-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, HGWSkmH4d/jY3OCa1F+g055gicr36s1htGfPnX8rErQgL+ozbzkF8mkGg669N98b L7BrBxJ0SR2SM1zaZTUUew== 0000012208-02-000014.txt : 20021113 0000012208-02-000014.hdr.sgml : 20021113 20021113162856 ACCESSION NUMBER: 0000012208-02-000014 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20020930 FILED AS OF DATE: 20021113 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BIO RAD LABORATORIES INC CENTRAL INDEX KEY: 0000012208 STANDARD INDUSTRIAL CLASSIFICATION: LABORATORY ANALYTICAL INSTRUMENTS [3826] IRS NUMBER: 941381833 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-07928 FILM NUMBER: 02820363 BUSINESS ADDRESS: STREET 1: 1000 ALFRED NOBEL DR CITY: HERCULES STATE: CA ZIP: 94547 BUSINESS PHONE: 5107247000 10-Q 1 r10q023q.txt SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 10-Q X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2002 OR __ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______________to __________________. Commission file number 1-7928 BIO-RAD LABORATORIES, INC. (Exact name of registrant as specified in its charter) Delaware 94-1381833 (State or other jurisdiction (I.R.S. Employer of incorporation or organization) Identification No.) 1000 Alfred Nobel Drive, Hercules, California 94547 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (510) 724-7000 No Change Former name, former address and former fiscal year, if changed since last report. Indicate by check whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 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 X No _____ Indicate the number of shares outstanding of each of the issuer's classes of common stock ,as of the latest practicable date-- Shares Outstanding Title of each Class at October 31, 2002 Class A Common Stock, Par Value $0.0001 per share 20,364,367 Class B Common Stock, Par Value $0.0001 per share 4,849,542 PART I - FINANCIAL INFORMATION Item 1. Financial Statements. BIO-RAD LABORATORIES, INC. Condensed Consolidated Statements of Income (In thousands, except per share data) (Unaudited) Three Months Ended Nine Months Ended
September 30, September 30, 2002 2001 2002 2001 NET SALES . . . . . . . . . . . . . . . . . . $224,878 $186,104 $649,720 $584,126 Cost of goods sold . . . . . . . . . . . . . 95,852 81,357 277,080 261,188 -------- -------- -------- -------- GROSS PROFIT . . . . . . . . . . . . . . . . 129,026 104,747 372,640 322,938 Selling, general and administrative expense . (73,415) (62,831) (208,637) (188,637) Product research and development expense . . (19,988) (18,425) (60,035) (54,554) Goodwill amortization . . . . . . . . . . . . -- (2,022) -- (6,064) Loss on sale of assets. . . . . . . . . . . . -- -- -- (5,150) Interest expense . . . . . . . . . . . . . . (6,861) (6,071) (18,397) (18,600) Foreign exchange losses . . . . . . . . . . . (2,727) (1,536) (5,536) (2,385) Other, net . . . . . . . . . . . . . . . . . 345 (2,676) (617) (4,410) -------- -------- -------- -------- INCOME BEFORE TAXES . . . . . . . . . . . . . 26,380 11,186 79,418 43,138 Provision for income taxes . . . . . . . . . (9,763) (4,139) (27,796) (15,961) -------- -------- -------- -------- NET INCOME . . . . . . . . . . . . . . . . . $ 16,617 $ 7,047 $ 51,622 $ 27,177 ======== ======== ======== ======== Basic earnings per share: Net income . . . . . . . . . . . . . . . . $0.66 $0.29 $2.06 $1.10 ======== ======== ======== ======== Weighted average common shares . . . . . . 25,160 24,702 25,064 24,604 ======== ======== ======== ======== Diluted earnings per share: Net income . . . . . . . . . . . . . . . . $0.64 $0.28 $1.99 $1.07 ======== ======== ======== ======== Weighted average common shares . . . . . . 26,071 25,526 25,992 25,346 ======== ======== ======== ======== The accompanying notes are an integral part of these statements.
1 BIO-RAD LABORATORIES, INC. Condensed Consolidated Balance Sheets (In thousands, except share data) (Unaudited) September 30, December 31,
2002 2001 ASSETS: Cash and cash equivalents . . . . . . . . . . . . . . . $ 39,250 $ 47,129 Accounts receivable, net . . . . . . . . . . . . . . . . 201,261 194,400 Inventories, net . . . . . . . . . . . . . . . . . . . . 160,683 139,179 Prepaid expenses, taxes and other current assets . . . . 61,345 50,120 -------- -------- Total current assets . . . . . . . . . . . . . . . . 462,539 430,828 Net property, plant and equipment . . . . . . . . . . . 139,718 132,974 Goodwill, net . . . . . . . . . . . . . . . . . . . . . 74,566 77,703 Other assets . . . . . . . . . . . . . . . . . . . . . . 42,199 42,523 -------- -------- Total assets. . . . . . . . . . . . . . . . . . . . $719,022 $684,028 ======== ======== LIABILITIES AND STOCKHOLDERS' EQUITY: Accounts payable . . . . . . . . . . . . . . . . . . . . $ 68,496 $ 64,903 Accrued payroll and employee benefits . . . . . . . . . 65,904 58,434 Notes payable and current maturities of long-term debt . 10,385 9,931 Sales, income and other taxes payable . . . . . . . . . 24,857 18,633 Other current liabilities . . . . . . . . . . . . . . . 42,940 47,205 -------- -------- Total current liabilities . . . . . . . . . . . . . . 212,582 199,106 Long-term debt, net of current maturities . . . . . . . 139,124 188,423 Deferred tax liabilities . . . . . . . . . . . . . . . . 10,791 12,622 -------- -------- Total liabilities . . . . . . . . . . . . . . . . . . 362,497 400,151 STOCKHOLDERS' EQUITY: Preferred stock, $0.0001 par value, 7,500,000 shares authorized; none outstanding . . . . . . . . . . . . . -- -- Class A common stock, $0.0001 par value, 50,000,000 shares authorized; outstanding - 20,332,469 at September 30, 2002 and 20,166,636 at December 31, 2001. . . . . . . . . . 2 2 Class B common stock, $0.0001 par value, 20,000,000 shares authorized; outstanding - 4,852,542 at September 30, 2002 and 4,826,562 at December 31, 2001 . . . . . . . . . . 1 -- Additional paid-in capital . . . . . . . . . . . . . . . 34,659 32,171 Class A treasury stock, 0 shares at September 30, 2002 and 161,336 shares at December 31, 2001 at cost . . . -- (1,863) Retained earnings . . . . . . . . . . . . . . . . . . . 328,600 276,554 Accumulated other comprehensive income: Currency translation and other . . . . . . . . . . . . (6,737) (22,987) -------- -------- Total stockholders' equity. . . . . . . . . . . . . . 356,525 283,877 -------- -------- Total liabilities and stockholders' equity. . . . . $719,022 $684,028 ======== ======== The accompanying notes are an integral part of these statements.
2
BIO-RAD LABORATORIES, INC. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) Nine Months Ended September 30, 2002 2001 Cash flows from operating activities: Cash received from customers . . . . . . . . . . . . . . . $645,269 $572,326 Cash paid to suppliers and employees . . . . . . . . . . . (519,406) (487,845) Interest paid . . . . . . . . . . . . . . . . . . . . . . (20,991) (21,554) Income tax payments . . . . . . . . . . . . . . . . . . . (35,815) (6,348) Miscellaneous receipts . . . . . . . . . . . . . . . . . . 1,093 2,504 -------- -------- Net cash provided by operating activities. . . . . . . . . 70,150 59,083 Cash flows from investing activities: Capital expenditures, net . . . . . . . . . . . . . . . . (31,258) (32,070) Net sales (purchases) of marketable securities and investments . . . . . . . . . . . . . . . . . . . . (961) 119 Foreign currency hedges, net . . . . . . . . . . . . . . . (986) 283 Payments for acquisitions . . . . . . . . . . . . . . . . (8,568) (4,650) -------- -------- Net cash used in investing activities . . . . . . . . . . (41,773) (36,318) Cash flows from financing activities: Net borrowings(payments)under line-of-credit arrangements. 8,235 (10) Long-term borrowings . . . . . . . . . . . . . . . . . . . 32,723 74,250 Payments on long-term debt . . . . . . . . . . . . . . . . (88,514) (84,562) Proceeds from issuance of common stock . . . . . . . . . . 2,689 423 Treasury stock activity, net . . . . . . . . . . . . . . . 2,287 2,648 -------- -------- Net cash used in financing activities . . . . . . . . . . (42,580) (7,251) Effect of exchange rate changes on cash . . . . . . . . . . . . 6,324 2,858 Net increase (decrease) in cash and cash equivalents . . . . . (7,879) 18,372 Cash and cash equivalents at beginning of period . . . . . . . 47,129 13,954 -------- -------- Cash and cash equivalents at end of period . . . . . . . . . . $ 39,250 $ 32,326 ======== ======== Reconciliation of net income to net cash provided by operating activities: Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 51,622 $ 27,177 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization . . . . . . . . . . . . . 27,434 30,688 Foreign currency hedge transactions, net . . . . . . . . 986 (283) Gains on disposition of marketable securities . . . . . (140) (80) (Increase) decrease in accounts receivable . . . . . . . 2,218 (6,603) Increase in inventories . . . . . . . . . . . . . . . . (14,147) (27,417) Increase in other current assets . . . . . . . . . . . . (9,867) (1,333) Increase in accounts payable and all other current liabilities . . . . . . . . . . . . 1,250 13,272 Increase in income taxes payable . . . . . . . . . . . . 1,980 10,435 Other . . . . . . . . . . . . . . . . . . . . . . . . . 8,814 13,227 -------- -------- Net cash provided by operating activities . . . . . . . . . . . $ 70,150 $ 59,083 ======== ======== The accompanying notes are an integral part of these statements.
3 BIO-RAD LABORATORIES, INC. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. BASIS OF PRESENTATION The accompanying unaudited condensed consolidated financial statements of Bio-Rad Laboratories, Inc. ("Bio-Rad" or the "Company"), have been prepared in accordance with accounting principles generally accepted in the United States of America and reflect all adjustments which are, in the opinion of management, necessary to fairly state the results of the interim periods presented. All such adjustments are of a normal recurring nature. Results for the interim period are not necessarily indicative of the results for the entire year. The condensed consolidated financial statements should be read in conjunction with the notes to the consolidated financial statements contained in the Company's Annual Report for the year ended December 31, 2001. Beginning January 1, 2002, the Company has classified freight costs related to shipping and handling as part of cost of goods sold rather than in selling, general and administrative expense as allowed by Financial Accounting Standards Board Emerging Issues Task Force Issue No. 00-10, "Accounting for Shipping and Handling Fees and Costs." Prior period shipping costs, as well as certain other items, have been reclassified to conform to the current year presentation. Additionally, the Company has changed the presentation of the income statement to eliminate the subtotal "Income from Operations" and provide further clarification of items previously grouped in "Other, net." 2. INVENTORIES The principal components of inventories are as follows (in thousands): September 30, December 31, 2002 2001 Raw materials $ 40,449 $ 33,488 Work in process 32,273 28,715 Finished goods 87,961 76,976 -------- -------- $160,683 $139,179 ======== ======== 3. PROPERTY, PLANT AND EQUIPMENT The principal components of property, plant and equipment are as follows (in thousands): 4 September 30, December 31, 2002 2001 Land and improvements $ 9,581 $ 9,658 Buildings and leasehold improvements 78,135 75,231 Equipment 224,860 191,284 -------- -------- 312,576 276,173 Accumulated depreciation (172,858) (143,199) -------- -------- Net property, plant and equipment $139,718 $132,974 ======== ======== 4. GOODWILL In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 141, "Business Combinations", and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires that all business combinations initiated after June 30, 2001 be accounted for under the purchase method of accounting and addresses the initial recognition and measurement of goodwill and other intangible assets acquired in a business combination. SFAS No. 142 addresses the initial recognition and measurement of goodwill and other intangible assets subsequent to their acquisition. SFAS No. 142 provides that intangible assets with finite useful lives will be amortized and that goodwill and intangible assets with indefinite lives will not be amortized, but will be required to be tested at least annually for impairment. The Company adopted SFAS No. 142 on January 1, 2002. At that date, the Company stopped the amortization of goodwill, with a net carrying value of $77.7 million, and annual amortization of approximately $8 million that had resulted from purchases of businesses completed prior to the adoption of SFAS No. 141. Had the Company been accounting for its goodwill under SFAS No. 142 for all periods presented, the Company's net income and net income per share would have been as follows (in thousands): Three Months Ended Nine Months Ended
September 30, September 30, 2002 2001 2002 2001 Reported Net Income $16,617 $ 7,047 $51,622 $27,177 Add back goodwill amortization, net of tax -- 1,274 -- 3,820 ------- ------- ------- ------- Pro forma adjusted net income $16,617 $ 8,321 $51,622 $30,997 Basic earnings per share: Reported basic earnings per share $ 0.66 $ 0.29 $ 2.06 $ 1.10 Goodwill amortization, net of tax -- 0.05 -- 0.16 Pro forma adjusted basic ------ ------ ------ ------ earnings per share $ 0.66 $ 0.34 $ 2.06 $ 1.26 ====== ====== ====== ====== Diluted earnings per share: Reported diluted earnings per share $ 0.64 $ 0.28 $ 1.99 $ 1.07 Goodwill amortization, net of tax -- 0.05 -- 0.15 Pro forma adjusted diluted ------ ------ ------ ------ earnings per share $ 0.64 $ 0.33 $ 1.99 $ 1.22 ====== ====== ====== ======
5 During the nine months ended September 30, 2002, no goodwill was acquired, impaired or written off. An adjustment was made during the third quarter to reflect the utilization of foreign tax loss carryforwards acquired at the time the Company purchased Pasteur Sanofi Diagnostics S.A. (PSD) in October 1999 which were not valued at the acquisition date. The adjustment reduced Goodwill by $3.1 million. 5. EARNINGS PER SHARE The Company calculates basic earnings per share (EPS) and diluted EPS in accordance with SFAS No. 128, "Earnings per Share." Basic EPS is computed by dividing net income (loss) by the weighted average number of common shares outstanding for that period. Diluted EPS takes into account the effect of dilutive instruments, such as stock options, and uses the average share price for the period in determining the number of common stock equivalents that are to be added to the weighted average number of shares outstanding. Common stock equivalents are excluded from the diluted earnings per share calculation if the effect would be anti-dilutive. Weighted average shares used for diluted earnings per share include the dilutive effect of outstanding stock options of 911,000 and 824,000 shares for the three month periods ended September 30, 2002 and 2001, respectively. There were no anti-dilutive shares for the three month periods ended September 30, 2002 and 2001. Weighted average shares used for diluted earnings per share include the dilutive effect of outstanding stock options of 928,000 and 742,000 shares for the nine month periods ended September 30, 2002 and 2001, respectively. There were no anti-dilutive shares for the nine month periods ended September 30, 2002 and 2001. 6. ACQUISITIONS AND DISPOSITIONS On June 28, 2002, the Company purchased for cash the microarray and robotics technologies business of Virtek Biotech Inc., a subsidiary of Virtek Vision International Inc. of Waterloo, Ontario, Canada. The purchased business had annual sales of approximately $8.3 million Canadian. Bio-Rad acquired the assets for approximately $7 million US and will include these operations in its Life Science segment. The Company has completed its evaluation of purchased assets and has not assigned any value to goodwill. Assets purchased include amortizable patents and other intangible assets totaling $4.1 million with a weighted average amortization period of 5 years. In the first quarter of 2001, the Company recorded a $4.5 million non- cash pre-tax charge reflecting the estimated impact of its intent to sell the spectroscopy instrument business to a new owner. In the third quarter of 2001, the Company also had a write-down of $0.7 million on the value of a related production facility. 7. LONG-TERM DEBT The Company repurchased, in the open market, $10.0 million (par value) of the $150.0 million (par value) outstanding Senior Subordinated debt during the third quarter of 2002. Originally issued in February 2000, the debt is non-callable until February 2004. The price paid includes interest to February 2004. Total interest, unamortized debt issue cost and unamortized original issue discount expensed amounts to $1.6 million. This amount has been included in interest expense. 6 Subsequent to September 30, 2002 and to date, the Company repurchased an additional $18.2 million (par value) at an expense including interest (to February 2004), unamortized issue costs and unamortized original issue discount of approximately $3 million. 8. FOREIGN EXCHANGE LOSSES Foreign exchange losses include premiums and discounts on forward foreign exchange contracts and mark-to-market adjustments on foreign exchange contracts. 9. OTHER, NET In the first quarter of 2002, the Company recorded a $2.0 million non-cash pre-tax charge reflecting the write-down of the Company's investment in Digilab, LLC. This reduced the investment value to zero. In the first three quarters of 2001, the Company recorded $4.8 million in non-cash pre-tax charges to adjust the value of its investment in Instrumentation Laboratory, S.p.A. based on discussions with the investees management concerning its future capital structure. 10. COMPREHENSIVE INCOME SFAS No. 130, "Reporting Comprehensive Income" requires disclosure of total non-stockholder changes in equity, which include unrealized gains and losses on securities classified as available-for sale under SFAS No. 115 "Accounting for Certain Investments in Debt and Equity Securities", foreign currency translation adjustments accounted for under SFAS No. 52 "Foreign Currency Translation" and minimum pension liability adjustments made pursuant to SFAS No. 87 "Employers' Accounting for Pensions." The components of the Company's total comprehensive income were (in thousands): Three Months Ended Nine Months Ended
September 30, September 30, 2002 2001 2002 2001 Net Income $16,617 $ 7,047 $51,622 $27,177 Currency translation adjustments (1,472) 8,294 16,583 (2,392) Net unrealized holding gains (losses) on securities (423) (47) (241) (86) Reclassification adjustments for gains included in net income (20) 1 (92) (67) ------- ------- ------- ------- Total comprehensive income $14,702 $15,295 $67,872 $24,632 ======= ======= ======= =======
7 11. SEGMENT INFORMATION Information regarding industry segments for the three months ended September 30, 2002 and 2001 is as follows (in thousands): Life Clinical Other Science Diagnostics Operations Segment net sales 2002 $106,048 $116,757 $ 2,073 2001 $ 82,757 $ 97,474 $ 5,873 Segment profit(loss) 2002 $ 17,341 $ 12,921 $ (228) 2001 $ 10,344 $ 4,400 $(2,029) Information regarding industry segments for the nine months ended September 30, 2002 and 2001 is as follows (in thousands): Life Clinical Other Science Diagnostics Operations Segment net sales 2002 $307,260 $336,344 $ 6,116 2001 $262,632 $302,748 $18,746 Segment profit(loss) 2002 $ 52,333 $ 33,496 $ (993) 2001 $ 44,619 $ 23,362 $(4,645) Segment results are presented in the same manner as the Company presents its operations internally to make operating decisions and assess performance. Net corporate operating income (expense) consists of receipts and expenditures that are not the primary responsibility of segment operating management. Interest expense is charged to segments based on the carrying amount of inventory and receivables employed by that segment. The following reconciles total segment profit to consolidated income before taxes (in thousands): Three Months Ended Nine Months Ended
September 30, September 30, 2002 2001 2002 2001 Total segment profit $30,034 $12,715 $84,836 $63,336 Net corporate operating, interest and other income (expense) not allocated to segments (1,272) 4,705 735 (2,189) Goodwill amortization -- (2,022) -- (6,064) Loss on sale of assets -- -- -- (5,150) Foreign exchange losses (2,727) (1,536) (5,536) (2,385) Other, net 345 (2,676) (617) (4,410) ------- ------- ------- ------- Consolidated income before taxes $26,380 $11,186 $79,418 $43,138 ======= ======= ======= =======
8 12. NEW FINANCIAL ACCOUNTING STANDARDS In October 2001, the FASB issued SFAS No. 144, "Accounting for the Impairment of Long-Lived Assets", which addresses financial accounting and reporting for the impairment or disposal of long- lived assets. SFAS No. 144 supersedes SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of", but retains the fundamental provisions for recognizing and measuring impairment of long-lived assets to be held and used or disposed of by sale. The Statement also supersedes the accounting and reporting provisions for the disposal of a segment of a business, and eliminates the exception to consolidation for a subsidiary for which control is likely to be temporary. SFAS No. 144 eliminates the conflict between accounting models for treating the dispositions of long-lived assets that existed between SFAS No. 121 and the guidance for a segment of a business accounted for as a discontinued operation by adopting the methodology established in SFAS No. 121, and also resolves implementation issues of SFAS No. 121. This Statement is effective for fiscal years beginning after December 15, 2001. The Company has adopted SFAS No. 144 for its fiscal year beginning January 1, 2002. The adoption of SFAS No. 144 did not have an impact on the financial position, results of operations or cash flows of the Company. In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB Statements 4, 44 and 64, Amendment to FASB Statement 13, and Technical Corrections." One of the major changes of this statement is to change the accounting for the classification of gains and losses from the extinguishment of debt. The Company adopted SFAS No. 145 as of September 1, 2002 and will follow APB 30, "Reporting the Results of Operations -- Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions" in determining whether such extinguishment of debt may be classified as extraordinary. In April 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities", which addresses accounting for restructuring and similar costs. SFAS 146 supersedes previous accounting guidance, principally Emerging Issues Task Force Issue No. 94-3 "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (Including Certain Costs Incurred in a Restructuring)." SFAS 146 requires that the liability for costs associated with an exit cost or disposal activity be recognized when the liability is incurred. Under Issue 94-3, a liability for an exit cost was recognized at the date of the Company's commitment to an exit plan. SFAS 146 also establishes that the liability should initially be measured and recorded at fair value. Accordingly, SFAS 146 may affect the timing of recognizing future restructuring costs as well as the amounts recognized. The Company will adopt the provisions of SFAS 146 for restructuring activities after December 31, 2002. 9 13. LEGAL PROCEEDINGS The Company is party to various claims, legal actions and complaints arising in the ordinary course of business. In the opinion of management, the outcome of these claims, legal actions and complaints will not have a material adverse effect on the future results of operations or the financial position of the Company. 10 Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition. The following discussion should be read in conjunction with the Company's unaudited financial statements and notes thereto included elsewhere in this Form 10-Q and the Company's Consolidated Financial Statements for the year ended December 31, 2001. The following table shows gross profit and expense items as a percentage of net sales:
Three Months Ended Nine Months Ended Year Ended September 30, September 30, December 31, 2002 2001 2002 2001 2001 Net sales 100.0% 100.0% 100.0% 100.0% 100.0% Cost of goods sold 42.6 43.7 42.6 44.7 44.3 ----- ----- ----- ----- ----- Gross profit 57.4 56.3 57.4 55.3 55.7 Selling, general and administrative 32.6 33.8 32.1 32.3 32.4 Product research and development 8.9 9.9 9.2 9.3 9.4 Net income 7.4% 3.8% 7.9% 4.7% 5.4% ===== ===== ===== ===== =====
Critical Accounting Policies As previously disclosed in the Company's Annual Report on Form 10- K for the year ended December 31, 2001, the Company has identified accounting for income taxes, valuation of long-lived and intangible assets and goodwill, and valuation of inventories as the accounting policies critical to the operations of the Company. For a full discussion of these policies, please refer to the Form 10-K. Forward Looking Statements Other than statements of historical fact, statements made in this report include forward looking statements, such as statements with respect to the Company's future financial performance, operating results, plans and objectives. We have based these forward looking statements on our current expectations and projections about future events. However, actual results may differ materially from those currently anticipated depending on a variety of risk factors including among other things: our ability to successfully develop and market new products; our reliance on and access to necessary intellectual property; our substantial leverage and ability to service our debt; competition in and government regulation of the industries in which we operate; and the monetary policies of various countries. We undertake no obligation to publicly update or revise any forward looking statements, whether as a result of new information, future events, or otherwise. The Company manufactures and supplies the life science research, healthcare, analytical chemistry and other markets with a broad range of products and systems used to separate complex chemical 11 and biological materials and to identify, analyze and purify their components. Three Months Ended September 30, 2002 Compared to Three Months Ended September 30, 2001 Corporate Results - Sales, Margins and Expenses Net sales (sales) for the third quarter of 2002 were $224.9 million compared to $186.1 million in the third quarter of 2001, an increase of 21%. The favorable impact from a weakening U.S. dollar amounted to approximately 4% sales growth for the Company as the Euro strengthened about 10% versus the dollar. The divestiture of the Company's spectroscopy instrument product line in October 2001 lowered reported sales growth by 3.2%. The growth in the Life Science segment adjusting for the favorable impact from currency translation was 22.7%. Life Science growth is attributed to continuing demand for the Company's Bovine Spongiform Encephalopathy (BSE) or "mad cow disease" test and for the Company's proteomic and functional genomic tools. The sale of large instruments remains flat when compared to the prior year. Clinical Diagnostics growth of 17%, excluding the favorable impact from currency translation, resulted from increased demand for the Company's quality controls, autoimmune and diabetes product line offerings. Consolidated gross margins were 57.4% for the third quarter of 2002 compared to 56.3% for the third quarter of 2001 and 55.7% for all of 2001. The Company's gross margin benefited from an improved sales mix as consumables, which have higher gross margins than equipment, comprised a larger percentage of total sales. Additionally, the divestiture of the spectroscopy instrument product line, whose margins were considerably less than the Company's overall average, had a positive impact. Finally in Life Science the weakening US dollar improves the margin on US manufactured goods sold outside the US. Clinical Diagnostics margins benefited from the above, excluding the divestiture. Selling, general and administrative expense (SG&A) decreased to 32.6% of sales in the third quarter of 2002 from 33.8% of sales in the third quarter of 2001. Both Life Science and Diagnostics grew selling and marketing expenses at a rate slower than sales growth for the quarter. The long-term goal for Bio-Rad remains a consistent gradual reduction in SG&A spending as a percent of sales. Product research and development expense decreased slightly to 8.9% of sales compared to 9.9% in the prior-year period. The current quarter benefited from lower external R&D expenses. This spending is not reflective of any general trend only that current efforts do not require the expenditures in this period. The mix of spending changed slightly as Life Science increased the rate of spending and Diagnostics decreased its rate of spending. The Company plans to reinvest between 9% and 10% of sales in research and development to continue to introduce new and enhanced products. 12 Corporate Results - Other Items During the third quarter of 2002, the Company repurchased in the open market $10.0 million (par value) of its Senior Subordinated debt reducing the amount outstanding to $140.0 million (par value). The debt, originally issued in February 2000, is non- callable until February 2004. The price paid includes interest to February 2004. The total amount of interest, unamortized debt issue cost and unamortized original issue discount expensed amounts to $1.6 million. This amount has been included in interest expense. Subsequent to September 30, 2002 and to date, the Company has redeemed an additional $18.2 million (par value) at an expense including interest, unamortized issue costs and unamortized discount, of approximately $3 million. Foreign exchange losses increased by $1.2 million compared to the prior-year period primarily as a result of losses recorded on the books of the Company's Brazilian subsidiary. The Brazilian Real declined by approximately 25% versus the dollar in the period and a like amount versus the Euro. The cost of hedging the Company's Brazilian exposure is extremely expensive and approximates the net cash charge to revalue the Brazilian subsidiaries foreign denominated payables. The Company's effective tax rate was 37% for the third quarter of 2002 and 2001. Nine Months Ended September 30, 2002 Compared to Nine Months Ended September 30, 2001 Corporate Results - Sales, Margins and Expenses Net sales (sales) for the nine months ended 2002 were $649.7 million compared to $584.1 million for the first nine months of 2001, an increase of 11.2%. Adjusting for currency and divestitures, sales growth from new and existing products was 14.0%. Sales have increased 16.6% in Life Science on a constant currency basis. Clinical Diagnostics sales growth on a constant currency basis was 10.8%. The growth in Life Science is attributed to the continuing demand for the Company's BSE test, consumable laboratory research products and functional genomic and proteomic products. The growth in Clinical Diagnostics was from products for quality controls, autoimmune testing and diabetes monitoring. Foreign sales for the year-to-date 2002 have been positively impacted by a U.S. dollar that is relatively weaker than in the prior-year period. The net year-to-date positive impact to total sales amounts to less than a 1% impact on sales growth. Consolidated gross margins were 57.4% for the year-to-date September 30, 2002 compared to 55.3% for the same period of 2001 and 55.7% for all of 2001. The increased sales of consumable laboratory products, functional genomic and proteomic products, 13 and the BSE test have improved the overall Life Science gross margin. Clinical Diagnostics margins have increased by less than 1%. Selling, general and administrative expense have declined to 32.1% of sales in the first nine months of 2002 from 32.3% of sales in the first nine months of 2001. Overall, selling and marketing expense grew at a rate similar to sales growth. In part this was due to increased Life Science expenses for retaining and expanding the Life Science food testing business and opportunities in proteomics and genomics. Life Science has increased sales and customer services to support these businesses faster than sales growth in the current period. Clinical Diagnostics selling and marketing grew at a rate near sales growth. General and administrative expense grew at less than half the rate of sales growth for the Company and lowered the overall rate of growth. Product research and development expense increased 10% to $60.0 million or 9.2% of sales in the nine months to September 2002 compared to 9.3% of sales in the prior year. Spending increased in Life Science in absolute dollars, while Clinical Diagnostics spending remained nearly the same as in 2001. The Company plans to reinvest between 9% and 10% of sales in research and development going forward to support growth. Corporate Results - Other Items Interest expense remains virtually unchanged despite the reduction in overall borrowings. This is brought about by the early extinguishment of debt; the Senior Subordinated Notes, and the Term Loan portion of the Senior Credit Facility. Interest expense includes the following costs for retired debt; the write-off of unamortized debt issue costs, original issue discount and interest to February of 2004 on the Subordinated Notes which had a "no call" feature to this date. The subordinated debentures originally had a $150 million par value, and are due February 2007. The Term Loan was originally $100 million and called for repayment over a five year period. The loan was repaid approximately 30 months early. Foreign exchange losses increased compared to the prior period primarily as a result of losses recorded in the books of the Company's Brazilian subsidiary and to a lesser extent its Russian subsidiary. The Brazilian Real is extremely expensive to hedge, as local borrowing rates approach 30% per annum. The Real has declined 60% from January 1, 2002 versus the U.S. dollar. The Company plans to take several actions to lower its overall exposure but will not be able to eliminate the exposure. Foreign exchange losses also include premiums and discounts for the Company's hedging program. Other, net includes a $2.0 million non-cash pre-tax expense reflecting impairment in the Company's investment in Digilab LLC,which was booked in the first quarter of 2002. The Company's effective tax rate was 35% for the first nine months 14 of 2002 compared to 37% in the first nine months of 2001. For the full year 2001, the effective rate was 32%. The rise to 35% from 32% reflects increased profitability in countries with higher tax rates, current period local tax losses which do not provide a consolidated tax benefit and the effect of proportionally less tax credits for foreign sales and research and development, when compared to taxable income. Financial Condition The Company, as of September 30, 2002, had available approximately $100 million, or 100% of its principal revolving credit agreement and $23 million under various foreign lines of credit. Cash and cash equivalents available were $39.2 million. After September 2002, the Company bought approximately $18 million (par value) of its Subordinated Debentures paying $20.9 million in cash to retire this portion of the debt. Consolidated accounts receivable increased by $6.9 million from December 31, 2001 to September 30, 2002. The increase is due exclusively to the strengthening of European and the Japanese currencies. On a currency neutral basis, accounts receivables have, declined in part, on better collections as average days outstanding have dropped. At September 30, 2002, consolidated net inventories increased by $21.5 million from December 31, 2001. Approximately one third of this increase is due to the strengthening of European and to a lesser extent the Japanese currency against the U.S. dollar. The acquisition of inventory related to the microarray product line was $3 million. The remaining increase largely represents levels necessary to meet customer demands for Life Science consumable products and for recent new product launches. Inventory for the Clinical Diagnostics controls business is characterized by long lead times and large infrequent batch production which is necessary to meet customer requirements. Bio-Rad management regularly reviews inventory valuation for excess, obsolete and slow moving products. Net capital expenditures totaled $31.3 million for the first nine months of 2002 compared to $32.1 million for the same period of 2001. Capital expenditures for the period include reagent rental equipment placed with Clinical Diagnostic customers who then commit to purchase the Company's diagnostic reagents for use. Other expenditures represent the Company's investment in business systems to standardize distribution software, data communication, production equipment and improvements to production facilities. The Company has begun construction of new facilities for manufacturing, laboratory and general office use. These facilities are being constructed on Company owned land in the business park where the Corporate headquarters, Life Science and Diagnostics group operations are now located. The estimated current cost of the facility is approximately $25 million and it will take approximately 15 months to complete. Through September 2002, approximately $1 million has been capitalized for the project. 15 On June 28, 2002, the Company purchased for cash the microarray and robotics technologies business of Virtek Biotech Inc., a subsidiary of Virtek Vision International Inc. of Waterloo, Ontario, Canada. The purchased business had annual sales of approximately $8.3 million Canadian. Bio-Rad acquired the assets for approximately $7 million US and will include these operations in its Life Science segment. Assets purchased include amortizable patents and other intangible assets totaling $4.1 million with a weighted average amortization period of 5 years. No goodwill was recorded with respect to the purchase. The Company continues to review possible acquisitions to expand both its Life Science and Diagnostics segments. The Company routinely meets with the principals or brokers of the subject companies. Currently no discussions involving a material acquisition have progressed beyond the most initial phases. Should the Company make a material acquisition it would most likely require an increase in borrowed funds, further increasing its financial leverage. Item 3. Quantitative and Qualitative Disclosures About Market Risk During the nine months ended September 30, 2002, there have been no material changes from the disclosures about market risk provided in the Company's Annual Report on Form 10-K for the year ended December 31, 2001. Item 4. Controls and Procedures The Company's chief executive officer and its principal financial officer after evaluating the effectiveness of the Company's disclosure controls and procedures (as defined in Exchange Act Rules 13a-14(c) and 15-d-14(c)) as of a date within 90 days of the filing date of the quarterly report (the "Evaluation Date") have concluded that as of the Evaluation Date, the Company's disclosure controls and procedures were adequate and effective to ensure that material information relating to the Company and its consolidated subsidiaries would be made known to them by others within those entities during the period in which this quarterly report was being prepared. There were no significant changes in the Company's internal controls or in other factors that could significantly affect the Company's disclosure controls and procedures subsequent to the Evaluation Date, nor any significant deficiencies or material weaknesses in such disclosure controls and procedures requiring corrective actions. As a result, no corrective actions were taken. 16 PART II. OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. (a) Exhibits 4.1.3 Amendment dated as of August 9, 2002 to the Credit Agreement dated as of September 30, 1999, among Bio-Rad Laboratories, Inc., the lenders named therein, and Bank One, N.A. as Agent. 99.1 Certification of Chief Executive Officer 99.2 Certificate of Principal Financial Officer (b) Reports on Form 8-K Bio-Rad filed a current report on form 8-K with the SEC on July 10, 2002, announcing that it has selected Deloitte & Touche LLP as its independent public accountants. Prior to this selection, Arthur Andersen LLP was the Company's independent public accountants. 17 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: November 13, 2002 /s/ Sanford S. Wadler ---------------------------------- Sanford S. Wadler, Vice President, General Counsel and Secretary Date: November 13, 2002 /s/ James R. Stark ---------------------------------- James R. Stark, Corporate Controller 18 CERTIFICATIONS I, David Schwartz, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Bio-Rad Laboratories, Inc. 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report fairly present, in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions); a. all significant deficiencies in the design or operation of internal controls which could 19 adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weakness in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 13, 2002 /s/ David Schwartz ---------------------- David Schwartz Chief Executive Officer 20 I, James R. Stark, certify that: 1. I have reviewed this quarterly report on Form 10-Q of Bio-Rad Laboratories, Inc. 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report fairly present, in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have: a. designed such disclosure controls and procedures to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b. evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c. presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officer and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions); a. all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial 21 data and have identified for the registrant's auditors any material weakness in internal controls; and b. any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officer and I have indicated in this quarterly report whether or not there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. Date: November 13, 2002 /s/ James R. Stark -------------------------- James R. Stark Corporate Controller Principal Financial Officer 22 EX-4 3 ex431.txt EXHIBIT 4.1.3 Exhibit 4.1.3 AMENDMENT NO. 3 TO CREDIT AGREEMENT This Amendment No. 3 (this "Amendment") is entered into as of August 9, 2002 by and among BIO-RAD LABORATORIES, INC., a Delaware corporation (the "Borrower"), the undersigned lenders (collectively, the "Lenders") and BANK ONE, NA, having its principal office in Chicago, Illinois, as one of the Lenders and in its capacity as contractual representative (the "Agent") on behalf of itself and the other Lenders. RECITALS: WHEREAS, the Borrower, the Lenders and the Agent have entered into that certain Credit Agreement dated as of September 30, 1999, as amended (the "Credit Agreement"); WHEREAS, the Borrower seeks to amend the Credit Agreement, among other things, to permit the repurchase by the Borrower of certain subordinated debt; and WHEREAS, the Lenders and the Agent are willing to amend the Credit Agreement on the terms and conditions herein set forth; NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto hereby agree as follows: 1. Defined Terms. Capitalized terms used herein and not otherwise defined herein shall have the meanings attributed to such terms in the Credit Agreement. 2. Amendments to Credit Agreement. Upon the effectiveness of this Amendment in accordance with the provisions of Section 3 below, the Credit Agreement is hereby amended by adding the following sentence at the end of Section 6.21: Notwithstanding the foregoing, so long as no Default or Unmatured Default shall have occurred and be continuing or would result, or would be reasonably likely to result, therefrom, the Borrower may repurchase its Senior Subordinated Notes due 2007, provided that (i) the aggregate purchase price for such Subordinated Indebtedness on a cumulative basis shall not exceed $50,000,000 and (ii) such repurchased Subordinated Indebtedness shall be cancelled and not reissued. 3. Conditions of Effectiveness. This Amendment shall become effective and be deemed effective as of the date hereof (the "Effective Date") if, and only if, the Agent shall have received duly executed originals of this Amendment from the Borrower and the Required Lenders. 4. Representations and Warranties of the Borrower. The Borrower represents and warrants to the Lenders that, as of the Effective Date and giving effect to this Amendment: (a) there exists no Default or Unmatured Default; and (b) the representations and warranties contained in Article V of the Credit Agreement are true and correct as of the Effective Date except to the extent any such representation or warranty is stated to relate solely to an earlier date, in which case such representation or warranty was true and correct on and as of such earlier date. 5. Reference to and Effect on the Credit Agreement. 5.1 Upon the effectiveness of this Amendment pursuant to Section 3 hereof, on and after the Effective Date each reference in the Credit Agreement to "this Agreement," "hereunder,"hereof," "herein" or words of like import and each reference to the Credit Agreement in each Loan Document shall mean and be a reference to the Credit Agreement as modified hereby. 5.2 Except as specifically waived or amended herein, all of the terms, conditions and covenants of the Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed. 5.3 The execution, delivery and effectiveness of this Amendment shall not, except as expressly provided herein, operate as a waiver of (a) any right, power or remedy of any Lender or the Agent under the Credit Agreement or any of the Loan Documents, or (b) any Default or Unmatured Default under the Credit Agreement. 6. CHOICE OF LAW. THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS (INCLUDING 735 ILCS 105/5-1 ET SEQ. BUT OTHERWISE WITHOUT REGARD TO THE CONFLICT OF LAWS PROVISIONS) OF THE STATE OF ILLINOIS, BUT GIVING EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS. 7. Counterparts. This Amendment may be executed in any number of counterparts, each of which when so executed shall be deemed an original and all of which taken together shall constitute one and the same agreement. 8. Headings. Section headings in this Amendment are included herein for convenience of reference only and shall not constitute a part of this Amendment for any other purpose. [Signature Pages Follow] Amendment No. 3 to Bio-Rad Laboratories, Inc. Credit Agreement IN WITNESS WHEREOF, the Borrower, the Agent and the Lenders have executed this Amendment No. 3 as of the date first above written. BIO-RAD LABORATORIES, INC. By: /s/ Ronald W. Hutton Name: Ronald W. Hutton Title: Treasurer BANK ONE, NA, as a Lender and as Agent By: /s/ Kandis A. Jaffrey Name: Kandis A. Jaffrey Title: Director ABN AMRO BANK N.V., as a Lender By: /s/ Todd J. Miller Name: Todd J. Miller Title: Assistant Vice President By: /s/ Craig Trautwein Name: Craig Trautwein Title: Vice President UNION BANK OF CALIFORNIA, N.A., as a Lender By: /s/ Mark Reardon Name: Mark Reardon Title: Vice President THE BANK OF NOVA SCOTIA, as a Lender By: /s/ R. P. Reynolds Name: R. P. Reynolds Title: Director BNP PARIBAS, as a Lender By: /s/ Sandy Bertram Name: Sandy Bertram Title: Vice President By: /s/ Joseph Mack Name: Joseph Mack Title: Associate WELLS FARGO BANK, as a Lender By: /s/ Nuzha Bukhari Name: Nuzha Bukhari Title: Vice President COMERICA BANK, as a Lender By: /s/ John Bonifacio Name: John Bonifacio Title: Vice President CREDIT LYONNAIS NEW YORK BRANCH, as a Lender By:/s/ Dianne M. Scott Name: Diane M. Scott Title: Senior Vice President LLOYDS TSB BANK PLC, as a Lender By: /s/ Matthew A. L. Packham Name: Matthew A. L. Packham Title: Assistant Director Acquisition Finance P-002 By: /s/ Nicholas J. Bruce Name: Nicholas J. Bruce Title: Vice President Credit Services B-499 THE NORTHERN TRUST COMPANY, as a Lender By: /s/ Patricia A. Williams Name: Patricia A. Williams Title: Vice President U.S. BANK, NATIONAL ASSOCIATION, as a Lender By:/s/ Scott T. Smith Name: Scott T. Smith Title: Vice President EX-99 4 ex991.txt EXHIBIT 99.1 Exhibit 99.1 Bio-Rad Laboratories, Inc., CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACTION OF 2002 I, David Schwartz, of Bio-Rad Laboratories, Inc. (the "Registrant"), do hereby certify in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. the Quarterly Report on Form 10-Q of the Registrant, to which this certificate is attached as an exhibit (the "Report"), fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Dated: November 13, 2002 /s/ David Schwartz ----------------------- David Schwartz Chief Executive Officer EX-99 5 ex992.txt EXHIBIT 99.2 Exhibit 99.2 Bio-Rad Laboratories, Inc., CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACTION OF 2002 I, James R. Stark, of Bio-Rad Laboratories, Inc. (the "Registrant"), do hereby certify in accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that: 1. the Quarterly Report on Form 10-Q of the Registrant, to which this certificate is attached as an exhibit (the "Report"), fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934 (15 U.S.C. 78m); and 2. the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. Dated: November 13, 2002 /s/ James R. Stark -------------------- James R. Stark Corporate Controller Principal Financial Officer -----END PRIVACY-ENHANCED MESSAGE-----