilities in the Condensed Consolidated Balance Sheets.
|
(e)
|
Contingent consideration liability is included in the following accounts in the Condensed Consolidated Balance Sheets (in millions):
|
|
March 31, 2017
|
|
December 31, 2016
|
||||
Other current liabilities
|
$
|
3.2
|
|
|
$
|
14.5
|
|
Other long-term liabilities
|
22.8
|
|
|
24.0
|
|
||
Total
|
$
|
26.0
|
|
|
$
|
38.5
|
|
|
2017
|
||
January 1
|
$
|
28.5
|
|
Cell sorting system:
|
|
||
Payment of sales milestone
|
(3.1
|
)
|
|
|
|
||
Analytical flow cytometer platform:
|
|
||
Increase in estimated fair value of contingent consideration included in Selling, general and administrative expense
|
0.6
|
|
|
March 31
|
$
|
26.0
|
|
|
|
|
|
|
|
Valuation Technique
|
Unobservable Input
|
|
|
Analytical flow cytometer platform
|
Probability-weighted income approach
|
Sales milestones:
|
|
|
|
|
Discount rate
|
11
|
%
|
|
|
Cost of debt
|
4.6
|
%
|
|
|
|
|
|
March 31, 2017
|
||||||||||||||
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Estimated
Fair
Value
|
||||||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
$
|
189.0
|
|
|
$
|
0.3
|
|
|
$
|
(0.3
|
)
|
|
$
|
189.0
|
|
Brokered certificates of deposit
|
3.6
|
|
|
—
|
|
|
—
|
|
|
3.6
|
|
||||
Municipal obligations
|
14.9
|
|
|
—
|
|
|
(0.1
|
)
|
|
14.8
|
|
||||
Asset-backed securities
|
61.4
|
|
|
0.2
|
|
|
(0.1
|
)
|
|
61.5
|
|
||||
U.S. government sponsored agencies
|
73.3
|
|
|
0.1
|
|
|
(0.6
|
)
|
|
72.8
|
|
||||
Foreign government obligations
|
2.9
|
|
|
—
|
|
|
—
|
|
|
2.9
|
|
||||
Marketable equity securities
|
32.4
|
|
|
5.7
|
|
|
(0.3
|
)
|
|
37.8
|
|
||||
|
377.5
|
|
|
6.3
|
|
|
(1.4
|
)
|
|
382.4
|
|
||||
Long-term investments:
|
|
|
|
|
|
|
|
||||||||
Marketable equity securities
|
54.5
|
|
|
801.8
|
|
|
—
|
|
|
856.3
|
|
||||
Asset-backed securities
|
0.2
|
|
|
—
|
|
|
—
|
|
|
0.2
|
|
||||
|
54.7
|
|
|
801.8
|
|
|
—
|
|
|
856.5
|
|
||||
Total
|
$
|
432.2
|
|
|
$
|
808.1
|
|
|
$
|
(1.4
|
)
|
|
$
|
1,238.9
|
|
|
December 31, 2016
|
||||||||||||||
|
Amortized
Cost
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Estimated
Fair
Value
|
||||||||
Short-term investments:
|
|
|
|
|
|
|
|
||||||||
Corporate debt securities
|
$
|
179.7
|
|
|
$
|
0.2
|
|
|
$
|
(0.5
|
)
|
|
$
|
179.4
|
|
Brokered certificates of deposit
|
3.6
|
|
|
—
|
|
|
—
|
|
|
3.6
|
|
||||
Municipal obligations
|
15.5
|
|
|
—
|
|
|
(0.1
|
)
|
|
15.4
|
|
||||
Asset-backed securities
|
62.2
|
|
|
0.1
|
|
|
(0.1
|
)
|
|
62.2
|
|
||||
U.S. government sponsored agencies
|
83.1
|
|
|
0.1
|
|
|
(0.7
|
)
|
|
82.5
|
|
||||
Foreign government obligations
|
4.4
|
|
|
—
|
|
|
—
|
|
|
4.4
|
|
||||
Marketable equity securities
|
32.4
|
|
|
3.7
|
|
|
(0.4
|
)
|
|
35.7
|
|
||||
|
380.9
|
|
|
4.1
|
|
|
(1.8
|
)
|
|
383.2
|
|
||||
Long-term investments:
|
|
|
|
|
|
|
|
||||||||
Marketable equity securities
|
54.5
|
|
|
677.6
|
|
|
—
|
|
|
732.1
|
|
||||
Asset-backed securities
|
0.3
|
|
|
—
|
|
|
—
|
|
|
0.3
|
|
||||
|
54.8
|
|
|
677.6
|
|
|
—
|
|
|
732.4
|
|
||||
Total
|
$
|
435.7
|
|
|
$
|
681.7
|
|
|
$
|
(1.8
|
)
|
|
$
|
1,115.6
|
|
|
March 31,
2017 |
|
December 31, 2016
|
||||
Fair value of investments in a loss position 12 months or more
|
$
|
8.9
|
|
|
$
|
11.8
|
|
Fair value of investments in a loss position less than 12 months
|
$
|
158.4
|
|
|
$
|
160.5
|
|
Gross unrealized losses for investments in a loss position 12 months or more
|
$
|
0.1
|
|
|
$
|
0.3
|
|
Gross unrealized losses for investments in a loss position less than 12 months
|
$
|
1.3
|
|
|
$
|
1.5
|
|
|
March 31,
|
||
|
2017
|
||
Contracts maturing in April through June 2017 to sell foreign currency:
|
|
||
Notional value
|
$
|
17.4
|
|
Unrealized gain
|
$
|
0.1
|
|
Contracts maturing in April through June 2017 to purchase foreign currency:
|
|
||
Notional value
|
$
|
406.6
|
|
Unrealized gain
|
$
|
1.3
|
|
|
Amortized
Cost
|
|
Estimated Fair
Value
|
||||
Mature in less than one year
|
$
|
151.7
|
|
|
$
|
151.8
|
|
Mature in one to five years
|
139.6
|
|
|
139.4
|
|
||
Mature in more than five years
|
54.0
|
|
|
53.6
|
|
||
Total
|
$
|
345.3
|
|
|
$
|
344.8
|
|
|
March 31, 2017
|
|
December 31, 2016
|
||||||||||||||||
|
Carrying
Amount
|
|
Estimated
Fair
Value
|
|
Fair Value Hierarchy Level
|
|
Carrying
Amount
|
|
Estimated
Fair
Value
|
|
Fair Value Hierarchy Level
|
||||||||
Other investments
|
$
|
93.4
|
|
|
$
|
1,149.2
|
|
|
2
|
|
$
|
92.8
|
|
|
$
|
984.2
|
|
|
2
|
Total long-term debt, excluding leases and current maturities
|
$
|
422.6
|
|
|
$
|
453.6
|
|
|
2
|
|
$
|
422.5
|
|
|
$
|
454.2
|
|
|
2
|
|
Life
Science
|
|
Clinical
Diagnostics
|
|
Total
|
||||||
Balances as of January 1, 2017:
|
|
|
|
|
|
||||||
Goodwill
|
$
|
207.1
|
|
|
$
|
311.7
|
|
|
$
|
518.8
|
|
Accumulated impairment losses
|
(27.2
|
)
|
|
(14.5
|
)
|
|
(41.7
|
)
|
|||
Goodwill, net
|
179.9
|
|
|
297.2
|
|
|
477.1
|
|
|||
|
|
|
|
|
|
||||||
Acquisitions
|
34.8
|
|
|
—
|
|
|
34.8
|
|
|||
Currency fluctuations
|
0.2
|
|
|
4.1
|
|
|
4.3
|
|
|||
|
|
|
|
|
|
||||||
Balances as of March 31, 2017:
|
|
|
|
|
|
||||||
Goodwill
|
242.1
|
|
|
315.8
|
|
|
557.9
|
|
|||
Accumulated impairment losses
|
(27.2
|
)
|
|
(14.5
|
)
|
|
(41.7
|
)
|
|||
Goodwill, net
|
$
|
214.9
|
|
|
$
|
301.3
|
|
|
$
|
516.2
|
|
|
March 31, 2017
|
||||||||||||
|
Average
Remaining
Life (years)
|
|
Purchase
Price
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||
Customer relationships/lists
|
1-8
|
|
$
|
85.7
|
|
|
$
|
(55.1
|
)
|
|
$
|
30.6
|
|
Know how
|
1-9
|
|
184.0
|
|
|
(140.6
|
)
|
|
43.4
|
|
|||
Developed product technology
|
2-12
|
|
126.7
|
|
|
(58.9
|
)
|
|
67.8
|
|
|||
Licenses
|
1-14
|
|
74.1
|
|
|
(31.4
|
)
|
|
42.7
|
|
|||
Tradenames
|
4-8
|
|
3.6
|
|
|
(2.7
|
)
|
|
0.9
|
|
|||
Covenants not to compete
|
2-7
|
|
7.8
|
|
|
(2.6
|
)
|
|
5.2
|
|
|||
Total definite-lived intangible assets
|
|
|
$
|
481.9
|
|
|
$
|
(291.3
|
)
|
|
$
|
190.6
|
|
|
December 31, 2016
|
||||||||||||
|
Average
Remaining
Life (years)
|
|
Purchase
Price
|
|
Accumulated
Amortization
|
|
Net
Carrying
Amount
|
||||||
Customer relationships/lists
|
1-8
|
|
$
|
84.4
|
|
|
$
|
(52.8
|
)
|
|
$
|
31.6
|
|
Know how
|
1-9
|
|
182.6
|
|
|
(136.9
|
)
|
|
45.7
|
|
|||
Developed product technology
|
3-12
|
|
125.9
|
|
|
(56.3
|
)
|
|
69.6
|
|
|||
Licenses
|
1-9
|
|
39.0
|
|
|
(30.6
|
)
|
|
8.4
|
|
|||
Tradenames
|
4-8
|
|
3.5
|
|
|
(2.5
|
)
|
|
1.0
|
|
|||
Covenants not to compete
|
2-9
|
|
7.8
|
|
|
(2.5
|
)
|
|
5.3
|
|
|||
Total definite-lived intangible assets
|
|
|
$
|
443.2
|
|
|
$
|
(281.6
|
)
|
|
$
|
161.6
|
|
|
Three Months Ended
|
||||||
|
March 31,
|
||||||
|
2017
|
|
2016
|
||||
|
|
|
|
||||
Amortization expense
|
$
|
6.9
|
|
|
$
|
9.4
|
|
January 1, 2017
|
$
|
17.6
|
|
Provision for warranty
|
8.0
|
|
|
Actual warranty costs
|
(8.0
|
)
|
|
March 31, 2017
|
$
|
17.6
|
|
|
March 31,
2017 |
|
December 31, 2016
|
||||
4.875% Senior Notes due 2020 principal amount
|
$
|
425.0
|
|
|
$
|
425.0
|
|
Less unamortized discount and debt issuance costs
|
(2.4
|
)
|
|
(2.5
|
)
|
||
Long-term debt less unamortized discount and debt issuance costs
|
422.6
|
|
|
422.5
|
|
||
Capital leases and other debt
|
12.2
|
|
|
12.0
|
|
||
|
434.8
|
|
|
434.5
|
|
||
Less current maturities
|
(0.5
|
)
|
|
(0.3
|
)
|
||
Long-term debt
|
$
|
434.3
|
|
|
$
|
434.2
|
|
|
Foreign currency translation adjustments
|
Foreign other post-employment benefits adjustments
|
Net unrealized holding gains on available-for-sale investments
|
Total accumulated other comprehensive income
|
||||||||
Balances as of January 1, 2017:
|
$
|
1.3
|
|
$
|
(18.6
|
)
|
$
|
435.0
|
|
$
|
417.7
|
|
Other comprehensive income (loss), before reclassifications
|
18.8
|
|
(0.3
|
)
|
127.1
|
|
145.6
|
|
||||
Amounts reclassified from Accumulated other comprehensive income
|
—
|
|
0.2
|
|
(0.2
|
)
|
—
|
|
||||
Income tax effects
|
—
|
|
—
|
|
(46.7
|
)
|
(46.7
|
)
|
||||
Other comprehensive income (loss), net of income taxes
|
18.8
|
|
(0.1
|
)
|
80.2
|
|
98.9
|
|
||||
Balances as of March 31, 2017:
|
$
|
20.1
|
|
$
|
(18.7
|
)
|
$
|
515.2
|
|
$
|
516.6
|
|
|
Foreign currency translation adjustments
|
Foreign other post-employment benefits adjustments
|
Net unrealized holding losses on available-for-sale investments
|
Total accumulated other comprehensive income
|
||||||||
Balances as of January 1, 2016:
|
$
|
33.7
|
|
$
|
(20.7
|
)
|
$
|
369.1
|
|
$
|
382.1
|
|
Other comprehensive income (loss), before reclassifications
|
37.9
|
|
(0.9
|
)
|
(6.5
|
)
|
30.5
|
|
||||
Amounts reclassified from Accumulated other comprehensive income
|
—
|
|
0.3
|
|
—
|
|
0.3
|
|
||||
Income tax effects
|
—
|
|
—
|
|
2.4
|
|
2.4
|
|
||||
Other comprehensive income (loss), net of income taxes
|
37.9
|
|
(0.6
|
)
|
(4.1
|
)
|
33.2
|
|
||||
Balances as of March 31, 2016:
|
$
|
71.6
|
|
$
|
(21.3
|
)
|
$
|
365.0
|
|
$
|
415.3
|
|
|
Income before taxes impact (in millions):
|
|
||||||||
|
|
Three Months Ended
|
|
|
||||||
|
|
March 31,
|
|
|
||||||
Components of Comprehensive income
|
|
2017
|
|
2016
|
|
Location
|
||||
Amortization of foreign other post-employment benefit items
|
|
$
|
(0.2
|
)
|
|
$
|
(0.3
|
)
|
|
Selling, general and administrative expense
|
Net holding gains on available-for-sale investments
|
|
$
|
0.2
|
|
|
$
|
—
|
|
|
Other (income) expense, net
|
|
Three Months Ended
|
|
||||
|
March 31,
|
|
||||
|
2017
|
|
2016
|
|
||
Basic weighted average shares outstanding
|
29,580
|
|
|
29,364
|
|
|
Effect of potentially dilutive stock options and restricted stock awards
|
331
|
|
|
142
|
|
|
Diluted weighted average common shares
|
29,911
|
|
|
29,506
|
|
|
Anti-dilutive shares
|
17
|
|
|
90
|
|
|
|
Three Months Ended
|
|
||||||
|
March 31,
|
|
||||||
|
2017
|
|
2016
|
|
||||
Interest and investment income
|
$
|
(1.1
|
)
|
|
$
|
(1.2
|
)
|
|
Net realized gain on investments
|
(0.3
|
)
|
|
—
|
|
|
||
Other (income) expense, net
|
$
|
(1.4
|
)
|
|
$
|
(1.2
|
)
|
|
|
|
Life
Science
|
|
Clinical
Diagnostics
|
|
Other
Operations
|
||||||
|
|
|
|
|
|
|
||||||
Segment net sales
|
2017
|
$
|
174.3
|
|
|
$
|
322.3
|
|
|
$
|
3.5
|
|
|
2016
|
$
|
165.9
|
|
|
$
|
301.7
|
|
|
$
|
3.6
|
|
|
|
|
|
|
|
|
||||||
Segment net (loss) profit
|
2017
|
$
|
(18.8
|
)
|
|
$
|
41.0
|
|
|
$
|
0.2
|
|
|
2016
|
$
|
(3.3
|
)
|
|
$
|
24.8
|
|
|
$
|
0.3
|
|
|
Three Months Ended
|
|
||||||
|
March 31,
|
|
||||||
|
2017
|
|
2016
|
|
||||
Total segment profit
|
$
|
22.4
|
|
|
$
|
21.8
|
|
|
Foreign currency exchange losses, net
|
(1.8
|
)
|
|
(1.1
|
)
|
|
||
Net corporate operating, interest and other expense not allocated to segments
|
(1.9
|
)
|
|
(1.7
|
)
|
|
||
Other income (expense), net
|
1.4
|
|
|
1.2
|
|
|
||
Consolidated income before income taxes
|
$
|
20.1
|
|
|
$
|
20.2
|
|
|
|
|
Life Science
|
|
Clinical Diagnostics
|
|
Total
|
||||||
Balance at December 31, 2016
|
|
$
|
3.2
|
|
|
$
|
5.8
|
|
|
$
|
9.0
|
|
Charged to expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Adjustment to expense
|
|
—
|
|
|
—
|
|
|
—
|
|
|||
Cash payments
|
|
(0.3
|
)
|
|
(0.6
|
)
|
|
(0.9
|
)
|
|||
Foreign currency translation losses
|
|
—
|
|
|
0.1
|
|
|
0.1
|
|
|||
Balance at March 31, 2017
|
|
$
|
2.9
|
|
|
$
|
5.3
|
|
|
$
|
8.2
|
|
|
Three Months Ended
|
|
||||
|
March 31,
|
|
||||
|
2017
|
|
2016
|
|
||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
Cost of goods sold
|
46.0
|
|
|
44.0
|
|
|
Gross profit
|
54.0
|
|
|
56.0
|
|
|
Selling, general and administrative expense
|
39.0
|
|
|
40.3
|
|
|
Research and development expense
|
9.9
|
|
|
10.3
|
|
|
Net income
|
2.5
|
|
|
2.6
|
|
|
•
|
more cash paid to suppliers to close open purchase orders received and related payables to minimize the transition for the third deployment of our ERP system that was implemented in April 2017,
|
•
|
income tax payments in 2017 compared to net income tax refunds received in 2016 that included refunds of $12.1 million of U.S. federal income taxes, and
|
•
|
higher net payments in 2017 compared to 2016 for forward foreign exchange contracts, partially offset by
|
•
|
higher cash received from customers primarily due to higher sales activity in the fourth quarter of 2016 than the same period in 2015, which resulted in more cash collected in the first quarter of 2017.
|
•
|
The trend towards managed care, together with healthcare reform of the delivery system in the United States and efforts to reform in Europe, has resulted in increased pressure on healthcare providers and other participants in the healthcare industry to reduce selling prices. Consolidation among healthcare providers has resulted in fewer, more powerful groups, whose purchasing power gives them cost containment leverage. In particular, there has been a consolidation of blood transfusion centers, as well as an industry decline in the number of blood transfusions. These industry trends and competitive forces place constraints on the levels of overall pricing, and thus could have a material adverse effect on our gross margins for products we sell in clinical diagnostic markets.
|
•
|
Third party payors, such as Medicare and Medicaid in the United States, have reduced their reimbursements for certain medical products and services. Our Clinical Diagnostics business is impacted by the level of reimbursement available for clinical tests from third party payors. In the United States payment for many diagnostic tests furnished to Medicare fee-for-service beneficiaries is made based on the Medicare Clinical Laboratory Fee Schedule (CLFS), a fee schedule established and adjusted from time to time by the Centers for Medicare and Medicaid Services (CMS). Some commercial payors are guided by the CLFS in establishing their reimbursement rates. Clinicians may decide not to order clinical diagnostic tests if third party payments are inadequate, and we cannot predict whether third party payors will offer adequate reimbursement for tests utilizing our products to make them commercially attractive. Legislation, such as the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act (PPACA) and the Middle Class Tax Relief and Job Creation Act of 2012, has reduced the payments for clinical laboratory services paid under the CLFS. In addition, the Protecting Access to Medicare Act of 2014 will make significant changes to the way Medicare will pay for clinical laboratory services, which will further reduce reimbursement rates.
|
•
|
The PPACA has also imposed a 2.3% excise tax on the sales of certain medical devices in the U.S., which we are required to pay on most of our United States Clinical Diagnostic sales. However, the Consolidated Appropriations Act, 2016 (Pub. L. 114-113), signed into law on December 18, 2015, includes a two year moratorium on the medical device excise tax during the period beginning on January 1, 2016, and ending on December 31, 2017.
|
•
|
assimilate the operations and personnel of acquired companies;
|
•
|
retain acquired business customers;
|
•
|
minimize potential disruption to our ongoing business;
|
•
|
retain key technical and management personnel;
|
•
|
integrate acquired companies into our strategic and financial plans;
|
•
|
accurately assess the value of target companies, products and technologies;
|
•
|
comply with new regulatory requirements;
|
•
|
harmonize standards, controls, procedures and policies;
|
•
|
minimize the impact to our relationships with our employees and customers; and
|
•
|
assess, document and remediate any deficiencies in disclosure controls and procedures and internal control over financial reporting.
|
•
|
make it more difficult for us to satisfy our financial obligations, including those relating to our outstanding debt;
|
•
|
require us to dedicate a substantial portion of our cash flow from operations to the payment of interest and principal due under our debt, which will reduce funds available for other business purposes;
|
•
|
increase our vulnerability to general adverse economic and industry conditions;
|
•
|
limit our flexibility in planning for, or reacting to, changes in our business and the industries in which we operate;
|
•
|
place us at a competitive disadvantage compared with some of our competitors that have less debt; and
|
•
|
limit our ability to obtain additional financing required to fund working capital and capital expenditures and for other general corporate purposes.
|
•
|
the U.S. federal Anti-Kickback Statute, which prohibits, among other things, persons or entities from soliciting, receiving, offering or providing remuneration, directly or indirectly, in return for or to induce either the referral of an individual for, or the purchase order or recommendation of, any item or services for which payment may be made under a federal healthcare program such as the Medicare and Medicaid programs;
|
•
|
U.S. federal false claims laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other third-party payors that are false or fraudulent. In addition, the U.S. federal government may assert that a claim
|
•
|
the U.S. Physician Payment Sunshine Act, which requires certain manufacturers of drugs, biologics, devices and medical supplies to record any transfers of value to U.S. physicians and U.S. teaching hospitals;
|
•
|
the Health Insurance Portability and Accountability Act ("HIPAA"), as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information; and
|
•
|
state or foreign law equivalents of each of the U.S. federal laws above, such as anti-kickback and false claims laws, which may apply to items or services reimbursed by any third-party payor, including commercial insurers.
|
Exhibit
No.
|
|
|
|
31.1
|
Chief Executive Officer Section 302 Certification
|
|
|
31.2
|
Chief Financial Officer Section 302 Certification
|
|
|
32.1
|
Chief Executive Officer Certification pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
32.2
|
Chief Financial Officer Certification pursuant to 18 U.S.C Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
10.1
|
Bio-Rad Laboratories, Inc. 2017 Incentive Award Plan
|
|
|
10.2
|
First Amendment to the Bio-Rad Laboratories, Inc. 2011 Employee Stock Purchase Plan
|
|
|
101.INS
|
The instance document does not appear in the interactive data file because its XBRL tags are embedded within the inline XBRL document.
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
101.LAB
|
XBRL Taxonomy Extension Labels Linkbase Document
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
|
|
BIO-RAD LABORATORIES, INC.
|
|||
(Registrant)
|
|||
|
|
|
|
Date:
|
May 8, 2017
|
|
/s/ Norman Schwartz
|
|
|
|
Norman Schwartz, Chairman of the Board,
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
Date:
|
May 8, 2017
|
|
/s/ Christine A. Tsingos
|
|
|
|
Christine A. Tsingos, Executive Vice President,
|
|
|
|
Chief Financial Officer
|
|
|
|
|
|
*
|
|
*
|
|
*
|
By:
|
|
/s/ Timothy S. Ernst
|
|
|
Timothy S. Ernst
|
|
|
EVP, General Counsel and Secretary
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Bio-Rad Laboratories, Inc.
|
2.
|
Based on my knowledge, this 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 report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
May 8, 2017
|
|
/s/ Norman Schwartz
|
|
|
|
Norman Schwartz, Chairman of the Board,
|
|
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this quarterly report on Form 10-Q of Bio-Rad Laboratories, Inc.
|
2.
|
Based on my knowledge, this 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 report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this 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 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-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13-a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, 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 report is being prepared;
|
(b)
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, 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 and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
Date:
|
May 8, 2017
|
|
/s/ Christine A.Tsingos
|
|
|
|
Christine A. Tsingos
|
|
|
|
Executive Vice President,
|
|
|
|
Chief Financial Officer
|
(1)
|
the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) 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 Company.
|
Date:
|
May 8, 2017
|
|
/s/ Norman Schwartz
|
|
|
|
Norman Schwartz, Chairman of the Board,
|
|
|
|
President and Chief Executive Officer
|
(1)
|
the Quarterly Report on Form 10-Q of the Company for the quarter ended March 31, 2017 (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) 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 Company.
|
Date:
|
May 8, 2017
|
|
/s/ Christine A. Tsingos
|
|
|
|
Christine A. Tsingos
|
|
|
|
Executive Vice President,
|
|
|
|
Chief Financial Officer
|