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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549
FORM 10-Q
(Mark One)
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period endedSeptember 30, 2022
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 number1-7928
BIO-RAD LABORATORIES, INC.
(Exact name of registrant as specified in its charter)
Delaware94-1381833
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
1000 Alfred Nobel Drive,Hercules,California94547
(Address of principal executive offices)(Zip Code)
(510)724-7000
(Registrant's telephone number, including area code)
No Change
(Former name, former address and former fiscal year, if changed since last report.)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Class A Common Stock, Par Value $0.0001 per shareBIONew York Stock Exchange
Class B Common Stock, Par Value $0.0001 per shareBIObNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes☒No☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232,405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit files).
Yes☒No☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.  (Check one):
Large accelerated filer☒Accelerated filer☐
Non-accelerated filer☐Smaller reporting company☐
Emerging growth company☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes☐No☒
.
Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.
Common Shares Outstanding at October 21, 2022:Class A - 24,749,308Class B - 5,074,822



BIO-RAD LABORATORIES, INC.

FORM 10-Q SEPTEMBER 30, 2022

TABLE OF CONTENTS

2

INFORMATION RELATING TO FORWARD-LOOKING STATEMENTS

Other than statements of historical fact, statements made in this report include forward-looking statements, within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements we make regarding our future financial performance, operating results, plans and objectives, impact of the COVID-19 pandemic on Bio-Rad’s results and operations, and steps governments, universities, hospitals and private industry, including diagnostic laboratories, are taking or may take as a result of the pandemic. Forward-looking statements generally can be identified by the use of forward-looking terminology, such as “believe,” “expect,” “anticipate,” “may,” “will,” “intend,” “estimate,” “continue,” or similar expressions or the negative of those terms or expressions. Such statements involve risks and uncertainties, which could cause actual results to vary materially from those expressed in or indicated by the forward-looking statements. We have based these forward-looking statements on our current expectations and projections about future events. However, actual results may differ materially from those currently anticipated depending on a variety of risk factors including, but not limited to, the duration, severity and impact of the COVID-19 pandemic, global economic conditions, supply chain issues, our ability to develop and market new or improved products, our ability to compete effectively, foreign currency exchange fluctuations, reductions in government funding or capital spending of our customers, international legal and regulatory risks, product quality and liability issues, our ability to integrate acquired companies, products or technologies into our company successfully, changes in the healthcare industry, natural disasters and other catastrophic events beyond our control, and other risks and uncertainties identified under “Part II, Item 1A, Risk Factors” of this Quarterly Report on Form 10-Q. We caution you not to place undue reliance on forward-looking statements, which reflect an analysis only and speak only as of the date hereof. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise, except as required by law.

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PART I – FINANCIAL INFORMATION
Item 1.          Financial Statements

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

September 30, 2022December 31, 2021
ASSETS:(Unaudited)
Cash and cash equivalents$517,943 $470,783 
Short-term investments1,332,180 399,135 
Restricted investments5,560 5,560 
Accounts receivable, less allowance for credit losses of $14,119 at 2022 and $15,142 at 2021
432,302 423,537 
Inventory685,850 572,239 
Prepaid expenses147,198 107,745 
Other current assets19,122 10,089 
Total current assets3,140,155 1,989,088 
Property, plant and equipment1,481,658 1,488,568 
Less: accumulated depreciation and amortization(1,020,546)(997,616)
Property, plant and equipment, net461,112 490,952 
Operating lease right-of-use assets171,587 204,798 
Goodwill, net399,589 347,343 
Purchased intangibles, net325,076 253,939 
Other investments7,459,169 14,387,006 
Other assets101,774 102,669 
Total assets$12,058,462 $17,775,795 
















The accompanying notes are an integral part of these condensed consolidated financial statements.
4





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

September 30, 2022December 31, 2021
LIABILITIES AND STOCKHOLDERS’ EQUITY:(Unaudited) 
Accounts payable$142,746 $141,941 
Accrued payroll and employee benefits192,460 276,986 
Current maturities of long-term debt and notes payable448 489 
Income and other taxes payable29,274 46,299 
Current operating lease liabilities34,043 36,435 
Other current liabilities171,706 178,788 
Total current liabilities570,677 680,938 
Long-term debt, net of current maturities1,197,272 10,514 
Deferred income taxes1,484,606 3,059,080 
Operating lease liabilities147,211 175,938 
Other long-term liabilities205,091 182,191 
Total liabilities3,604,857 4,108,661 
Stockholders’ equity:  
Class A common stock, shares issued 25,161,383 and 25,133,530 at 2022 and 2021, respectively; shares outstanding 24,749,308 and 24,853,986 at 2022 and 2021, respectively
2 2 
Class B common stock, shares issued and outstanding, 5,074,822 at 2022 and 5,078,452 at 2021
1 1 
Additional paid-in capital430,547 441,733 
Class A treasury stock at cost, 412,075 and 279,544 shares at 2022 and 2021, respectively
(178,261)(106,290)
Retained earnings9,046,530 13,507,241 
Accumulated other comprehensive income (loss)(845,214)(175,553)
Total stockholders’ equity8,453,605 13,667,134 
Total liabilities and stockholders’ equity$12,058,462 $17,775,795 













The accompanying notes are an integral part of these condensed consolidated financial statements. 
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BIO-RAD LABORATORIES, INC.
Condensed Consolidated Statements of Income (Loss)
(In thousands, except per share data)
(Unaudited)
 Three Months EndedNine Months Ended
 September 30,September 30,
 2022202120222021
Net sales$680,800 $747,049 $2,071,961 $2,189,776 
Cost of goods sold307,008 309,614 898,628 950,116 
Gross profit373,792 437,435 1,173,333 1,239,660 
Selling, general and administrative expense211,047 216,150 617,371 655,428 
Research and development expense69,949 64,481 199,526 201,784 
Income from operations92,796 156,804 356,436 382,448 
Interest expense11,663 426 26,431 1,187 
Foreign currency exchange losses, net4,364 2,232 3,133 542 
(Gains) losses from change in fair market value of equity securities and loan receivable288,999 (4,868,659)6,172,306 (7,078,753)
Other (income) expense, net(3,062)579 (42,369)(16,732)
Income (loss) before income taxes(209,168)5,022,226 (5,803,065)7,476,204 
Benefit from (provision for) income taxes44,936 (1,094,193)1,342,036 (1,656,643)
Net income (loss)$(164,232)$3,928,033 $(4,461,029)$5,819,561 
Basic earnings (loss) per share:  
Net income (loss) per basic share$(5.52)$131.75 $(149.60)$195.29 
Weighted average common shares - basic29,733 29,814 29,819 29,800 
Diluted earnings (loss) per share:  
Net income (loss) per diluted share$(5.52)$129.96 $(149.60)$192.76 
Weighted average common shares - diluted29,733 30,224 29,819 30,190 


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



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BIO-RAD LABORATORIES, INC.
Condensed Consolidated Statements of Comprehensive Income (Loss)
(In thousands)
(Unaudited)
Three Months EndedNine Months Ended
September 30,September 30,
 2022202120222021
Net income (loss)$(164,232)$3,928,033 $(4,461,029)$5,819,561 
Other comprehensive income (loss):
Foreign currency translation adjustments, net of income taxes(305,666)(188,859)(653,301)(347,100)
Foreign other post-employment benefits adjustments, net of income taxes481 1,162 1,004 3,761 
Net unrealized holding loss on available-for-sale debt investments, net of income taxes(6,643)(510)(17,364)(2,158)
Other comprehensive loss, net of income taxes(311,828)(188,207)(669,661)(345,497)
Comprehensive income (loss)$(476,060)$3,739,826 $(5,130,690)$5,474,064 



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

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BIO-RAD LABORATORIES, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands, unaudited)
 Nine Months Ended
 September 30,
 20222021
Cash flows from operating activities:  
Cash received from customers$1,981,952 $2,177,199 
Cash paid to suppliers and employees(1,811,250)(1,597,938)
Interest paid, net(23,974)(1,848)
Income tax payments, net(137,863)(103,902)
Dividend proceeds and miscellaneous receipts, net51,146 24,219 
Proceeds from forward foreign exchange contracts, net44,016 867 
Net cash provided by operating activities104,027 498,597 
Cash flows from investing activities:  
Payments for purchases of property, plant and equipment(67,224)(77,563)
Proceeds from dispositions of property, plant and equipment114 52 
Proceeds from divestiture of a division1,360 — 
Payments for acquisitions, net of cash received(100,746)— 
Payments for purchases of marketable securities and investments(1,807,148)(460,061)
Proceeds from sales of marketable securities and investments542,639 55,487 
Proceeds from maturities of marketable securities and investments292,727 252,131 
Net cash used in investing activities(1,138,278)(229,954)
Cash flows from financing activities:  
Proceeds from issuance of Notes, net of debt financing costs1,186,220 — 
Payments on long-term borrowings(367)(1,645)
Payments of contingent consideration— (561)
Proceeds from issuance of common stock and from reissuance of treasury stock under the employee stock purchase plan and upon exercise of stock options13,218 14,460 
Tax payments from net share settlement(13,876)(22,320)
Payments for purchases of treasury stock(125,000)(49,998)
Net cash provided by (used in) financing activities1,060,195 (60,064)
Effect of foreign exchange rate changes on cash21,167 (11,174)
Net increase in cash, cash equivalents and restricted cash47,111 197,405 
Cash, cash equivalents and restricted cash at beginning of period471,133 667,115 
Cash, cash equivalents and restricted cash at end of period$518,244 $864,520 

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the condensed consolidated balance sheets that agrees to the same amounts shown in the condensed consolidated statements of cash flows (in thousands):
September 30, 2022September 30, 2021
Cash and cash equivalents$517,943 $859,902 
Restricted cash included in Other current assets12 3,772 
Restricted cash included in Other assets289 846 
Total cash, cash equivalents and restricted cash shown in the condensed consolidated statements of cash flows$518,244 $864,520 

These restricted cash items are primarily related to performance guarantees and other restricted deposits.

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

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BIO-RAD LABORATORIES, INC.
Condensed Consolidated Statements of Changes in Stockholders' Equity
(In thousands)
(Unaudited)
Common StockAdditional Paid-in CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders' Equity
Balance at December 31, 2021$3 $441,733 $(106,290)$13,507,241 $(175,553)$13,667,134 
Net loss— — — (3,369,613)— (3,369,613)
Other comprehensive loss, net of tax— — — — (132,303)(132,303)
Issuance of common stock— 4,177 — — — 4,177 
Stock compensation expense— 13,521 — — — 13,521 
Balance at March 31, 2022$3 $459,431 $(106,290)$10,137,628 $(307,856)$10,182,916 
Net loss— — — (927,184)— (927,184)
Other comprehensive loss, net of tax— — — — (225,530)(225,530)
Issuance of common stock— (443)— — — (443)
Stock compensation expense— 13,571 — — — 13,571 
Purchase of treasury stock— — (125,000)— — (125,000)
Issuance of treasury stock— (696)4,950 13 — 4,267 
Balance at June 30, 2022$3 $471,863 $(226,340)$9,210,457 $(533,386)$8,922,597 
Net loss— — — (164,232)— (164,232)
Other comprehensive loss, net of tax— — — — (311,828)(311,828)
Issuance of common stock— (7,550)— (7,550)
Stock compensation expense— 15,735 — — — 15,735 
Issuance of treasury stock— (49,501)48,079 305 — (1,117)
Balance at September 30, 2022$3 $430,547 $(178,261)$9,046,530 $(845,214)$8,453,605 



9

BIO-RAD LABORATORIES, INC.
Condensed Consolidated Statements of Changes in Stockholders' Equity
(continued)
(In thousands)
(Unaudited)

Common StockAdditional Paid-in CapitalTreasury StockRetained EarningsAccumulated Other Comprehensive Income (Loss)Total Stockholders' Equity
Balance at December 31, 2020$3 $429,376 $(99,907)$9,268,012 $282,456 $9,879,940 
Net income— — — 977,414 — 977,414 
Other comprehensive loss, net of tax— — — — (214,022)(214,022)
Issuance of common stock— 4,052 — — — 4,052 
Stock compensation expense— 11,673 — — — 11,673 
Purchase of treasury stock— — (49,998)— — (49,998)
Balance at March 31, 2021$3 $445,101 $(149,905)$10,245,426 $68,434 $10,609,059 
Net income— — — 914,114 — 914,114 
Other comprehensive income, net of tax— — — — 56,732 56,732 
Issuance of common stock— 3,548 — — — 3,548 
Stock compensation expense— 11,428 — — — 11,428 
Issuance of treasury stock— (379)443 (65)— (1)
Balance at June 30, 2021$3 $459,698 $(149,462)$11,159,475 $125,166 $11,594,880 
Net income— — — 3,928,033 — 3,928,033 
Other comprehensive loss, net of tax— — — — (188,207)(188,207)
Issuance of common stock— (15,460)— — — (15,460)
Stock compensation expense— 13,141 — — — 13,141 
Issuance of treasury stock— (36,176)42,821 (6,654)— (9)
Balance at September 30, 2021$3 $421,203 $(106,641)$15,080,854 $(63,041)$15,332,378 


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

10

BIO-RAD LABORATORIES, INC

Notes to Condensed Consolidated Financial Statements
(Unaudited)

1.BASIS OF PRESENTATION AND USE OF ESTIMATES

Basis of Presentation

In this report, “Bio-Rad,” “we,” “us,” “the Company” and “our” refer to Bio-Rad Laboratories, Inc. and its subsidiaries.  The accompanying unaudited condensed consolidated financial statements of Bio-Rad have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) 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 balance sheet at December 31, 2021 has been derived from the audited consolidated financial statements at that date but does not include all of the information and footnotes required by GAAP for complete financial statements. The condensed consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements contained in our Annual Report on Form 10-K for the year ended December 31, 2021.

We evaluate subsequent events and the evidence they provide about conditions existing at the date of the balance sheet as well as conditions that arose after the balance sheet date but through the date the financial statements are issued.  The effects of conditions that existed at the balance sheet date are recognized in the financial statements. Events and conditions arising after the balance sheet date but before the financial statements are issued are evaluated to determine if disclosure is required to keep the financial statements from being misleading.  To the extent such events and conditions exist, disclosures are made regarding the nature of events and the estimated financial effects of those events and conditions.

Use of Estimates

The preparation of the condensed consolidated financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingencies at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting periods. Bio-Rad bases its estimates on historical experience and on various other market-specific and other relevant assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Such estimates include, but are not limited to, revenue recognition, the valuation of inventory, the valuation of intangible assets, the recognition and measurement of current and deferred income tax assets and fair value measurement of the Loan receivable. Actual results could differ materially from those estimates.

Revenue Recognition

We recognize revenue from operations through the sale of products, services, license of intellectual property and rental of instruments. Revenue from contracts with customers is recognized upon transfer of control of promised products or services to customers in an amount that reflects the consideration we expect to receive in exchange for those products or services. We enter into contracts that can include various combinations of products and services, which are generally accounted for as distinct performance obligations. Revenue is recognized net of any taxes collected from customers (sales tax, value added tax, etc.), which are subsequently remitted to government authorities.
11


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

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

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

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

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

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



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Reagent Rental Agreements

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

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

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

Our reagent rental arrangements are predominantly comprised of variable lease payments that fluctuate depending on the volume of reagents purchased, as very few of such arrangements contain any fixed/minimum lease payments.  Further, our reagent rental arrangements are predominantly classified as operating leases, and any sales-type leases represent in aggregate an immaterial amount of lease income. Our reported lease income is primarily variable in nature and is recognized upon delivery or as the reagents are consumed by the customer.
Revenue allocated to the lease elements of these reagent rental arrangements represented approximately 3% and 2% of total revenue for both the three and nine months ended September 30, 2022 and September 30, 2021, respectively, and are included as part of Net sales in our condensed consolidated statements of income (loss).

Contract costs:

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

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Disaggregation of Revenue:

The following table presents our revenues disaggregated by geographic region (in millions):
Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
United States$284.1 $315.4 $848.2 $861.4 
EMEA200.1 221.5 636.3 698.2 
APAC156.8 171.2 470.3 512.2 
Other (primarily Canada and Latin America)39.8 38.9 117.2 118.0 
Total net sales$680.8 $747.0 $2,072.0 $2,189.8 

The disaggregation of our revenue by geographic region is based primarily on the location of the use of the product or service, and by industry segment sources. The disaggregation of our revenues by industry segment sources are presented in our Segment Information footnote (see Note 12).

Deferred revenues primarily represent unrecognized fees billed or collected for extended service arrangements. The deferred revenue balance at September 30, 2022 and December 31, 2021 was $76.6 million and $71.0 million, respectively. The short-term deferred revenue balance at September 30, 2022 and December 31, 2021 was $58.0 million and $50.9 million, respectively.

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

Warranty liabilities are included in Other current liabilities and Other long-term liabilities in the condensed consolidated balance sheets. Change in our warranty liability for the nine months ended September 30, 2022 and 2021 were as follows (in millions):
Nine Months Ended
September 30,
20222021
Balance at beginning of period$12.7 $9.8 
Provision for warranty6.7 8.7 
Actual warranty costs(8.8)(8.3)
Balance at end of period$10.6 $10.2 

Allowance for Credit Losses

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

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


14

Changes in our allowance for credit losses were as follows (in millions):
Nine Months Ended
September 30,
20222021
Balance at beginning of period$15.1 $19.8 
Provision for expected credit losses1.2 0.6 
Write-offs charged against the allowance(2.3)(5.6)
 Recoveries collected0.1 0.2 
Balance at end of period$14.1 $15.0 

Reclassification of Prior Period Amounts

Certain reclassifications have been made to prior period amounts to conform to the current period financial statement presentation. Raw Materials, Work in process and Finished goods have been combined into Total Inventory on the condensed consolidated balance sheet. This change had no impact on Total Inventory.

Refer to Note 5 for the components of Total Inventory at September 30, 2022 and December 31, 2021.

Immaterial Revision of Prior Period Financial Statements

During the three months ending September 30, 2022, we identified a misclassification of certain inventory between Work in process and Finished goods and revised the previously reported components of inventory balances. We evaluated the misclassification and concluded that it was not material to the previously issued annual or interim consolidated financial statements. This immaterial revision did not impact the previously reported balances of Total Inventory or current and total assets or the previously reported balances in the consolidated statements of net income (loss), comprehensive income (loss), cash flows or changes in stockholders’ equity.

A summary of the impact of the revision to the previously reported balances are presented in the table below for comparative purposes (in millions):

December 31, 2021
As reportedAdjustmentAs revised
Raw materials$116.9 $— $116.9 
Work in process142.755.3198.0
Finished goods312.6(55.3)257.3
Total Inventory$572.2 $— $572.2 

Recent Accounting Pronouncements Adopted

In November 2021, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) No. 2021-10, "Government Assistance." The ASU includes tax credits but not within Topic 740, "Income Taxes," cash grants, grants of other assets and project grants. The ASU excludes transactions in which a government is a customer within Topic 606, "Revenue from Contracts with Customers." The ASU was effective for fiscal years beginning after December 15, 2021. The adoption of ASU 2021-10 did not have a material impact on our condensed consolidated financial statements.
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In October 2021, the FASB issued ASU 2021-08, "Accounting for Contract Assets and Contract Liabilities from Contracts with Customers." ASU 2021-08 requires an acquirer in a business combination to recognize and measure contract assets and contract liabilities (deferred revenue) from acquired contracts using the revenue recognition guidance in Topic 606. Under this approach, the acquirer applies the revenue model as if it had originated the contracts. This is a departure from the current requirement to measure contract assets and contract liabilities at fair value. ASU 2021-08 is applied to business combinations occurring on or after January 1, 2023. We early adopted ASU 2021-08 on January 1, 2022, which did not have a material impact on our condensed consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03, “Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions.” ASU 2022-03 clarifies the guidance in Topic 820, "Fair Value Measurement," and uses two examples to differentiate between (1) a restriction that is a characteristic of the security (for which the effect of the restriction is included in the equity security’s fair value because it is a security-specific characteristic) and (2) a contractual sale restriction (for which the effect of the restriction is not included in the equity security’s fair value because it is an entity-specific characteristic). In addition, the amendments clarify that an entity cannot recognize a contractual sale restriction as a separate unit of account (i.e. as a contra-asset or separate liability); and require new disclosures for all entities with equity securities subject to contractual sale restrictions. ASU 2022-03 is effective for fiscal years beginning after December 15, 2023, and early adoption is permitted for both interim and annual financial statements. We early adopted ASU 2022-03 during the third quarter of 2022, which did not have a material impact on our condensed consolidated financial statements.


2.ACQUISITIONS AND DIVESTITURES

ACQUISITIONS

Curiosity Diagnostics Acquisition:

On August 3, 2022 (the "Acquisition Date"), we acquired all equity interests of Curiosity Diagnostics, sp.z o.o. ("Curiosity") for a total consideration of $137.1 million, including the estimated fair value of contingent consideration. The contingent consideration of up to $70.0 million is payable upon achievement of certain technological development and sales-related milestones.

Curiosity Diagnostics, a late-stage, pre-commercial platform company, is in the process of developing a sample-to-answer, rapid diagnostics PCR system for the molecular diagnostics market. The strategic rationale for the transaction was to facilitate our entry into the molecular disease testing market with a differentiated platform. We believe this acquisition will complement our Clinical Diagnostics product offerings. The acquisition was included in our Clinical Diagnostics segment's results of operations from the Acquisition Date. The amount of acquisition-related costs was not material.

The acquisition of Curiosity was accounted for as a business combination.

The preliminary fair value of consideration transferred for the Curiosity acquisition consists of the following (in millions):
Purchase price (cash)$101.0 
Fair value of contingent consideration (earn-out)36.1 
Fair value of total consideration transferred$137.1 

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

Preliminary Fair Value
In-process research and development$99.0 
Deferred tax liabilities(18.8)
Other identifiable assets acquired, net1.0 
Net identifiable assets acquired81.2 
Goodwill55.9 
Net assets acquired$137.1 

Goodwill related to the acquisition is primarily attributable to opportunities to further develop and enhance the rapid diagnostics PCR systems and combining the operations and technologies of Bio-Rad and Curiosity, and is not deductible for tax purposes. In-process research and development (IPR&D) is accounted for as an indefinite-lived asset. Once the project is completed, the carrying value of the IPR&D will be amortized over the estimated useful life of the asset. IPR&D is assessed for impairment on an annual basis until the project is completed.

As additional information becomes available, such as finalization of the estimated fair value of the assets acquired and liabilities assumed, and working capital adjustments that may affect the total consideration transferred, we may revise the preliminary estimates of fair values of the tangible and intangible assets acquired and liabilities assumed during the remainder of the measurement period (which will not exceed 12 months from the Acquisition Date). Any such revisions or changes may be material as we finalize the fair values of those tangible and intangible assets acquired and liabilities assumed.

We included Curiosity's estimated fair value of assets acquired and liabilities assumed in our condensed consolidated balance sheets beginning on the Acquisition Date. The results of operations for Curiosity subsequent to the Acquisition Date have been included in, but are immaterial to, our condensed consolidated statements of income (loss) for the three and nine months ended September 30, 2022. Pro forma results of operations for the Curiosity acquisition have not been presented because they are not material to the condensed consolidated statements of income (loss).

3.    FAIR VALUE MEASUREMENTS

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

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

17

Financial assets and liabilities carried at fair value and measured on a recurring basis as of September 30, 2022 are classified in the hierarchy as follows (in millions):
Level 1Level 2Level 3Total
Financial assets carried at fair value:
Cash equivalents:
Commercial paper$— $24.7 $— $24.7 
Time deposits18.2 — — 18.2 
Asset-backed securities— 4.5 — 4.5 
U.S. government sponsored agencies— 19.5 — 19.5 
Money market funds61.3 — — 61.3 
Total cash equivalents (a)79.5 48.7 — 128.2 
Restricted investments (b)6.8 — — 6.8 
Equity securities (c)7,224.6 — — 7,224.6 
Loan under the fair value option (d)— — 247.7 247.7 
Available-for-sale investments:
Corporate debt securities— 665.1 — 665.1 
U.S. government sponsored agencies— 224.5 — 224.5 
Foreign government obligations— 14.1 — 14.1 
Municipal obligations— 36.2 — 36.2 
Asset-backed securities— 340.3 — 340.3 
Total available-for-sale investments (e)— 1,280.2 — 1,280.2 
Forward foreign exchange contracts (f)— 3.5 — 3.5 
Total financial assets carried at fair value$7,310.9 $1,332.4 $247.7 $8,891.0 
Financial liabilities carried at fair value:   
Forward foreign exchange contracts (g)$— $7.5 $— $7.5 
Contingent consideration (h)— — 36.1 36.1 
Total financial liabilities carried at fair value$— $7.5 $36.1 $43.6 


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Financial assets and liabilities carried at fair value and measured on a recurring basis as of December 31, 2021 are classified in the hierarchy as follows (in millions):
Level 1Level 2Level 3Total
Financial assets carried at fair value:
Cash equivalents:
Commercial paper$— $39.8 $— $39.8 
Time deposits7.2 10.1 — 17.3 
Asset-backed securities— 0.1 — 0.1 
Foreign government obligations— 0.8 — 0.8 
Municipals obligations— 0.3 — 0.3 
U.S. government sponsored agencies— 33.6— 33.6 
Money market funds50.7 — — 50.7 
Total cash equivalents (a)57.9 84.7 — 142.6 
Restricted investments (b)6.9 — — 6.9 
Equity securities (c)13,977.5 — — 13,977.5 
Loan under the fair value option (d)— — 443.1 443.1 
Available-for-sale investments:
Corporate debt securities— 182.3 — 182.3 
U.S. government sponsored agencies— 44.3 — 44.3 
Foreign government obligations— 1.0 — 1.0 
Other foreign obligations— 3.8 — 3.8 
Municipal obligations— 9.0 — 9.0 
Asset-backed securities— 87.3 — 87.3 
Total available-for-sale investments (e)— 327.7 — 327.7 
Forward foreign exchange contracts (f)— 1.7 — 1.7 
Total financial assets carried at fair value$14,042.3 $414.1 $443.1 $14,899.5 
Financial liabilities carried at fair value:
Forward foreign exchange contracts (g)$— $2.8 $— $2.8 
Total financial liabilities carried at fair value$— $2.8 $— $2.8 

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

(b) Restricted investments are included in the following accounts in the condensed consolidated balance sheets (in millions):
September 30, 2022December 31, 2021
Restricted investments$5.6 $5.6 
Other investments1.2 1.3 
    Total$6.8 $6.9 

(c) Equity securities are included in the following accounts in the condensed consolidated balance sheets (in millions):
September 30, 2022December 31, 2021
Short-term investments$52.0 $71.4 
Other investments7,172.6 13,906.1 
        Total$7,224.6 $13,977.5 
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(d) The Loan under the fair value option is included in Other investments in the condensed consolidated balance sheets.

(e) Available-for-sale investments are included in Short-term investments in the condensed consolidated
balance sheets.

(f) Forward foreign exchange contracts in an asset position are included in Other current assets in the condensed consolidated balance sheets.

(g) Forward foreign exchange contracts in a liability position are included in Other current liabilities in the condensed consolidated balance sheets.

(h) Contingent considerations in a liability position are included in Other long-term liabilities in the condensed consolidated balance sheets.

Level 1 Fair Value Measurements

As of September 30, 2022, we own 12,987,900 ordinary voting shares and 9,588,908 preference shares of Sartorius AG (Sartorius), of Goettingen, Germany, a process technology supplier to the biotechnology, pharmaceutical, chemical and food and beverage industries. We own approximately 37% of the ordinary outstanding shares (excluding treasury shares) and 28% of the preference shares of Sartorius as of September 30, 2022. The Sartorius family trust (Sartorius family members are beneficiaries of the trust) holds a majority interest of the outstanding ordinary shares of Sartorius. We do not have the ability to exercise significant influence over the operating and financial policies of Sartorius primarily because we do not have any representative or designee on Sartorius' board of directors and have tried and failed to obtain access to operating or financial information necessary to apply the equity method of accounting.

The changes in fair market value of our investment in Sartorius for the three and nine months ended September 30, 2022 was a $0.27 billion loss and a $6.00 billion loss, respectively, which is recorded in our condensed consolidated statements of income (loss).

Level 2 Fair Value Measurements

To estimate the fair value of Level 2 debt securities as of September 30, 2022, our primary pricing provider uses Refinitiv as the primary pricing source. Our pricing process allows us to select a hierarchy of pricing sources for securities held. If Refinitiv does not price a Level 2 security that we hold, then the pricing provider will utilize our custodian supplied pricing as the secondary pricing source.

Available-for-sale investments consist of the following (in millions):
 September 30, 2022
Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Allowances for Credit Losses
Fair
Value
Short-term investments:    
Corporate debt securities$677.6 $— $(12.5)$— $665.1 
Municipal obligations36.6 — (0.4)— 36.2 
Asset-backed securities$346.1 $0.1 $(5.9)$— $340.3 
U.S. government sponsored agencies227.8 — (3.3)— 224.5 
Foreign government obligations$14.3 $— $(0.2)$— $14.1 
 $1,302.4 $0.1 $(22.3)$— $1,280.2 

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The following is a summary of the amortized cost and estimated fair value of our debt securities at September 30, 2022 by contractual maturity date (in millions):
Amortized
Cost		Estimated Fair
Value
Mature in less than one year$341.6 $338.9 
Mature in one to five years802.5 786.4 
Mature in more than five years158.3 154.9 
Total$1,302.4 $1,280.2 

Available-for-sale investments consist of the following (in millions):
 December 31, 2021
Amortized
Cost		Unrealized
Gains		Unrealized
Losses		Allowances for Credit LossesEstimated
Fair
Value
Short-term investments:    
Corporate debt securities$181.9 $0.5 $(0.2)— $182.2 
Municipal obligations9.0 — — — 9.0 
Asset-backed securities87.5 0.1 (0.2)— 87.4 
U.S. government sponsored agencies44.3 — — — 44.3 
Foreign government obligations1.0 — — — 1.0 
  Other foreign obligations3.8 — — — 3.8 
Total327.5 0.6 (0.4)— 327.7 

As of September 30, 2022 there were no significant continuous unrealized losses greater than 12 months.
Our evaluation of credit losses for available-for-sale debt securities included the extent to which the fair value is less than the amortized cost basis, adverse conditions specifically related to the debt security, an industry or geographic area, and any changes in the rating of a security by a rating agency. Credit loss impairments are limited to the amount that the fair value of an instrument is less than its amortized cost basis.

At September 30, 2022, we have concluded that all payments related to our available-for-sale investments are expected to be made in full and on time at par value. The diminution of value in the intervening period is due to market conditions such as illiquidity and interest rate movements and not due to significant, inherent credit concerns surrounding the issuer. As a result, we have no allowances for credit losses on our available-for-sale investments portfolio as of September 30, 2022.
Included in other current assets are $8.5 million and $2.2 million of interest receivable as of September 30, 2022 and December 31, 2021, respectively, primarily associated with securities in our available-for-sale investments portfolio. The interest on these securities is typically payable semi-annually. Due to the short-term nature of our interest receivable asset, we have made an accounting policy election not to measure an allowance for credit losses for accrued interest receivable. We consider any uncollected interest receivable that is overdue greater than one year to be impaired for purposes of write-off. For the nine months ended September 30, 2022, we have not written-off any uncollected interest receivable.

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As part of distributing our products, we regularly enter into intercompany transactions. We enter into forward foreign exchange contracts to manage foreign exchange risk of future movements in foreign exchange rates that affect foreign currency denominated intercompany receivables and payables. We do not use derivative financial instruments for speculative or trading purposes. We do not seek hedge accounting treatment for these contracts.  As a result, these contracts, generally with maturity dates of 90 days or less and denominated primarily in currencies of industrial countries, are recorded at their fair value at each balance sheet date. The notional principal amounts provide one measure of the transaction volume outstanding as of September 30, 2022 and do not represent the amount of Bio-Rad's exposure to loss. The estimated fair value of these contracts was derived using the spot rates from Refinitiv on the last business day of the quarter and the points provided by counterparties. The resulting gains or losses offset exchange gains or losses on the related receivables and payables, both of which are included in Foreign currency exchange (gains) losses, net in the condensed consolidated statements of income (loss).

The following is a summary of our forward foreign exchange contracts (in millions):
 September 30,
 2022
Contracts maturing in October through December 2022 to sell foreign currency: 
Notional value$545.8 
Unrealized gain/(loss)$(4.5)
Contracts maturing in October through December 2022 to purchase foreign currency: 
Notional value$51.9 
Unrealized gain/(loss)$0.5 

Level 3 Fair Value Investments

During the fourth quarter of 2021, we extended a collateralized loan to Sartorius-Herbst Beteiligungen II Gmbh ("SHB"), a private limited company incorporated under the laws of Germany, with a principal amount of €400 million due on January 31, 2029, subject to certain events which could trigger payment prior to maturity (the “Loan”). SHB used the Loan proceeds to partially finance the acquisition of interests under the Sartorius family trust (“Trust”) from a beneficiary of the Trust. The Loan is collateralized by the pledge of certain of the Trust interests, which upon termination of the Trust in mid-2028 represent the right to receive Sartorius ordinary shares. Interest on the loan is payable annually in arrears at 1.5% per annum, and the entire principal amount is due at maturity. In addition to contractual interest, we are entitled to certain value appreciation rights associated with the acquired Trust interests, which upon termination of the Trust represent the right to receive Sartorius ordinary shares, that is due upon repayment of the Loan. We elected the fair value option under ASC 825, Financial Instruments for accounting of the Loan to SHB to simplify the accounting. The fair value of the Loan and value appreciation right is estimated under the income approach using a discounted cash flow, and option pricing model, respectively, which results in a fair value measurement categorized in Level 3. The significant assumptions used to estimate fair value of the Loan include an estimate of the discount rate and cash flows of the Loan and the significant assumptions used to estimate the fair value of the value appreciation right include volatility, the risk-free interest rate, expected life (in years) and expected dividend. The inputs are subject to estimation uncertainty and actual amounts realized may materially differ. An increase in the expected volatility may result in a significantly higher fair value, whereas a decrease in expected life may result in a significantly lower fair value. All subsequent changes in fair value of the Loan and value appreciation right, including accrued interest are recognized in (Gains) losses from change in fair market value of equity securities and loan receivable in our condensed consolidated statements of income (loss). The overall change in fair market value reflected in (Gains) losses from change in fair market value of equity securities and loan receivable during the three months ended September 30, 2022 was $19.4 million, which includes $20.0 million for the change in fair market value for the Loan and $(0.6) million for the change in fair market value of the value appreciation right. The overall change in fair market value reflected in (Gains) losses from change in fair market value of equity securities and loan receivable during the nine months ended September 30, 2022 was $149.0 million, which includes $63.8 million for the change in fair market value for the Loan and $85.2 million for the change in fair market value of the value appreciation right. The decrease in the fair market value of the value
22

appreciation right was due to a decline in the value of the Sartorius ordinary shares. As of September 30, 2022, the €400 million principal amount of the loan is still due on January 31, 2029.

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

December 31, 2021$443.1 
Net decrease in estimated fair market value of the loan included in Gains (losses) in fair market value of equity securities and loan receivable$(149.0)
Foreign currency exchange gains (losses), net$(46.4)
September 30, 2022$247.7 

During the third quarter of 2022, we recognized a contingent consideration liability upon our acquisition of Curiosity which represents future potential payments of up to $70.0 million payable in cash upon the achievement of certain technological development and revenue milestones, commencing on the Acquisition Date through June 30, 2027. At the Acquisition Date, the fair value of the contingent consideration of $36.1 million was determined by using a probability-weighted income approach related to the achievement of the technological development and revenue milestones. The significant assumptions used to estimate the fair value of the contingent consideration include an estimate of the probability of achievement and the discount rate. The probability of achievement is subject to estimation uncertainty and actual amounts realized may materially differ. An increase in the expected probability of achievement may result in a higher fair value, whereas a decrease in expected probability of achievement may result in a lower fair value. The fair value of the contingent consideration is remeasured at each reporting period based on the assumptions and inputs on the date of remeasurement. As of September 30, 2022, no change was recorded in the fair value of the contingent consideration since the Curiosity Acquisition Date.



4.    GOODWILL AND OTHER PURCHASED INTANGIBLE ASSETS

Changes to goodwill by segment are as follows (in millions):
Life
Science		Clinical
Diagnostics		Total
Balances as of December 31, 2021:
Goodwill$333.3 $349.2 $682.5 
Accumulated impairment losses(41.8)(293.4)(335.2)
Goodwill, net291.5 55.8 347.3 
Acquisitions (see Note 2)— 55.9 55.9 
Currency fluctuations— (3.6)(3.6)
Period increase, net— 52.3 52.3 
Balances as of September 30, 2022:
Goodwill333.3 401.5 734.8 
Accumulated impairment losses(41.8)(293.4)(335.2)
Goodwill, net$291.5 $108.1 $399.6 

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Information regarding our identifiable purchased intangible assets with finite and indefinite lives is as follows (in millions):
September 30, 2022
Weighted-Average Remaining Amortization Period (years)Purchase
Price		Accumulated
Amortization		Net
Carrying
Amount
Customer relationships/lists5.13$99.2 $(83.1)$16.1 
Know how3.00158.9 (145.5)13.4 
Developed product technology13.06206.8 (115.6)91.2 
Licenses6.1158.2 (37.0)21.2 
Tradenames6.815.9 (4.2)1.7 
Covenants not to compete3.276.4 (3.7)2.7 
     Total finite-lived intangible assets535.4 (389.1)146.3 
In-process research and development178.8 — 178.8 
     Total purchased intangible assets $714.2 $(389.1)$325.1 

 December 31, 2021
Weighted-Average Remaining Amortization Period (years)Purchase
Price		Accumulated
Amortization		Net
Carrying
Amount
Customer relationships/lists5.27$111.8 $(90.7)$21.1 
Know how3.75171.6 (154.9)16.7 
Developed product technology13.42215.6 (115.6)100.0 
Licenses6.7964.9 (40.6)24.3 
Tradenames7.336.3 (4.4)1.9 
Covenants not to compete3.786.5 (2.9)3.6 
     Total finite-lived intangible assets576.7 (409.1)167.6 
In-process research and development86.3 — 86.3 
     Total purchased intangible assets $663.0 $(409.1)$253.9 


Amortization expense related to purchased intangible assets is as follows (in millions):

Three Months EndedNine Months Ended
 September 30,September 30,
 2022202120222021
Amortization expense$6.2 $7.3 $18.8 $21.7 


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5.    INVENTORY

Following are the components of Inventory at September 30, 2022 and December 31, 2021 (in millions):

September 30, 2022December 31, 2021
Inventory:
  Raw materials$209.0 $116.9 
  Work in process211.8198.0
  Finished goods 265.1257.3
      Total Inventory$685.9 $572.2 
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6.    SUPPLEMENTAL CASH FLOW INFORMATION

The reconciliation of net income (loss) to net cash provided by operating activities is as follows (in millions):
Nine Months Ended
September 30, 2022September 30, 2021
Net income (loss)$(4,461.0)$5,819.6 
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization97.3 100.1 
Reduction in the carrying amount of right-of-use assets29.8 29.3 
Share-based compensation42.8 36.2 
Other-than-temporary impairment losses on investment— 0.8 
(Gains) losses from change in fair market value of equity securities and loan receivable6,172.3 (7,078.8)
(Gain) on divestiture of a division(1.4)— 
Payments for operating lease liabilities(28.1)(30.9)
(Increase) in accounts receivable(44.5)(10.8)
(Increase) decrease in inventory(150.6)28.2 
(Increase) in other current assets(11.8)(1.4)
Increase (decrease) in accounts payable and other current liabilities(69.7)22.4 
(Decrease) in income taxes payable(39.2)(22.2)
Increase (decrease) in deferred income taxes(1,440.9)1,573.2 
Increase (decrease) in other long-term liabilities(2.0)28.6 
Other11.0 4.3 
Net cash provided by operating activities$104.0 $498.6 
Non-cash investing activities:
Purchased property, plant and equipment$6.8 $3.3 
Purchased marketable securities and investments$— $11.8 







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7.    LONG-TERM DEBT

The principal components of long-term debt are as follows (in millions):
September 30,
2022		December 31,
2021
3.3%, Senior Notes due 2027$400.0 $— 
3.7%, Senior Notes due 2032800.0 — 
Less unamortized discounts and debt issuance costs(12.9)— 
Long-term debt less unamortized discounts and debt issuance costs1,187.1 — 
Finance leases and other debt10.6 11.0 
Less current maturities(0.4)(0.5)
Long-term debt$1,197.3 $10.5 

Senior Notes due 2027 and 2032

In March 2022, pursuant to an indenture we issued $400.0 million in principal amount of Senior Notes due March 2027 (the “2027 Notes”) and $800.0 million in principal amount of Senior Notes due March 2032 (the “2032 Notes” and, together with the 2027 Notes, the “Notes”). The issuance of the 2027 Notes yielded net cash proceeds of $395.7 million at an effective rate of 3.5346% and the sale of the 2032 Notes yielded net cash proceeds of $790.5 million at an effective rate of 3.8429%. The 2027 Notes and the 2032 Notes pay a fixed rate of interest of 3.3% and 3.7% per annum, respectively. Interest on the Notes is payable semi-annually in arrears on March 15 and September 15 of each year until the principal is paid or made available for payment. We have the option to redeem the Notes at any time, in whole or in part, at a redemption price calculated in accordance with the indenture, plus accrued and unpaid interest thereon to the redemption date. In the event of a change of control, the holders may require us to repurchase for cash all or a portion of their notes at a purchase price equal to 101% of the principal amount of the notes, plus accrued and unpaid interest, if any. Our obligations under the Notes are unsecured senior obligations that rank equally in right of payment with all of our other existing and future unsecured, unsubordinated debt. The Notes include covenants that limit our ability to, among other things, (i) grant specified liens, (ii) engage in specified sale and leaseback transactions, (iii) consolidate or merge with or into other companies or (iv) sell all or substantially all of our assets. We were in compliance with these covenants as of September 30, 2022.



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8.    ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Accumulated other comprehensive income included in our condensed consolidated balance sheets consists of the following components (in millions):
Foreign currency translation adjustmentsForeign other post-employment benefits adjustmentsNet unrealized holding gains (losses) on available-for-sale investmentsTotal accumulated other comprehensive income (loss)
Balances as of January 1, 2022:$(170.5)$(10.9)$5.8 $(175.6)
Other comprehensive income (loss), before reclassifications(654.4)1.4 (23.3)(676.3)
Amounts reclassified from Accumulated other comprehensive income (loss)— 0.2 0.6 0.8 
Income tax effects1.1 (0.5)5.3 5.9 
Other comprehensive income (loss), net of income taxes(653.3)1.1 (17.4)(669.6)
Balances as of September 30, 2022:$(823.8)$(9.8)$(11.6)$(845.2)
Foreign currency translation adjustmentsForeign other post-employment benefits adjustmentsNet unrealized holding gains (losses) on available-for-sale investmentsTotal accumulated other comprehensive income (loss)
Balances as of January 1, 2021:$298.6 $(26.0)$9.8 $282.4 
Other comprehensive income (loss), before reclassifications(347.5)1.7 (2.7)(348.5)
Amounts reclassified from Accumulated other comprehensive income (loss)— 2.6 (0.1)2.5 
Income tax effects0.4 (0.5)0.7 0.6 
Other comprehensive income (loss), net of income taxes(347.1)3.8 (2.1)(345.4)
Balances as of September 30, 2021:$(48.5)$(22.2)$7.7 $(63.0)

The reclassification adjustments are calculated using the specific identification method.

The impact to Income (loss) before income taxes for amounts reclassified out of Accumulated other comprehensive income (loss) into Other (income) expense, net in the condensed consolidated statements of income (loss) were as follows (in millions):
Three Months EndedNine Months Ended
September 30,September 30,
Components of comprehensive income (loss)2022202120222021
Amortization of foreign other post-employment benefit items$(0.1)$(1.0)$(0.2)$(2.6)
Net holding gains on equity securities and available-for-sale investments$(0.2)$— $(0.6)$0.1 

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9.    EARNINGS (LOSS) PER SHARE

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

The weighted average number of common shares outstanding used to calculate basic and diluted earnings (loss) per share, and the anti-dilutive shares that are excluded from the diluted earnings (loss) per share calculation are as follows (in thousands):
Three Months EndedNine Months Ended
September 30,September 30,
 2022202120222021
Basic weighted average shares outstanding29,733 29,814 29,819 29,800 
Effect of potentially dilutive stock options, restricted stock and performance stock awards— 410 — 390 
Diluted weighted average common shares outstanding29,733 30,224 29,819 30,190 
Anti-dilutive shares541 32 541 18 


10.    OTHER INCOME AND EXPENSE, NET

Other (income) expense, net includes the following components (in millions):
Three Months EndedNine Months Ended
September 30,September 30,
 2022202120222021
Interest and investment (income)$(8.0)$0.3 $(45.7)$(18.7)
Net realized (gains) losses on investments0.2 — 0.6 (0.1)
Other-than-temporary impairment loss on investment— — — 0.8 
Current expected credit losses on loans5.1 — 5.1 — 
Escrow receipts on prior divestitures— — (1.4)— 
Other (income) expense(0.4)0.3 (1.0)1.3 
Other (income) expense, net$(3.1)$0.6 $(42.4)$(16.7)


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11.    INCOME TAXES

Our effective income tax rate was 21.5% and 21.8% for the three months ended September 30, 2022 and 2021, respectively. Our effective income tax rate was 23.1% and 22.2% for the nine months ended September 30, 2022 and 2021, respectively.

The realization of deferred tax assets is dependent upon the generation of sufficient taxable income of the appropriate character in future periods. We regularly assess our ability to realize our deferred tax assets and establish a valuation allowance if it is more likely than not that some portion, or all, of our deferred tax assets will not be realized. In assessing the realizability of our deferred tax assets, we weigh all available positive and negative evidence. Due to the weight of objectively verifiable negative evidence, we believe that it is more likely than not that certain deferred tax assets will not be realized as of September 30, 2022, and have maintained a valuation allowance on such deferred tax assets.

Our income tax returns are routinely audited by U.S. federal, state and foreign tax authorities. We are currently under examination by many of these tax authorities. There are differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax authorities involving issues around the timing and amount of deductions and allocations of income among various tax jurisdictions. We evaluate our exposures associated with our tax filing positions on a quarterly basis.

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

Our gross unrecognized tax benefits were $73.9 million and $61.9 million as of September 30, 2022 and December 31, 2021, respectively. The increase in our gross unrecognized tax benefits is attributable to increases of uncertain tax accruals in various jurisdictions, partially offset by the release of accruals due to the lapse of statute of limitations.

As of September 30, 2022, based on the expected outcome of certain examinations or as a result of the expiration of statutes of limitations for certain jurisdictions, we believe that within the next twelve months it is reasonably possible that our previously unrecognized tax benefits could decrease by up to $3.5 million.

12.    SEGMENT INFORMATION

Information regarding operating segments for the three months ended September 30, 2022 and 2021 is as follows (in millions):

Life
Science		Clinical
Diagnostics		Other
Operations
Segment net sales 2022$317.9 $361.9 $1.0 
 2021$373.5 $372.2 $1.3 
Segment net profit (loss)2022$45.7 $36.0 $(0.6)
 2021$105.8 $50.7 $(0.2)



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Information regarding operating segments for the nine months ended September 30, 2022 and 2021 is as follows (in millions):
Life
Science		Clinical
Diagnostics		Other
Operations
Segment net sales 2022$987.5 $1,081.4 $3.1 
 2021$1,074.2 $1,111.0 $4.6 
Segment net profit (loss)2022$183.5 $148.0 $(1.5)
 2021$272.7 $108.9 $(0.4)

Segment results are presented in the same manner as we manage our business internally to make operating decisions and assess performance. Our chief operating decision maker ("CODM") views all operating expenses, interest expense and corporate overhead as directly supporting the strategies of our segments.

The following reconciles total segment profit to consolidated income (loss) before income taxes (in millions):

Three Months EndedNine Months Ended
September 30,September 30,
 2022202120222021
Total segment profit $81.1 $156.3 $330.0 $381.2 
Foreign currency exchange gains (losses), net(4.4)(2.2)(3.1)(0.5)
Gains (losses) from change in fair market value of equity securities and loan receivable(289.0)4,868.7 (6,172.3)7,078.8 
Other income (expense), net3.1 (0.6)42.3 16.7 
Consolidated income (loss) before income taxes$(209.2)$5,022.2 $(5,803.1)$7,476.2 


13.    LEGAL PROCEEDINGS

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

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14.    RESTRUCTURING COSTS

In February 2021, we announced our strategy-driven restructuring plan in furtherance of our ongoing program to improve operating performance. The restructuring plan primarily impacts our operations in EMEA and includes the elimination of certain positions, the consolidation of certain functions, and the relocation of certain manufacturing operations from EMEA to APAC. The restructuring plan is being implemented in phases and is expected to be substantially complete by mid-2023. The liability of $36.4 million as of September 30, 2022 was recorded in Accrued payroll and employee benefits in the condensed consolidated balance sheets. The amounts reflected in Cost of goods sold, Selling, general and administrative expense and Research and development expense for the three months ended September 30, 2022 were $1.3 million, $2.8 million and $0.5 million, respectively, in the condensed consolidated statements of income (loss). The amounts reflected in Cost of goods sold, Selling, general and administrative expense and Research and development expense for the nine months ended September 30, 2022 were $1.3 million, $3.0 million and $0.3 million, respectively, in the condensed consolidated statements of income (loss). The adjustments to expense recorded were primarily due to extension of termination dates for certain employees and for changes in the estimates of employee termination benefits. From February 2021 to September 30, 2022, total expenses were $69.0 million.

The following table summarizes the activity of our European reorganization restructuring reserves (in millions):

Life ScienceClinical DiagnosticsTotal
Balances as of December 31, 2021:$5.2 $41.9 $47.1 
Adjustment to expense1.2 3.4 4.6 
Cash payments(2.6)(6.9)(9.5)
Foreign currency translation gains(0.5)(5.3)(5.8)
Balances as of September 30, 2022:$3.3 $33.1 $36.4 

15.    LEASES

We have operating leases and to a lesser extent finance leases, for buildings, vehicles and equipment. Our leases have remaining lease terms of 1 year to 17 years, which includes our determination to exercise renewal options.

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

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

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The components of lease expense were as follows (in millions):
Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
Operating lease cost$14.2 $13.7 $43.2 $40.2 
Finance lease cost:
  Amortization of right-of-use assets$0.1 $0.1 $0.3 $0.4 
  Interest on lease liabilities0.2 0.2 0.6 0.6 
        Total finance lease cost$0.3 $0.3 $0.9 $1.0 
Sublease income$0.7 $0.7 $2.2 $2.2 

The sublease is for a building with a term that ends in 2025, with no options to extend or renew.

Operating lease cost includes original reduction in the carrying amount of ROU assets, the impact of remeasurements, modifications, impairments and abandonments.

Our short-term leases are expensed as incurred, reflecting leases with a lease term of one year or less, and are not significant for the three and nine months ended September 30, 2022 and 2021. Operating lease variable cost is primarily comprised of reimbursed actual common area maintenance, property taxes and insurance, which are immaterial for the three and nine months ended September 30, 2022 and 2021.

Supplemental cash flow information related to leases was as follows (in millions):
Three Months EndedNine Months Ended
September 30,September 30,
2022202120222021
Cash paid for amounts included in the measurement of lease liabilities:
  Operating cash flows from operating leases$9.5 $7.2 $28.1 $30.9 
  Operating cash flows from finance leases$0.2 $0.1 $0.6 $0.4 
  Financing cash flows from finance leases$0.1 $0.2 $0.3 $0.6 
Right-of-use assets obtained in exchange for new lease obligations:
  Operating leases$2.3 $5.8 $9.4 $12.3 
  Finance leases$— $— $— $— 

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Supplemental balance sheet information related to leases was as follows (in millions):
September 30, 2022December 31, 2021
Operating Leases
  Operating lease right-of-use assets$171.6 $204.8 
  Current operating lease liabilities$34.1 $36.4 
  Operating lease liabilities147.2 175.9 
     Total operating lease liabilities$181.3 $212.3 

Finance leases are included in Property, plant and equipment, Current maturities of long-term debt, and Long-term debt, net of current maturities (in millions):
September 30, 2022December 31, 2021
Finance Leases
  Property, plant and equipment, gross$11.6 $11.8 
  Less: accumulated depreciation and amortization(5.3)(5.1)
      Property, plant and equipment, net$6.3 $6.7 
  Current maturities of long-term debt and notes payable$0.4 $0.5 
  Long-term debt, net of current maturities10.2 10.5 
      Total finance lease liabilities$10.6 $11.0 

September 30, 2022December 31, 2021
Weighted Average Remaining Lease Term
  Operating leases - in years78
  Finance leases - in years1515.5
Weighted Average Discount Rate
  Operating leases3.2 %3.3 %
  Finance leases6.4 %6.3 %

Maturities of lease liabilities were as follows (in millions):
Year Ending December 31,Operating LeasesFinance Leases
2022 (excluding the nine months ended September 30, 2022)$38.9 $1.1 
202334.0 1.2 
202430.2 1.1 
202524.0 1.1 
202620.2 1.1 
Thereafter58.3 12.2 
   Total lease payments205.6 17.8 
Less imputed interest(24.3)(7.2)
    Total$181.3 $10.6 
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The value of our operating lease portfolio is principally for facilities with longer durations than the lesser value vehicles, and other equipment with shorter terms and higher turn-over.

As of September 30, 2022, operating leases that have not commenced are not material.


Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This discussion should be read in conjunction with the information contained in both our consolidated financial statements for the year ended December 31, 2021 and the condensed consolidated financial statements for the three and nine months ended September 30, 2022.

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

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

We manufacture and supply our customers with a range of reagents, apparatus and equipment to separate complex chemical and biological materials and to identify, analyze and purify components. As our customers require standardization for their experiments and test results, much of our revenues are recurring in nature.  

We are impacted by the support of many governments for both research and healthcare. The current global economic outlook is still uncertain as the need to control government social spending by many governments limits opportunities for growth. Approximately 41% of our year-to-date 2022 consolidated net sales are derived from the United States and approximately 59% are derived from international locations, with Europe being our largest international region. The international sales are largely denominated in local currencies such as the Euro, Swiss Franc, Japanese Yen, Chinese Yuan and British Sterling. As a result, our consolidated net sales expressed in dollars benefit when the U.S. dollar weakens and suffer when the dollar strengthens. When the U.S. dollar strengthens, we benefit from lower cost of sales from our own international manufacturing sites, and from lower international operating expenses. We regularly discuss our changes in revenue and expense categories in terms of both changing foreign exchange rates and in terms of a currency neutral basis, if notable, to explain the impact currency has on our results.

Acquisition

On August 3, 2022 (the "Acquisition Date"), we acquired all equity interests of Curiosity Diagnostics sp.z o.o.("Curiosity") for a total consideration of $137.1 million, including the estimated fair value of contingent consideration. The contingent consideration of up to $70.0 million is payable upon achievement of certain technological development and sales-related milestones.

Curiosity Diagnostics, a late-stage, pre-commercial platform company, is in the process of developing a sample-to-answer, rapid diagnostics PCR system for the molecular diagnostics market. The strategic rationale for the transaction was to facilitate our entry into the molecular disease testing market with a differentiated platform. We believe this acquisition will complement our Clinical Diagnostics product offerings. The acquisition was included in our Clinical Diagnostics segment's results of operations from the Acquisition Date. The amount of acquisition-related costs was not material.
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Senior Notes due 2027 and 2032

In March 2022, pursuant to an indenture we issued $400.0 million in principal amount of Senior Notes due March 2027 (the “2027 Notes”) and $800.0 million in principal amount of Senior Notes due March 2032 (the “2032 Notes” and, together with the 2027 Notes, the “Notes”). The issuance of the 2027 Notes yielded net cash proceeds of $395.7 million at an effective rate of 3.5346% and the sale of the 2032 Notes yielded net cash proceeds of $790.5 million at an effective rate of 3.8429%. The 2027 Notes and the 2032 Notes pay a fixed rate of interest of 3.3% and 3.7% per annum, respectively. Interest on the Notes is payable semi-annually in arrears on March 15 and September 15 of each year until the principal is paid or made available for payment.


COVID-19 and Supply Chain Impact

The full impact of the COVID-19 pandemic and supply constraints continues to be inherently uncertain at the time of this report. The COVID-19 pandemic has impacted and, we expect to some extent, will continue to impact parts of our business, operations, financial condition and results of operations in a variety of ways. During the third quarter of 2022, we saw continued but moderating demand for products associated with COVID-19 testing and related research. In addition, supply chain constraints and lockdowns in China have negatively impacted sales, particularly instrument placements. We continue to experience delays and shortages in the supply of components and raw materials. These shortages have caused a backlog of sales orders, some of which we consider to be significant, and some delays in certain new product development activities. They have also led to increases in inventory as we continue to receive available materials and source those in short supply. While we are putting significant effort into procuring required materials, we expect the backlog of sales orders to continue through the remainder of 2022 and some to continue into 2023. For more discussion relating to the impacts of the COVID-19 pandemic and supply chain constraints, please see "Item 1A. Risk Factors" to this Form 10-Q.
Results of Operations

The following table shows cost of goods sold, gross profit, components of operating expense, (gains) losses from change in fair market value of equity securities and loan receivable, and net income (loss) as a percentage of net sales:
Three Months EndedNine Months Ended
September 30,September 30,
 2022202120222021
Net sales100.0 %100.0 %100.0 %100.0 %
Cost of goods sold45.1 41.4 43.4 43.4 
Gross profit54.9 58.6 56.6 56.6 
Selling, general and administrative expense31.0 28.9 29.8 29.9 
Research and development expense10.3 8.6 9.6 9.2 
(Gains) losses from change in fair market value of equity securities and loan receivable42.4 (651.7)297.9 (323.3)
Net income (loss)(24.1)525.8 (215.3)265.8 

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Critical Accounting Policies and Estimates

An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably likely to occur could materially impact the financial statements.  Management believes that there have been no significant changes during the three and nine months ended September 30, 2022 to the items that we disclosed as our critical accounting policies and estimates in Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021.  

Other than the recent accounting pronouncement adoptions as discussed in Note 1 to the condensed consolidated financial statements, there have been no substantial changes in our significant accounting policies during the three and nine months ended September 30, 2022, compared with the significant accounting policies described in our Annual Report on Form 10-K for the year ended December 31, 2021.


Three Months Ended September 30, 2022 Compared to
Three Months Ended September 30, 2021

Results of Operations -- Sales, Margins and Expenses

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

Net sales (sales) for the third quarter of 2022 were $680.8 million compared to $747.0 million in the third quarter of 2021, a decrease of 8.9%.  COVID-related sales were approximately $17.2 million in the third quarter of 2022 compared to approximately $57.1 million reported in the third quarter of 2021. Excluding the impact of foreign currency, third quarter 2022 sales decreased by approximately 4.1% compared to the same period in 2021. Currency neutral sales increased in Europe, but this was more than offset by decreased sales in the Americas and Asia Pacific as a result of ongoing supply constraints. Sales in the third quarter of 2021 were elevated due to approximately $31.6 million of royalty revenue related to an intellectual property litigation settlement. Excluding COVID-related sales and the impact of royalty revenue related to an intellectual property litigation settlement in the third quarter of 2021, revenue increased 6.1% on a currency neutral basis from the third quarter of 2021.

The Life Science segment sales for the third quarter of 2022 were $317.9 million, a decrease of 14.9% compared to the same period last year.  On a currency neutral basis, sales decreased 11.0% compared to the third quarter in 2021. The currency neutral sales decline was primarily attributed to the $31.6 million royalty revenue related to an intellectual property litigation settlement in the third quarter of 2021, lower COVID-related sales, and the impact from ongoing supply constraints on instrument placements. The sales decreases were partially offset by increased sales of Process Media, Western Blotting, and Antibody products. Currency neutral sales decreased in both Asia Pacific and the Americas, partially offset by increased sales in Europe.

The Clinical Diagnostics segment sales for the third quarter of 2022 were $361.9 million, a decrease of 2.8% compared to the same period last year.  On a currency neutral basis, sales increased 3.0% compared to the third quarter in 2021.  The currency neutral sales increase was primarily driven by Quality Controls, Blood Typing, and Infectious Disease products, despite supply chain constraints having an impact on instrument placements. Currency neutral sales increased in both Asia Pacific and the Americas, partially offset by a decrease in Europe.

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Consolidated gross margins were 54.9% for the third quarter of 2022 compared to 58.6% for the third quarter of 2021.  Life Science segment gross margins for the third quarter of 2022 decreased by approximately 5.6 percentage points, primarily due to higher logistics costs and product mix due to lower COVID related sales, partially offset by the strong US dollar. The third quarter of 2021 Life Science margins benefited from the $31.6 million royalty revenue related to an intellectual property litigation settlement. Clinical Diagnostics segment gross margins for the third quarter of 2022 decreased by approximately 1.1 percentage points from the same period last year. The decrease in gross margins was primarily driven by higher logistics costs and production costs, partially offset by the strong US dollar.

Selling, general and administrative expenses (SG&A) decreased to $211.0 million or 31.0% of sales for the third quarter of 2022 compared to $216.2 million or 28.9% of sales for the third quarter of 2021.  The decrease to SG&A was primarily driven by lower employee related expenses, partially offset by higher discretionary expense, including marketing and travel. The SG&A expenses in the third quarter of 2022 also benefitted from the impact of a stronger dollar.

Research and development (R&D) expenses increased to $69.9 million or 10.3% of sales in the third quarter of 2022 compared to $64.5 million or 8.6% of sales in the third quarter of 2021.  Life Science segment R&D expense increased in the third quarter of 2022 compared to the prior year period, primarily from increased personnel costs from the Dropworks, Inc. acquisition in October of 2021, and increased investment to complete strategic projects in key investment areas. Clinical Diagnostics segment R&D expense increased in the third quarter of 2022 from the prior year period driven by continued investment in new strategic development projects.

Results of Operations – Non-operating

Interest expense for the third quarter of 2022 and 2021 was $11.7 million and $0.4 million, respectively, an increase of $11.3 million compared to the prior year period. The increase was primarily due to the $1.2 billion Senior Notes (see Note 7, "Long-term Debt" in the condensed consolidated financial statements).

Foreign currency exchange (gains) and losses consist primarily of foreign currency transaction gains and losses on intercompany net receivables and payables and the change in fair value of our forward foreign exchange contracts used to manage our foreign currency exchange risk.  Foreign currency exchange losses, net were $4.4 million for the third quarter of 2022 compared to foreign currency exchange losses, net of $2.2 million for the third quarter of 2021. Gains and losses are primarily due to the estimating process inherent in the timing of product shipments and intercompany debt payments, market volatility, and the change in the fair value of our foreign exchange contracts.

(Gains) losses from change in fair market value of equity securities and loan receivable was a loss of $289.0 million and a gain of $4.87 billion for the third quarter of 2022 and 2021, respectively. The change in the fair market value primarily resulted from the recognition of holding losses of $267.8 million in the third quarter of 2022 compared to holding gains of $4.87 billion in the third quarter of 2021 on our position in Sartorius AG. In addition, in the third quarter of 2022, there was a loss of $19.4 million in the change in fair market value of the Loan we entered into with SHB during the fourth quarter of 2021.

Other (income) expense, net for the third quarter of 2022 was income, net of $3.1 million compared to expense, net of $0.6 million for the third quarter of 2021. The difference of income, net of $3.6 million was primarily attributable to an increase in our investment income as a result of cash invested from the $1.2 billion Senior Notes issued in March 2022.

Our effective income tax rate was 21.5% and 21.8% for the third quarter of 2022 and 2021, respectively. The effective tax rate reported in the third quarter of 2022 was primarily affected by an unrealized loss in equity securities and the tax rate reported in the third quarter of 2021 was primarily affected by an unrealized gain in equity securities. The difference in the rate is primarily driven by geographical mix of earnings.

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Our income tax returns are routinely audited by U.S. federal, state and foreign tax authorities. We are currently under examination by many of these tax authorities. There are differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions.

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

As of September 30, 2022, based on the expected outcome of certain examinations or as a result of the expiration of
statutes of limitation for certain jurisdictions, we believe that within the next twelve months it is reasonably possible
that our previously unrecognized tax benefits could decrease by approximately $3.5 million.
Nine Months Ended September 30, 2022 Compared to
Nine Months Ended September 30, 2021

Results of Operations -- Sales, Margins and Expenses

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

Net sales (sales) for the first nine months of 2022 were $2.07 billion compared to $2.19 billion in the first nine months of 2021, a decrease of 5.4%.  COVID-related sales were approximately $95.7 million in the first nine months of 2022 compared to approximately $220.1 million reported in the first nine months of 2021. On a currency neutral basis, the first nine months of 2022 sales decreased by approximately 1.5% compared to the same period in 2021. Currency neutral sales decreased in both Asia Pacific and Europe, partially offset by increased sales in the Americas. Sales in the first nine months of 2021 were elevated due to the approximately $31.6 million of royalty revenue related to an intellectual property settlement. Excluding COVID-related sales and the impact of royalty revenue related to an intellectual property litigation settlement in the third quarter of 2021, sales increased 6.1% on a currency neutral basis from the first nine months of 2021.

The Life Science segment sales for the first nine months of 2022 were $987.5 million, a decrease of 8.1% compared to the same period last year.  On a currency neutral basis, sales decreased 4.5% compared to the first nine months of 2021. The currency neutral sales decline was primarily attributed to lower qPCR product sales due to the decline in COVID-19 related demand and the impact of supply chain constraints on instrument placements, partially offset by strong growth of Process Media, Western Blotting, and Antibody products. Sales in 2021 also benefited from the $31.6 million royalty revenue related to an intellectual property litigation settlement. Currency neutral sales declined in Europe and Asia Pacific, while the Americas was essentially flat.

The Clinical Diagnostics segment sales for the first nine months of 2022 were $1.08 billion, a decrease of 2.7% compared to the same period last year.  On a currency neutral basis, sales increased 1.6% compared to the first nine months of 2021. The currency neutral sales increase was primarily driven by growth in Quality Controls and Blood Typing products, especially in Europe and the Americas, despite supply chain constraints having an impact on instrument placements. The increase in currency neutral sales was partially offset by the impact of COVID lockdowns in China during the second and third quarters of 2022.
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Consolidated gross margins were 56.6% for the first nine months of 2022 compared to 56.6% for the first nine months of 2021.  Life Science segment gross margins for the first nine months of 2022 decreased by approximately 2.1 percentage points from the same period last year. The decrease in gross margins was primarily driven by higher logistics costs and product mix. The 2021 Life Science margins also benefited from the $31.6 million royalty revenue related to an intellectual property litigation settlement. Clinical Diagnostics segment gross margins for the first nine months of 2022 increased by approximately 2.4 percentage points compared to the same period last year. The increase in gross margins was primarily driven by a one-time restructuring expense related to the 2021 restructuring plan that was announced and recorded in the first quarter of 2021 and the strong US dollar, partially offset by higher logistics cost and product mix.

Selling, general and administrative expenses (SG&A) decreased to $617.4 million or 29.8% of sales for the first nine months of 2022 compared to $655.4 million or 29.9% of sales for the first nine months of 2021.  The decrease in SG&A was primarily driven by a one-time restructuring expense related to the 2021 restructuring plan that was announced and recorded in the first quarter of 2021, as well as by lower employee related expenses.

Research and development (R&D) expenses decreased to $199.5 million or 9.6% of sales in the first nine months of 2022 compared to $201.8 million or 9.2% of sales in the first nine months of 2021.  Life Science segment R&D expense increased in the first nine months of 2022 compared to the prior year period, primarily from increased personnel costs from the Dropworks, Inc. acquisition in October of 2021, and increased investment to complete strategic projects in key investment areas. Clinical Diagnostics segment R&D expense decreased in the first nine months of 2022 from the prior year period, primarily due to a one-time restructuring expense related to the 2021 restructuring plan that was announced and recorded in the first quarter of 2021, partially offset by continued investment in new strategic development projects.

Results of Operations – Non-operating

Interest expense for the first nine months of 2022 and 2021 was $26.4 million and $1.2 million, respectively, an increase of $25.2 million compared to the prior year period. The increase was primarily due to the sale in March 2022 of the $1.2 billion Senior Notes.

Foreign currency exchange (gains) and losses consist primarily of foreign currency transaction gains and losses on intercompany net receivables and payables and the change in fair value of our forward foreign exchange contracts used to manage our foreign currency exchange risk.  Foreign currency exchange losses, net were $3.1 million for the first nine months of 2022 compared to losses, net of $0.5 million for the first nine months of 2021. Gains and losses are primarily due to the estimating process inherent in the timing of product shipments and intercompany debt payments, market volatility, and the change in the fair value of our foreign exchange contracts.

(Gains) losses from change in fair market value of equity securities and loan receivable was a loss of $6.17 billion and a gain of $7.08 billion for the first nine months of 2022 and 2021, respectively. The change in the fair market value primarily resulted from the recognition of holding losses of $6.0 billion in the first nine months of 2022 compared to holding gains of $7.07 billion in the first nine months of 2021 on our position in Sartorius AG. In addition, there was a loss of $149.0 million in the change in fair market value of the Loan entered into with SHB during the fourth quarter of 2021.

Other income, net for the first nine months of 2022 was $42.4 million compared to $16.7 million for the first nine months of 2021. The difference of income of $25.6 million was primarily due to $12.6 million increase in the Sartorius AG dividends declared in the first quarter of 2022 compared to the first quarter of 2021 and an increase in our investment income primarily attributable to an increase in our investments as a result of cash invested from the $1.2 billion Senior Notes issued in March 2022.

Our effective income tax rate was 23.1% and 22.2% for the first nine months of 2022 and 2021, respectively. The effective tax rate reported in the first nine months of 2022 was primarily affected by an unrealized loss in equity securities and the tax rate reported in the first nine months of 2021 was primarily affected by an unrealized gain in equity securities. The difference in the rate is primarily driven by geographical mix of earnings.

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On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which includes an Alternative Minimum Tax based on the Adjusted Financial Statement Income of Applicable Corporations. Based on our initial evaluation, we do not believe the Inflation Reduction Act will have a material impact on our income tax provision and cash taxes. The company continues to monitor the changes in tax laws and regulations to evaluate their potential impact on our business.
Liquidity and Capital Resources

Bio-Rad operates and conducts business globally, primarily through subsidiary companies established in the markets in which we trade.  Goods are manufactured in a small number of locations, and are then shipped to local distribution facilities around the world.  Our product mix is diversified, and certain products compete largely on product efficacy, while others compete on price.  Gross margins are generally sufficient to exceed normal operating costs, and funding for research and development of new products, as well as routine outflows for capital expenditures, interest and taxes.  In addition to the annual positive cash flow from operating activities, additional liquidity is readily available via the sale of short-term investments and access to our $200.0 million unsecured revolving credit facility (Credit Agreement, as amended) that we entered into in April 2019, and to a lesser extent international lines of credit.  Borrowings under the Credit Agreement, as amended, are available on a revolving basis and can be used to make permitted acquisitions, for working capital and for other general corporate purposes. We had no outstanding borrowings under the 2019 Credit Agreement, as amended, as of September 30, 2022, however, $0.2 million was utilized for domestic standby letters of credit that reduced our borrowing availability. In March 2022, we sold $400 million aggregate principal amount of 3.3% Senior Notes due 2027, and $800 million aggregate principal amount of 3.7% Senior Notes due 2032. The sales yielded net cash proceeds after deducting the underwriting discount and estimated offering expenses payable by it, of $1.186 billion. Interest on the Notes is payable semiannually in arrears on March 15 and September 15 of each year until the principal is paid or made available for payment. Management believes that this availability, together with cash flow from operations, will be adequate to meet our current objectives for operations, research and development, capital additions for manufacturing and distribution, plant and equipment, information technology systems and acquisitions of reasonable proportion to our existing total available capital.

At September 30, 2022, we had available $1.85 billion in cash, cash equivalents and short-term investments, of which approximately 13% was held in our foreign subsidiaries. The amount of funds held in the United States can fluctuate due to the timing of receipts and payments in the ordinary course of business and due to other reasons, such as acquisitions and borrowings. As part of our ongoing liquidity assessments, we regularly monitor the mix of domestic and foreign cash flows (both inflows and outflows).

It is generally our intention to repatriate certain foreign earnings to the extent that such repatriations are not restricted by local laws or accounting rules, and there are no substantial incremental costs. 

Cash Flows from Operations

Net cash provided by operations was $104.0 million compared to cash provided by operations of $498.6 million for the nine months ended September 30, 2022 and 2021, respectively.  The decrease in operating cash flows was primarily due to lower cash received from customers, higher cash paid to suppliers and to employees, higher income taxes paid, and interest paid in September 2022 on the Notes in the first nine months of 2022. These decreases were partially offset by higher proceeds from foreign exchange contracts and higher dividends in 2022 compared to 2021.

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Cash Flows from Investing Activities

Our investing activities have consisted primarily of cash used for purchases of marketable securities and investments, and an acquisition.

Net cash used in investing activities was $1,138.3 million and $230.0 million for the nine months ended September 30, 2022 and 2021, respectively. The increase was primarily attributable to the purchase of marketable securities and investments utilizing the cash proceeds from the sale of the senior notes as described below. The increase also included net cash outflows of $100.8 million for the acquisition of Curiosity.
Cash Flows from Financing Activities

Our financing activities have consisted primarily of cash from the issuance of senior notes.

Net cash provided by financing activities was $1,060.2 million compared to cash used for financing activities of $60.1 million for the nine months ended September 30, 2022, and 2021, respectively. This increase was primarily attributable to the net cash proceeds from the Notes. The increase was partially offset by a higher repurchase of our common stock by $75.0 million in 2022 than in 2021 as described below.

Treasury Shares

During the third quarter of 2022, 111,144 shares of Class A treasury stock with an aggregate total cost of $48.1 million were reissued to fulfill grants to employees under our restricted stock program and our Employee Stock Purchase Program. Upon reissuing the Class A treasury stock, a loss of $0.3 million was incurred as they were reissued at a lower price than their average cost, which reduced Retained earnings, while $49.5 million reduced Additional paid-in-capital.

During the second quarter of 2022, 11,609 shares of Class A treasury stock with an aggregate total cost of $4.95 million were reissued to fulfill grants to employees under our restricted stock program and our Employee Stock Purchase Program. Upon reissuing the Class A treasury stock, a loss of $13 thousand was incurred as they were reissued at a lower price than their average cost, which reduced Retained earnings, while $0.7 million reduced Additional paid-in-capital.

During the second quarter of 2022, we repurchased 255,284 shares of Class A common stock for $125.0 million under our Share Repurchase Program. We designated these repurchased shares as treasury stock. In July 2022, the Board of Directors authorized increasing the amount available under the Share Repurchase Program to allow the Company to repurchase up to an additional $200.0 million of stock. As of September 30, 2022, $298.1 million remained available for repurchases under the Share Repurchase Program.

During the second quarter of 2021, 1,164 shares of Class A treasury stock with an aggregate total cost of $0.4 million were reissued to fulfill grants to employees under our restricted stock program. Upon reissuing the Class A treasury stock, a loss of $65 thousand was incurred as they were reissued at a lower price than their average cost, which reduced Retained earnings, while $0.4 million reduced Additional paid-in capital.

During the third quarter of 2021, 112,623 shares of Class A treasury stock with an aggregate total cost of $42.8 million were reissued to fulfill grants to employees under our restricted stock program. Upon reissuing the Class A treasury stock, a loss of $6.7 million was incurred as they were reissued at a lower price than their average cost, which reduced Retained earnings, while $36.2 million reduced Additional paid-in capital.

During the first quarter of 2021, we repurchased 89,506 shares of Class A common stock for $50.0 million under our Share Repurchase Program. We designated these repurchased shares as treasury stock.

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

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

During the nine months ended September 30, 2022, there have been no material changes from the disclosures about market risk provided in our Annual Report on Form 10-K for the year ended December 31, 2021.

Item 4. Controls and Procedures

Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), as appropriate, to allow for timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

Subject to the limitations noted above, our management, with the participation of our CEO and CFO, has evaluated the effectiveness of the design and operation of our disclosure controls and procedures as of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, the CEO and CFO have concluded that, as of such date, our disclosure controls and procedures were effective to meet the objective for which they were designed and operate at the reasonable assurance level.

Changes to Internal Control Over Financial Reporting

We identified no changes in internal control over financial reporting that occurred during our quarter ended September 30, 2022 that have materially affected, or that are reasonably likely to materially affect, our internal control over financial reporting.


PART II – OTHER INFORMATION

Item 1. Legal Proceedings

See Note 13, “Legal Proceedings” in the Notes to the condensed consolidated financial statements of Part I, Item 1 of this Quarterly Report on Form 10-Q.

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Item 1A. Risk Factors

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

Business, Economic, Legal and Industry Risks

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

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

Although we have experienced increased demand for certain of our products being used in fighting the COVID-19 pandemic, we previously experienced some decreases in product demand in certain of our other businesses. Many of our customers reduced or modified operations to various extents, resulting in labs, universities and other customers' facilities being opened at reduced capacity, hospital visits declined as people delayed elective surgeries and avoided non-essential trips to the hospital, and routine diagnostic testing slowed. If conditions related to the pandemic were to deteriorate, we expect that parts of our business could again suffer negative impacts from the pandemic. For example, lockdowns and other COVID-19 related restrictions implemented by China starting in late March 2022 had a negative impact on our business in China for the second and third quarters of 2022 and we expect that if any similar lockdowns and restrictions in China are implemented in the future our business in China could be negatively impacted in future quarters. We expect that improvement in the COVID-19 pandemic conditions will continue to result in a decrease in demand for our products being used in fighting the COVID-19 pandemic which could have a negative impact on our financial results if the negative impact is not offset by the recovery of other parts of our businesses as a result of improved conditions related to the pandemic.

On the supply side, we are experiencing increased challenges with the supply of raw materials and components used in the production of our products, with some suppliers operating at reduced or modified capacity and otherwise unable to meet our demand for raw materials and inputs to manufacture our products. There are currently industry wide supply shortages of certain raw materials and electronic components. These shortages have caused a backlog of sales orders, some of which we consider to be significant, and some delays in certain new product development activities. We expect the backlog of sales orders to continue through the remainder of 2022 and some to continue into 2023. We have experienced raw material cost increases as a result of the COVID-19 pandemic, which may continue. In addition, while logistics capacity constraints are improving, we continue to experience significant freight surcharges and expect these to continue at least for the near term. Some countries continue to impose travel restrictions and may continue to impose measures that restrict the movement of our goods.

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With respect to our personnel, as a critical health care supplier, we continued to keep essential production, distribution and service teams onsite working in manufacturing and supply chain facilities throughout the world. During the COVID-19 pandemic, many employees in our administrative functions have worked remotely, but as conditions improved in March 2022, many employees in our administrative functions returned to work under a hybrid remote and in person work schedule. Although we are adhering to government mandated and Environmental, Health and Safety protocols, an outbreak of COVID-19 at one or more of our facilities could nonetheless cause shutdowns of facilities and a reduction in our workforce, which could dramatically affect our ability to operate our business and our financial results.

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

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

The manufacture of our products requires the timely delivery of sufficient amounts of quality components and materials. We manufacture our products in numerous manufacturing facilities around the world. We acquire our components and materials from many suppliers in various countries. We work closely with our suppliers to ensure the continuity of supply, but we cannot guarantee these efforts will always be successful. Further, while we seek to diversify our sources of components and materials, in certain instances we acquire components and materials from a sole supplier. The COVID-19 pandemic has created delays and shortages in the supply of components and raw materials. These shortages have caused a backlog of sales orders, some of which we consider to be significant, and some delays in certain new product development activities. We expect the backlog of sales orders to continue through the remainder of 2022 and some to continue into 2023. We also have experienced raw material cost increases as a result of the COVID-19 pandemic, which may continue. In addition, due to the regulatory environment in which we operate, we may be unable to quickly establish additional or replacement sources for some components or materials. When our supply is reduced or interrupted or of poor quality, and we are unable to develop alternative sources for such supply, our ability to manufacture our products in a timely or cost-effective manner is adversely affected, which adversely affects our ability to sell our products. See also our risk factor regarding the COVID-19 pandemic above.

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

We have significant international operations. We have direct distribution channels in over 35 countries outside the United States, and during the nine months ended September 30, 2022 our foreign entities generated 59% of our net sales. Compliance with complex foreign and U.S. laws and regulations that apply to our international operations increases our cost of doing business. These numerous and sometimes conflicting laws and regulations include, among others, data privacy requirements, labor relations laws, tax laws, anti-competition regulations, import and trade restrictions, tariffs, duties, quotas and other trade barriers, export requirements, U.S. laws such as the Foreign Corrupt Practices Act ("FCPA") and other U.S. federal laws and regulations established by the office of Foreign Asset Control, foreign laws such as the UK Bribery Act 2010 or other foreign laws which prohibit corrupt payments to governmental officials or certain payments or remunerations to customers. In addition, changes in laws or regulations potentially could be disruptive to our operations and business relationships in the affected regions. For example, the United Kingdom's withdrawal from the European Union (commonly referred to as “Brexit”) has caused some disruption to the free movement of goods, services and people between the United Kingdom and the European Union and has resulted in increased regulatory complexities.

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

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

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

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

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

Our future growth depends in part on our ability to continue to improve our product offerings and develop and introduce new product lines and extensions that integrate technological advances. If we are unable to integrate technological advances into our product offerings or to design, develop, manufacture and market new product lines and extensions successfully and in a timely manner, our business, results of operations and financial condition will be adversely affected. The COVID-19 pandemic and supply chain disruptions have caused some delays to our ability to develop and introduce new products. We have experienced product launch delays in the past and may do so in the future. We cannot assure you that our product and process development efforts will be successful or that new products we introduce will achieve market acceptance. Failure to launch successful new products or improvements to existing products may cause our products to become obsolete, which could harm our business, results of operations and financial condition.

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

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

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

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

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

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

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

Changes in the market value of our position in Sartorius AG materially impact our financial results.
Changes in the market value of our position in Sartorius AG will continue to materially impact our consolidated statements of income and other financial statements. A decline in the market value of our position in Sartorius AG will result in losses due to write-downs in the value of the equity securities. An increase in the market value of our position in Sartorius AG will result in a favorable impact to net income independent of the actual operating performance of our business. Depending on the extent of the decline or of the increase in the market value of our position in Sartorius AG, these negative or positive impacts on us could be significant and material. Our share price may change significantly based upon changes in the market valuation of Sartorius AG, and such change are unrelated to the actual performance of our business. Non-operating income for a period may be significantly impacted by the timing of dividends paid by Sartorius AG, particularly in comparison to prior year periods.

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The value of our position in Sartorius AG might cause us to be deemed an investment company under the Investment Company Act of 1940.

As a result of the market value of our position in Sartorius AG, we might be deemed to be an “investment company” under Section 3(a)(1)(C) of the Investment Company Act of 1940, as amended (the “Investment Company Act”) The Company does not believe it is an investment company primarily in reliance on Section 3(b)(1) of the Investment Company Act because we are “primarily engaged” in a business other than that of investing, reinvesting, owning, holding or trading in securities. Rather, we are primarily engaged in the development, manufacturing and marketing of products for the life science research and clinical diagnostic markets, and we believe that our historical development, our public representations of policy, the activity of our officers and directors, the nature of our present assets, the sources of our present income, and the public perception of the nature of our business all support the conclusion that we are an operating company and not an investment company. Although we have discussed this issue with the staff of the SEC and we are comfortable with our position, if it is determined later that the Company may not rely on Section 3(b)(1) or any other exemption under the Investment Company Act, and the Company were deemed to be an unregistered investment company, such determination would have a material adverse effect on our business as we would need to register as an investment company and be subject to the regulations of the Investment Company Act which are designed to restrict and regulate mutual funds rather than operating companies. It could also call into question the validity of all contracts in which the Company is a party. If it appeared likely that we would be deemed to be an investment company, we may modify our position in Sartorius AG in order to avoid such determination.

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

As discussed further in Part 1, Item 1 of this Quarterly Report in Note 3 of the Notes to the condensed consolidated financial statements under the heading "Level 3 Fair Value Investments", we made a loan ("Loan") of 400 million Euros to Sartorius-Herbst Beteiligungen II GmbH in November 2021 that is secured by the pledge of certain trust interests which upon termination of the trust represent the right to receive Sartorius ordinary shares. Prior to a termination of the trust, the trust interests, which are provided as collateral for the Loan, are not tradable on the capital markets and may, in case of an enforcement, have to be sold with a significant discount to the value of the underlying shares.

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

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

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

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

We made significant changes to our organizational structure over the past few years, including the reorganization of aspects of our European operations that was announced in February 2021. These changes may have unintended consequences, such as distraction of our management and employees, labor unrest, business disruption, disruption of supply, attrition of our workforce, inability to attract or retain key employees, and reduced employee morale or productivity.

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

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

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Global economic and geopolitical conditions could adversely affect our operations.

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

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

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

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

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

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

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

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

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

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

The FDA can also require us to repair, replace or refund the cost of devices that we manufactured or distributed. In addition, the FDA may change its clearance and approval policies, adopt additional regulations or revise existing regulations, or take other actions, which may prevent or delay approval or clearance of our products or impact our ability to modify our currently approved or cleared products on a timely basis. Any delay in, or failure to receive or maintain, clearance or approval for our products or changes in regulation could prevent us from generating revenue from these products and adversely affect our business operations and financial results. Additionally, the FDA and other regulatory authorities have broad enforcement powers. Regulatory enforcement or inquiries, or other increased scrutiny on us, could affect the perceived safety and efficacy of our products and dissuade our customers from using our products.

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

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

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

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

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

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

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

We may have higher than anticipated tax liabilities.

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

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

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

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

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022, which includes an Alternative Minimum Tax based on the Adjusted Financial Statement Income of Applicable Corporations. Based on our initial evaluation, we do not believe the Inflation Reduction Act will have a material impact on our income tax provision and cash taxes. However, future U.S. Department of the Treasury guidance and regulations could result in changes in this initial conclusion.

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

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

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

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

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

We have substantial debt and have the ability to incur additional debt. As of September 30, 2022, we had approximately $1,197.3 million of outstanding long-term indebtedness, primarily consisting of the 3.300% Senior Notes due in March 2027 and the 3.700% Senior Notes due in March 2032 as further discussed in Note 7 of the condensed consolidated financial statements. In addition, we have a revolving credit facility that provides for up to $200.0 million in borrowing capacity, $0.2 million of which has been utilized for domestic standby letters of credit. Our incurrence of substantial amounts of debt may have important consequences. For instance, it could:
•make it more difficult for us to satisfy our financial obligations, including those relating to our outstanding debt;
•require us to dedicate a 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.

Our existing credit facility, our 3.300% Senior Notes due in March 2027, our 3.700% Senior Notes due in March 2032 and agreements we may enter in the future, contain or may contain covenants imposing restrictions on our business. These restrictions may affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities as they arise.  Existing covenants place restrictions on our ability to, among other things: incur additional debt; acquire other businesses or assets through merger or purchase; create liens; make investments; enter into transactions with affiliates; sell assets; in the case of some of our subsidiaries, guarantee debt; and declare or pay dividends, redeem stock or make other distributions to stockholders. Our existing credit facility also requires that we comply with certain financial ratios, including a maximum consolidated leverage ratio test and a minimum consolidated interest coverage ratio test. Our ability to comply with these covenants may be affected by events beyond our control, including prevailing economic, financial and industry conditions. The breach of any of these restrictions could result in a default. An event of default under our debt agreements would permit some of our lenders to declare all amounts borrowed from them to be due and payable, together with accrued and unpaid interest. In addition, acceleration of our other indebtedness may cause us to be unable to make interest payments on our outstanding notes and repay the principal amount of our outstanding notes or may cause the future subsidiary guarantors, if any, to be unable to make payments under the guarantees.

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

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

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

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

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

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

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

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

Risks Related to Being a Public Company

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

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

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General Business Risks

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

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

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

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

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

Our bylaws provide that unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have jurisdiction, another state court located within the State of Delaware or, if no state court located within the State of Delaware has jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for (i) any derivative action or proceeding brought on behalf of the Company, (ii) any action asserting a claim of breach of a fiduciary duty owed by any director, officer or other employee of the Company to the Company or the Company’s stockholders, (iii) any action arising pursuant to any provision of the General Corporation Law of the State of Delaware, the Certificate of Incorporation or the Bylaws (in each case, as may be amended from time to time) or (iv) any action asserting a claim against the Company or any of its directors, officers or other employees governed by the internal affairs doctrine of the State of Delaware. This choice of forum provision may increase costs to bring a claim, discourage claims or limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with the Company or the Company’s directors, officers or other employees, which may discourage such lawsuits against the Company or the Company’s directors, officers and other employees. Alternatively, if a court were to find the choice of forum provision contained in the Company’s bylaws to be inapplicable or unenforceable in an action, the Company may incur additional costs associated with resolving such action in other jurisdictions.
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Application of the choice of forum provision may be limited in some instances by applicable law. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations thereunder. As a result, the choice of forum provision will not apply to actions arising under the Exchange Act or the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder, subject to a limited exception for certain “covered class actions.” There is uncertainty, particularly in light of current litigation, as to whether a court would enforce the choice of forum provision with respect to claims under the Securities Act. Our stockholders will not be deemed, by operation of the Company’s choice of forum provision, to have waived claims arising under the federal securities laws and the rules and regulations thereunder.


Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

As of September 30, 2022, $298.1 million of stock remained available for repurchases under the Company's current Share Repurchase Program, which was authorized by the Board of Directors in July 2022, July 2020 and in November 2017. Repurchases under the Share Repurchase Program may be made at management's discretion from time to time on the open market or through privately negotiated transactions. The authorization has no expiration.

The following table contains information on the shares of our common stock that we purchased or otherwise acquired during the three months ended September 30, 2022.

PeriodTotal Number of Shares PurchasedAverage Price Paid per ShareTotal Number of Shares Purchased as Part of Publicly Announced Plans or ProgramsMaximum Number (or Approximate Dollar Value) of Shares that May yet be Purchased Under the Plans or Programs (in millions)
July 1 to July 31, 2022—$— —$298.1 
August 1 to August 31, 2022—$— —$298.1 
September 1 to September 30, 2022—$— —$298.1 

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.
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Item 6. Exhibits

(a)  Exhibits

The following documents are filed as part of this report:

Exhibit
No.		 
10.1
31.1
  
31.2
  
32.1
  
32.2
  
101.INSThe instance document does not appear in the interactive data file because its XBRL tags are embedded within the Inline XBRL document.
101.SCHInline XBRL Taxonomy Extension Schema Document
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document
101.LABInline XBRL Taxonomy Extension Labels Linkbase Document
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document
104.1The cover page Interactive Data File is formatted in Inline XBRL and is contained in Exhibits 101

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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:October 28, 2022 /s/ Norman Schwartz
   Norman Schwartz, Chairman of the Board,
   President and Chief Executive Officer
    
Date:October 28, 2022 /s/ Ilan Daskal
   Ilan Daskal, Executive Vice President,
   Chief Financial Officer
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        Exhibit 10.1
BIO-RAD LABORATORIES, INC.
2017 INCENTIVE AWARD PLAN

PERFORMANCE STOCK UNIT AWARD AGREEMENT
Pursuant to the Performance Stock Unit Award Grant Notice (the “Grant Notice”) to which this Performance Stock Unit Award Agreement (this “Agreement”) is attached, Bio-Rad Laboratories, Inc., a Delaware corporation (the “Company”), has granted to Holder the right to receive the number of Performance Stock Units (the “PSUs”) under the 2017 Incentive Award Plan, as amended from time to time (the “Plan”), as set forth in the Grant Notice.
All capitalized terms used in this Agreement without definition shall have the meanings ascribed in the Plan and the Grant Notice.
The PSUs are subject to the terms and conditions of the Plan, which are incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the Plan shall control.
1.Grant and Vesting of the PSUs. As set forth in the Grant Notice, the Company hereby grants Holder PSUs, subject to all the terms and conditions in this Agreement, the Country Addenda, the Grant Notice and the Plan. The PSUs shall vest as set forth on the Grant Notice under “Vesting and Settlement”. Unless the Achievement Factor (as defined in Exhibit B) is greater than zero and unless and until the PSUs have vested in the manner set forth in this Agreement, the Holder will have no right to receive Shares under any such PSUs. No Shares shall be issued to Holder until the time set forth in Section 2 below. Prior to the actual issuance of any Shares, such PSUs will represent an unsecured obligation of the Company, payable only from the general assets of the Company. Only whole Shares shall be issued upon vesting of the PSUs, and the Company shall be under no obligation to issue any fractional Shares to Holder.

2.Issuance of Shares. Shares shall be issued to Holder on or as soon as administratively practicable following each Determination Date as set forth in Exhibit B (the “Vesting Date”) (and in no event later than the earlier of 90 days following the Vesting Date or 2 1/2 months following the end of the calendar year in which such Vesting Date or vesting event occurs). After each Vesting Date the Company shall promptly cause to be issued (either in book-entry form or otherwise) to Holder or Holder’s beneficiaries, as the case may be, Shares with respect to PSUs that became vested on such Vesting Date.

3.Acceleration of Vesting. Notwithstanding Section 1 above, pursuant to Section 13.2(d) of the Plan, in the event of a Change in Control that occurs prior to March 31, 2025, the PSUs shall become fully vested upon the Change in Control based on an Achievement Factor of one (1.0), or if determinable and greater than (1.0), the actual Achievement Factor determined in accordance with Exhibit B.

4.Taxes.

(a)Regardless of any action the Company, or, if different, Holder’s employer (the “Employer”) takes with respect to any or all income tax, social insurance, payroll tax, fringe benefits tax, payment on account or other tax-related items related to Holder’s participation in the Plan and legally applicable to Holder (“Tax-Related Items”), Holder acknowledges and agrees that the ultimate liability for all Tax-Related Items is and remains Holder’s responsibility and may exceed the amount actually withheld by the Company or the Employer. Holder further acknowledges that the Company and/or the Employer (i) make no representations or undertakings regarding the treatment of any Tax-Related Items in connection with any aspect of the PSUs, including, but not limited to, the grant, vesting or settlement of the PSUs, the issuance of Shares upon settlement of the PSUs, the subsequent sale of Shares acquired under the Plan and the receipt of dividends or Dividend Equivalents, if any; and (ii) do not commit to and are under no obligation to structure the terms of the PSUs or any aspect of the PSUs to reduce or eliminate Holder’s liability for Tax-Related Items or achieve any particular tax result. Further, if Holder is subject to Tax-Related Items in more than one jurisdiction, Holder acknowledges that the Company

        
and/or the Employer (or former employer, as applicable) may be required to withhold or account for Tax-Related Items in more than one jurisdiction.

(b)Prior to any relevant taxable or tax withholding event, as applicable, Holder agrees to make adequate arrangements satisfactory to the Company and/or the Employer to satisfy any withholding obligation for Tax-Related Items. In this regard, except as set forth in any separate 10b5-1 plan entered into by Holder and approved by the Company, Holder authorizes the Company and/or the Employer, or their respective agents, at their discretion, to satisfy the withholding obligation for Tax-Related Items by one or any combination of the following:

(i)requiring Holder to pay an amount the Company determines to be an appropriate amount to satisfy the Tax-Related Items directly to the Company and/or the Employer in the form of cash, check or other cash equivalent;

(ii)withholding from proceeds of the sale of a number of Shares acquired upon settlement of the PSUs that the Company determines to be appropriate to generate cash proceeds sufficient to satisfy the withholding obligations for Tax-Related Items either through a voluntary sale or through a mandatory sale arranged by the Company (on Holder’s behalf pursuant to this authorization), provided that Holder will be responsible for all brokerage fees and other costs of the sale and agrees to indemnify and hold the Company harmless from any losses, costs, damages, or expenses related to any such sale and that no fractional Shares will be sold to cover the Tax-Related Items;

(iii)deducting an amount the Company determines to be an appropriate amount to satisfy the Tax-Related Items from wages or other cash compensation payable to Holder by the Company and/or the Employer;

(iv)    withholding a number of vested whole Shares subject to the PSUs otherwise issuable to Holder that have a Fair Market Value equal to the amount the Company determines to be an appropriate amount to satisfy the withholding obligations for Tax-Related Items; and/or

(v) any other method of withholding determined by the Company and, to the extent required by Applicable Law or the Plan, approved by the Committee.

(c)Notwithstanding anything to the contrary in this Section 4, if Holder is an officer of the Company within the meaning of Section 16 of the Exchange Act, the Board or Committee (as constituted to satisfy Rule 16b-3 of the Exchange Act) will determine which, if any, of the withholding methods set out in Section 4(b) will be used.

(d) In determining the appropriate amount to satisfy any withholding obligation for Tax-Related Items, the Company may refer to minimum statutory withholding rates or other applicable withholding rates, including up to the maximum statutory tax rate for the tax jurisdiction(s) applicable to Holder, provided that Holder may be required to pay Tax-Related Items in the event that a minimum statutory withholding rate is used or Holder may receive a refund in cash of any amount that was over-withheld based on a rate that exceeds Holder’s actual tax rate and, in this case, Holder will have no entitlement to the Class A common stock equivalent.

(e)If the obligation for Tax-Related Items is satisfied by withholding a number of whole Shares as described in Section 4(b)(iv) above, for tax purposes, Holder is deemed to have been issued the full number of Shares subject to the vested PSUs, notwithstanding that a number of the Shares are held back solely for the purpose of paying the Tax-Related Items.

(f)The Company shall not be obligated to deliver any new certificate representing Shares issuable (or other indicia of Share ownership) with respect to the PSUs to Holder or Holder’s legal representative unless and until Holder or Holder’s legal representative shall have paid or otherwise satisfied in full the amount of all Tax-Related Items.

(g)This Agreement, the PSUs and payments made pursuant to this Agreement are intended to comply with or qualify for an exemption from Section 409A of the Code and the Treasury
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Regulations thereunder (“Section 409A”) and shall be interpreted in a manner consistent with that intention. Notwithstanding any other provision of this Agreement, the Company reserves the right, to the extent the Company deems necessary or advisable, in its sole discretion, to unilaterally amend the Plan and/or this Agreement to ensure that all PSUs are awarded in a manner that qualifies for exemption from or complies with Section 409A. This Section 4(g) does not create an obligation on the part of the Company to modify the terms of this Agreement or the Plan or to mitigate any additional tax, interest and/or penalties or other adverse tax consequences that may apply under Code Section 409A if compliance is not practical and does not guarantee that the PSUs or the delivery of Shares upon vesting/settlement of the PSUs will not be subject to taxes, interest and penalties or any other adverse tax consequences under Section 409A of the Code. The Company will have no liability to the Holder or any other party if the PSU that is intended to be exempt from, or compliant with, Section 409A of the Code, is not so exempt or compliant or for any action taken by the Administrator with respect thereto.

5.Award Not Transferable. This grant of PSUs and the rights and privileges conferred hereby will not be transferred, assigned, pledged or hypothecated in any way (whether by operation of law or otherwise) and will not be subject to sale under execution, attachment or similar process. Upon any attempt to transfer, assign, pledge, hypothecate or otherwise dispose of this grant, or any right or privilege conferred hereby, or upon any attempted sale under any execution, attachment or similar process, this grant and the rights and privileges conferred hereby immediately will become null and void.

6.Rights as Stockholder. Neither Holder nor any person claiming under or through Holder will have any of the rights or privileges of a stockholder of the Company with respect to any Shares deliverable hereunder unless and until certificates representing such Shares (which may be in book entry form) will have been issued and recorded on the records of the Company or its transfer agents or registrars, and delivered to Holder (including through electronic delivery to a brokerage account). After such issuance, recordation and delivery, Holder will have all the rights of a stockholder of the Company with respect to voting such Shares and receipt of dividends and distributions on such Shares.

7.Conditions to Issuance of Certificates. Notwithstanding any other provision of this Agreement, unless there is an available exemption from any registration, qualification or other legal requirement applicable to the Shares, the Company shall not be required to issue or deliver any certificate or certificates for any Shares prior to the fulfillment of all of the following conditions: (a) the admission of the Shares to listing on all stock exchanges on which such Shares are then listed, (b) the completion of any registration or other qualification of the Shares under any state, federal, or local law or under rulings or regulations of the U.S. Securities and Exchange Commission (“SEC”) or other governmental regulatory body, which the Company shall, in its sole and absolute discretion, deem necessary and advisable, (c) the obtaining of any approval or other clearance from any governmental agency that the Company shall, in its absolute discretion, determine to be necessary or advisable, and (d) the lapse of any such reasonable period of time following the date the PSUs vest as the Company may from time to time establish for reasons of administrative convenience. Holder understands that the Company is under no obligation to register or qualify the Shares with the SEC or any state or foreign securities commission or to seek approval or clearance from any governmental authority for the issuance or sale of the Shares. Further, Holder agrees that the Company shall have unilateral authority to amend the Plan and this Agreement without Holder’s consent to the extent necessary to facilitate compliance with securities or other laws applicable to the issuance of Shares.

8.Not a Contract of Employment. Nothing in this Agreement or in the Plan, or Holder’s participation in the Plan, shall confer upon Holder any right to continue to serve as an Employee or other service provider of the Company, any Subsidiary or the Employer and shall not interfere with the ability of the Company, any Subsidiary or the Employer to terminate Holder’s employment or service relationship at any time. Further, the grant of PSUs and Holder’s participation in the Plan will not be interpreted to form or amend an employment contract or relationship with the Company or any Subsidiary.

9.Nature of Grant. In accepting the PSUs, Holder acknowledges, understands and agrees that:

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(a)the Plan is established voluntarily by the Company, it is discretionary in nature and it may be modified, amended, suspended or terminated by the Company at any time to the extent permitted by the Plan;
(b)the grant of the PSUs is exceptional, voluntary and occasional and does not create any contractual or other right to receive future grants of PSUs, or benefits in lieu of PSUs even if PSUs have been granted in the past;
(c)all decisions with respect to future awards of PSUs, if any, will be at the sole discretion of the Company;
(d)Holder’s participation in the Plan is voluntary;
(e)the PSUs and the Shares subject to the PSUs, and the income and value of same, are not intended to replace any pension rights or compensation;
(f)the PSUs and the Shares subject to the PSUs, and the income and value of same, are not part of normal or expected compensation or salary for any purposes, including, but not limited to, calculating any severance, resignation, termination, redundancy, dismissal, end of service payments, bonuses, long-service awards, holiday pay, pension or retirement or welfare benefits or similar payments;
(g)unless otherwise agreed with the Company, the PSUs and the Shares subject to the PSUs, and the income and value of same, are not granted for, or in connection with, any service the Holder may provide as a director of any Subsidiary;
(h)the future value of the underlying Shares is unknown, indeterminable and cannot be predicted with certainty;
(i)no claim or entitlement to compensation or damages shall arise from forfeiture of the PSUs resulting from termination of Holder’s employment relationship (for any reason whatsoever and whether or not later found to be invalid or in breach of employment laws in the jurisdiction where Holder is employed or the terms of Holder’s employment agreement, if any);
(j)for purposes of the PSUs, Holder's employment will be considered terminated as of the date Holder is no longer actively providing services as an employee to the Company, the Employer or any other Subsidiary of the Company (regardless of the reason for the termination and whether or not such termination is later to be found invalid or in breach of employment laws in the jurisdiction where Holder is employed or the terms of Holder’s employment agreement, if any), and unless otherwise expressly provided in this Agreement or determined by the Company, Holder’s right to vest in the PSUs under the Plan, if any, will terminate as of such date and will not be extended by any notice period (e.g., Holder's period of active service would not include any contractual notice period or any period of “garden leave” or similar period mandated under employment laws in the jurisdiction where Holder is employed or the terms of Holder’s employment, if any) and Holder will not earn or be entitled to any pro-rated vesting for that portion of time before the date on which Holder’s right to vest terminates (as determined under this provision) nor will Holder be entitled to any compensation for lost vesting; the Company shall have the exclusive discretion to determine when Holder is no longer actively providing services as an employee for purposes of the PSU Award while on a leave of absence;
(k)unless otherwise provided in the Plan or by the Company in its discretion, the PSUs and the benefits evidenced by this Agreement do not create any entitlement to have the PSUs or any such benefits transferred to, or assumed by, another company nor be exchanged, cashed-out or substituted for, in connection with any corporate transaction affecting the shares of the Company; and
(l)neither the Company, the Employer nor any Subsidiary shall be liable for any foreign exchange rate fluctuation between Holder’s local currency and the United States Dollar that may affect the value of the PSUs or of any amounts due to Holder pursuant to the settlement of the PSUs or the subsequent sale of any Shares acquired upon settlement.
10.No Advice Regarding Grant. The Company is not providing any tax, legal or financial advice, nor is the Company making any recommendations regarding Holder’s participation in the Plan, or Holder’s acquisition or sale of the underlying Shares. Holder understands and agrees he or she should consult with his or her own personal tax, legal and financial advisors regarding Holder’s participation in the Plan before taking any action related to the Plan.
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11.Data Privacy Consent
This Section 11 replaces Section 11.8 of the Plan.
The Company is located at 1000 Alfred Nobel Drive, Hercules, California, 94547, U.S.A., and grants PSUs under the Plan to employees of the Company and its Subsidiaries, at the Company's sole discretion. In order to do so and to implement, administer and manage its Plan, the Company needs to collect, use and otherwise process Holder's personal data.
If Holder would like to participate in the Plan, Holder will need to review the following information about the processing of personal data by or on behalf of the Company and declare Holder's consent by electronically agreeing to or signing this Agreement.
(a)    Controller and European Union Representative. The Company, located at 1000 Alfred Nobel Drive, Hercules, California 94547, U.S.A., is the controller responsible for the processing of Holder's personal data in connection with the Plan. For Holders located in the European Union, please be aware that the Company’s representative in the European Union is Bio-Rad Laboratories GmbH, Kapellenstrasse 12, 85622 Feldkirchen, Germany. 
(b)    Personal Data Subject to Processing. The personal data processed by the Company in the context of the Plan includes, without limitation, Holder’s name, home address and telephone number, email address, hire date, date of birth, social insurance number or other identification number, tax residency, salary, salary grade, citizenship, nationality, passport number, job title, payroll tax withholding rates and/or deductions as applicable to Participant, any shares of stock or directorships held in the Company or any Subsidiary, and details of all RSUs or any other entitlement to shares of stock awarded, canceled, exercised, vested, unvested or outstanding in Holder's favor, which the Company receives from Holder or the Employer (“Personal Data”).
(c)    Purposes and Legal Basis of the Processing. The Company processes the Personal Data for the purpose of implementing, administering and managing Holder's participation in the Plan. For those jurisdictions requiring a legal basis for processing such Personal Data, the legal basis for the processing of Holder's Personal Data by the Company, its third-party service providers, and the Subsidiary of the Company Holder may transfer employment to as described in Section (d) below is Holder's declaration of consent provided by electronically agreeing to or signing this Agreement.
(d)    Stock Plan Administration Service Providers and Other Data Recipients. The Company transfers Holder's Personal Data, or parts thereof, to E*TRADE Securities LLC, 11 Times Square, 32nd Floor, New York, NY 10036, the brokerage firm engaged by the Company to hold Holders’ shares and other amounts acquired under the Plan, and its affiliated company E*TRADE Financial Corporate Services, Inc., 3 Edison Drive, Alpharetta, GA 30005 (collectively “E*TRADE”), independent service providers based in the United States which assist the Company with the implementation, administration and management of the Plan. In the future, the Company may select different or additional service providers and share Holder's Personal Data with such different or additional service providers that assist the Company with the implementation, administration and management of the Plan. The Company's service providers will open an account for Holder to receive and trade Shares acquired under the Plan. Holder will be asked to agree on separate terms and data processing practices with the service provider, which is a condition to Holder's ability to participate in the Plan. In addition to its service providers, the Company might disclose Holder’s Personal Data to the Subsidiary of the Company Holder may transfer employment to in the future if necessary to implement, administer and manage Holder’s participation in the Plan or comply with applicable reporting obligations or other legal requirements. Holder may, at any time, request a list with the names and addresses of any recipients of the Personal Data by contacting Holder’s local human resources representative.
(e)    International Data Transfers. For Holders residing outside of the United States, please be aware that the Company, E*TRADE is located in the United States. Similarly, future service providers of the Company might be located in the United States or elsewhere outside of the European Union. Further, for Holders located in the European Union who transfer employment to a Subsidiary
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located outside of the European Union, please be aware that Holder’s Personal Data may be transferred to such Subsidiary located outside of the European Union. Depending on Holder's country of residence, Holder understands and acknowledges that the United States is not, and any other jurisdictions his or her Personal Data might be transferred to and processed in may not be, subject to an unlimited adequacy finding by the European Commission and might apply laws not providing a level of protection of Holder's Personal Data equivalent to the level of protection in his or her country of residence. As a result, in the absence of appropriate safeguards such as standard data protection clauses, the processing of Holder's Personal Data in the United States or, as the case may be, other jurisdictions outside the European Union might not be subject to substantive data processing principles or supervision by data protection authorities. In addition, Holder might not have enforceable rights regarding the processing of his or her Personal Data in such jurisdictions. By electronically agreeing or signing this Agreement, Holder explicitly declares his or her consent to the Company receiving and transferring Holder's Personal Data to E*TRADE and, as the case may be, future service providers of the Company, and to the Subsidiary Holder may transfer employment to without implementing standard data protection clauses or similar safeguards and such processing of Holder's Personal Data is exclusively based on Holder's consent.
(f)    Data Retention. The Company and the Subsidiary Holder may transfer employment to will use Holder's Personal Data only as long as is necessary to implement, administer and manage Holder's participation in the Plan, or to comply with legal or regulatory obligations, including under tax and securities laws. This period may extend beyond Holder’s period of employment at the Company or at the Subsidiary Holder may transfer employment to the extent unsold shares of Company stock remain in Holder’s E*Trade account or such other account established in the future to serve the Plan in a similar manner. To the extent that the Company or the Subsidiary Holder may transfer employment to comply with legal or regulatory obligations, the legal basis, where required, for the processing of Holder's Personal Data would be compliance with the relevant laws or regulations or the pursuit by the Company or by the Subsidiary Holder may transfer employment to of respective legitimate interests not outweighed by Holder's interests, rights or freedoms. When the Company or the Subsidiary Holder may transfer employment to no longer needs Holder's Personal Data for any of the above purposes, it will cease processing it in this context and remove it from all of its systems used for such purposes to the fullest extent practicable.
(g)    Data Subject Rights. Subject to the conditions set out in the applicable law, Holder may, without limitation, have the rights to (i) inquire whether and what kind of Personal Data the Company or the Subsidiary Holder may transfer employment to, holds about Holder and how it is processed, and to access or request copies of such Personal Data, (ii) request the correction or supplementation of Personal Data that is inaccurate, incomplete or out-of-date in light of the purposes underlying the processing, or to (iii) obtain the erasure of Personal Data no longer necessary for the purposes underlying the processing, processed based on withdrawn consent, processed for legitimate interests that, in the context of Holder's objection, do not prove to be compelling or processed in non-compliance with applicable legal requirements. In addition, Holder may, subject to the conditions set out in the applicable law and without limitation, have the rights to (iv) request the Company or the Subsidiary Holder may transfer employment to, to restrict the processing of Personal Data in certain situations where Holder feels its processing is inappropriate, (v) object, in certain circumstances, to the processing of Personal Data for legitimate interests, and to (vi) request portability of Personal Data that Holder has actively or passively provided to the Company or to the Subsidiary Holder transferred employment to (which does not include data derived or inferred from the collected data), where the processing of such Personal Data is based on consent or a contractual agreement with Holder and is carried out by automated means. In case of concerns, Holder may also have the right to lodge a complaint with the competent local data protection authority.
(h)    Voluntariness and Consequences of Denial or Withdrawal of Consent. Holder's participation in the Plan and Holder's provision of consent is purely voluntary. Holder may deny or later withdraw Holder's consent at any time, with future effect and for any or no reason. If Holder does not consent, or if Holder later withdraws Holder’s consent, Holder's employment status, salary or service and career with the employer, a Subsidiary Holder may transfer employment to, will not be affected. The only consequence of denying or withdrawing Holder's consent is that the Company will not or no longer be able to grant RSUs or other equity awards to Holder or administer or maintain
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such awards. Therefore, denial or withdrawal of consent may affect Holder's ability to realize benefits from the RSUs and otherwise participate in the Plan. For more information on the consequences of Holder's denial or withdrawal of consent, Holder may contact his or her local human resources representative.
Finally, Holder understands that the Company may rely on a different legal basis for the collection, processing and/or transfer of the Personal Data either now or in the future and/or request Holder to provide another data privacy consent. If applicable and upon request of the Company or the Employer, Holder agrees to provide an executed acknowledgment or data privacy consent (or any other acknowledgments, agreements or consents) to the Company and/or the Employer that the Company and/or the Employer may deem necessary to obtain under the data privacy laws in Holder’s country, either now or in the future. Holder understands that he or she may be unable to participate in the Plan if Holder fails to execute any such acknowledgment, agreement or consent requested by the Company and/or the Employer.

12.Governing Law and Venue. The laws of the State of Delaware shall govern the interpretation, validity, administration, enforcement and performance of the terms of the Grant Notice and this Agreement, regardless of the law that might be applied under conflict of laws principles.

For purposes of litigating any dispute that arises under this grant of PSUs or this Agreement, the parties hereby submit to and consent to the jurisdiction of the State of California, agree that such litigation shall be conducted in the courts of Contra Costa County, California, or the federal courts for the United States for the Northern District of California, where this grant is made and/or to be performed.

13.Conformity to Securities Laws. Holder acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of the Securities Act and the Exchange Act, and any and all regulations and rules promulgated thereunder by the SEC, including without limitation Rule 16b-3 under the Exchange Act. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the PSUs are granted, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by Applicable Law, the Plan and this Agreement shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

14.Amendment, Suspension and Termination. To the extent permitted by the Plan, this Agreement may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator, provided, that, except as may otherwise be provided by the Plan or this Agreement, no amendment, modification, suspension or termination of this Agreement shall adversely effect the PSUs in any material way without the prior written consent of Holder.

15.Notices. Notices required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the mail by certified or registered mail, with postage and fees prepaid, addressed to Holder to his or her address shown in the Company records, and to the Company at its principal executive office.

16.Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Agreement shall be binding upon Holder and his or her heirs, executors, administrators, successors and assigns.
17.Electronic Delivery and Acceptance. The Company may, in its sole discretion, decide to deliver any documents related to current or future participation in the Plan by electronic means. Holder hereby consents to receive such documents by electronic delivery and agrees to participate in the Plan through an on-line or electronic system established and maintained by the Company or a third party designated by the Company.

18.Language. Holder acknowledges that he or she is sufficiently proficient in English to understand the terms and conditions of this Agreement. If Holder has received this Agreement or any other document related to the Plan translated into a language other than English and if the meaning of the translated version is different than the English version, the English version will control.
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19.Severability. The provisions of this Agreement are severable and if any one or more provisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions shall nevertheless be binding and enforceable.

20.Country Addenda. The PSUs shall be subject to any special terms and conditions set forth in Exhibit C to this Agreement for Holder’s country. Moreover, if Holder relocates to one of the countries included in Exhibit C, the special terms and conditions for such country will apply to Holder, to the extent the Company determines that the application of such terms and conditions is necessary or advisable for legal or administrative reasons. Exhibit C constitutes part of this Agreement.

21.Imposition of Other Requirements. The Company reserves the right to impose other requirements on Holder’s participation in the Plan, on the PSUs and on any Shares acquired under the Plan, to the extent the Company determines it is necessary or advisable for legal or administrative reasons, and to require Holder to sign any additional agreements or undertakings that may be necessary to accomplish the foregoing.

22.Waiver. Holder acknowledges that a waiver by the Company of breach of any provision of the Agreement shall not operate or be construed as a waiver of any other provision of this Agreement, or of any subsequent breach by Holder or any other Holder.

23.Insider Trading/Market Abuse Laws. Holder acknowledges that he or she may be subject to insider trading restrictions and/or market abuse laws based on the exchange (if any) on which Shares are listed, and in applicable jurisdictions, including but not limited to the United States, Holder’s country and the designated broker’s country, which may affect Holder’s ability to accept, acquire, sell or otherwise dispose of Shares, rights to Shares (e.g., RSUs) or rights linked to the value of Shares under the Plan during such times as Holder is considered to have “inside information” regarding the Company (as defined by the laws in applicable jurisdictions). Local insider trading laws and regulations may prohibit the cancellation or amendment of orders Holder placed before he or she possessed inside information. Further, Holder could be prohibited from (i) disclosing the inside information to any third party, which may include fellow employees and (ii) “tipping” third parties or causing them otherwise to buy or sell securities. Any restrictions under these laws or regulations are separate from and in addition to any restrictions that may be imposed under any applicable Company insider trading policy. Holder acknowledges he or she is responsible for complying with any applicable restrictions and is encouraged to speak to his or her personal legal advisor for further details regarding any applicable insider trading and/or market abuse laws in Holder’s country.

24.Foreign Asset / Account Reporting Requirements, Exchange Controls and Tax Requirements. Holder acknowledges that his or her country may have certain foreign asset and/or account reporting requirements and exchange controls which may affect his or her ability to acquire or hold Shares under the Plan or cash received from participating in the Plan (including from any dividends or Dividend Equivalents received or sale proceeds arising from the sale of Shares) in a brokerage or bank account outside his or her country. Holder understands that he or she may be required to report such accounts, assets or transactions to the tax or other authorities in his or her country. Holder also may be required to repatriate sale proceeds or other funds received as a result of Holder's participation in the Plan to his or her country through a designated bank or broker and/or within a certain time after receipt. In addition, Holder may be subject to tax payment and/or reporting obligations in connection with any income realized under the Plan and/or from the sale of Shares. Holder acknowledges that it is his or her responsibility to be compliant with all such requirements, and that Holder should consult his or her personal legal and tax advisors, as applicable, to ensure Holder's compliance.

25.Recovery of Erroneously Awarded Compensation. As an additional condition of receiving this Award, Holder agrees that the PSU and any proceeds or other benefits Holder may receive hereunder shall be subject to forfeiture and/or repayment to the Company to the extent and in the manner required (i) to comply with any requirements imposed under Applicable Law and/or the rules and regulations of the securities exchange or inter-dealer quotation system on which the Shares are listed or quoted, including, without limitation, pursuant to Section 954 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (collectively, the “Rules and Regulations”) and (ii) under the terms of
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any policy adopted by the Company as of the date hereof or as may be amended from time to time to comply with Applicable Law or the Rules and Regulations(and such requirements shall be deemed incorporated into this Agreement without the consent of Holder). Further, if Holder receives any amount in excess of what Holder should have received under the terms of the PSU for any reason (including without limitation by reason of a financial restatement, mistake in calculations or administrative error), all as determined by the Administrator, then Holder shall be required to promptly repay any such excess amount to the Company. For purposes of the foregoing, Holder expressly and explicitly authorizes the Company to issue instructions, on Holder’s behalf, to any brokerage firm and/or third party administrator engaged by the Company to hold Holder’s Shares and other amounts acquired under the Plan to re-convey, transfer or otherwise return such Shares and/or other amounts to the Company. This Section 25 is not the Company’s exclusive remedy with respect to such matters.

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Exhibit 31.1

Certification of Chief Executive Officer Required By
Exchange Act Rules 13a-14(a) and 15d-14(a)

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 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:October 28, 2022 /s/ Norman Schwartz
   Norman Schwartz, Chairman of the Board,
   President and Chief Executive Officer

Exhibit 31.2

Certification of Chief Financial Officer Required By
Exchange Act Rules 13a-14(a) and 15d-14(a)

I, Ilan Daskal, certify that:

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:October 28, 2022 /s/ Ilan Daskal
   Ilan Daskal
   Executive Vice President,
   Chief Financial Officer

Exhibit 32.1




Certification of Periodic Report


I, Norman Schwartz, Chief Executive Officer of Bio-Rad Laboratories, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:


(1)the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2022 (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:October 28, 2022 /s/ Norman Schwartz
   Norman Schwartz, Chairman of the Board, President and
   Chief Executive Officer


The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.

Exhibit 32.2




Certification of Periodic Report


I, Ilan Daskal, Chief Financial Officer of Bio-Rad Laboratories, Inc. (the “Company”), certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:


(1)the Quarterly Report on Form 10-Q of the Company for the quarter ended September 30, 2022 (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:October 28, 2022 /s/ Ilan Daskal
   Ilan Daskal
   Executive Vice President,
   Chief Financial Officer


The foregoing certification is being furnished solely pursuant to 18 U.S.C. Section 1350 and is not being filed as part of the Report or as a separate disclosure document.