avatar Bio-RAD Laboratories, Inc. Manufacturing
  • Location: California 
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    et pl Ap e ar sit e tw f eb So W e d Q ar Ra iC o- via BR Bi Nu ue ng ay De Ass a eli g Relationships at 1 A Pl NS Customer ng ni Clinical Diagnostics e re Sc V HI n io at ay er ss en A -g IV th H ur Fo d oo Bl em START HERE 0 st 00 Sy Product Development -1 g Innovation& IH ypin T l ta gi Di tem let ys op S ed Dr PCR at 00 m to r X1 Au nte Q 10 ou d TC ell C ar C Bo y or vis Ad LifeS cience Research ce ien Sc Better Healthcare e as rs w rb o er tion o s lym ac cle kfl Tu tem ro l Cy or ot s nt Po Re al Bl Sy Co m rn W s- er ain er te an sf Tr ran lity Ch Th es T ua W Q Bio-Rad Laboratories V3 t Annual Report 2011 uc t od en g Pr m s tin ile lop Te Ag eve lex D tip ul M g rin tic ito eu ins ch on ap te u M er ro To es Th P 00 0 et ab C1 Di


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    S TA RT H E RE


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    A Guide to Bio-Rad’s Success in 2011 FOR OVER HALF HAL A CENTUR CENTURY, BIO-RA D HAS CHAR CHARTED A COURSE O F PROGRESS AND GROWTH THAT THAT HAS LED THE COMP COMPANY IN MANY IMPOR IMPORTANT ANT DIRECTIONS. ON N EACH OF O F THESE P PATHWAYS, AYS, YS, EVERY Y STEP ALONG THE WAY WA WAY Y HAS REPRESENTED A CONTINUING EVOLUTION IN OUR EFFORTS E ORTS TS TO CONSISTENTL CONSISTENTLY OFF FFER ER HIGH QUALITY PRODUCTS AND SERVICES SER FOR R THE ADVANCEMENT OF OF SCIENTI SCIENTIFIC DISCOVERY DISCOVERY AND THE IMPROVEMENT OF HEALTHCARE. THCARE. IN N 2011, WE CONTINUED THE JOURNEY JOURNEY, DELIVERING THE INNOV INNOVATIVE TIVE PRODUCTS AND SOLUTIONS OUR CUSTOMERS HA HAVE ASKED FOR, FR OM AUTOMA AUTOMATING TING PROCESSES TO DEVELOPING TESTS WITH GREATER TER SPEED, ACCURACY, ACCURACY, AND SENSITIVITY—ALL O F WHICH LEADS TO THE ULTIMATE ULTIMATE DESTINATION: ULTIMA DESTINATION: BETTER HEALTHCARE FOR ALL. BUT,, THEN, THA THAT’S T’S ONL ONLY Y JUST THE START. ST ns e tio iv lu vat So no In ts lity uc ua od Q Pr igh H ov fic y sc nti er Di cie S


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    Letter To Our Shareholders As we predicted, edicted, 2011 was a challenging yearyear. However, However amid all the natural disasters, economic upheaval, and geopolitical changes, we continued to make progress. In fact, we reached eached a real real milestone in the Company’s Company’ history, history passing the $2 billion mark in revenue. revenue. Some of you may remember remember that it was 2004 when we crossed ossed the $1 billion thr threshold. eshold. Our growth owth of 7.6% this year is modest by recent ecent historical standar standards, but respectable espectable given the economic turmoil ar around ound us. 2011 was a yea ear of resolve, e, a ass we con continued important imp mporta ntt area rtant a of DNA amplification. tion. D Droplet to watch ourr costs. co At the e same sa sam time, e, we digital PCR dig digi CR allows a scientists to o distin distinguish istin ist rare made key, stra rategic investments, tme including in sequencess in tumors seq tum and precisely ely measure m R&D, which h grew gre to $186.4 .4 million m for the yea ar ar. copy number variation. cop ariation tion During the he summer, summe we During the yea ear, we introduced uce more than 130 30 introduced several intr all add additional PCR CR thermal new productss a and systemss and a were granted d cyclers that enhance usab cycle usability through hro the 27 new patents nts, bringing our ttotal intellectual incorporation of touch-screen inc creen reen techn technology, echn property portfo tfolio to just over ve 1,000 patents. ouch™ tthermal including the C1000 Touch inc ouc rma cycler, Manufacturing ing and a procurement rem continued which offers extremely w wh melyy high h thermal ma perfor- to be prioritiess ffor us as we eeexpanded invest- mance for large,, high- ma man high high-throughput ut la labs. On ments in faciliti ilities and nd global bal o operations ns to t eo the other othe end off the oth th sspectrum, the he compact c support growth th and to increase rea our purchasing sing ing 10 ™ thermal cycler is small and T100 T d we w well-suited power. Addition ionally, we launched ionally ionall unc a major proj- oj- f re for researchers who prefer to have ve a p personal ect to globalize balize lize o our business ness ess systems sy (ERP), ), instrument on their bench. inst to help p us leve l everage our size ize and a diversity. In tthe area of diagnostics, we were ere pleased p to Late in tthe yea ear, we were re successful suc in acquir- ir- receive FDA Premarket Application rec tion approval a ing an exciting ing and innovative ative tive new technology gy f o for our fourth-generation HIV V assay assay, a test that called droplet digital igital PCR, P ,w which promises to detects both HIV antigens and HIV det H antibodies, extend our leadership ip position position ition a and reach in the he offering earlier detection offe n of HIV H infections. 2 Bio-Rad Laboratories Annual Report 2 2011


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    While the worldwide orldw economic conomic m malaise alaise ise is we are w re ass a c company toda today. We can’t predict dict expected to continue ontinu forr 2012,, we w hhave ave ea t future the re or what new w milestones miles mile ile we may llot tto look forward d to, in n this, t ou our u r 60th 6 year ear achieve a e in our upcoming journeys, ourne but we w off oper operation. With the acqu acquisition cquisition on o of Biotest a re confident are c dent that we are welll positio posit positione positioned sitio iti for in 2010, 10, 0, fo for f example, ourr entry tryy into i the t U U.S. w hateve r lies ahead. While manyy m whatever may fe ma feel we market for or blood blo typing continues tinues ess to t bear ffruit have h haave a e re reach reached ched hed ed d a destination, d we’d w rrather her th think as we become me emmore established d in n this t th very that th att w wee are only only just begin beginnin beginning. important market. et. We are re beginning be nning to to ro rol roll o out We W e tha thank k you u for f yoyour continued interest our new website and increase creas reas e-commerce e- mmerce mme ce e and a nd ssupport. capabilities to the e re rest of the world, giving ing g our o customers improved ved ttools with which to interact ract with us. We are just ust at a the starting gate with th the introduction of droplet opl digital PCR technology logy, and have a full lineup neup eup o of products in the pipeline for introduction in 2012. 201 Norman Schwartz PRESIDENT As we enter this milestone stone year, y we have spent some time looking g back ba ata the e many roads we have traveled to get ro et here. he re. Each Eac path h has, in its own way, contributed ibut uted to t who David Schwartz CHAIRMAN OF THE BOARD 3


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    BIO-RAD’S LIFE SCIENCE GROUP OFFERS PRODUCTS THAT HELP RESEARCHERS ANSWER COMPLEX BIOLOGICAL QUESTIONS. MANY OF THESE PRODUCTS, WHICH Life Science SEPARATE, PURIFY, IDENTIFY, AND AMPLIFY BIOLOGICAL MATERIALS SUCH AS PROTEINS, NUCLEIC ACIDS, AND Research BACTERIA, ARE USED IN ESTABLISHED RESEARCH TECHNIQUES, BIOPHARMACEUTICAL PRODUCTION PROCESSES, AND FOOD TESTING. rs cle Cy al m er Th In the early 1950s, when new insights were being the V3 Western Workflow™ system, a group of made into the molecular structure of DNA, Bio-Rad best-in-class products that, when used together, founders David and Alice Schwartz were embark- enable researchers to analyze their process in ing on their own journey of discovery. Knowing first- ways they were otherwise not able to do, saving hand the often tedious job of preparing samples for time and generating more reliable and robust data. analysis, the couple set about to create a company The V3 Western Workflow is centered around a that would provide scientists with the tools they common analytical technique called a “western needed to conduct their research. blot”, which is used to identify specific proteins and determine protein weight in a given sample. From these humble beginnings, over a half- century ago, Bio-Rad has continued to develop The first step in the process of the V3 Western products that help researchers make more pro- Workflow is performing electrophoresis using ductive use of their time, and ultimately, acceler- stain-free TGX™ precast gels to separate proteins. ate the process of discovery. Today, the company Next, researchers can visualize their separations is an internationally recognized leader in its field. using a Gel Doc™ EZ imaging system or ChemiDoc™ MP imaging system. The next step is the transfer Nowhere is that leadership more apparent than of proteins from the gel to a more solid and stable in the market for thermal cyclers—Polymerase membrane—a process that is now completed Chain Reaction (PCR) instruments—that replicate more quickly than ever thanks to Bio-Rad’s ready- and amplify fragments of DNA. Since our first to-use Trans-Blot® Turbo™ transfer system. product was introduced in 1988, Bio-Rad has led Afterward, there is more verification and validation the way in thermal cycler innovation, continuing to to determine if the results are biologically relevant offer a unique family of products for PCR research by defining the amount of protein present in a cell with increased levels of ease and efficiency. or tissue sample. The entire V3 Western Workflow delivers results in a single day—half the time of a Separating DNA and proteins with a process traditional western blot process. called gel electrophoresis is another area in which Bio-Rad has over 30 years of leadership, offer- In the 1960s, with a focus on greater efficiency, ing the fastest separation and imaging capabili- higher reliability, and innovation, continued on page 8 ties available. Most recently, Bio-Rad introduced 4


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    kfl rn or ste ow W We V3 VA 1 LI D AT Separate E st bo em Sy Tur 4 2 er t sf lo an -B Tr ans Verify Visualize Tr E 3 AT VISUALIZE, VERIFY, AND VALIDATE D LI WITH THE V3 WESTERN WORKFLOW VA Transfer SYSTEM, OFFERING BEST-IN-CLASS PRODUCTS FOR ELECTROPHORESIS, BLOTTING, AND IMAGING AND UNMATCHED VALUE FOR RUNNING WESTERN BLOTS. 5


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    6 Bio-Rad Laboratories Annual Report 2011


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    SET UP IS AS EASY AS 1-2-3 WITH THE C1000 TOUCH THERMAL CYCLER, WHICH OFFERS SUPERIOR PERFORMANCE AND A LARGE COLOR TOUCH SCREEN FOR FAST AND EASY PROTOCOL PROGRAMMING. AMPLIFYING DNA: THE NEWEST GENERATION OF THERMAL CYCLERS Polymerase Chain Reaction, or allowed researchers to automate PCR, is a technique commonly used the writing of protocols used to in a wide range of medical and amplify DNA. With the 1000-series biological research, from analysis thermal cyclers, all the researcher and forensic investigation—where needed to do was enter the experi- there may be only a few drops of ment’s parameters and the device blood available—to the basic study would automatically generate a and identification of genes. Similar “recipe” the instrument would to the function of a photocopier, use. As a result, researchers could PCR amplifies selected sections achieve more accurate and reliable of nucleic acid into thousands, results—with shorter run times and millions, even billions of specific optimized thermal performance. copies, so researchers have Today, the C1000 Touch thermal adequate samples with which to cycler offers yet a new level of make specific proteins, compare user-friendliness, with a stream- gene sequences, and perform lined, touch-screen interface and a a variety of other applications. minimum number of button clicks. Bio-Rad has been an important This allows researchers to focus at contributor to this area for over two a greater degree on their experi- decades, supplying thermal cyclers, ments—and not on their tools. In reagents, and related products. late 2011, Bio-Rad introduced a The newest generation of PCR droplet digital PCR platform that instrumentation made its debut takes PCR to the next level, by offer- in 2008 with Bio-Rad’s innovative ing researchers the quantification of 1000-series thermal cycler plat- target molecules with unprecedent- form, which for the first time ed precision and sensitivity. Bio-Rad Laboratories Annual Report 2011 7


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    BIO-RAD’S CLINICAL DIAGNOSTICS GROUP PROVIDES A BROAD RANGE OF PRODUCTS THAT SERVE CLINICAL Clinical LABORATO A RIES IN THE GLOBAL DIAGNOSTICS MARKET. ATO THESE PRODUCTS ADDRESS SPECIFIC NICHES WITHIN Diagnostics THE MEDICAL DIAGNOSTICS TEST MARKET AND CONSIST OF INSTRUMENTS, REAGENTS, AND SOFTWARE. sa ue As ng y g e in Ag D en 1 lia re NS late Sc P V HI the company was led in another direction when workflow is designed to help laboratories that it discovered a new market that was after similar are increasingly struggling to find qualified and benefits. Physicians and hospital pathologists at experienced technicians. the time were seeking a more reliable method for determining thyroid function, an important mea- The IH-1000 system utilizes the gold standard sure of human metabolic activity. The first stop ID-System gel card technology, offering full on this new journey was Bio-Rad’s introduction automation, high throughput, and integrated of the T-4 (thyroxine) test, one of the first com- quality control and validation software featuring mercially available tests to accurately determine an intuitive user interface. Its state-of-the-art thyroid function. This product led to the formation robotic and mechanical systems ensure uninter- of the company’s Clinical Diagnostics Group, rupted operations for walk-away convenience which in later years established itself as a leader and reliability. Bio-Rad also offers the TANGO™ in the field, offering products used for medical optimo automated blood typing system, which screening and diagnostics. provides a high level of automation and is based on microplate technology. Case in point: HIV screening. Bio-Rad has a long history of providing laboratories the tools One of the critical functions played by many of they need for HIV detection. In 2011, the company these labs is the screening and early detection of introduced to the U.S. market its fourth-generation harmful viruses such as dengue fever, a viral dis- HIV assay. Identifying both HIV antigens and HIV ease that results in widespread infections every antibodies in the same test offers earlier detection year in people located in tropical and subtropical of infections. regions around the world. The detection of blood-borne diseases, which can To combat its spread, Bio-Rad, in partnership with be spread through the contamination of blood, is the National Center for Scientific Research (Centre not the only area of blood testing for which Bio- National de la Recherche Scientifique, or “CNRS”), Rad has developed products. For those laboratories in France, introduced the Platelia™ Dengue NS1 testing blood for transfusions or to replace blood Ag assay, a test shown to be over 90% effective lost either during surgery or resulting from a in detecting the Dengue virus NS1 antigen as soon critical injury, Bio-Rad created the IH-1000 blood as the first clinical signs appear. continued on page 13 typing system. This new approach to blood bank 8 Bio-Rad Laboratories Annual Report 2011


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    n tio ra y e sa en As -g V th st od HI our Sy Blo F em ng 0 pi 0 Ty -10 IH OPEN THE DOOR, LOAD THE SAMPLE, AND WALK AWAY; IT’S THAT EASY WITH THE IH-1000 AUTOMATED BLOOD TYPING SYSTEM, DESIGNED FOR HIGH-VOLUME BLOOD TESTING FOR OUR CUSTOMERS OUTSIDE THE U.S. 9


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    OVER 1 MILLION PEOPLE LIVING WITH HIV IN THE UNITED STATES 10 Bio-Rad Laboratories Annual Report 2011


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    HIV SCREENING: FASTER TO TREATMENT According to the most recent HIV assays. As a result, the HIV information published by the antigen window represents lost World Health Organization, time for alerting patients, when approximately 34 million people they tend to be most infectious. worldwide were estimated to This earlier detection reduces the be living with HIV in 2010. Early likelihood of transmission. detection of the disease leads to With Bio-Rad’s new fourth- early treatment and helps prevent generation HIV assay, both new infections of the virus. But types of proteins can be found how to diagnose faster? using the same test, resulting The body’s immunological in faster diagnosis, in turn response to HIV is to produce enabling HIV-infected individuals antibodies—proteins used to to get the treatment they need fight infection—but that only more quickly. At the same time, happens after a sharp increase the assay contributes to the in the level of antigens—proteins prevention of new infections that are part of the virus itself. of the virus. These antigens are not detected by current, third-generation THOSE INFECTED WITH HIV ARE MOST INFECTIOUS IN THE FIRST FEW MONTHS AND MANY ARE UNAWARE OF THEIR STATUS UNTIL LATER STAGES. BIO-RAD’S FOURTH-GENERATION HIV ASSAY OFFERS EARLY DETECTION SO THAT TREATMENT CAN BEGIN SOONER. 11


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    AN APPLET FOR THAT: SUPPORTING OUR CUSTOMERS REMOTELY From work to play to the routines of everyday life, we are all increasingly connected by tech- nology. When our technological devices malfunction, all activity seems to grind to a stop. In healthcare, where the stakes tend to be much higher, it is im- perative that work does not stop— or not for long—when problems arise. Which is why Bio-Rad in 2011 introduced the BRiCare software applet, an application designed for the highest level of sit d eb a remote service and support, W io-R e including customer training for B both instruments and software. With BRiCare, we can remotely and rapidly troubleshoot and solve problems and can pro- actively identify developing problems before they occur. This not only allows for a much faster response time, but also reduces costs by not requiring Bio-Rad engineers to be physically on site et in order to resolve an issue. pl Ap ftw are e So RiC ar B


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    BIO-RAD’S STRONG AND LASTING RELATIONSHIPS WITH ITS CUSTOMERS HAVE THEIR ROOTS IN THE COMPANY PHILOSOPHY THAT VALUES THE PRINCIPLES OF INVOLVEMENT, INNOVATION, AND INDEPENDENCE. Customer THESE CORE VALUES REFLECT THE WAY WE WORK AND WHO WE ARE. THEY REPRESENT OUR Relationships COMMITMENT NOT JUST TO EACH OTHER, BUT ALSO TO THOSE WHOM WE SERVE. Q ia v Nu Partnerships such as the one we have with To further help those customers, in 2011 we CNRS, are emblematic of how we approach our introduced the BRiCare software applet. shared responsibilities for helping to improve In addition to enabling us to support and train scientific research and medical diagnostics—all customers, the application allows us to monitor leading to better healthcare. It all leads to our and remotely diagnose the performance of their relationships with our customers: university and instruments, thus eliminating the need for research institutions, hospitals, public health customers to wait for an engineer to arrive and commercial laboratories, other leading diag- on site to get those instruments back up and nostic manufacturers, and leading companies producing results. in the biotechnology, pharmaceutical, chemical, and food industries. Another example of a project with strong customer input is the Bio-Rad website. This With all of these groups, we work closely with updated site continues to be heavily influenced researchers and clinicians to understand how by what our customers tell us they need and they conduct their research at a very deep level. want: speed, efficiency, reliability, and, most A good example of this is our customer immersion importantly, access to the information they process, in which Bio-Rad engineers travel to require. The result combines not only a unique a customer’s laboratory and observe how their information carousel display on the home page researchers work. This careful level of observa- for immediate access to hot topics, but straight- tion provides a way for our engineers to notice forward, intuitive navigation; accelerated and details that the researchers themselves may efficient searching; in-depth resources; and not think to mention as feedback to us. Our streamlined, information-rich product pages in compact, user-friendly and fast-starting T100 a variety of languages. thermal cycler is the result of this deeper level of understanding of what our customers We even help our customers help their customers. wanted. Its design was based not only on customer In August 2011, we introduced Nuvia™ Q media, feedback, but on our observations of how it could an ultra-high capacity anion continued on page 14 contribute to the success of those who use it. Bio-Rad Laboratories Annual Report 2011 13


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    Innovation BUILT INTO OUR CHARTER AS ONE OF OUR THREE CORE VALUES, INNOVATION IS THE DRIVER OF BIO-RAD’S GROWTH & Product AND SUCCESS. WE CONTINUOUSLY STRIVE TO APPLY Development NEW IDEAS, METHODS, AND TECHNOLOGY IN CREATIVE AND USEFUL WAYS, ALLOWING US TO OFFER A BROAD AND DIVERSIFIED RANGE OF PRODUCTS WITH OPTIMUM FUNCTIONALITY, QUALITY, EFFICIENCY, AND VALUE. Ag eve Ad ile lop D vis Sc Bo Pr m ory od en ien ard uc t ce t exchange media that helps our customers purify used a microscope and a device called a large volumes of therapeutic proteins used to hemocytometer, manually “clicking” a counter as treat human diseases. This translates to lower they counted cells in the hemocytometer grid. production costs for our customers who can then With Bio-Rad’s TC10™ automated cell counter, pass along these cost savings to the consumer. this process is completely automated, requiring the scientist to do nothing more than inject a These products are examples of the kinds of sample onto a slide, insert it into the device, and innovative products and services—exemplified read the actual cell count of the sample. by the more than 1,000 patents the company TC 10 Ce owns—that not only meet our customers’ Further innovation comes from our involvement Au ll C needs, but exceed their expectations. Whether it with those outside the company. Bio-Rad’s to ou m nt at er is inventing a new, more efficient way to perform Science Advisory Board, for example—com- ed a common process or improving the way an prising representatives from major research instrument works, we are always looking to raise and academic institutions—helps us brain- the bar on what is possible. storm ideas, offers feedback and evaluations of new products, and provides insights on Take our new QX100™ Droplet Digital™ PCR emerging trends. system, for example. This next-generation PCR system offers a new level of precision in the Similarly, our relationship with CNRS has quantification of target nucleic acid molecules, enabled us to jointly operate a research facility providing accurate determination of copy in Montpellier, France, giving us access to tech- number variation. It also enables the detection nologies that not only support our R&D activities of rare mutation events such as those seen in in the fields of biostatistics and proteomics, but certain tumors. have led directly to the development of important new products and processes. Or take something even simpler: the need for researchers to count cells—to maintain In upholding our commitment to using industry populations in a tissue culture or to ensure best practices, Bio-Rad employs the Agile an accurate number of cells used in the Product Development design philosophy, experiment. Traditionally, most scientists which enables software and hardware developers to work with marketing in a continued on page 19 14 Bio-Rad Laboratories Annual Report 2011


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    Di Q PC gi X1 R ta l 00 S Dr yste op m let WITH THE COMPACT YET POWERFUL QX100 DROPLET DIGITAL PCR SYSTEM, RESEARCHERS CAN STUDY BIOLOGICAL SYSTEMS AT UNPRECEDENTED RESOLUTION.


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    DETECTING RARE MUTATIONS: DROPLET DIGITAL PCR In PCR experiments, precision is By taking advantage of droplet of paramount importance. It was digital PCR to understand the once believed that genes occurred arrangements that occur between in pairs, with one gene from each different genomes, he was able parental chromosome forming to measure and validate copy that pair. But, later research, in number variation that was only particular, the Human Genome previously revealed by other Project, revealed that there are in more labor intensive—and less fact many duplications and deletions precise—techniques. of sections of chromosomes within Beyond the ability to accurately the human population. These determine copy number variation, duplications and deletions can droplet digital PCR also offers the result in wide ranges of gene copy ability to distinguish rare nucleic number between individuals. Certain acid sequences and the absolute numbers of genes may be doubled, quantification of target DNA tripled, quadrupled, or more, and molecules with unprecedented therefore affect the type and amount precision and sensitivity. of a particular protein that results. Applications of these new Accurate determination of copy capabilities will accelerate the number variation has been made development of new strategies much simpler by the use of for both diagnosing and treating Bio-Rad’s QX100 Droplet Digital inherited disorders, cancer, and PCR system as demonstrated by infectious diseases. the work of Dr. Michael Snyder of Stanford University. EVERY DROPLET HAS AN ANSWER … DNA SAMPLES ARE PREPARED AND THEN LOADED INTO THE DROPLET GENERATOR. LATER, THE DROPLETS ARE AMPLIFIED USING A STANDARD THERMAL CYCLER. 16


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    DIABETES: LEADING THE WAY IN MONITORING TREATMENT REGIMENS In the United States, diabetes affects more than 25 million; worldwide, approximately 350 million suffer from the disease. Proper monitoring, treatment, and control allow many of these individuals to lead otherwise normal lives. Part of that monitoring regimen is the measurement of A1C, a subset of a “glycosated” hemoglobin protein that had been shown to have elevated levels in diabetics, but was difficult and expensive to test. Bio-Rad was the first company to offer a test to the U.S. market that could measure A1C, a more precise indicator of average blood glucose levels over time. As the new test became established as a useful clinical tool, test volumes increased rapidly, and we introduced a series of automated high-perfor- mance liquid chromatography (HPLC) platforms to further improve perfor- mance and laboratory efficiency. Today, Bio-Rad advancements con- tinue to lead the way in monitoring diabetes treatment regimens around the world. 25 MILLION AMERICANS 350 MILLION WORLDWIDE 18


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    THIS IS THE REASON WE COME TO WORK EACH DAY: AN ABIDING DETERMINATION TO SEE THAT WHAT WE DO TRULY BENEFITS THE CONSUMERS OF OUR Better Q on EFFORTS: SCIENTISTS AND CLINICIANS, TO BE SURE, u a tro C lit ls y BUT MOST IMPORTANTLY, PATIENTS AROUND THE WORLD. OUR PRODUCTS CONNECT RESEARCHERS Healthcare AND DIAGNOSTICIANS TO THE SOLUTIONS THAT HELP PEOPLE LEAD LONGER, HEALTHIER LIVES. M e st ul ing T ti p le x cross-functional approach. This process creates worldwide who suffer from illnesses caused by higher-quality products that better meet the autoimmune diseases. Because these diseases needs of customers in a shorter period of time. affect multiple body systems and produce highly divergent and often misleading symptoms, The outcome of all of these innovative new accurate diagnosis is a challenge at best. approaches to developing products is evident in The BioPlex® 2200 ANA Screen with Medical the impact that they make on real human beings, Decision Support Software (MDSS) is the most with real health issues. Using Bio-Rad products, comprehensive autoimmune product available, scientists who make advances in cancer allowing clinical laboratories and doctors research increase the survival rate for patients to provide patients with the most relevant suffering from this complex and highly variable information for better diagnoses of systemic disease. Other researchers, who are working to autoimmune diseases, leading to faster, more identify specific disease biomarkers improve their targeted treatment solutions, enabling patients methods when using Bio-Rad products. to live longer, healthier lives. For physicians treating patients who live every The most important measure of all of these day with diseases such as diabetes in which systems may be the profound confidence they must take an active and daily role in their that our customers have in them. Our highly own therapy, Bio-Rad offers a series of market- regarded Quality Controls and informatics D on i a i to M leading products. In the field of diabetes be r solutions offer advanced error detection, te i n g monitoring, these instruments range from s delivering dependable values and results that our D-10™ and VARIANT™ line of automated labs can rely on. This ensures that the most hemoglobin testing systems to the small, point- reliable data goes back to the physician or of-care in2it™ Analyzer, which can deliver results healthcare provider—and, most importantly, to from a patient’s sample within minutes in a the patient. To further enhance quality, we offer physician’s office. powerful software to monitor performance, so labs can feel confident that their instruments Similarly, through the development of the and reagents are working properly. BioPlex® 2200 system, the only random access multiplex testing instrument of its kind, there is new hope for the millions of women and men Bio-Rad Laboratories Annual Report 2011 19


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    20 Bio-Rad Laboratories Annual Repor Report 2011 S Pr cie og nti re fic ss D Im iag pr no ov st em ics en ts


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    2) 1 hs 20 es e g re g nc ar vin tu ou kt c va thc in rri Fu ea ti hr Br ene Ad eal (A he G H T As we come to the end of Bio-Rad’s 2011 journey, we reflect on the many accomplishments we have achieved throughout the year and take pride in how they contributed to raising the level of healthcare throughout the world—even if only in the smallest increments, as measured by the precision of our instruments. One of the most important lessons we’ve taken away from our experiences is that no matter where you start from, there are always new paths to follow, new opportunities along the way, and new discoveries to make. As long as you keep going forward, your real goal will always be met: the continuous improvement of people’s health. Welcome to 2012.


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    The Business BIO-RAD LABORATORIES HAS PLAYED A LEADING ROLE IN THE ADVANCEMENT OF SCIENTIFIC of Bio-Rad DISCOVERY FOR 60 YEARS BY PROVIDING A BROAD RANGE OF INNOVATIVE TOOLS AND SERVICES TO THE LIFE SCIENCE RESEARCH AND CLINICAL DIAGNOSTICS MARKETS. Founded in 1952, Bio-Rad has a global team of more than 7,000 employees and serves more than 100,000 research and industry customers worldwide through its global network of operations. Throughout its existence, Bio-Rad has built strong customer relationships that advance scientific research and development efforts and support the introduction of new technology used in the growing fields of genomics, proteomics, drug discovery, food safety, medical diagnostics, and more. LIFE SCIENCES CLINICAL DIAGNOSTICS Bio-Rad’s Life Science Group develops, manu- The Clinical Diagnostics Group develops, manu- factures, and markets a wide range of laboratory factures, sells, and supports a large portfolio of instruments, apparatus, and consumables used products for medical screening and diagnos- for research in functional genomics, proteomics, tics. Bio-Rad is a leading specialty diagnostics and food safety. The group ranks among the company and its products are recognized as top five life science companies worldwide, and the gold standard for diabetes monitoring and maintains a solid reputation for quality, innova- quality control (QC) systems. The company tion, and a longstanding focus on the success is also well known for its blood virus testing of its customers. Bio-Rad’s life science products and detection, blood typing, autoimmune and are based on technologies used to separate, genetic disorders testing, and internet-based purify, identify, analyze, and amplify biological software products. Bio-Rad’s clinical diag- materials such as proteins, nucleic acids, and nostics products incorporate a broad range bacteria. These technologies include elec- of technologies used to detect, identify, and trophoresis, imaging, multiplex immunoassay, quantify substances in bodily fluids and tissues. chromatography, microbiology, bioinformatics, The results are used as aids to support medi- protein function analysis, transfection, amplifica- cal diagnosis, detection, evaluation, and the tion, and real-time and droplet digital PCR. monitoring and treatment of diseases and other Bio-Rad products support researchers in labo- medical conditions. ratories throughout the world. 22 Bio-Rad Laboratories Annual Report 2011


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    2011 Financial Highlights FIVE-YEAR RECORD 2007 2008 2009 2010 2011 (IN MILLIONS, EXCEPT FOR RETURN ON SALES AND PER SHARE DATA) Net Sales $ 1,461.1 $ 1,764.4 $ 1,784.2 $ 1,927.1 $ 2,073.5 Gross Profit $ 791.4 $ 962.5 $ 999.8 $ 1,091.5 $ 1,177.9 R&D Expense $ 140.5(1) $ 159.5 $ 163.6 $ 172.3 $ 186.4 Net Income attributable to Bio-Rad $ 93.0 $ 89.5 $ 144.6 $ 185.5 $ 178.2 Return On Sales 6.4% 5.1% 8.1% 9.6% 8.6% Book Value Per Share $ 36.12 $ 38.11 $ 45.76 $ 55.17 $ 61.87 Basic Earnings Per Share $ 3.48 $ 3.30 $ 5.28 $ 6.70 $ 6.36 Cash Flow From Operations $ 191.6 $ 191.4 $ 325.1 $ 225.9 $ 259.8 (1) EXCLUDES $7.7 OF PURCHASED R&D IN 2007 Ne (IN t S ILLIO 20 by R M ale NS) 11 eg s Sa ion $2,073.5 les $1,927.1 $1,784.2 $1,764.4 $1,461.1 44% 37% Americas Europe 19% Pacific Rim 07 08 09 10 11 Ba Fr om sic Pe Ca per ILLI Ea r Sh O (IN M sh atio ONS rn ar Fl ns ) in e ow gs $325.1 $6.70 $6.36 $259.8 $5.28 $225.9 $191.6 $191.4 $3.48 $3.30 07 08 09 10 11 07 08 09 10 11


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    $2.0 billion $1.9 billion $1.8 billion $1.7 billion Bio-Rad $1.6 billion Sales History $1.5 billion $1.4 billion $1.3 billion $1.2 billion $1.1 billion $1.0 billion $900 million $800 million $700 million $600 million $500 million $400 million $300 million $200 million $100 million 1959 1965 1970 1975 1980 1985 1990 1995 2000 2005 2011 24 Bio-Rad Laboratories Annual Report 2011


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    UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the year ended December 31, 2011 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 of incorporation or organization) (I.R.S. Employer Identification No.) 1000 Alfred Nobel Drive, Hercules, California 94547 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area (510) 724-7000 Securities registered pursuant to Section 12(b) of the Act: Title of Each Class Name of Each Exchange on Which Registered Class A Common Stock Par Value $0.0001 per share New York Stock Exchange Class B Common Stock Par Value $0.0001 per share New York Stock Exchange Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No 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 and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one): Large accelerated filer Accelerated filer Non-accelerated file (Do not check if a smaller reporting company) Smaller reporting company Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No As of June 30, 2011, the last business day of the registrant's most recently completed second fiscal quarter, the aggregate market value of the Registrant's Class A Common Stock held by non-affiliates was approximately $2,733,758,179 and the aggregate market value of the registrant's Class B Common Stock held by non-affiliates was approximately $608,003,753. As of February 14, 2012, there were 23,043,332 shares of Class A Common Stock and 5,156,587 of Class B Common Stock outstanding. Documents Incorporated by Reference Document Form 10-K Parts (1) Definitive Proxy Statement to be mailed to stockholders in connection with the registrant's 2012 Annual Meeting of Stockholders (specified portions) III


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    BIO-RAD LABORATORIES, INC. FORM 10-K DECEMBER 31, 2011 TABLE OF CONTENTS Part I. 3 Item 1. Business 3 Item 1A. Risk Factors 6 Item 1B. Unresolved Staff Comments 14 Item 2. Properties 14 Item 3. Legal Proceedings 14 Item 4. Mine Safety Disclosures 15 Part II. 15 Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 15 Item 6. Selected Financial Data 17 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 17 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 29 Item 8. Financial Statements and Supplementary Data 30 Item 9. Changes and Disagreements with Accountants on Accounting and Financial Disclosure 66 Item 9A. Controls and Procedures 66 Item 9B. Other Information 69 Part III. 69 Item 10. Directors, Executive Officers and Corporate Governance 69 Item 11. Executive Compensation 70 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters 70 Item 13. Certain Relationships and Related Transactions, and Director Independence 70 Item 14. Principal Accountant Fees and Services 71 Part IV. 71 Item 15. Exhibits and Financial Statement Schedules 71 Signatures 72 2


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    PART I. ITEM 1. BUSINESS General Founded in 1952 and incorporated in 1957, Bio-Rad Laboratories, Inc. (referred to in this report as “Bio-Rad,” “we,” “us,” and “our”) was initially engaged in the development and production of specialty chemicals used in biochemical, pharmaceutical and other life science research applications. We entered the field of clinical diagnostics with the development of our first test kit based on separation techniques and materials developed for life science research. Through internal research and development efforts and acquisitions we have expanded into various markets. Today, Bio-Rad manufactures and supplies the life science research, healthcare, analytical chemistry and other markets with a broad range of products and systems used to separate complex chemical and biological materials and to identify, analyze and purify their components. As we broadened our product lines, we also expanded our geographical market. We have direct distribution channels in over 35 countries outside the United States through subsidiaries whose focus is sales, customer service and product distribution. In some regions, sales efforts are supplemented by distributors and agents. Description of Business Business Segments Today, Bio-Rad operates in two industry segments designated as Life Science and Clinical Diagnostics. Both segments operate worldwide. Our Life Science segment and our Clinical Diagnostics segment generated 33% and 66%, respectively, of our net sales for the year ended December 31, 2011. We generated approximately 30% of our consolidated net sales for the year ended December 31, 2011 from U.S. sales and approximately 70% from sales in our remaining worldwide markets. For a description of business and financial information on industry and geographic segments, see Note 13 on pages 63 through 65 of Item 8 of Part II of this report. Life Science Segment Our Life Science segment is at the forefront of discovery, creating advanced tools to answer complex biological questions. We are a market leader in the life sciences market, developing, manufacturing and marketing a range of more than 5,000 reagents, apparatus and laboratory instruments that serve a global customer base. Many of our products are used in established research techniques, biopharmaceutical production processes and food testing regimes. These techniques are typically used to separate, purify and identify biological materials such as proteins, nucleic acids and bacteria within a laboratory or production setting. We focus on selected segments of the life sciences market in proteomics (the study of proteins), genomics (the study of genes), biopharmaceutical production, cell biology and food safety. Based on the most recent studies, we estimate that the worldwide market for products in these selected segments was approximately $6 billion. Our principal life science customers include universities and medical schools, industrial research organizations, government agencies, pharmaceutical manufacturers, biotechnology researchers, food producers and food testing laboratories. Clinical Diagnostics Segment Our Clinical Diagnostics segment designs, manufactures, sells and supports test systems, informatics systems, test kits and specialized quality controls that serve clinical laboratories in the global diagnostics market. Our products currently address specific niches within the in vitro diagnostics (IVD) test market, and we focus on the higher margin, higher growth segments of this market. 3


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    We supply more than 3,000 different products that cover more than 300 clinical diagnostic tests to the IVD test market. Based on the most recent studies, we estimate that the worldwide sales for products in the markets we serve were approximately $10.0 billion. IVD tests are conducted outside the human body and are used to identify and measure substances in a patient’s tissue, blood or urine. Our products consist of reagents, instruments and software, typically provided to our customers as an integrated package to allow them to generate reproducible test results. Revenue in this business is highly recurring, as laboratories typically standardize test methodologies, which are dependent on a particular supplier’s equipment, reagents and consumable products. An installed base of diagnostic test systems creates an ongoing source of revenue through the sale of test kits for each sample analyzed on an installed system. Our principal clinical diagnostic customers include hospital laboratories, reference laboratories, transfusion laboratories and physician office laboratories. Raw Materials and Components We utilize a wide variety of chemicals, biological materials, electronic components, machined metal parts, optical parts, minicomputers and peripheral devices. Most of these materials and components are available from numerous sources and we have not experienced difficulty in securing adequate supplies. Patents and Trademarks We own numerous U.S. and international patents and patent licenses. We believe, however, that our ability to develop and manufacture our products depends primarily on our knowledge, technology and special skills. We pay royalties on the sales of certain products under several patent license agreements. We view these patents and license agreements as valuable assets. Seasonal Operations and Backlog Our business is not inherently seasonal. However, the European custom of concentrating vacation during the summer months usually tempers third quarter sales volume and operating income. For the most part, we operate in markets characterized by short lead times and the absence of significant backlogs. Management has concluded that backlog information is not material to our business as a whole. Sales and Marketing We conduct our worldwide operations through an extensive direct sales force and service network, employing approximately 1,000 sales and service people around the world. Our sales force typically consists of experienced industry practitioners with scientific training, and we maintain a separate specialist sales force for each of our segments. Our direct sales approach contrasts with the distributor approach used by some of our competitors, allowing us to sell a broader range of our products and have more direct contact with our customers. Our customer base is broad and diversified. Our worldwide customer base includes (1) prominent university and research institutions, providing us access to more than 150,000 scientists in the U.S. alone; (2) hospital, public health and commercial laboratories; (3) other leading diagnostic manufacturers; and (4) leading companies in the biotechnology, pharmaceutical, chemical and food industries. In 2011, no single customer accounted for more than two percent of our total net sales. Our sales are affected by certain external factors. For example, a number of our customers, particularly in the Life Science segment, are substantially dependent on government grants and research contracts for their funding. A significant reduction of government funding would have a detrimental effect on the results of this segment. Most of our international sales are generated by our wholly-owned subsidiaries and their branch offices. Certain of these subsidiaries also have manufacturing facilities. Bio-Rad’s international operations are subject to certain risks common to foreign operations in general, such as changes in governmental regulations, import restrictions and foreign exchange fluctuations. However, our international operations are principally in developed nations, which we regard as presenting no significantly greater risks to our operations than are present in the United States. 4


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    Competition The markets served by our product groups are highly competitive. Our competitors range in size from start-ups to large multinational corporations with significant resources and reach. Reliable independent information on sales and market share of products produced by our competitors is not generally available. We believe, however, based on our own estimates, no one company is so dominant that it prevents other companies, including Bio-Rad, from competing effectively. We compete mainly in market segments where our products and technology offer customers specific advantages over the competition. Because of the breadth of its product lines, the Life Science segment does not face the same competitors for all of its products. Competitors in this market include GE Biosciences, Life Technologies, Merck Millipore and Thermo Fisher Scientific. We compete primarily based on meeting performance specifications. Major competitors in the Clinical Diagnostics segment include Roche, Abbott Laboratories (Diagnostic Division), Siemens Medical Diagnostics Solutions, Danaher, Thermo Fisher, Becton Dickinson, bioMérieux, Ortho Clinical Diagnostics, Tosoh, Immucor and DiaSorin. Research and Development We conduct extensive research and development activities in all areas of our business, employing approximately 850 people worldwide in these activities. Research and development have played a major role in Bio-Rad's growth and are expected to continue to do so in the future. Our research teams are continuously developing new products and new applications for existing products. In our development of new products and applications, we interact with scientific and medical professionals at universities, hospitals and medical schools, and within our industry. We spent approximately $186.4 million, $172.3 million and $163.6 million on research and development activities during the years ended December 31, 2011, 2010 and 2009, respectively. Regulatory Matters The manufacturing, marketing and labeling of certain of our products (primarily diagnostic products) are subject to regulation in the United States by the Center for Devices and Radiological Health of the United States Food and Drug Administration (FDA) and in other jurisdictions by state and foreign government authorities. FDA regulations require that some new products have pre-marketing approval by the FDA and require certain products to be manufactured in accordance with “good manufacturing practices,” to be extensively tested and to be properly labeled to disclose test results and performance claims and limitations. As a multinational manufacturer and distributor of sophisticated instrumentation, we must meet a wide array of electromagnetic compatibility and safety compliance requirements to satisfy regulations in the United States, the European Community and other jurisdictions. 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 liabilities 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 could 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. These regulatory requirements vary widely among countries. 5


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    Employees At December 31, 2011, Bio-Rad had approximately 7,030 full-time employees. Fewer than seven percent of Bio- Rad's approximately 2,950 U.S. employees are covered by a collective bargaining agreement which will expire on November 7, 2012. Many of Bio-Rad's non-U.S. full-time employees, especially in France, are covered by collective bargaining agreements. We consider our employee relations in general to be good. Available Information Bio-Rad files annual, quarterly, and current reports, proxy statements, and other documents with the Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934. The public may read and copy any materials that we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. Also, the SEC maintains an Internet website that contains reports, proxy and information statements, and other information regarding issuers, including Bio-Rad, that file electronically with the SEC. The public can obtain any documents that we file with the SEC at http://www.sec.gov. Bio-Rad’s website address is www.bio-rad.com. We make available, free of charge through our website, our Form 10-Ks, 10-Qs and 8-Ks, and any amendments to these forms, as soon as reasonably practicable after filing with the SEC. ITEM 1A. RISK FACTORS The following risk factors should be read carefully in connection with evaluating our business and the forward- looking information contained in this Annual Report on Form 10-K. We believe that any of the following risks could have a material affect on our business, operations, industry, financial position or our future financial performance. While we believe that we have identified and discussed below the key risk factors affecting our business, there may be additional risks and uncertainties that are not presently known or that are not currently believed to be significant that may adversely affect our business, operations, industry, financial position and financial performance in the future. The ongoing investigation by our Audit Committee and by government agencies of possible violations by us of the United States Foreign Corrupt Practices Act and similar laws could have a material adverse effect on our business. Based on an internal review, we have identified conduct in certain of our overseas operations that may have violated the anti-bribery provisions of the United States Foreign Corrupt Practices Act (FCPA) and is likely to have violated the FCPA’s books and records and internal controls provisions and our own internal policies. In May 2010, we voluntarily disclosed these matters to the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC), each of which commenced an investigation. The Audit Committee of our Board of Directors (Audit Committee) has assumed direct responsibility for reviewing these matters and has hired experienced independent counsel to conduct an investigation and provide legal advice. We have provided, and intend to continue to provide, additional information to the DOJ and the SEC as the Audit Committee’s investigation progresses. The Audit Committee’s investigation and the DOJ and SEC investigations are continuing and we are presently unable to predict the duration, scope or results of the Audit Committee’s investigation, of the investigations by the DOJ or the SEC or whether either agency will commence any legal actions. The DOJ and the SEC have a broad range of civil and criminal sanctions under the FCPA and other laws and regulations including, but not limited to, injunctive relief, disgorgement, fines, penalties, modifications to business practices including the termination or modification of existing business relationships, the imposition of compliance programs and the retention of a monitor to oversee compliance with the FCPA. We are unable to estimate the outcome of this matter. However, the imposition of any of these sanctions or remedial measures could have a material adverse effect on our business, 6


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    including our results of operations, cash balance and credit rates. We have not to date determined whether any of the activities in question violated the laws of the foreign jurisdictions in which they took place. We previously identified significant deficiencies in our internal control over financial reporting that, when considered and taken together, had constituted a material weakness in our internal control over financial reporting. Although we have remediated those significant deficiencies to the extent that they no longer, when considered and taken together, constitute a material weakness in internal control over financial reporting, some remain significant deficiencies and we have identified other significant deficiencies in internal control over financial reporting. Any failure to maintain effective internal control over financial reporting could result in 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. In connection with our Audit Committee’s investigation of our compliance with the FCPA discussed above, our management had identified three significant deficiencies in our internal control over financial reporting that, when considered and taken together, had constituted a material weakness in our internal control over financial reporting as of December 31, 2010 and through the first three quarters of 2011. A significant deficiency is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting. A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The three significant deficiencies that we identified were the result of: (i) a number of entity-level control deficiencies, including our lack of a comprehensive FCPA policy and training program; our lack of a formal, effective disclosure committee to facilitate our compliance with Section 302 of the Sarbanes-Oxley Act of 2002; inadequate policies regarding enterprise-wide risk assessment and management related to doing business in high- risk, emerging markets; our failure to perform background checks on certain parties prior to entering into material contracts with such parties; our lack of compliance with our existing Code of Business Ethics and Conduct in certain countries; and ineffective disclosure of significant exceptions to compliance with company policies through our quarterly management sub-certification process; (ii) a number of control deficiencies related to our expenditure processes at certain of our international subsidiaries; and (iii) a number of control deficiencies related to our revenue and accounts receivable process at certain of our international subsidiaries. In response to, and following identification of the material weakness, management has enhanced the operation of a number of existing controls related to Bio-Rad's internal control over financial reporting, including our previously existing controls and processes for FCPA compliance, and implemented additional controls. We have determined that these actions have remediated significant deficiencies that, when considered and taken together, constituted the material weakness described above to the extent that a material weakness no longer exists. However, we continue to have a significant deficiency related to our revenue process, and we have identified two additional significant deficiencies with respect to (i) reagent rentals at certain of our international subsidiaries and (ii) multiple controls for various business processes at a more limited number of minor international subsidiaries. We cannot assure you that we will be able to remediate these significant deficiencies or that additional significant deficiencies or material weaknesses in our internal control over financial reporting will not be identified in the future. Such significant deficiencies or material weaknesses could result in material misstatements in our financial statements and cause us to fail to meet our reporting obligations, which in turn could cause the trading price of our common stock to decline. Any such failure could also adversely affect 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. On April 13, 2011, a shareholder derivative lawsuit was filed against each of our directors in the Superior Court for Contra Costa County, California. The case, which also names the Company as a nominal defendant, is captioned City of Riviera Beach General Employees’ Retirement System v. David Schwartz, et al., Case No. MSC11-00854. 7


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    In the complaint, the plaintiff alleges that our directors breached their fiduciary duties by failing to ensure that we had sufficient internal controls and systems for compliance with the FCPA. Purportedly seeking relief on our behalf, the plaintiff seeks an award of unspecified compensatory and punitive damages, costs and expenses (including attorneys’ fees), and a declaration that our directors have breached their fiduciary duties. We and the individual defendants filed a demurrer requesting dismissal of the complaint in this case, as well as a motion to stay this matter pending resolution of the above-referenced investigations by the DOJ and SEC. Following a hearing on September 30, 2011, the court sustained our demurrer and dismissed the complaint, without prejudice, and granted the plaintiff until February 29, 2012 to file an amended complaint. (The parties subsequently agreed to extend that date to March 29, 2012, subject to court approval.) The court denied our motion to stay this matter because it dismissed the complaint. Adverse changes in general domestic and worldwide economic conditions and instability and disruption of credit markets could adversely affect our operating results, financial condition or liquidity. The continuing slow economic growth in developed nations may adversely affect our future results of operations. Demand for our products and services could change more dramatically than in previous years based on activity, funding, reimbursement constraints and support levels from government, universities, hospitals and private industry, including diagnostic laboratories. The need for certain sovereign nations with large annual deficits to curtail spending could lead to slower growth of, or even a decline in, our business. Although signs of limited recovery may exist in some markets, there are continued concerns about systemic economic imbalance, the availability and cost of credit, declining asset values and geopolitical issues that contribute to increased market volatility and uncertain expectations for the global economy. These conditions, combined with greater volatility in business activity levels and consumer confidence, high unemployment and volatile oil prices, contributed to unprecedented levels of volatility in the capital markets in recent years. Continuing or recurring disruptions in the capital and credit markets may adversely affect our business, results of operations, cash flows and financial condition. As a result of these market conditions, the cost and availability of credit has been and may continue to be adversely affected by illiquid credit markets and wider credit spreads. Concern about the stability of the markets generally and the strength of counterparties specifically has led many private sector investors to reduce and, in some cases, cease to provide credit to governments, businesses and consumers. These factors have led to depressed spending by some governments, businesses and consumers. Our customers and suppliers may experience cash flow concerns and, as a result, customers may modify, delay or cancel plans to purchase our products and suppliers may increase their prices, reduce their output or change terms of sales. Additionally, if customers’ or suppliers’ operating and financial performance deteriorates, or if they are unable to make scheduled payments or obtain credit, customers may not be able to pay, or may delay payment of, amounts owed to us. Sovereign nations either delaying payment for goods and services or renegotiating their debts could impact our liquidity. The situation in these sovereign nations is continuously developing and we have no greater knowledge of the situation other than what is being reported in the media. As of December 31, 2011, we had accounts receivable, net of allowance for doubtful accounts, in Spain, Italy, Greece and Portugal of $81.3 million. Suppliers may restrict credit or impose less favorable payment terms. Any inability of current and/or potential customers to pay us for our products or any demands by suppliers for accelerated payment terms may adversely affect our earnings and cash flow. Additionally, strengthening of the U.S. dollar associated with the global financial crisis may adversely affect the results of our international operations when those results are translated into U.S. dollars. Furthermore, the disruption in the credit markets could impede our access to capital, especially if we are unable to maintain our current credit ratings. Should we have limited access to additional financing sources when needed, we may decide to defer capital expenditures or seek other higher cost sources of liquidity, which may or may not be available to us on acceptable terms. Continued turbulence in the U.S. and international markets and economies, and prolonged declines in business and consumer spending may adversely affect our liquidity and financial condition, and the liquidity and financial condition of our customers, including our ability to refinance maturing liabilities and access the capital markets to meet liquidity needs. 8


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    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. In order to be successful in these activities, we must, among other things: • assimilate the operations and personnel of acquired companies; • retain acquired business customers; • minimize potential disruption to our ongoing business; • retain key technical and management personnel; • integrate acquired companies into our strategic and financial plans; • accurately assess the value of target companies, products and technologies; • comply with new regulatory requirements; • harmonize standards, controls, procedures and policies; • minimize the impact to our relationships with our employees and customers; and • assess, document and remediate any deficiencies in disclosure controls and procedures and internal control over financial reporting. The benefits of any acquisition may prove to be less than anticipated and may not outweigh the costs reported in our financial statements. Completing any potential future acquisition could cause significant diversion of our management’s time and resources. If we acquire 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. We cannot assure you that we will successfully overcome these risks or any other problems we encounter in connection with any acquisitions, and any such acquisitions could adversely affect our business, financial position or operating results. The industries and market segments in which we operate are highly competitive, and we may not be able to compete effectively with larger companies with greater financial resources than we have. The life science and clinical diagnostics markets are each highly competitive. Some of our competitors have greater financial resources than we do and are less leveraged than we are, making them better equipped to license technologies and intellectual property from third parties or to fund research and development, manufacturing and marketing efforts. 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. Our competitors can be expected to continue to improve the design and performance of their products and to introduce new products with competitive price and performance characteristics. Maintaining these advantages will require us to continue to invest in research and development, sales and marketing and customer service and support. We cannot assure you that we will have sufficient resources to continue to make such investments or that we will be successful in maintaining such advantages. We have significant international operations which subject us to various risks such as general economic and market conditions in the countries in which we operate. A significant portion of our sales are made outside of the United States. Our foreign subsidiaries generated 70% of our net sales for the year ended December 31, 2011. Our international operations are subject to risks common to foreign operations, such as general economic and market conditions in the countries in which we operate, changes in governmental regulations, political instability, import restrictions, additional scrutiny over certain financial instruments and currency exchange rate risks. We cannot assure you that shifts in currency exchange rates, especially significant strengthening of the U.S. dollar compared to the Euro, will not have a material adverse effect on our operating results and financial condition. 9


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    We are dependent on government funding and the capital spending programs of our customers, and the effect of healthcare reform on government funding and our customers’ ability to purchase our products is uncertain. 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 among 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, financial condition or results of operations could be materially adversely affected. Healthcare reform and the growth of managed care organizations have been and continue to be significant factors in the clinical diagnostics market. 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 costs. Consolidation among healthcare providers has resulted in fewer, more powerful groups, whose purchasing power gives them cost containment leverage. These competitive forces place constraints on the levels of overall pricing, and thus could have a material adverse effect on our profit margins for products we sell in clinical diagnostics markets. To the extent that the healthcare industry seeks to address the need to contain costs by limiting the number of clinical tests being performed, our results of operations could be materially and 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. Our failure to improve our product offerings and develop and introduce new products may negatively impact our business. Our future success depends on our ability to continue to improve our product offerings and develop and introduce new product lines and extensions that integrate new 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 operating results will be adversely affected. We cannot assure you that our product and process development efforts will be successful or that new products we introduce will achieve market acceptance. If we experience a disruption of our information technology systems, or if we fail to successfully implement, manage and integrate our information technology and reporting systems, it could harm our business. Our information technology (IT) systems are an integral part of our business, and a serious disruption of our IT systems could have a material adverse effect on our business and results of operations. 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 cannot assure you that our contingency plans will allow us to operate at our current level of efficiency. 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. If we fail to successfully manage and integrate our IT systems, reporting systems and operating procedures, it could adversely affect our business or operating results. 10


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    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, it may be possible for unauthorized third parties to copy our intellectual property, to reverse engineer or obtain and use information that we regard as proprietary, or to develop equivalent technologies independently. Additionally, third parties may assert patent, copyright and other intellectual property rights to technologies that are important to us. 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. We may find it necessary to enforce our patents or other intellectual property rights or to defend ourselves against claimed infringement of the rights of others through litigation, which could result in substantial costs to us and divert our resources. We also could incur substantial costs to redesign our products, to defend any legal action taken against us or to pay damages to an infringed party. The foregoing matters could adversely impact our business. We are subject to substantial government regulation. Some of our products (primarily diagnostic products), production processes and marketing are subject to federal, state, local and foreign regulation, including the FDA and its foreign counterparts. We are also subject to government regulation of the use and handling of a number of materials and controlled substances. Failure to comply with present or future 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 are currently subject to environmental regulations and enforcement proceedings. 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 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 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 can provide no assurance, however, that such matters or any future obligations to comply with environmental laws and regulations will not have a material impact on our operations or financial condition. Loss of key personnel could hurt our business. Our products and services are highly technical in nature. In general, only highly qualified and trained scientists have the necessary skills to develop and market our products and provide our services. In addition, some of our manufacturing positions are highly technical. We face intense competition for these professionals from our competitors, customers, marketing partners and other companies throughout our industry. We generally do not enter into employment agreements requiring these employees to continue in our employment for any period of time. Any failure on our part to hire, train and retain a sufficient number of qualified personnel could substantially damage our business. Additionally, if we were to lose a sufficient number of our research and development 11


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    scientists and were unable to replace them or satisfy our needs for research and development through outsourcing, it could adversely affect our business. 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 of February 14, 2012, the Schwartz family collectively held approximately 16% of our Class A Common Stock and 91% of our Class B Common Stock. As a result, the Schwartz family is able to elect a majority of the directors, effect fundamental changes in our direction and control matters affecting us, including the allocation of business opportunities that may be suitable for our company. In addition, this concentration of ownership and voting power may have the effect of delaying or preventing a change in control of our company. The Schwartz family may exercise its control over us according to interests that are different from other investors’ or debtors’ interests. Natural disasters, terrorist attacks or acts of war may cause damage or disruption to us and our employees, facilities, information systems, security systems, vendors and customers, which could significantly impact our net sales, costs and expenses, and financial condition. We have significant manufacturing and distribution facilities, particularly in the western United States, France and Switzerland. In particular, the western United States has experienced a number of earthquakes, wildfires, floods, landslides and other natural disasters in recent years. The occurrences could damage or destroy our facilities which may result in interruptions to our business and losses that exceed our insurance coverage. Terrorist attacks, such as those that occurred on September 11, 2001, have contributed to economic instability in the United States, and further acts of terrorism, bioterrorism, violence or war could affect the markets in which we operate, our business operations, our expectations and other forward-looking statements contained or incorporated in this document. Any of these events could cause a decrease in our revenue, earnings and cash flows. 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 quite volatile and the markets for these securities can be illiquid. The value of these securities will continue to be impacted by external market factors including default rates, changes in the value of the underlying property, such as residential or commercial real estate, rating agency actions, the prices at which observable market transactions occur and the financial strength of various entities, such as financial guarantors who provide insurance for the securities. Should we need to convert these positions to cash, we may not be able to sell these instruments without significant losses due to current debtor financial conditions or other market considerations. We have substantial debt and have the ability to incur additional debt. The principal and interest payment obligations of such debt may restrict our future operations and impair our ability to meet our obligations under our notes. As of December 31, 2011 we and our subsidiaries had approximately $732.5 million of outstanding indebtedness. In addition, we are permitted to incur additional debt provided we comply with the limitation on the incurrence of additional indebtedness and disqualified capital stock covenants contained in the indenture governing our 8.0% Senior Subordinated Notes due 2016 (8.0% Notes). 12


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    The following chart shows certain important credit statistics. At December 31, 2011 (dollars in millions) Total debt $ 732.5 Bio-Rad’s stockholders’ equity $ 1,743.9 Debt to equity ratio 0.4 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 notes; • require us to dedicate a substantial portion of our cash flow from operations to the payment of interest and principal due under our debt, including our outstanding notes, 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 ability to satisfy our obligations and to reduce our total debt depends on our future operating performance and on economic, financial, competitive and other factors, many of which are beyond our control. Our business may not generate sufficient cash flow, and future financings may not be available to provide sufficient net proceeds, to meet these obligations or to successfully execute our business strategy. Our existing credit facility, the indenture governing our 8.0% Notes and the terms of our other debt instruments, including agreements we may enter in the future, contain or will contain covenants imposing significant 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. These 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 meet certain financial tests and maintain certain financial ratios, including a maximum consolidated leverage ratio test, minimum consolidated interest coverage ratio test and a minimum net worth 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 13


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    them to be due and payable, together with accrued and unpaid interest. If we were unable to repay debt to our senior secured lenders, these lenders could proceed against the collateral securing that debt. The collateral is substantially all of our personal property assets, the assets of our domestic subsidiaries and 65% of the capital stock of certain of our foreign subsidiaries. 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. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES We own our corporate headquarters located in Hercules, California. The principal manufacturing and research locations for each segment are as follows: Segment Location Owned/Leased Life Science Richmond, California Owned/Leased Hercules, California Owned/Leased Pleasanton, California Leased Singapore Leased Shanghai, China Leased Clinical Diagnostics Hercules, California Owned/Leased Benicia, California Leased Irvine, California Leased Greater Seattle area, Washington Leased Plano, Texas Leased Lille, France Owned Greater Paris area, France Leased Nazareth-Eke, Belgium Leased Cressier, Switzerland Owned/Leased Dreieich, Germany Owned/Leased Most manufacturing and research facilities also house administration, sales and distribution activities. In addition, we lease office and warehouse facilities in a variety of locations around the world. The facilities are used principally for sales, service, distribution and administration for both segments. ITEM 3. LEGAL PROCEEDINGS Based on an internal review, we have identified conduct in certain of our overseas operations that may have violated the anti-bribery provisions of the United States Foreign Corrupt Practices Act (FCPA) and is likely to have violated the FCPA’s books and records and internal controls provisions and our own internal policies. In May 2010, we voluntarily disclosed these matters to the U.S. Department of Justice (DOJ) and the Securities and Exchange 14


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    Commission (SEC), each of which commenced an investigation. The Audit Committee of our Board of Directors (Audit Committee) has assumed direct responsibility for reviewing these matters and has hired experienced independent counsel to conduct an investigation and provide legal advice. We have provided, and intend to continue to provide, additional information to the DOJ and the SEC as the Audit Committee’s investigation progresses. The Audit Committee’s investigation and the DOJ and SEC investigations are continuing and we are presently unable to predict the duration, scope or results of the Audit Committee’s investigation, of the investigations by the DOJ or the SEC or whether either agency will commence any legal actions. The DOJ and the SEC have a broad range of civil and criminal sanctions under the FCPA and other laws and regulations including, but not limited to, injunctive relief, disgorgement, fines, penalties, modifications to business practices including the termination or modification of existing business relationships, the imposition of compliance programs and the retention of a monitor to oversee compliance with the FCPA. We are unable to estimate the outcome of this matter. However, the imposition of any of these sanctions or remedial measures could have a material adverse effect on our business or financial condition. We have not to date determined whether any of the activities in question violated the laws of the foreign jurisdictions in which they took place. On April 13, 2011, a shareholder derivative lawsuit was filed against each of our directors in the Superior Court for Contra Costa County, California. The case, which also names the Company as a nominal defendant, is captioned City of Riviera Beach General Employees’ Retirement System v. David Schwartz, et al., Case No. MSC11-00854. In the complaint, the plaintiff alleges that our directors breached their fiduciary duties by failing to ensure that we had sufficient internal controls and systems for compliance with the FCPA. Purportedly seeking relief on our behalf, the plaintiff seeks an award of unspecified compensatory and punitive damages, costs and expenses (including attorneys’ fees), and a declaration that our directors have breached their fiduciary duties. We and the individual defendants filed a demurrer requesting dismissal of the complaint in this case, as well as a motion to stay this matter pending resolution of the above-referenced investigations by the DOJ and SEC. Following a hearing on September 30, 2011, the court sustained our demurrer and dismissed the complaint, without prejudice, and granted the plaintiff until February 29, 2012 to file an amended complaint. (The parties subsequently agreed to extend that date to March 29, 2012, subject to court approval.) The court denied our motion to stay this matter because it dismissed the complaint. In addition, we are party to various other claims, legal actions and complaints arising in the ordinary course of business. We do not believe, at this time, that any ultimate liability resulting from any of these other matters will have a material adverse effect on our results of operations, financial position or liquidity. However, we cannot give any assurance regarding the ultimate outcome of these other matters and their resolution could be material to our operating results for any particular period, depending on the level of income for the period. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. PART II. ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Information Concerning Common Stock Bio-Rad’s Class A and Class B Common Stock are listed on the New York Stock Exchange with the symbols BIO and BIO.B, respectively. The following sets forth, for the periods indicated, the high and low intraday sales prices for our Class A and Class B Common Stock. 15


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    Class A Class B High Low High Low 2011 Fourth Quarter $ 103.22 $ 87.98 $ 102.90 $ 89.20 Third Quarter 122.39 84.02 122.21 87.33 Second Quarter 126.98 115.77 126.56 116.67 First Quarter 120.18 104.30 121.02 104.89 2010 Fourth Quarter $ 105.60 $ 89.02 $ 104.57 $ 89.82 Third Quarter 93.36 80.00 92.72 83.82 Second Quarter 113.68 85.57 112.94 87.25 First Quarter 104.44 89.82 103.14 90.00 On February 14, 2012, we had 546 holders of record of Class A Common Stock and 154 holders of record of Class B Common Stock. Bio-Rad has never paid a cash dividend and has no present plans to pay cash dividends. See Item 12 of Part III of this report for the security ownership of certain beneficial owners and management and for securities authorized for issuance under equity compensation plans. Stock Performance Graph The following graph compares the cumulative stockholder returns over the past five years for our Class A Common Stock, the S&P 400 MidCap Index and a selected peer group, assuming $100 invested on December 31, 2006, and reinvestment of dividends if paid: (1)The Peer Group consists of the following public companies: Danaher, Becton Dickinson, Thermo Fisher Scientific, Meridian Bioscience, PerkinElmer and Life Technologies. Companies in our peer group reflect our participation in two different markets: life science research products and clinical diagnostics. No single public or private company has a comparable mix of products which serve the same markets. In many cases, only one division of a peer group company competes in the same market as we do. Collectively, however, our peer group reflects products and markets similar to those of Bio-Rad. This stock performance graph shall not be deemed incorporated by reference by any general statement incorporating by reference into any filing under the Securities Act or the Exchange Act, and shall not otherwise be deemed filed under these Acts. 16


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    ITEM 6. SELECTED FINANCIAL DATA BIO-RAD LABORATORIES, INC. Selected Financial Data (in thousands, except per share data) Year Ended December 31, 2011 2010 2009 2008 2007 (1) Net sales $ 2,073,529 $ 1,927,118 $ 1,784,244 $ 1,764,365 $ 1,461,052 Cost of goods sold 895,640 835,630 784,401 801,843 669,690 Gross profit 1,177,889 1,091,488 999,843 962,522 791,362 Selling, general and administrative expense 696,294 635,213 601,468 591,304 507,978 Research and development expense 186,439 172,266 163,585 159,518 140,535 Purchased in-process research and development expense — — — — 7,656 Impairment losses on goodwill and long-lived assets — — 3,802 28,757 — Interest expense 53,135 63,717 47,024 32,113 31,606 Foreign exchange losses, net 13,842 3,884 5,003 7,634 2,576 Other (income) expense, net (7,583) (3,875) (6,871) 353 (19,832) Income before income taxes and 235,762 220,283 185,832 142,843 120,843 noncontrolling interests Provision for income taxes (57,739) (33,348) (36,667) (44,579) (26,548) Net loss (income) attributable to noncontrolling interests 200 (1,445) (4,545) (8,754) (1,301) Net income attributable to Bio-Rad $ 178,223 $ 185,490 $ 144,620 $ 89,510 $ 92,994 Basic earnings per share $ 6.36 $ 6.70 $ 5.28 $ 3.30 $ 3.48 Diluted earnings per share $ 6.26 $ 6.59 $ 5.20 $ 3.24 $ 3.41 Cash dividends paid per common share $ — $ — $ — $ — $ — Total assets $ 3,096,803 $ 3,062,764 $ 2,535,853 $ 2,037,264 $ 1,971,594 Long-term debt, net of current maturities $ 731,698 $ 731,100 $ 737,919 $ 445,979 $ 441,805 (1) Included in 2007 are the fourth quarter operating results of an acquisition. See Note 2 to the consolidated financial statements. ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion should be read in conjunction with the information contained in our consolidated financial statements and the accompanying notes which are an integral part of the statements. Other than statements of historical fact, statements made in this Annual Report include forward looking statements, such as statements with respect to our future financial performance, operating results, plans and objectives that involve risk and uncertainties. Forward-looking statements generally can be identified by the use of forward- looking terminology, such as “believe,” “expect,” “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 among other things: changes in general domestic and worldwide economic conditions; our ability to successfully develop and market new products; our reliance on and access to necessary intellectual 17


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    property; our ability to successfully integrate any acquired business; 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 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 Federal Securities law. 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 primary segments, Life Science and Clinical Diagnostics, with the mission to provide scientists with specialized tools needed for biological research and clinical diagnostics. We sell more than 8,000 products and services to a diverse client base comprised of scientific research, healthcare, education and government customers worldwide. 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. Because our customers require standardization for their experiments and test results, much of our revenues are recurring. We are impacted by the support of many governments for both research and healthcare. The current global economic outlook is becoming increasingly uncertain as the need to control government social spending by many governments limits opportunities for growth. Approximately 30% of our 2011 consolidated net sales are derived from the United States and approximately 70% are derived from international locations. The international sales are largely denominated in local currencies such as Euros, Swiss Franc, Japanese Yen, Singapore Dollar 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 as well as non-U.S. suppliers and from lower international operating expenses. In October 2011, we acquired all the issued and outstanding stock of QuantaLife, Inc. (QuantaLife). The fair value of the consideration as of the acquisition date was $179.4 million, which comprised of $150.3 million paid in cash at the closing date, a $5.0 million holdback of cash until the completion of certain post-closing matters, and $24.1 million in contingent consideration potentially payable to QuantaLife shareholders. The contingent consideration could reach $48 million upon the achievement of certain sales and development milestones. The pretax loss from operations of QuantaLife was $7.0 million for the period from acquisition (October 4, 2011) through December 31, 2011. These results of operations of QuantaLife are included in the results of operations of our Life Science segment. This transaction was accounted for as the acquisition of a business. Integrating the acquired QuantaLife business into Bio-Rad is expected to expand our current state-of-the-art methods of quantitative Polymerase Chain Reaction (PCR) and we believe it will complement Bio-Rad's existing amplification business. The determination of the fair value of net assets acquired of QuantaLife was based upon valuation information, estimates and assumptions available at October 4, 2011. We are still finalizing our analysis of a limited number of acquired tax attributes which could affect the fair values of certain deferred tax assets and goodwill. As a result, as of December 31, 2011, our accounting for the acquisition was preliminary. In January 2012, we purchased certain assets from a current raw materials supplier for approximately $15.5 million. The asset acquisition will be included in the Clinical Diagnostics segment's results of operations from the acquisition date and will be accounted for as a business combination. We believe this acquisition will allow us to secure the supply of critical raw materials and lower our overall costs in the Clinical Diagnostics segment. 18


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    The following shows cost of goods sold, gross profit, expense items and net income as a percentage of net sales: Year Ended December 31, 2011 2010 2009 Net sales 100.0% 100.0% 100.0% Cost of goods sold 43.2 43.4 44.0 Gross profit 56.8 56.6 56.0 Selling, general and administrative expense 33.6 33.0 33.7 Research and development expense 9.0 8.9 9.2 Net income attributable to Bio-Rad 8.6 9.6 8.1 We intend that the discussions of critical accounting policies and estimates and recent accounting pronouncements that follow will assist you in understanding how such principles, estimates and accounting pronouncements affect our financial condition and results of operations as well as significant factors that caused changes in our financial condition and results of operations for the years ended December 31, 2011 and 2010. Critical Accounting Policies and Estimates The accompanying discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles (GAAP). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and contingencies as of the date of the financial statements and reported amounts of revenues and expenses during the reporting periods. We evaluate our estimates on an on-going basis. We base our estimates on historical experience and on other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. However, future events may cause us to change our assumptions and estimates, which may require adjustment. Actual results could differ from these estimates. We have determined that for the periods reported in this Annual Report on Form 10-K the following accounting policies and estimates are critical in understanding our financial condition and results of operations. Accounting for Income Taxes. Management is required to make estimates related to our income tax provision in each of the jurisdictions in which we operate. This process involves estimating our current tax exposure together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included within our Consolidated Balance Sheets. Management then assesses the likelihood that the deferred tax assets will be recovered from future taxable income and to the extent management believes that recovery is not likely, a valuation allowance must be established. To the extent management establishes a valuation allowance or increases this allowance in a period, an increase to expense within the Provision for income taxes in the Consolidated Statements of Income may result. We recognize the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements on a particular tax position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. The amount of unrecognized tax benefits is adjusted as appropriate for changes in facts and circumstances, such as significant amendments to existing tax law, new regulations or interpretations by the taxing authorities, new information obtained during a tax examination, or resolution of an examination. We recognize both accrued interest and penalties, where appropriate, related to unrecognized tax benefits in income tax expense. Significant management judgment is required in determining the provision for income taxes, deferred tax assets and liabilities, and any valuation allowance recorded in connection with the deferred tax assets. We have recorded a valuation allowance of $48.9 million and $37.0 million as of December 31, 2011 and 2010, respectively, due to 19


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    uncertainties related to our ability to utilize some of the deferred tax assets, primarily consisting of certain foreign net operating losses carried forward. The valuation allowance is based on management’s current estimates of taxable income for the jurisdictions in which we operate and the period over which the deferred tax assets will be recoverable. In the event that actual results differ from these estimates, or these estimates are adjusted in future periods, an additional valuation allowance may need to be established, which would increase the tax provision, lowering income and impacting our financial position. Should realization of these deferred tax assets for which a valuation allowance has been provided occur, the provision for income taxes may decrease, raising income and positively impacting Bio-Rad’s financial position. Valuation of Goodwill and Long-lived Assets. Goodwill represents the excess of the cost over the fair value of net tangible and identifiable intangible assets of acquired businesses. Goodwill amounts are assigned to reporting units at the time of acquisition and are adjusted for any subsequent significant transfers of business between reporting units. We assess the impairment of goodwill annually in the fourth quarter or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. We perform the impairment tests of goodwill at our reporting unit level, which is one level below our reporting segments. The goodwill impairment test consists of a two-step process. The first step of the goodwill impairment test, used to identify potential impairment, compares the fair value of a reporting unit to its carrying value, including goodwill. If the fair value of the reporting unit exceeds its carrying amount, goodwill of the reporting unit is considered not impaired, and the second step of the impairment test is not required. The second step, if required, compares the implied fair value of the reporting unit goodwill with the carrying amount of that goodwill. The fair value of a reporting unit is allocated to all of the assets and liabilities of that unit (including any unrecognized intangible assets) as if the reporting unit had been acquired in a business combination and the fair value of the reporting unit was the price paid to acquire the reporting unit. If the carrying amount of the reporting unit's goodwill exceeds its implied fair value, an impairment charge is recognized in an amount equal to that excess. We use a projected discounted cash flow model to determine the fair value of a reporting unit. This discounted cash value method for determining goodwill may be different from the fair value that would result from an actual transaction between a willing buyer and a willing seller. Projections such as discounted cash flow models are inherently uncertain and accordingly, actual future cash flows may differ materially from projected cash flows. Management judgment is required in developing the assumptions for the discounted cash flow model. These assumptions include revenue growth rates, profit margins, future capital expenditures, working capital needs, expected foreign currency rates, discount rates and terminal values. We estimate future cash flows using current and longer-term high level financial forecasts. These forecasts take into account the current economic environment. The discount rates used are compiled using independent sources, current trends in similar businesses and other observable market data. Changes to these rates might result in material changes in the valuation and determination of the recoverability of goodwill. For example, an increase in the discount rate used to discount cash flows will decrease the computed fair value. In order to evaluate the sensitivity of the fair value calculations on the goodwill impairment test, we apply a 10% decrease to the fair value of each reporting unit. To validate the reasonableness of the reporting unit fair values, we reconcile the aggregate fair values of the reporting units to the enterprise market capitalization including an implied control premium. In performing the reconciliation we may, depending on the volatility of the market value of our stock price, use either the stock price on the valuation date or the average stock price over a range of dates around the valuation date. We compare the implied control premium to premiums paid in observable recent transactions of comparable companies to determine if the accumulated fair values of all the reporting units are reasonable. For purposes of recognition and measurement of an impairment loss, a long-lived asset or assets are grouped with other assets and liabilities at the lowest level for which identifiable cash flows are largely independent of the cash flows of other assets and liabilities. We assess the impairment of long-lived assets (including identifiable intangibles) whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors that we consider important that could trigger an impairment review include: • significant under-performance relative to expected, historical or projected future operating results; • significant changes in the manner of use of the long-lived assets, intangible assets or the strategy for our 20


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    overall business; • a current expectation that, more likely than not, a long-lived asset will be sold or otherwise disposed of before the end of its previously estimated useful life; and • significant negative industry, legal, regulatory or economic trends. When management determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the above indicators of impairment, we test for any impairment based on a projected undiscounted cash flow method. Projected future operating results and cash flows of the asset or asset group are used to establish the fair value used in evaluating the carrying value of long-lived and intangible assets. We estimate the future cash flows of the long-lived assets using current and long-term financial forecasts. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the undiscounted cash flows expected to result from the use and eventual disposition of the asset. If this is the case, an impairment loss would be recognized. The impairment loss recognized is the amount by which the carrying amount exceeds the fair value. In 2009, our reviews indicated an impairment charge of $3.8 million related to the developed technology intangible assets of certain product lines that were acquired in 2006. There were no impairment losses recorded in 2011 and 2010. Valuation of Inventories. We value inventory at the lower of the actual cost to purchase and/or manufacture the inventory, or the current estimated net realizable value of the inventory. We review inventory quantities on hand and reduce the cost basis of excess and obsolete inventory based primarily on an estimated forecast of product demand, production requirements and the quality, efficacy and potency of raw materials. This review is done on a quarterly basis or, if warranted by the circumstances, more frequently. In addition, our industry is characterized by technological change, frequent new product development and product obsolescence that could result in an increase in the amount of obsolete inventory quantities on hand. Our estimates of future product demand may prove to be inaccurate, and if too high, we may have overstated the carrying value of our inventory. In the future, if inventory is determined to be overvalued, we would be required to write down the value of inventory to market and recognize such costs in our cost of goods sold at the time of such determination. Therefore, although we make efforts to ensure the accuracy of our forecasts of future product demand and perform procedures to safeguard overall inventory quality, any significant unanticipated changes in demand, technological developments, regulations, storage conditions, or other economic or environmental factors affecting biological materials, could have a significant impact on the value of our inventory and reported results of operations. Valuation of Investments. We regularly review our investments for factors that may indicate that a decline in the fair value of an investment below its carrying value is other-than-temporary. Some factors considered in evaluating whether or not a decline in fair value is other-than-temporary include our ability and intent to retain the investment for a period of time sufficient to allow for a recovery in value, the duration and extent to which the fair value has been less than cost and the financial condition and prospects of the issuer. Such reviews are inherently uncertain in that the value of the investment may not fully recover or may decline further in future periods resulting in realized losses. Warranty Reserves. We warrant certain equipment against defects in design, materials and workmanship, generally for a period of one year. Upon delivery and on acceptance of that equipment, we establish, as part of cost of goods sold, a provision for the expected costs of such warranty repairs based on historical experience, specific warranty terms and customer feedback. A review is performed on a quarterly basis to assess the adequacy of our warranty reserve and it is adjusted if necessary. The warranty reserve is based on actual experience and expected future costs to be incurred. Should realized costs be higher than expected costs, cost of goods sold would be lower in the period of estimation and higher when realized. Allowance for Doubtful Accounts. We maintain an allowance for doubtful accounts for estimated losses resulting from the collectability of our customer accounts. The amount of the allowance is determined by analyzing known uncollectible accounts, the age of our receivables, economic conditions in the customers’ country or industry, historical losses and our customers’ general credit-worthiness. Amounts later determined and specifically identified to be uncollectible are charged or written off against this allowance. Uncertainty in the current economic 21


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    environment, if prolonged, could result in greater amounts becoming uncollectible in the future. Should the estimates of losses be higher than the actual uncollectible accounts, we would report lower profitability when the estimates are made and higher profitability when the receivable is collected. Litigation Accruals. We record as liabilities in our Consolidated Balance Sheets estimated amounts for claims that are probable and can be reasonably estimated. The likelihood of a material change in these estimated reserves is dependent on the possible outcome of settlement negotiations, regulatory or judicial review and the development of facts and circumstances in extended litigation which could change claims or assessments when both the amount and range of loss on some outstanding litigation is uncertain. We disclose in the footnotes of the financial statements when we are unable to make a reasonable estimate of a material liability that could result from unfavorable outcomes in litigation. As events occur, we will assess the potential liability related to our pending litigation and revise our estimates. Such revisions could materially impact our results of operations. Results of Operations -- Sales, Gross Margins and Expenses Net sales Net sales (sales) in 2011 increased to $2.07 billion from $1.93 billion in 2010, a sales increase of 7.6%. Excluding the impact of foreign currency, 2011 sales increased by approximately 3.1% compared to 2010. Currency neutral sales growth was achieved in many regions, except for Europe. The Life Science segment sales in 2011 were $694.7 million, an increase of 7.2% compared to 2010. On a currency neutral basis, sales increased 3.4% compared to 2010. Product groups showing growth included process chromatography media, imaging systems, amplification and electrophoresis. Currency neutral sales growth in the Life Science segment was primarily in the U.S., Latin America and the Pacific Rim. In many developed countries, constraints in government budgets have limited sales growth opportunities. The Clinical Diagnostics segment sales in 2011 were $1.36 billion, an increase of 7.8% compared to 2010. On a currency neutral basis, sales increased 2.9% compared to 2010. Clinical Diagnostics product lines generating growth were immunohematology, quality controls, BioPlex 2200, diabetes monitoring and clinical microbiology. Currency neutral sales growth was primarily in the Pacific Rim, partially offset by weaker sales in Europe due to spending constraints in several countries' national healthcare systems. Sales in 2010 increased 8.0% to $1.93 billion from $1.78 billion in 2009, with Biotest contributing approximately $56.1 million to the growth in sales. Foreign currency had minimal impact on total sales growth. Excluding the additional sales from the Biotest acquisition, 2010 sales grew by 4.8% on a currency neutral basis. Currency neutral sales growth, excluding Biotest, was achieved in all regions, but was primarily driven by growth in the Pacific Rim, Eastern Europe and Latin America. The Life Science segment sales in 2010 were $648.1 million, an increase of 2.6%, or 2.2% on a currency neutral basis, compared to 2009. Sales growth was primarily attributed to real-time PCR products and a new product line TC 10™ automated cell counter, partially offset by general market weakness, especially in Europe. Currency neutral sales growth in the Life Science segment was primarily in the Pacific Rim, Eastern Europe, Latin America and North America, while European sales declined. The Clinical Diagnostics segment reported sales in 2010 of $1.27 billion, an increase of 11.0% compared to 2009, with Biotest contributing approximately 4.9% to the sales growth. On a currency neutral basis, sales in 2010 increased 11.3% including Biotest compared to 2009. Clinical Diagnostics realized growth in its quality controls product line and in immunohematology (before the inclusion of Biotest), diabetes and BioPlex® 2200 instruments and reagents. Sales growth was primarily in the Pacific Rim, Eastern Europe and Latin America, and to a lesser extent North America. 22


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    Gross margin Consolidated gross margins were 56.8% in 2011 compared to 56.6% in 2010 and were relatively unchanged for both the Life Science segment and the Clinical Diagnostics segment. Consolidated gross margins were 56.6% in 2010 compared to 56.0% in 2009. Life Science segment gross margins in 2010 improved from 2009 by approximately 2.4%. The increase was primarily due to improved manufacturing overhead absorption, reduction in costs and a favorable product mix toward higher margin products. Clinical Diagnostics segment gross margins in 2010 decreased by approximately 0.4% from 2009. The Biotest acquisition had a negative impact on Clinical Diagnostics segment gross margins due to higher inventory values resulting from purchase accounting and overall lower margins than historically achieved by the segment. Partially offsetting this decrease in gross margins was a favorable settlement of intellectual property disputes and lower royalty expenses. Selling, general and administrative expense Consolidated selling, general and administrative expenses (SG&A) represented 33.6% of sales in 2011 compared to 33.0% of sales in 2010. Growth in SG&A was greater than the rate of sales growth. Increases were primarily driven by employee-related costs, our largest cost, professional services, bad debt provisions primarily associated with public agencies in southern Europe, facilities, travel, information technology and marketing. Consolidated SG&A represented 33.0% of sales in 2010 compared to 33.7% of sales in 2009. The growth rate in absolute SG&A spending was less than the rate of sales growth. Moderation in spending for employee related costs and third party commissions lowered the rate of SG&A spending to sales. Absolute dollar increases in SG&A were primarily in employee-related costs, travel and related costs, and professional services. Research and development expense Research and development expense increased to $186.4 million or 9.0% of sales in 2011 compared to $172.3 million or 8.9% of sales in 2010. Life Science segment research and development expense increased in 2011 from 2010 in part due to the acquisition of QuantaLife in October 2011. Life Science segment efforts were concentrated on genomics, proteomics and process chromatography applications. Clinical Diagnostics segment research and development expense increased in 2011 from 2010 with efforts concentrated on diabetes and immunohematology, and is focused mainly on the development and cost reduction of instruments. Research and development expense was $172.3 million in 2010, or 8.9% of sales, compared to $163.6 million or 9.2% of sales in 2009. Both the Life Science and Clinical Diagnostics segments research and development expense increased in absolute dollars, however as a percent of sales, Clinical Diagnostics segment expense decreased from 2009. Life Science segment efforts concentrated on genomics, proteomics process chromatography and food diagnostics applications. The majority of the Clinical Diagnostics segment increase was related to an additional emphasis in diabetes monitoring, clinical microbiology, expanded blood virus diagnostic tests and improved automation. Results of Operations – Non-operating Interest expense Interest expense in 2011 decreased 16.6% to $53.1 million compared to 2010 primarily due to the refinancing of a portion of our debt in December 2010 through January 2011, lowering our overall borrowing rate. The interest rates on our current borrowings for our $300.0 million of 8.0% Senior Subordinated Notes are fixed through 2016 at 8.0% and for our $425.0 million of 4.875% Senior Notes are fixed through 2020 at 4.875%. Interest expense in 2010 increased 35.5% to $63.7 million compared to 2009. The increase in interest expense in 2010 from 2009 was primarily due to the payment of a call premium and the expensing of unamortized debt issuance costs for the redemption of the $200.0 million of 6.125% Senior Subordinated Notes in December 2010, 23


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    and the interest associated with the $300.0 million of 8.0% Senior Subordinated Notes that were issued in May 2009. Our other principal debt obligation was the $225.0 million 7.5% Senior Subordinated Notes, which were redeemed in January 2011. Foreign currency exchange gains and losses Foreign currency exchange gains and losses consist 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. Net foreign currency exchange losses for 2011, 2010 and 2009 were $13.8 million, $3.9 million and $5.0 million, respectively. The 2011, 2010 and 2009 net foreign currency exchange losses were attributable to market volatility, increasing costs to hedge and the result of the estimating process inherent in the timing of shipments and payments of intercompany debt. In addition, approximately $4.6 million of the 2011 loss was attributable to entering into larger forward foreign exchange contracts than required. All years are affected by the economic hedging program we employ to hedge our intercompany receivables and payables. Other income and expense, net Other income and expense, net includes investment and dividend income, generally interest income on our cash and cash equivalents, short-term investments and long term marketable securities. Other (income) expense, net for in 2011 increased to $7.6 million income compared to $3.9 million income in 2010. The increase was primarily due to higher investment income, which included dividend income from holdings in Sartorius AG whose dividends almost doubled from 2010, and a settlement of a legal dispute in the third quarter of 2010, partially offset by higher other- than-temporary impairment losses on certain investments during 2011 than in 2010. Other income, net in 2010 was $3.9 million compared to $6.9 million in 2009. The decrease primarily resulted from non-recurring income of $4.6 million in 2009 related to the relief of a foreign non-income based tax obligation, partially offset by higher other-than-temporary impairment of investments in 2009 than in 2010. Effective tax rate Our effective tax rate was 24% and 15% in 2011 and 2010, respectively. The effective tax rates for both periods were lower than the U.S. statutory rate due to tax benefits for nontaxable dividend income, research and development tax credits, differences between U.S. and foreign statutory tax rates, and discrete events recorded in the period. The lower effective tax rate in 2010 was primarily due to a benefit of approximately $22.4 million that related to U.S. foreign tax credits associated with a $163.9 million distribution of earnings from our foreign affiliates to the U.S. Our effective tax rate was 15% and 20% in 2010 and 2009, respectively. The effective tax rates in 2010 and 2009 both reflected tax benefits for nontaxable dividend income, research and development tax credits, and differences between U.S. and foreign rates. The lower effective tax rate in 2010 was primarily due to a benefit of approximately $22.4 million that related to U.S. foreign tax credits associated with a $163.9 million distribution of earnings from our foreign affiliates to the U.S. Our effective tax rate may be impacted in the future, either favorably or unfavorably, by many factors including, but not limited to, changes to statutory tax rates, changes in tax laws or regulations, tax audits and settlements, and generation of tax credits. 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 24

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