UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 8-K

	
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
Date of Report:   October 28, 2021
(Date of earliest event reported)

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

	

Commission File Number: 1-7928

									
Delaware	 	94-1381833	
(State or other jurisdiction of incorporation)	 	(I.R.S. Employer Identification No.)	
 
1000 Alfred Nobel Dr.
Hercules, California 94547
(Address of principal executive offices, including zip code)
 
(510)724-7000
(Registrant’s telephone number, including area code)

	

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:	
		
☐	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)	
		
☐	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)	
		
☐	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))	
		
☐	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))	

					
Securities registered pursuant to Section 12(b) of the Act:	
					
Title of each class	 	Trading Symbol(s)	 	Name of each exchange on which registered	
Class A Common Stock, Par Value $0.0001 per share	 	BIO	 	New York Stock Exchange	
Class B Common Stock, Par Value $0.0001 per share	 	BIOb	 	New York Stock Exchange	

Indicate by check mark whether the registrant is an emerging growth company as deﬁned in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

	Emerging growth company	☐	
			
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   	☐	

ITEM 2.02    Results of Operations and Financial Condition

On October 28, 2021, Bio-Rad Laboratories, Inc. announced its financial results for the quarter ended September 30, 2021.  A copy of the press release is furnished as Exhibit 99.1 to this report.

In accordance with General Instruction B.2 of Form 8-K, the information in Item 2.02 of this Current Report on Form 8-K, including Exhibit 99.1 attached hereto, shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

ITEM 9.01    Financial Statements and Exhibits
									
Exhibit
Number 	 	Description	
99.1 	 	Press release of Bio-Rad Laboratories, Inc. dated October 28, 2021	
104.1		Cover Page Interactive Data File - the cover page iXBRL tags are embedded within the Inline XBRL document	

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 hereunto duly authorized.

 	 		BIO-RAD LABORATORIES, INC.	
 	 		 		
Date:	October 28, 2021		By:	/s/ Ilan Daskal	
 	 		 	Ilan Daskal	
 	 		 	Executive Vice President and Chief Financial Officer	

Exhibit 99.1

Press Release

Bio-Rad Reports Third-Quarter 2021 Financial Results

HERCULES, Calif.–October 28, 2021–Bio-Rad Laboratories, Inc. (NYSE: BIO and BIOb), a global leader of life science research and clinical diagnostic products, today announced financial results for the third quarter ended September 30, 2021.

Third-quarter 2021 net sales were $747.0 million, an increase of 15.4 percent compared to $647.3 million reported for the third quarter of 2020. On a currency-neutral basis, quarterly sales increased 13.8 percent compared to the same period in 2020. Third-quarter gross margin was 58.6 percent compared to 56.7 percent during the third quarter in 2020.

Life Science segment net sales for the third quarter were $373.5 million, an increase of 15.3 percent compared to the same period in 2020. On a currency-neutral basis, Life Science segment sales increased by 13.9 percent compared to the same quarter in 2020. Currency-neutral sales growth was primarily attributed to sales of our Droplet Digital PCR® and Process Media product lines, as well as back royalties from a legal settlement. On a geographic basis, Life Science currency-neutral year-over-year sales grew across the Americas and Asia but declined in Europe. Excluding COVID19-related sales, European region revenue posted a double-digit percent increase from the year ago period.

Clinical Diagnostics segment net sales for the third quarter were $372.2 million, an increase of 15.5 percent compared to the same period in 2020. On a currency-neutral basis, net sales increased 13.7 percent versus the same quarter last year. Currency-neutral sales were up for all product lines and across all regions, primarily driven by higher utilization in lab operations as businesses recover from the COVID-19 pandemic.

Income from operations during the third quarter of 2021 was $156.8 million versus $109.6 million during the same quarter last year.

Net income for the third quarter of 2021 was $3,928.0 million, or $129.96 per share on a diluted basis, versus $1,314.8 million, or $43.64 per share on a diluted basis, during the same period in 2020. Net income for the third quarter of 2021 and 2020 was impacted by the recognition of changes in the fair market value of equity securities, primarily related to the holdings of our investment in Sartorius AG. The effective tax rate for the third quarter of 2021 was 21.8 percent, compared to 21.9 percent for the same period in 2020. The tax rates for both periods were driven by the large unrealized gain in equity securities.

“We are pleased with our performance in the third quarter, which reflected strength across many product lines,” said Norman Schwartz, Bio-Rad President and Chief Executive Officer. “During the quarter, demand continued for products associated with COVID-19 testing and research, though at a more moderate level,” he said.

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GAAP Results	
	Q3 2021	Q3 2020	
Revenue (millions)	$	747.0 		$	647.3 		
Gross margin	58.6 	%	56.7 	%	
Operating margin	21.0 	%	16.9 	%	
Net income (millions)	$	3,928.0 		$	1,314.8 		
Income per diluted share	$	129.96 		$	43.64 		
	
Non-GAAP Results	
	Q3 2021	Q3 2020	
Revenue (millions)	$	715.2 		$	647.3 		
Gross margin	57.9 	%	57.5 	%	
Operating margin	19.4 	%	18.8 	%	
Net income (millions)	$	112.2 		$	90.3 		
Income per diluted share	$	3.71 		$	3.00 		

A reconciliation between GAAP operating results and non-GAAP operating results is provided following the financial statements that are part of this press release. Non-GAAP adjustments include amortization of purchased intangibles; acquisition-related expenses and benefits; restructuring, impairment charges and valuation changes in equity-owned securities; gains and losses on equity-method investments; significant litigation charges or benefits and legal costs; and discrete income tax events and the income tax effect on these non-GAAP adjustments.

Non-GAAP net income and non-GAAP diluted income per share (non-GAAP EPS) are non-GAAP measures that exclude certain items detailed later in this press release under the heading “Non-GAAP Reporting.”

Non-GAAP net income for the third quarter of 2021 was $112.2 million, or $3.71 per share on a diluted basis, compared to $90.3 million, or $3.00 per share on a diluted basis, during the same period in 2020.

The non-GAAP effective tax rate for the third quarter of 2021 was 18.0 percent, compared to 22.5 percent for the same period in 2020. The lower rate in 2021 was driven by the geographic mix of earnings. In addition, the effective tax rate was lower as a result of an increase in compensation related tax deductions.

The following table represents a reconciliation of Bio-Rad’s reported net income and diluted income per share to non-GAAP net income and non-GAAP diluted income per share for the three and nine months ended September 30, 2021 and 2020:

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		Three Months Ended		Nine Months Ended	
	(in thousands, except per share data)	September 30,		September 30,	
		2021		2020		2021		2020	
GAAP net income	$	3,928,033 			$	1,314,824 			$	5,819,561 			$	2,967,165 		
	Legal settlements	(28,083)			— 			(28,619)			— 		
	Amortization of purchased intangibles	7,097 			7,163 			21,032 			20,257 		
	Legal matters	2,325 			5,977 			15,501 			10,395 		
	Acquisition related costs (benefits)	— 			165 			(40)			(837)		
	Restructuring costs (benefits)	15 			(1,111)			67,799 			(827)		
	Valuation gain on equity-owned securities	(4,868,659)			(1,580,350)			(7,078,753)			(3,591,509)		
	Loss on equity-method investments	1,899 			183 			5,579 			2,634 		
	Other non-recurring items	— 			— 			— 			(11,680)		
	Income tax effect on non-GAAP adjustments	1,069,577 			343,401 			1,554,100 			800,631 		
Non-GAAP net income	$	112,204 			$	90,252 			$	376,160 			$	196,229 		
									
GAAP diluted income per share	$	129.96 			$	43.64 			$	192.76 			$	98.46 		
Non-GAAP diluted income per share	$	3.71 			$	3.00 			$	12.46 			$	6.51 		

On a reported basis, net sales for the first three quarters of 2021 increased 24.7 percent to $2,189.8 million compared to $1,755.8 million for the same period in 2020. On a currency-neutral basis, net sales grew 21.2 percent.

Year-to-date net income for 2021 was $5,819.6 million, or $192.76 per share on a fully diluted basis, compared to $2,967.2 million, or $98.46 per share during the same period in 2020. The COVID-19 pandemic positively impacted overall results for the first three quarters of the year. On a non-GAAP basis net income for the first three quarters of 2021 was $376.2 million, or $12.46 per share, compared to $196.2 million, or $6.51 per share during the same period in 2020.

“Throughout the year we adapted well to challenges posed by the COVID-19 pandemic, supporting our customers and ensuring the safety of our employees while continuing to make progress on our core strategies,” Mr. Schwartz said. “As we head into the end of 2021, we will continue to build on the progress we’ve made during the first three quarters and expect to generate improved operating profit over 2020,” he added.

2021 Financial Outlook
For the full year 2021, the company has updated its guidance and now anticipates non-GAAP currency-neutral revenue growth between 12 to 13 percent and an estimated non-GAAP operating margin of approximately 19.5 percent. Management will discuss this outlook in greater detail on the third-quarter 2021 financial results conference call.

Use of Non-GAAP Reporting and Currency-Neutral
In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including non-GAAP net income and non-GAAP EPS, which exclude amortization of acquisition-related intangible assets, certain acquisition-related expenses and benefits, restructuring charges, asset impairment charges, valuation changes of equity-owned securities, gains and losses on equity-method investments, and significant legal-related charges or benefits and associated legal costs. Non-GAAP net income and non-GAAP EPS also exclude certain other gains and losses that are either isolated or cannot be expected to occur again with any predictability, income tax provisions/benefits related to the previous items, and significant discrete tax
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events. We exclude the above items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods.

We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, forecasting and planning for future periods, and determining payments under compensation programs. We consider the use of the non-GAAP measures to be helpful in assessing the performance of the ongoing operation of our business. We believe that disclosing non-GAAP financial measures provides useful supplemental data that, while not a substitute for financial measures prepared in accordance with GAAP, allows for greater transparency in the review of our financial and operational performance. We also believe that disclosing non-GAAP financial measures provides useful information to investors and others in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies. More specifically, management adjusts for the excluded items for the following reasons:

Amortization of purchased intangible assets: we do not acquire businesses and assets on a predictable cycle. The amount of purchase price allocated to purchased intangible assets and the term of amortization can vary significantly and are unique to each acquisition or purchase. We believe that excluding amortization of purchased intangible assets allows the users of our financial statements to better review and understand the historic and current results of our operations, and also facilitates comparisons to peer companies.

Acquisition-related expenses and benefits: we incur expenses or benefits with respect to certain items associated with our acquisitions, such as transaction costs, professional fees for assistance with the transaction; valuation or integration costs; changes in the fair value of contingent consideration, gain or loss on settlement of pre-existing relationships with the acquired entity; or adjustments to purchase price. We exclude such expenses or benefits as they are related to acquisitions and have no direct correlation to the operation of our on-going business.

Restructuring, impairment charges and valuation changes in equity-owned securities and gains and losses on equity-method investments: we incur restructuring and impairment charges on individual or groups of employed assets and charges and benefits arising from valuation changes in equity-owned securities and gains and losses on equity-method investments, which arise from unforeseen circumstances and/or often occur outside of the ordinary course of our on-going business. Although these events are reflected in our GAAP financials, these unique transactions may limit the comparability of our on-going operations with prior and future periods.

Significant litigation charges or benefits and legal costs: we may incur charges or benefits as well as legal costs in connection with litigation and other contingencies unrelated to our core operations. We exclude these charges or benefits, when significant, as well as legal costs associated with significant legal matters, because we do not believe they are reflective of on-going business and operating results.

Income tax expense: we estimate the tax effect of the excluded items identified above to determine a non-GAAP annual effective income tax rate applied to the pretax amount in order to calculate the non-GAAP provision for income taxes. We also adjust for items for which the nature and/or tax jurisdiction requires the application of a specific tax rate or treatment.

From time to time in the future, there may be other items excluded if we believe that doing so is consistent with the goal of providing useful information to investors and management.
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Percentage sales growth in currency-neutral amounts are calculated by translating prior period sales in each local currency using the current period’s monthly average foreign exchange rates for that currency and comparing that to current period sales.

There are limitations in using non-GAAP financial measures because the non-GAAP financial measures are not prepared in accordance with generally accepted accounting principles and may be different from non-GAAP financial measures used by other companies. The non-GAAP financial measures are limited in value because they exclude certain items that may have a material impact on our reported financial results. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the directly comparable financial measures prepared in accordance with GAAP in the United States. Investors should review the reconciliation of the non-GAAP financial measures to their most directly comparable GAAP financial measures as provided in the tables accompanying this press release.

Conference Call and Webcast
Management will discuss third-quarter ended September 30, 2021 results in a conference call at 2 PM Pacific Time (5 PM Eastern Time) October 28, 2021. To listen, call 844-200-6205 within the U.S. or 929-526-1599 outside the U.S., access code: 535686. You may also listen to the conference call live via a webcast that is available on the “Investor Relations” section of our website under “Quarterly Results” at
bio-rad.com. The webcast will be available for up to a year.

BIO-RAD and DROPLET DIGITAL PCR are trademarks of Bio-Rad Laboratories, Inc.
in certain jurisdictions.

About Bio-Rad
Bio-Rad Laboratories, Inc. (NYSE: BIO and BIOb) is a global leader in developing, manufacturing, and marketing a broad range of innovative products for the life science research and clinical diagnostic markets. With a focus on quality and customer service for over 65 years, our products advance the discovery process and improve healthcare. Our customers are university and research institutions, hospitals, public health and commercial laboratories, biotechnology and pharmaceutical companies, as well as applied laboratories that include food safety and environmental quality. Founded in 1952, Bio-Rad is based in Hercules, California, and has a global network of operations with approximately 7,800 employees worldwide. Bio-Rad had revenues exceeding $2.5 billion in 2020. Please visit bio-rad.com for further information.

This release may be deemed to contain certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements we make regarding estimated future financial performance or results; anticipating non-GAAP currency-neutral revenue growth of between 12 to 13 percent and an estimated non-GAAP operating margin of approximately 19.5 percent for the full year 2021; continuing to build on the progress we’ve made during the first three quarters as we head into the end of 2021; and expecting to generate improved operating profit over 2020. Forward-looking statements generally can be identified by the use of forward-looking terminology such as, "anticipate," "estimate," "expect," "continue," "believe," "will," "project," "assume," "may," "intend," or similar expressions or the negative of those terms or expressions, although not all forward-looking statements contain these words. 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. These risks and uncertainties include the duration, severity and impact of the COVID-19 pandemic, global economic conditions, our ability to develop and market new or improved
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products, our ability to compete effectively, foreign currency exchange fluctuations, supply chain issues, reductions in government funding or capital spending of our customers, international legal and regulatory risks, product quality and liability issues, our ability to integrate acquired companies, products or technologies into our company successfully, changes in the healthcare industry, and natural disasters and other catastrophic events beyond our control. For further information regarding the Company's risks and uncertainties, please refer to the "Risk Factors" and "Management’s Discussion and Analysis of Financial Condition and Results of Operations" in the Company's public reports filed with the Securities and Exchange Commission (the "SEC"), including the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2020, and its Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2021 to be filed with the SEC. The Company cautions you not to place undue reliance on forward-looking statements, which reflect an analysis only and speak only as of the date hereof. Bio-Rad Laboratories, Inc. disclaims any obligation to update these forward-looking statements.

Investor Contact:
Edward Chung, Vice President, Investor Relations
510-741-6577
ir@bio-rad.com

Media Contact:
Tina Cuccia, Manager, Corporate Communications
510-741-6063
tina_cuccia@bio-rad.com
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Bio-Rad Laboratories, Inc.
Condensed Consolidated Statements of Income
(In thousands, except per share data)
(Unaudited)

	Three Months Ended		Nine Months Ended	
	September 30,		September 30,	
 	2021		2020		2021		2020	
Net sales	$	747,049 			$	647,263 			$	2,189,776 			$	1,755,787 		
Cost of goods sold	309,614 			279,952 			950,116 			778,120 		
Gross profit	437,435 			367,311 			1,239,660 			977,667 		
Selling, general and administrative expense	216,150 			198,165 			655,428 			581,119 		
Research and development expense	64,481 			59,546 			201,784 			160,833 		
	
Income from operations	156,804 			109,600 			382,448 			235,715 		
Interest expense	426 			5,728 			1,187 			17,158 		
Foreign currency exchange losses, net	2,232 			776 			542 			2,478 		
Change in fair market value of equity securities	(4,868,659)			(1,580,350)			(7,078,753)			(3,591,509)		
Other expense (income), net	579 			(1,015)			(16,732)			(21,517)		
Income before income taxes	5,022,226 			1,684,461 			7,476,204 			3,829,105 		
Provision for income taxes	(1,094,193)			(369,637)			(1,656,643)			(861,940)		
Net income	$	3,928,033 			$	1,314,824 			$	5,819,561 			$	2,967,165 		
								
Basic earnings per share:								
Net income per basic share	$	131.75 			$	44.24 			$	195.29 			$	99.75 		
Weighted average common shares - basic	29,814 			29,721 			29,800 			29,746 		
								
Diluted earnings per share:								
Net income per diluted share	$	129.96 			$	43.64 			$	192.76 			$	98.46 		
Weighted average common shares - diluted	30,224 			30,128 			30,190 			30,137 		

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Bio-Rad Laboratories, Inc.
Condensed Consolidated Balance Sheets
(In thousands)

	September 30,
2021		December 31,
2020	
	 (Unaudited)			
Current assets:			 	
Cash and cash equivalents	$	859,902 			$	662,205 		
Short-term investments	482,756 			334,473 		
Accounts receivable, net	417,714 			419,424 		
Inventories, net	588,911 			622,253 		
Other current assets	117,003 			101,480 		
        Total current assets	2,466,286 			2,139,835 		
				
Property, plant and equipment, net	476,648 			491,371 		
Operating lease right-of-use assets	204,191 			202,136 		
Goodwill, net	291,916 			291,916 		
Purchased intangibles, net	177,073 			199,497 		
Other investments	16,230,635 			9,561,140 		
Other assets	106,631 			86,723 		
Total assets	$	19,953,380 			$	12,972,618 		
				
Current liabilities:	 		 	
Accounts payable, accrued payroll and employee benefits	$	380,344 			$	362,326 		
Current maturities of long-term debt	1,739 			1,798 		
Income and other taxes payable	54,050 			57,335 		
Other current liabilities	213,783 			210,077 		
        Total current liabilities	649,916 			631,536 		
				
Long-term debt, net of current maturities	10,645 			12,258 		
Other long-term liabilities	3,960,441 			2,448,884 		
Total liabilities	4,621,002 			3,092,678 		
				
Total stockholders’ equity	15,332,378 			9,879,940 		
Total liabilities and stockholders’ equity	$	19,953,380 			$	12,972,618 		

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Bio-Rad Laboratories, Inc.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(Unaudited)
												
 	Nine Months Ended	
 	September 30,	
 	2021		2020	
Cash flows from operating activities:	 		 	
Cash received from customers	$	2,177,199 			$	1,741,431 		
Cash paid to suppliers and employees	(1,597,938)			(1,406,427)		
Interest paid, net	(1,848)			(11,066)		
Income tax payments, net	(103,902)			(51,539)		
Other operating activities	25,086 			18,195 		
Net cash provided by operating activities	498,597 			290,594 		
Cash flows from investing activities:				
Payments for acquisitions	— 			(96,655)		
Other investing activities	(229,954)			86,514 		
Net cash used in investing activities	(229,954)			(10,141)		
Cash flows from financing activities:	 		 	
Payments on long-term borrowings	(1,645)			(1,780)		
Other financing activities	(58,419)			(99,377)		
Net cash used in financing activities	(60,064)			(101,157)		
Effect of foreign exchange rate changes on cash	(11,174)			3,154 		
Net increase in cash, cash equivalents, and restricted cash	197,405 			182,450 		
Cash, cash equivalents, and restricted cash at beginning of period	667,115 			662,651 		
Cash, cash equivalents, and restricted cash at end of period	$	864,520 			$	845,101 		
				
Reconciliation of net income to net cash provided by operating activities:	 		 	
Net income	$	5,819,561 			$	2,967,165 		
Adjustments to reconcile net income to net cash provided by operating activities:				
        Depreciation and amortization	100,075 			101,938 		
        Reduction in the carrying amount of right-of-use assets	29,311 			27,694 		
        Changes in working capital	(14,538)			(44,360)		
        Other	(5,435,812)			(2,761,843)		
Net cash provided by operating activities	$	498,597 			$	290,594 		
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Bio-Rad Laboratories, Inc.
Reconciliation of GAAP financial measures to non-GAAP financial measures
(In thousands, except per share data)
(Unaudited)

In addition to the financial measures prepared in accordance with generally accepted accounting principles (GAAP), we use certain non-GAAP financial measures, including non-GAAP net income and non-GAAP diluted income per share (non-GAAP EPS), which exclude amortization of acquisition-related intangible assets; certain acquisition-related expenses and benefits; restructuring charges; asset impairment charges; valuation changes of equity-owned securities; gains and losses on equity-method investments; and significant legal-related charges or benefits and associated legal costs. Non-GAAP net income and non-GAAP EPS also exclude certain other gains and losses that are either isolated or cannot be expected to occur again with any predictability, tax provisions/benefits related to the previous items, and significant discrete tax events. We exclude the above items because they are outside of our normal operations and/or, in certain cases, are difficult to forecast accurately for future periods.

We utilize a number of different financial measures, both GAAP and non-GAAP, in analyzing and assessing the overall performance of our business, in making operating decisions, forecasting and planning for future periods, and determining payments under compensation programs. We consider the use of the non-GAAP measures to be helpful in assessing the performance of the ongoing operation of our business. We believe that disclosing non-GAAP financial measures provides useful supplemental data that, while not a substitute for financial measures prepared in accordance with GAAP, allows for greater transparency in the review of our financial and operational performance. We also believe that disclosing non-GAAP financial measures provides useful information to investors and others in understanding and evaluating our operating results and future prospects in the same manner as management and in comparing financial results across accounting periods and to those of peer companies.
																																																
	Three Months Ended				Three Months Ended				Nine Months Ended				Nine Months Ended			
	September 30, 2021		% of revenue		September 30, 2020		% of revenue		September 30, 2021		% of revenue		September 30, 2020		% of revenue	
																
GAAP net sales	$	747,049 					$	647,263 					$	2,189,776 					$	1,755,787 				
Legal settlements	(31,843)					— 					(31,843)					— 				
Non-GAAP net sales	$	715,206 					$	647,263 					$	2,157,933 					$	1,755,787 				
																
GAAP cost of goods sold	$	309,614 					$	279,952 					$	950,116 					$	778,120 				
Amortization of purchased intangibles	(4,678)					(4,841)					(13,903)					(13,700)				
Legal settlements	(4,071)					— 					(3,535)					— 				
	
Restructuring benefits (costs)	(52)					237 					(25,241)					1,705 				
Non-GAAP cost of goods sold	$	300,813 					$	275,348 					$	907,437 					$	766,125 				

GAAP gross profit	$	437,435 			58.6%		$	367,311 			56.7%		$	1,239,660 			56.6%		$	977,667 			55.7%	
Amortization of purchased intangibles	4,678 					4,841 					13,903 					13,700 				
Legal settlements	(27,772)					— 					(28,308)					— 				
	
Restructuring (benefits) costs	52 					(237)					25,241 					(1,705)				
Non-GAAP gross profit	$	414,393 			57.9%		$	371,915 			57.5%		$	1,250,496 			57.9%		$	989,662 			56.4%	

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GAAP selling, general and administrative expense	$	216,150 					$	198,165 					$	655,428 					$	581,119 				
Amortization of purchased intangibles	(2,419)					(2,322)					(7,129)					(6,557)				
Legal matters	(2,325)					(5,977)					(15,501)					(10,395)				
Acquisition related benefits (costs) (1)	— 					(165)					40 					837 				
Restructuring benefits (costs)	299 					815 					(27,507)					(1,992)				
Non-GAAP selling, general and administrative expense	$	211,705 					$	190,516 					$	605,331 					$	563,012 				

GAAP research and development expense	$	64,481 					$	59,546 					$	201,784 					$	160,833 				
	
Restructuring benefits (costs)	(262)					59 					(15,051)					1,114 				
Non-GAAP research and development expense	$	64,219 					$	59,605 					$	186,733 					$	161,947 				

GAAP income from operations	$	156,804 			21.0%		$	109,600 			16.9%		$	382,448 			17.5%		$	235,715 			13.4%	
Legal settlements	(27,772)					— 					(28,308)					— 				
Amortization of purchased intangibles	7,097 					7,163 					21,032 					20,257 				
Legal matters	2,325 					5,977 					15,501 					10,395 				
Acquisition related (benefits) costs (1)	— 					165 					(40)					(837)				
Restructuring (benefits) costs	15 					(1,111)					67,799 					(827)				
Non-GAAP income from operations	$	138,469 			19.4%		$	121,794 			18.8%		$	458,432 			21.2%		$	264,703 			15.1%	

GAAP change in fair market value of equity securities	$	(4,868,659)					$	(1,580,350)					$	(7,078,753)					$	(3,591,509)				
Valuation (loss) gain on equity-owned securities	4,868,659 					1,580,350 					7,078,753 					3,591,509 				
Non-GAAP change in fair market value of equity securities	$	— 					$	— 					$	— 					$	— 				

GAAP other (income) expense, net	$	579 					$	(1,015)					$	(16,732)					$	(21,517)				
(Loss) gain on equity-method investments	(1,899)					(183)					(5,579)					(2,634)				
Legal settlements	311 					— 					311 					— 				
Other non-recurring items (3)	— 					— 					— 					11,680 				
Non-GAAP other (income) expense, net	$	(1,009)					$	(1,198)					$	(22,000)					$	(12,471)				

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GAAP income before income taxes	$	5,022,226 					$	1,684,461 					$	7,476,204 					$	3,829,105 				
Legal settlements	(28,083)					— 					(28,619)					— 				
Amortization of purchased intangibles	7,097 					7,163 					21,032 					20,257 				
Legal matters	2,325 					5,977 					15,501 					10,395 				
Acquisition related (benefits) costs (1)	— 					165 					(40)					(837)				
Restructuring (benefits) costs	15 					(1,111)					67,799 					(827)				
Valuation loss (gain) on equity-owned securities	(4,868,659)					(1,580,350)					(7,078,753)					(3,591,509)				
Loss (gain) on equity-method investments	1,899 					183 					5,579 					2,634 				
Other non-recurring items (3)	— 					— 					— 					(11,680)				
Non-GAAP income before income taxes	$	136,820 					$	116,488 					$	478,703 					$	257,538 				

GAAP provision for income taxes	$	(1,094,193)					$	(369,637)					$	(1,656,643)					$	(861,940)				
Income tax effect of non-GAAP adjustments (2)	1,069,577 					343,401 					1,554,100 					800,631 				
Non-GAAP provision for income taxes	$	(24,616)					$	(26,236)					$	(102,543)					$	(61,309)				

																																																
GAAP net income	$	3,928,033 			525.8%		$	1,314,824 			203.1%		$	5,819,561 			265.8%		$	2,967,165 			169.0%	
Legal settlements	(28,083)					— 					(28,619)					— 				
Amortization of purchased intangibles	7,097 					7,163 					21,032 					20,257 				
Legal matters	2,325 					5,977 					15,501 					10,395 				
Acquisition related (benefits) costs (1)	— 					165 					(40)					(837)				
Restructuring (benefits) costs	15 					(1,111)					67,799 					(827)				
Valuation loss (gain) on equity-owned securities	(4,868,659)					(1,580,350)					(7,078,753)					(3,591,509)				
Loss (gain) on equity-method investments	1,899 					183 					5,579 					2,634 				
Other non-recurring items (3)	— 					— 					— 					(11,680)				
Income tax effect of non-GAAP adjustments (2)	1,069,577 					343,401 					1,554,100 					800,631 				
Non-GAAP net income	$	112,204 			15.7%		$	90,252 			13.9%		$	376,160 			17.4%		$	196,229 			11.2%	

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GAAP diluted income per share	$	129.96 					$	43.64 					$	192.76 					$	98.46 				
Legal settlements	(0.93)					— 					(0.95)					— 				
Amortization of purchased intangibles	0.23 					0.24 					0.70 					0.67 				
Legal matters	0.08 					0.20 					0.51 					0.34 				
Acquisition related (benefits) costs (1)	— 					0.01 					— 					(0.03)				
Restructuring (benefits) costs	— 					(0.04)					2.25 					(0.03)				
Valuation loss (gain) on equity-owned securities	(161.09)					(52.45)					(234.47)					(119.17)				
Loss (gain) on equity-method investments	0.06 					0.01 					0.18 					0.09 				
Other non-recurring items (3)	— 					— 					— 					(0.39)				
Income tax effect of non-GAAP adjustments (2)	35.40 					11.39 					51.48 					26.57 				
	
Non-GAAP diluted income per share	$	3.71 					$	3.00 					$	12.46 					$	6.51 				

GAAP diluted weighted average shares used in per share calculation	30,224 					30,128 					30,190 					30,137 				
Shares included in non-GAAP net income per share, but excluded from GAAP net loss per share as they would have been anti-dilutive	— 					— 					— 					— 				
Non-GAAP diluted weighted average shares used in per share calculation	30,224 					30,128 					30,190 					30,137 				

(1) Release of contingent consideration and other acquisition-related (benefits) expenses.
(2) Excluded items identified in the reconciliation schedule are tax effected by application of a non-GAAP effective tax rate. The non-GAAP tax provision is adjusted for items, the nature of which and/or tax jurisdiction requires the application of a specific tax rate or treatment.
(3) Gain on the sale of a division (2020).

2021 Financial Outlook

Forecasted non-GAAP operating margin excludes 96 basis points related to amortization of purchased intangibles. Forecasted non-GAAP operating margin does not reflect future gains and charges that are inherently difficult to predict and estimate due to their unknown timing, effect and/or significance, such as foreign currency fluctuations, future gains or losses associated with certain legal matters, acquisitions and restructuring activities.
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