BIO RAD LABORATORIES INC - 10-Q Quarterly Report

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

Form 10-Q

X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2002

OR

__ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from _______________to __________________.

Commission file number 1-7928

BIO-RAD LABORATORIES, INC.
(Exact name of registrant as specified in its charter)

Delaware 94-1381833
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)

1000 Alfred Nobel Drive, Hercules, California 94547
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code
(510) 724-7000

No Change
Former name, former address and former fiscal year, if changed since last
report.

Indicate by check whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days. Yes X No _____

Indicate the number of shares outstanding of each of the issuer's classes
of common stock ,as of the latest practicable date--
Shares Outstanding
Title of each Class at October 31, 2002

Class A Common Stock,
Par Value $0.0001 per share 20,364,367

Class B Common Stock,
Par Value $0.0001 per share 4,849,542

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

BIO-RAD LABORATORIES, INC.

Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)

Three Months Ended Nine Months Ended

1

BIO-RAD LABORATORIES, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share data)
(Unaudited)
September 30, December 31,

3

BIO-RAD LABORATORIES, INC.

Notes to Condensed Consolidated Financial Statements
(Unaudited)

1. BASIS OF PRESENTATION

The accompanying unaudited condensed consolidated financial
statements of Bio-Rad Laboratories, Inc. ("Bio-Rad" or the
"Company"), have been prepared in accordance with accounting
principles generally accepted in the United States of America and
reflect all adjustments which are, in the opinion of management,
necessary to fairly state the results of the interim periods
presented. All such adjustments are of a normal recurring
nature. Results for the interim period are not necessarily
indicative of the results for the entire year. The condensed
consolidated financial statements should be read in conjunction
with the notes to the consolidated financial statements contained
in the Company's Annual Report for the year ended December 31,
2001.

Beginning January 1, 2002, the Company has classified freight
costs related to shipping and handling as part of cost of goods
sold rather than in selling, general and administrative expense
as allowed by Financial Accounting Standards Board Emerging
Issues Task Force Issue No. 00-10, "Accounting for Shipping and
Handling Fees and Costs." Prior period shipping costs, as well
as certain other items, have been reclassified to conform to the
current year presentation.

Additionally, the Company has changed the presentation of the
income statement to eliminate the subtotal "Income from
Operations" and provide further clarification of items previously
grouped in "Other, net."

2. INVENTORIES

The principal components of inventories are as follows (in
thousands):
September 30, December 31,
2002 2001

Raw materials $ 40,449 $ 33,488
Work in process 32,273 28,715
Finished goods 87,961 76,976
-------- --------
$160,683 $139,179
======== ========

3. PROPERTY, PLANT AND EQUIPMENT

The principal components of property, plant and equipment are as
follows (in thousands):

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September 30, December 31,
2002 2001

Land and improvements $ 9,581 $ 9,658
Buildings and leasehold
improvements 78,135 75,231
Equipment 224,860 191,284
-------- --------
312,576 276,173
Accumulated depreciation (172,858) (143,199)
-------- --------
Net property, plant and equipment $139,718 $132,974
======== ========

4. GOODWILL

In June 2001, the Financial Accounting Standards Board (FASB)
issued Statement of Financial Accounting Standards (SFAS) No.
141, "Business Combinations", and SFAS No. 142, "Goodwill and
Other Intangible Assets." SFAS No. 141 requires that all
business combinations initiated after June 30, 2001 be accounted
for under the purchase method of accounting and addresses the
initial recognition and measurement of goodwill and other
intangible assets acquired in a business combination. SFAS No.
142 addresses the initial recognition and measurement of goodwill
and other intangible assets subsequent to their acquisition.
SFAS No. 142 provides that intangible assets with finite useful
lives will be amortized and that goodwill and intangible assets
with indefinite lives will not be amortized, but will be required
to be tested at least annually for impairment. The Company
adopted SFAS No. 142 on January 1, 2002. At that date, the
Company stopped the amortization of goodwill, with a net carrying
value of $77.7 million, and annual amortization of approximately
$8 million that had resulted from purchases of businesses
completed prior to the adoption of SFAS No. 141.

Had the Company been accounting for its goodwill under SFAS No.
142 for all periods presented, the Company's net income and net
income per share would have been as follows (in thousands):

Three Months Ended Nine Months Ended

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During the nine months ended September 30, 2002, no goodwill was
acquired, impaired or written off. An adjustment was made during
the third quarter to reflect the utilization of foreign tax loss
carryforwards acquired at the time the Company purchased Pasteur
Sanofi Diagnostics S.A. (PSD) in October 1999 which were not valued
at the acquisition date. The adjustment reduced Goodwill by $3.1
million.

5. EARNINGS PER SHARE

The Company calculates basic earnings per share (EPS) and diluted EPS
in accordance with SFAS No. 128, "Earnings per Share." Basic EPS is
computed by dividing net income (loss) by the weighted average number
of common shares outstanding for that period. Diluted EPS takes into
account the effect of dilutive instruments, such as stock options, and
uses the average share price for the period in determining the number
of common stock equivalents that are to be added to the weighted
average number of shares outstanding. Common stock equivalents are
excluded from the diluted earnings per share calculation if the effect
would be anti-dilutive.

Weighted average shares used for diluted earnings per share include
the dilutive effect of outstanding stock options of 911,000 and
824,000 shares for the three month periods ended September 30, 2002
and 2001, respectively. There were no anti-dilutive shares for the
three month periods ended September 30, 2002 and 2001.

Weighted average shares used for diluted earnings per share include
the dilutive effect of outstanding stock options of 928,000 and
742,000 shares for the nine month periods ended September 30, 2002 and
2001, respectively. There were no anti-dilutive shares for the nine
month periods ended September 30, 2002 and 2001.

6. ACQUISITIONS AND DISPOSITIONS

On June 28, 2002, the Company purchased for cash the microarray and
robotics technologies business of Virtek Biotech Inc., a subsidiary of
Virtek Vision International Inc. of Waterloo, Ontario, Canada. The
purchased business had annual sales of approximately $8.3 million
Canadian. Bio-Rad acquired the assets for approximately $7 million US
and will include these operations in its Life Science segment. The
Company has completed its evaluation of purchased assets and has not
assigned any value to goodwill. Assets purchased include amortizable
patents and other intangible assets totaling $4.1 million with a
weighted average amortization period of 5 years.

In the first quarter of 2001, the Company recorded a $4.5 million non-
cash pre-tax charge reflecting the estimated impact of its intent to
sell the spectroscopy instrument business to a new owner. In the
third quarter of 2001, the Company also had a write-down of $0.7
million on the value of a related production facility.

7. LONG-TERM DEBT

The Company repurchased, in the open market, $10.0 million (par value)
of the $150.0 million (par value) outstanding Senior Subordinated debt
during the third quarter of 2002. Originally issued in February 2000,
the debt is non-callable until February 2004. The price paid includes
interest to February 2004. Total interest, unamortized debt issue
cost and unamortized original issue discount expensed amounts to $1.6
million. This amount has been included in interest expense.

6

Subsequent to September 30, 2002 and to date, the Company repurchased
an additional $18.2 million (par value) at an expense including
interest (to February 2004), unamortized issue costs and unamortized
original issue discount of approximately $3 million.

8. FOREIGN EXCHANGE LOSSES

Foreign exchange losses include premiums and discounts on forward
foreign exchange contracts and mark-to-market adjustments on foreign
exchange contracts.

9. OTHER, NET

In the first quarter of 2002, the Company recorded a $2.0 million
non-cash pre-tax charge reflecting the write-down of the Company's
investment in Digilab, LLC. This reduced the investment value to
zero.

In the first three quarters of 2001, the Company recorded $4.8 million
in non-cash pre-tax charges to adjust the value of its investment in
Instrumentation Laboratory, S.p.A. based on discussions with
the investees management concerning its future capital structure.

10. COMPREHENSIVE INCOME

SFAS No. 130, "Reporting Comprehensive Income" requires disclosure
of total non-stockholder changes in equity, which include unrealized
gains and losses on securities classified as available-for sale
under SFAS No. 115 "Accounting for Certain Investments in Debt and
Equity Securities", foreign currency translation adjustments accounted
for under SFAS No. 52 "Foreign Currency Translation" and minimum
pension liability adjustments made pursuant to SFAS No. 87
"Employers' Accounting for Pensions."

The components of the Company's total comprehensive income were
(in thousands):

Three Months Ended Nine Months Ended

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11. SEGMENT INFORMATION

Information regarding industry segments for the three months ended
September 30, 2002 and 2001 is as follows (in thousands):

Life Clinical Other
Science Diagnostics Operations

Segment net sales 2002 $106,048 $116,757 $ 2,073
2001 $ 82,757 $ 97,474 $ 5,873

Segment profit(loss) 2002 $ 17,341 $ 12,921 $ (228)
2001 $ 10,344 $ 4,400 $(2,029)

Information regarding industry segments for the nine months ended
September 30, 2002 and 2001 is as follows (in thousands):

Life Clinical Other
Science Diagnostics Operations

Segment net sales 2002 $307,260 $336,344 $ 6,116
2001 $262,632 $302,748 $18,746

Segment profit(loss) 2002 $ 52,333 $ 33,496 $ (993)
2001 $ 44,619 $ 23,362 $(4,645)

Segment results are presented in the same manner as the Company
presents its operations internally to make operating decisions and
assess performance. Net corporate operating income (expense)
consists of receipts and expenditures that are not the primary
responsibility of segment operating management.

Interest expense is charged to segments based on the carrying amount
of inventory and receivables employed by that segment. The following
reconciles total segment profit to consolidated income before taxes
(in thousands):

Three Months Ended Nine Months Ended

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12. NEW FINANCIAL ACCOUNTING STANDARDS

In October 2001, the FASB issued SFAS No. 144, "Accounting for the
Impairment of Long-Lived Assets", which addresses financial
accounting and reporting for the impairment or disposal of long-
lived assets. SFAS No. 144 supersedes SFAS No. 121, "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets
to be Disposed of", but retains the fundamental provisions for
recognizing and measuring impairment of long-lived assets to be
held and used or disposed of by sale. The Statement also
supersedes the accounting and reporting provisions for the
disposal of a segment of a business, and eliminates the exception
to consolidation for a subsidiary for which control is likely to
be temporary. SFAS No. 144 eliminates the conflict between
accounting models for treating the dispositions of long-lived
assets that existed between SFAS No. 121 and the guidance for a
segment of a business accounted for as a discontinued operation by
adopting the methodology established in SFAS No. 121, and also
resolves implementation issues of SFAS No. 121. This Statement is
effective for fiscal years beginning after December 15, 2001. The
Company has adopted SFAS No. 144 for its fiscal year beginning
January 1, 2002. The adoption of SFAS No. 144 did not have an
impact on the financial position, results of operations or cash
flows of the Company.

In April 2002, the FASB issued SFAS No. 145, "Rescission of FASB
Statements 4, 44 and 64, Amendment to FASB Statement 13, and
Technical Corrections." One of the major changes of this
statement is to change the accounting for the classification of
gains and losses from the extinguishment of debt. The Company
adopted SFAS No. 145 as of September 1, 2002 and will follow APB
30, "Reporting the Results of Operations -- Reporting the Effects
of Disposal of a Segment of a Business, and Extraordinary, Unusual
and Infrequently Occurring Events and Transactions" in determining
whether such extinguishment of debt may be classified as
extraordinary.

In April 2002, the FASB issued SFAS No. 146, "Accounting for Costs
Associated with Exit or Disposal Activities", which addresses
accounting for restructuring and similar costs. SFAS 146
supersedes previous accounting guidance, principally Emerging
Issues Task Force Issue No. 94-3 "Liability Recognition for
Certain Employee Termination Benefits and Other Costs to Exit an
Activity (Including Certain Costs Incurred in a Restructuring)."
SFAS 146 requires that the liability for costs associated with an
exit cost or disposal activity be recognized when the liability is
incurred. Under Issue 94-3, a liability for an exit cost was
recognized at the date of the Company's commitment to an exit
plan. SFAS 146 also establishes that the liability should
initially be measured and recorded at fair value. Accordingly,
SFAS 146 may affect the timing of recognizing future restructuring
costs as well as the amounts recognized. The Company will adopt
the provisions of SFAS 146 for restructuring activities after
December 31, 2002.

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13. LEGAL PROCEEDINGS

The Company is party to various claims, legal actions and
complaints arising in the ordinary course of business. In the
opinion of management, the outcome of these claims, legal actions
and complaints will not have a material adverse effect on the
future results of operations or the financial position of the
Company.

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Item 2. Management's Discussion and Analysis of
Results of Operations and Financial Condition.

The following discussion should be read in conjunction with the
Company's unaudited financial statements and notes thereto
included elsewhere in this Form 10-Q and the Company's
Consolidated Financial Statements for the year ended December 31,
2001.

The following table shows gross profit and expense items as a
percentage of net sales:

Critical Accounting Policies

As previously disclosed in the Company's Annual Report on Form 10-
K for the year ended December 31, 2001, the Company has identified
accounting for income taxes, valuation of long-lived and
intangible assets and goodwill, and valuation of inventories as
the accounting policies critical to the operations of the Company.
For a full discussion of these policies, please refer to the Form
10-K.

Forward Looking Statements

Other than statements of historical fact, statements made in this
report include forward looking statements, such as statements with
respect to the Company's future financial performance, operating
results, plans and objectives. We have based these forward
looking statements on our current expectations and projections
about future events. However, actual results may differ
materially from those currently anticipated depending on a variety
of risk factors including among other things: our ability to
successfully develop and market new products; our reliance on and
access to necessary intellectual property; our substantial
leverage and ability to service our debt; competition in and
government regulation of the industries in which we operate; and
the monetary policies of various countries. We undertake no
obligation to publicly update or revise any forward looking
statements, whether as a result of new information, future events,
or otherwise.

The Company manufactures and supplies the life science research,
healthcare, analytical chemistry and other markets with a broad
range of products and systems used to separate complex chemical

11

and biological materials and to identify, analyze and purify their
components.

Three Months Ended September 30, 2002
Compared to Three Months Ended September 30, 2001

Corporate Results - Sales, Margins and Expenses

Net sales (sales) for the third quarter of 2002 were $224.9
million compared to $186.1 million in the third quarter of 2001,
an increase of 21%. The favorable impact from a weakening U.S.
dollar amounted to approximately 4% sales growth for the Company
as the Euro strengthened about 10% versus the dollar. The
divestiture of the Company's spectroscopy instrument product line
in October 2001 lowered reported sales growth by 3.2%. The growth
in the Life Science segment adjusting for the favorable impact
from currency translation was 22.7%. Life Science growth is
attributed to continuing demand for the Company's Bovine
Spongiform Encephalopathy (BSE) or "mad cow disease" test and for
the Company's proteomic and functional genomic tools. The sale of
large instruments remains flat when compared to the prior year.
Clinical Diagnostics growth of 17%, excluding the favorable impact
from currency translation, resulted from increased demand for the
Company's quality controls, autoimmune and diabetes product line
offerings.

Consolidated gross margins were 57.4% for the third quarter of
2002 compared to 56.3% for the third quarter of 2001 and 55.7% for
all of 2001. The Company's gross margin benefited from an
improved sales mix as consumables, which have higher gross margins
than equipment, comprised a larger percentage of total sales.
Additionally, the divestiture of the spectroscopy instrument
product line, whose margins were considerably less than the
Company's overall average, had a positive impact. Finally in Life
Science the weakening US dollar improves the margin on US
manufactured goods sold outside the US. Clinical Diagnostics
margins benefited from the above, excluding the divestiture.

Selling, general and administrative expense (SG&A) decreased to
32.6% of sales in the third quarter of 2002 from 33.8% of sales in
the third quarter of 2001. Both Life Science and Diagnostics grew
selling and marketing expenses at a rate slower than sales growth
for the quarter. The long-term goal for Bio-Rad remains a
consistent gradual reduction in SG&A spending as a percent of
sales.

Product research and development expense decreased slightly to
8.9% of sales compared to 9.9% in the prior-year period. The
current quarter benefited from lower external R&D expenses. This
spending is not reflective of any general trend only that current
efforts do not require the expenditures in this period. The mix
of spending changed slightly as Life Science increased the rate of
spending and Diagnostics decreased its rate of spending. The
Company plans to reinvest between 9% and 10% of sales in research
and development to continue to introduce new and enhanced
products.

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Corporate Results - Other Items

During the third quarter of 2002, the Company repurchased in the
open market $10.0 million (par value) of its Senior Subordinated
debt reducing the amount outstanding to $140.0 million (par
value). The debt, originally issued in February 2000, is non-
callable until February 2004. The price paid includes interest to
February 2004. The total amount of interest, unamortized debt
issue cost and unamortized original issue discount expensed
amounts to $1.6 million. This amount has been included in
interest expense. Subsequent to September 30, 2002 and to date,
the Company has redeemed an additional $18.2 million (par value)
at an expense including interest, unamortized issue costs and
unamortized discount, of approximately $3 million.

Foreign exchange losses increased by $1.2 million compared to the
prior-year period primarily as a result of losses recorded on the
books of the Company's Brazilian subsidiary. The Brazilian Real
declined by approximately 25% versus the dollar in the period and
a like amount versus the Euro. The cost of hedging the Company's
Brazilian exposure is extremely expensive and approximates the net
cash charge to revalue the Brazilian subsidiaries foreign
denominated payables.

The Company's effective tax rate was 37% for the third quarter of
2002 and 2001.

Nine Months Ended September 30, 2002
Compared to Nine Months Ended September 30, 2001

Corporate Results - Sales, Margins and Expenses

Net sales (sales) for the nine months ended 2002 were $649.7
million compared to $584.1 million for the first nine months of
2001, an increase of 11.2%. Adjusting for currency and
divestitures, sales growth from new and existing products was
14.0%. Sales have increased 16.6% in Life Science on a constant
currency basis. Clinical Diagnostics sales growth on a constant
currency basis was 10.8%. The growth in Life Science is
attributed to the continuing demand for the Company's BSE test,
consumable laboratory research products and functional genomic and
proteomic products. The growth in Clinical Diagnostics was from
products for quality controls, autoimmune testing and diabetes
monitoring. Foreign sales for the year-to-date 2002 have been
positively impacted by a U.S. dollar that is relatively weaker
than in the prior-year period. The net year-to-date positive
impact to total sales amounts to less than a 1% impact on sales
growth.

Consolidated gross margins were 57.4% for the year-to-date
September 30, 2002 compared to 55.3% for the same period of 2001
and 55.7% for all of 2001. The increased sales of consumable
laboratory products, functional genomic and proteomic products,

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and the BSE test have improved the overall Life Science gross
margin. Clinical Diagnostics margins have increased by less than
1%.

Selling, general and administrative expense have declined to 32.1%
of sales in the first nine months of 2002 from 32.3% of sales in
the first nine months of 2001. Overall, selling and marketing
expense grew at a rate similar to sales growth. In part this was
due to increased Life Science expenses for retaining and expanding
the Life Science food testing business and opportunities in
proteomics and genomics. Life Science has increased sales and
customer services to support these businesses faster than sales
growth in the current period. Clinical Diagnostics selling and
marketing grew at a rate near sales growth. General and
administrative expense grew at less than half the rate of sales
growth for the Company and lowered the overall rate of growth.

Product research and development expense increased 10% to $60.0
million or 9.2% of sales in the nine months to September 2002
compared to 9.3% of sales in the prior year. Spending increased
in Life Science in absolute dollars, while Clinical Diagnostics
spending remained nearly the same as in 2001. The Company plans
to reinvest between 9% and 10% of sales in research and
development going forward to support growth.

Corporate Results - Other Items

Interest expense remains virtually unchanged despite the reduction
in overall borrowings. This is brought about by the early
extinguishment of debt; the Senior Subordinated Notes, and the
Term Loan portion of the Senior Credit Facility. Interest expense
includes the following costs for retired debt; the write-off of
unamortized debt issue costs, original issue discount and interest
to February of 2004 on the Subordinated Notes which had a "no
call" feature to this date. The subordinated debentures
originally had a $150 million par value, and are due February
2007. The Term Loan was originally $100 million and called for
repayment over a five year period. The loan was repaid
approximately 30 months early.

Foreign exchange losses increased compared to the prior period
primarily as a result of losses recorded in the books of the
Company's Brazilian subsidiary and to a lesser extent its Russian
subsidiary. The Brazilian Real is extremely expensive to hedge,
as local borrowing rates approach 30% per annum. The Real has
declined 60% from January 1, 2002 versus the U.S. dollar. The
Company plans to take several actions to lower its overall
exposure but will not be able to eliminate the exposure. Foreign
exchange losses also include premiums and discounts for the
Company's hedging program. Other, net includes a $2.0 million
non-cash pre-tax expense reflecting impairment in the Company's
investment in Digilab LLC,which was booked in the first quarter of
2002.

The Company's effective tax rate was 35% for the first nine months

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of 2002 compared to 37% in the first nine months of 2001. For the
full year 2001, the effective rate was 32%. The rise to 35% from
32% reflects increased profitability in countries with higher tax
rates, current period local tax losses which do not provide a
consolidated tax benefit and the effect of proportionally less tax
credits for foreign sales and research and development, when
compared to taxable income.

Financial Condition

The Company, as of September 30, 2002, had available approximately
$100 million, or 100% of its principal revolving credit agreement
and $23 million under various foreign lines of credit. Cash and
cash equivalents available were $39.2 million. After September
2002, the Company bought approximately $18 million (par value) of
its Subordinated Debentures paying $20.9 million in cash to retire
this portion of the debt.

Consolidated accounts receivable increased by $6.9 million from
December 31, 2001 to September 30, 2002. The increase is due
exclusively to the strengthening of European and the Japanese
currencies. On a currency neutral basis, accounts receivables
have, declined in part, on better collections as average days
outstanding have dropped.

At September 30, 2002, consolidated net inventories increased by
$21.5 million from December 31, 2001. Approximately one third of
this increase is due to the strengthening of European and to a
lesser extent the Japanese currency against the U.S. dollar. The
acquisition of inventory related to the microarray product line
was $3 million. The remaining increase largely represents levels
necessary to meet customer demands for Life Science consumable
products and for recent new product launches. Inventory for the
Clinical Diagnostics controls business is characterized by long
lead times and large infrequent batch production which is
necessary to meet customer requirements. Bio-Rad management
regularly reviews inventory valuation for excess, obsolete and
slow moving products.

Net capital expenditures totaled $31.3 million for the first nine
months of 2002 compared to $32.1 million for the same period of
2001. Capital expenditures for the period include reagent rental
equipment placed with Clinical Diagnostic customers who then commit
to purchase the Company's diagnostic reagents for use. Other
expenditures represent the Company's investment in business systems
to standardize distribution software, data communication, production
equipment and improvements to production facilities. The Company
has begun construction of new facilities for manufacturing,
laboratory and general office use. These facilities are being
constructed on Company owned land in the business park where the
Corporate headquarters, Life Science and Diagnostics group
operations are now located. The estimated current cost of the
facility is approximately $25 million and it will take approximately
15 months to complete. Through September 2002, approximately $1
million has been capitalized for the project.

15

On June 28, 2002, the Company purchased for cash the microarray and
robotics technologies business of Virtek Biotech Inc., a subsidiary
of Virtek Vision International Inc. of Waterloo, Ontario, Canada.
The purchased business had annual sales of approximately $8.3
million Canadian. Bio-Rad acquired the assets for approximately $7
million US and will include these operations in its Life Science
segment. Assets purchased include amortizable patents and other
intangible assets totaling $4.1 million with a weighted average
amortization period of 5 years. No goodwill was recorded with
respect to the purchase.

The Company continues to review possible acquisitions to expand both
its Life Science and Diagnostics segments. The Company routinely
meets with the principals or brokers of the subject companies.
Currently no discussions involving a material acquisition have
progressed beyond the most initial phases. Should the Company make
a material acquisition it would most likely require an increase in
borrowed funds, further increasing its financial leverage.

Item 3. Quantitative and Qualitative Disclosures
About Market Risk

During the nine months ended September 30, 2002, there have been
no material changes from the disclosures about market risk
provided in the Company's Annual Report on Form 10-K for the year
ended December 31, 2001.

Item 4. Controls and Procedures

The Company's chief executive officer and its principal financial
officer after evaluating the effectiveness of the Company's
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-14(c) and 15-d-14(c)) as of a date within 90 days of
the filing date of the quarterly report (the "Evaluation Date")
have concluded that as of the Evaluation Date, the Company's
disclosure controls and procedures were adequate and effective to
ensure that material information relating to the Company and its
consolidated subsidiaries would be made known to them by others
within those entities during the period in which this quarterly
report was being prepared.

There were no significant changes in the Company's internal
controls or in other factors that could significantly affect the
Company's disclosure controls and procedures subsequent to the
Evaluation Date, nor any significant deficiencies or material
weaknesses in such disclosure controls and procedures requiring
corrective actions. As a result, no corrective actions were
taken.

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PART II. OTHER INFORMATION

Item 6. Exhibits and Reports on Form 8-K.

(a) Exhibits

4.1.3 Amendment dated as of August 9, 2002 to the Credit
Agreement dated as of September 30, 1999, among Bio-Rad
Laboratories, Inc., the lenders named therein, and Bank
One, N.A. as Agent.

99.1 Certification of Chief Executive Officer

99.2 Certificate of Principal Financial Officer

(b) Reports on Form 8-K

Bio-Rad filed a current report on form 8-K with the SEC on
July 10, 2002, announcing that it has selected Deloitte & Touche
LLP as its independent public accountants. Prior to this
selection, Arthur Andersen LLP was the Company's independent
public accountants.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereto duly authorized.

BIO-RAD LABORATORIES, INC.
(Registrant)

Date: November 13, 2002 /s/ Sanford S. Wadler
----------------------------------
Sanford S. Wadler, Vice President,
General Counsel and Secretary

Date: November 13, 2002 /s/ James R. Stark
----------------------------------
James R. Stark, Corporate Controller

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CERTIFICATIONS

I, David Schwartz, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Bio-Rad
Laboratories, Inc.

2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
quarterly report;

3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report
fairly present, in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:

a. designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated
subsidiaries, is made known to us by others within
those entities, particularly during the period in
which this quarterly report is being prepared;

b. evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c. presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the
equivalent functions);

a. all significant deficiencies in the design or
operation of internal controls which could

19

adversely affect the registrant's ability to
record, process, summarize and report financial
data and have identified for the registrant's
auditors any material weakness in internal
controls; and

b. any fraud, whether or not material, that involves
management or other employees who have a
significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have
indicated in this quarterly report whether or not there
were significant changes in internal controls or in
other factors that could significantly affect internal
controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.

Date: November 13, 2002 /s/ David Schwartz
----------------------
David Schwartz
Chief Executive Officer

20

I, James R. Stark, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Bio-Rad
Laboratories, Inc.

2. Based on my knowledge, this quarterly report does not contain
any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light
of the circumstances under which such statements were made,
not misleading with respect to the period covered by this
quarterly report;

3. Based on my knowledge, the financial statements, and other
financial information included in this quarterly report
fairly present, in all material respects the financial
condition, results of operations and cash flows of the
registrant as of, and for, the periods presented in this
quarterly report;

4. The registrant's other certifying officer and I are
responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules
13a-14 and 15d-14) for the registrant and we have:

a. designed such disclosure controls and procedures to
ensure that material information relating to the
registrant, including its consolidated
subsidiaries, is made known to us by others within
those entities, particularly during the period in
which this quarterly report is being prepared;

b. evaluated the effectiveness of the registrant's
disclosure controls and procedures as of a date
within 90 days prior to the filing date of this
quarterly report (the "Evaluation Date"); and

c. presented in this quarterly report our conclusions
about the effectiveness of the disclosure controls
and procedures based on our evaluation as of the
Evaluation Date;

5. The registrant's other certifying officer and I have
disclosed, based on our most recent evaluation, to the
registrant's auditors and the audit committee of the
registrant's board of directors (or persons performing the
equivalent functions);

a. all significant deficiencies in the design or
operation of internal controls which could
adversely affect the registrant's ability to
record, process, summarize and report financial

21

data and have identified for the registrant's
auditors any material weakness in internal
controls; and

b. any fraud, whether or not material, that involves
management or other employees who have a
significant role in the registrant's internal
controls; and

6. The registrant's other certifying officer and I have
indicated in this quarterly report whether or not there
were significant changes in internal controls or in
other factors that could significantly affect internal
controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard
to significant deficiencies and material weaknesses.

Date: November 13, 2002 /s/ James R. Stark
--------------------------
James R. Stark
Corporate Controller
Principal Financial Officer

22